<PAGE>
As filed with the Securities and Exchange Commission on August 13, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Huntsman ICI Chemicals LLC
(Exact Name of Registrant as Specified in its Charter)
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Delaware 2800 87-0630358
(Primary Standard Industrial (I.R.S. Employer
(State or Other Classification Code Number) Identification Number)
Jurisdiction
of Incorporation or
Organization) ---------------
500 Huntsman Way
Salt Lake City, UT 84108
(801) 584-5700
(Address, Including Zip Code and Telephone Number, Including Area Code, of Co-
Registrants' Principal Executive Offices)
---------------
Robert B. Lence, Esq.
Secretary
Huntsman ICI Chemicals LLC
500 Huntsman Way
Salt Lake City, UT 84108
(801) 584-5700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
---------------
Copy to:
Phyllis G. Korff, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
(212) 735-3000
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<TABLE>
<CAPTION>
Jurisdiction
Exact Name of Additional of Primary Standard Industrial I.R.S. Employer
Registrants Incorporation Classification Code Number Identification Number
- ------------------------ -------------- --------------------------- ---------------------
<S> <C> <C> <C>
Huntsman ICI Financial
LLC*................... Delaware 2800 87-0632917
Tioxide Group*.......... U.K. 2800 00-0000000
Tioxide Americas Inc.*.. Cayman Islands 2800 98-0015568
</TABLE>
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* Address and telephone of principal executive offices are the same as those
of Huntsman ICI Chemicals LLC.
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Title of Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Aggregate Amount of
Registered Registered per Note(1) Offering Price(1) Registration Fee
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<S> <C> <C> <C> <C>
10 1/8% Senior
Subordinated Notes due
2009.................. $600,000,000 100% $600,000,000 $166,800
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10 1/8% Senior
Subordinated Notes due
2009.................. (Euro)200,000,000 100% (Euro)200,000,000 $59,826(2)
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Guarantees............. (3) (3) (3) None
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) promulgated under the Securities Act of 1933,
as amended.
(2) Calculated using an exchange rate of (Euro)1.00 = $1.076.
(3) No separate consideration will be received for the guarantees.
---------------
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 that specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until this registration statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information contained in this preliminary prospectus is not complete and +
+may be changed. We may not sell these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This prospectus is not an offer to sell these securities and is not +
+soliciting an offer to buy these securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion--Dated August 13, 1999.
PRELIMINARY PROSPECTUS
[LOGO OF HUNTSMAN APPEARS HERE]
[LOGO OF ICI APPEARS HERE]
Huntsman ICI Chemicals LLC
Exchange Offer for
$600,000,000 10 1/8% Senior Subordinated Notes due 2009
(Euro)200,000,000 10 1/8% Senior Subordinated Notes due 2009
-----------
This exchange offer will expire at , New York City Time,
on , 1999, unless extended.
-----------
Terms of the exchange offer:
. We will exchange all outstanding notes that are validly tendered and not
withdrawn prior to the expiration of the exchange offer.
. You may withdraw tendered outstanding notes at any time prior to the
expiration of the exchange offer.
. We believe that the exchange of outstanding notes will not be a taxable
exchange for United States federal income tax purposes, but you should see
the section entitled "Certain U.S. Federal Tax Consequences" on page for
more information.
. The terms of the notes to be issued are substantially identical to the
terms of the outstanding notes, except for transfer restrictions and
registration rights relating to the outstanding notes.
. We will not receive any proceeds from the exchange offer.
. There is no existing market for the notes to be issued, and we do not
intend to apply for their listing on any securities exchange other than
the Luxembourg Stock Exchange.
See the "Description of Notes" section on page 103 for more information about
the notes to be issued in this exchange offer.
This investment involves risks. See the section entitled "Risk Factors" that
begins on page 18 for a discussion of the risks that you should consider prior
to tendering your outstanding notes for exchange.
-----------
Neither the Securities and Exchange Commission nor any state securities and
exchange commission has approved or disapproved of these securities or passed
upon the adequacy or the accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
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Prospectus dated , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Market and Industry Data................................................. iii
Where You Can Find More Information...................................... iii
Cautionary Notice Regarding Forward-Looking Statements................... iii
Prospectus Summary....................................................... 1
Risk Factors............................................................. 18
The Exchange Offer....................................................... 28
The Transaction.......................................................... 37
Use of Proceeds.......................................................... 40
Capitalization........................................................... 41
Unaudited Pro Forma Financial Data....................................... 43
Selected Historical Financial Data....................................... 48
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 50
Business................................................................. 66
Management............................................................... 91
Certain Relationships and Related Transactions........................... 96
Description of Credit Facilities......................................... 101
Description of Notes..................................................... 103
Plan of Distribution..................................................... 150
Certain U.S. Federal Tax Consequences.................................... 151
Legal Matters............................................................ 153
Experts.................................................................. 154
General Listing Information.............................................. 154
Index to Financial Statements............................................ F-1
</TABLE>
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Our principal executive offices are located at 500 Huntsman Way, Salt Lake
City, Utah 84108, and our telephone number is (801) 584-5700.
ii
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MARKET AND INDUSTRY DATA
Market data used throughout this prospectus was obtained from internal
company surveys and industry surveys and publications. Industry surveys and
publications generally state that the information contained therein has been
obtained from sources believed to be reliable, but there can be no assurance as
to the accuracy and completeness of such information. We have not independently
verified such market data. Similarly, internal company surveys, while believed
to be reliable, have not been verified by any independent sources.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-4 under the Securities Act of 1933 with respect to the
notes offered in this prospectus. This prospectus, which forms part of the
registration statement, does not contain all of the information that is
included in the registration statement. You will find additional information
about our company and the notes in the registration statement. Any statements
made in this prospectus concerning the provisions of legal documents are not
necessarily complete and you should read the documents that are filed as
exhibits to the registration statement for a more complete understanding of the
document or matter.
After the registration statement becomes effective, we will be subject to
the informational requirements of the Exchange Act of 1934, and will file
periodic reports, registration statements and other information with the SEC.
You may read and copy the registration statement and any of the other documents
we file with the SEC at the public reference facilities maintained by the SEC
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the SEC's regional offices located at 7 World Trade Center, New York,
New York 10048 and at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Please call the SEC at 1-800- SEC-0330 for more
information on the public reference rooms. In addition, reports and other
filings are available to the public on the SEC's web site at
http://www.sec.gov.
If for any reason we are not subject to the reporting requirements of the
Securities Exchange Act of 1934 in the future, we will still be required under
the indenture governing the notes to furnish the holders of the notes with
certain financial and reporting information. See "Description of Notes--
Covenants--Reports" for a description of the information we are required to
provide.
----------------
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus are forward-looking in
nature. In some cases, you can identify forward-looking statements by
terminology such as "believes," "expects," "may," "will," "should," or
"anticipates" or the negative of such terms or other comparable terminology, or
by discussions of strategy. You are cautioned that our business and operations
are subject to a variety of risks and uncertainties and, consequently, our
actual results may materially differ from those projected by any forward-
looking statements. Some of those risks and uncertainties are discussed below
under "Risk Factors". We make no commitment to revise or update any forward-
looking statements in order to reflect events or circumstances after the date
any such statement is made.
iii
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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 term "company", "Huntsman ICI Chemicals", "we",
"us" or "our" means Huntsman ICI Chemicals LLC, a Delaware limited liability
company formed on March 23, 1999, and, unless the context otherwise requires,
its consolidated subsidiaries and partnerships. Unless stated otherwise,
references to capacities of our facilities refer to the "nameplate capacity",
or theoretical maximum production capacity, of such facilities; however, the
effective capacity of such facilities may actually be less than the nameplate
capacity due to the current operating conditions and asset configuration of
each facility. All references to "tonnes" are to metric tonnes.
The Company
General
We are a leading global manufacturer and marketer of specialty and
commodity chemicals through our four principal businesses: polyurethane
chemicals, propylene oxide, petrochemicals, and titanium dioxide. Our company
is characterized by leading market positions; superior low cost operating
capabilities; a high degree of technological expertise; a diversity of
products, end markets and geographic regions served; significant product
integration; and strong growth prospects.
. Our global polyurethane chemicals business is the world's second largest
producer of methylene diphenyl diisocyanate, commonly referred to in the
chemicals industry as "MDI", and MDI-based polyurethane systems. Our
customers use our products in a wide variety of polyurethane applications,
including automotive interiors, refrigeration and appliance insulation,
construction products, footwear, furniture cushioning and adhesives.
. Our propylene oxide business is one of three North American producers of
propylene oxide, which is commonly referred to in the chemicals industry as
"PO". PO is used in a variety of applications, the largest of which is the
production of polyols sold into the polyurethane chemicals market.
. Our petrochemicals business produces olefins and aromatics at our world-
scale, highly integrated facilities in Northern England. These products are
the key building blocks for the petrochemical industry and are used in
plastics, synthetic fibers, packaging materials and a wide variety of other
applications.
. Our titanium dioxide business, which operates under the trade name
"Tioxide", is the largest titanium dioxide producer in Europe and the third
largest producer in the world. Titanium dioxide, which is commonly referred
to in the chemicals industry as "TiO\\2\\", is a white pigment used to
impart whiteness, brightness and opacity to products such as paints,
plastics, paper, printing inks, synthetic fibers and ceramics.
For the twelve months ended March 31, 1999, we had pro forma revenues of $3.6
billion, pro forma EBITDA of $424 million and pro forma Adjusted EBITDA of $483
million (see footnote 2 to "--Summary Historical and Pro Forma Financial
Data"). For the year ended December 31, 1998, we derived 54%, 33%, 9% and 4% of
our pro forma revenues in Europe, the Americas, Asia and the rest of the world,
respectively. For the year ended December 31, 1998, our polyurethane chemicals,
PO, petrochemicals and TiO\\2\\ businesses represented 37%, 9%, 28% and 26% of
pro forma revenues, respectively.
1
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Polyurethane Chemicals
We are one of the leading polyurethane chemicals producers in the world. We
market a complete line of polyurethane chemicals, including MDI, toluene
diisocyanate, which is commonly referred to in the chemicals industry as "TDI",
polyols, polyurethane systems and aniline, with an emphasis on MDI-based
chemicals. We are the world's second largest producer of MDI and MDI-based
polyurethane systems, with an estimated 24% global MDI market share. Our
customers produce polyurethane products through the combination of an
isocyanate, such as MDI or TDI, with polyols, which are derived largely from PO
and ethylene oxide. Primary polyurethane end-uses include automotive interiors,
refrigeration and appliance insulation, construction products, footwear,
furniture cushioning, adhesives and other specialized engineering applications.
According to Chem Systems, an international consulting and research firm,
global consumption of MDI was approximately 4.6 billion pounds in 1998, growing
from 2.9 billion pounds in 1992, which represents an 8.1% compound annual
growth rate. This high growth rate is the result of the broad end-uses for MDI
and its superior performance characteristics relative to other polymers.
Our polyurethane chemicals business is widely recognized as an industry
leader in utilizing state-of-the-art application technology to develop new
polyurethane chemical products and applications. Approximately 30% of our 1998
polyurethane chemicals sales were generated from products and applications
introduced in the last three years. Our rapid rate of new product and
application development has led to a high rate of product substitution, which
in turn has led to MDI sales volume growth for our business of approximately
9.2% per year over the past 10 years, a rate in excess of the industry growth
rate. Largely as a result of our technological expertise and history of product
innovation, we have enjoyed long-term relationships with a diverse customer
base, including BMW, Nike, Louisiana Pacific, Ford, Weyerhaeuser,
DaimlerChrysler, Whirlpool, Bosch-Siemens and Electrolux.
We own the world's two largest MDI production facilities, located in
Rozenburg, Netherlands and Geismar, Louisiana, which are back-integrated into
the world's two largest aniline facilities, located in Wilton, U.K. and
Geismar, Louisiana. Since 1996, we have invested over $500 million to
significantly enhance our production capabilities through the rationalization
of our older, less efficient facilities and the modernization of our newer
facilities. According to Chem Systems, we are the lowest cost MDI producer in
the world, largely due to the scale of our operations, our modern facilities
and our back-integration into primary raw materials.
Propylene Oxide
We are one of three North American producers of PO. Our customers process
PO into derivative products such as polyols for polyurethane products,
propylene glycol, which is commonly referred to in the chemicals industry as
"PG", and various other chemical products. End uses for these derivative
products include applications in the home furnishings, construction, appliance,
packaging, automotive and transportation, food, paints and coatings and
cleaning products industries. According to Chem Systems, U.S. consumption of PO
was approximately 3.7 billion pounds in 1998, growing from 2.8 billion pounds
in 1992, which represents a 4.9% compound annual growth rate. Our PO business
is also the third largest U.S. marketer of PG which is used primarily to
produce unsaturated polyester resins for bath and shower enclosures and boat
hulls, and to produce heat transfer fluids and solvents. As a co-product of our
PO manufacturing process, we also produce methyl tertiary butyl ether, which is
commonly referred to in the chemicals industry as "MTBE". MTBE is an oxygenate
that is blended with gasoline to reduce harmful vehicle emissions and to
enhance the octane rating of gasoline.
2
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Our PO business utilizes our proprietary technology to manufacture PO and
MTBE at our state-of-the-art facility in Port Neches, Texas. This facility,
which is the most recently built PO manufacturing facility in North America,
was designed and built under the supervision of Texaco and began commercial
operations in August 1994. According to Chem Systems, we are one of the lowest
cost PO producers in North America, largely due to our proprietary production
process. Since acquiring the facility in 1997, we have increased its PO
capacity by approximately 30% through a series of low cost debottlenecking and
process improvement projects. The current capacity of the PO facility is
approximately 525 million pounds of PO per year. We produce PG under a tolling
arrangement with Huntsman Corporation, which has the capacity to produce
approximately 120 million pounds of PG per year at a neighboring facility.
Petrochemicals
We are a leading, highly-integrated European olefins and aromatics
producer. Olefins, principally ethylene and propylene, are the largest volume
basic petrochemicals and are the key building blocks from which many other
chemicals are made. For example, olefins are used to manufacture most plastics,
resins, adhesives, synthetic rubber and surfactants which are used in a variety
of end-use applications. Aromatics are basic petrochemicals used in the
manufacture of polyurethane chemicals, nylon, polyester fiber and a variety of
plastics.
Our olefins facility at Wilton, U.K. is one of Europe's largest and lowest
cost olefins facilities. Our Wilton olefins facility has the total capacity to
produce approximately 1.9 billion pounds of ethylene, 880 million pounds of
propylene and 200 million pounds of butadiene per year. We sell over 84% of our
olefins volume through long-term contracts with Union Carbide, European Vinyls
Corporation (through contractual arrangements with Imperial Chemical Industries
PLC, which is referred to in this prospectus as "ICI"), ICI, Targor, BASF, BP
Chemicals and others, and over 80% of our total volume is transported via
direct pipelines to customers or consumed internally. The Wilton olefins
facility benefits from its feedstock flexibility and superior logistics, which
allows for the processing of naphtha, condensates and liquid petroleum gases,
which are commonly referred to in the chemicals industry as "LPGs".
We produce aromatics at our two integrated manufacturing facilities located
in Wilton, U.K. and North Tees, U.K. We are Europe's largest cyclohexane
producer with 605 million pounds of annual capacity, Europe's second largest
paraxylene producer with 730 million pounds of annual capacity and Europe's
third largest benzene producer with 990 million pounds of annual capacity.
Additionally, we have the annual capacity to produce 275 million pounds of
cumene. We use all of the benzene produced by our aromatics business internally
in the production of nitrobenzene for our polyurethane chemicals business and
for the production of cyclohexane and cumene. The balance of our aromatics
products are sold to several key customers, including DuPont, BASF and
Phenolchemie. Our aromatics business has recently entered into a contract to
purchase reformate feedstock from Shell Trading International Limited which
will allow us to shut down a portion of our aromatics facilities and
permanently reduce fixed production costs while maintaining production of key
products. We believe that this contract will improve the future profitability
of our aromatics business.
Titanium Dioxide
Our TiO\\2\\ business, which operates under the trade name "Tioxide", is
the largest manufacturer of TiO\\2\\ in Europe, with an estimated 24% market
share, and the third largest in the world, with an estimated 13% market share.
TiO\\2\\ is a white pigment used to impart whiteness, brightness and opacity to
products such as paints, plastics, paper, printing inks, synthetic fibers and
ceramics. In addition to its optical properties, TiO\\2\\ possesses traits such
as stability, durability and non-toxicity,
3
<PAGE>
making it superior to other white pigments. According to International Business
Management Associates, an industry research and consulting firm, global
consumption of TiO\\2\\ was approximately 3.5 million tonnes in 1998, growing
from 3.0 million tonnes in 1992, representing a 2.8% compound annual growth
rate which approximates global GDP growth.
We offer an extensive range of products that are sold worldwide to over
3,000 customers in all major TiO\\2\\ end markets and geographic regions. The
geographic diversity of our manufacturing facilities allows our TiO\\2\\
business to service local customers, as well as global customers that require
multiple delivery points. Our major customers include Akzo Nobel, Cabot,
Schulman, ICI Paints and General Electric. Our TiO\\2\\ business has an
aggregate annual capacity of approximately 570,000 tonnes (approximately
515,000 tonnes of effective capacity in 1998) at our nine production
facilities. Five of our TiO\\2\\ manufacturing plants are located in Europe,
two are in North America, including a 50% interest in a manufacturing joint
venture with NL Industries, one is in Asia, and one is in South Africa (a 60%
owned subsidiary).
We are the second lowest cost TiO\\2\\ producer worldwide, according to
International Business Management Associates. To further enhance our cost
position, we have embarked on a comprehensive cost reduction program which has
eliminated approximately $50 million of annualized cash costs since 1996, with
an additional $30 million of annualized savings expected to be achieved by the
end of 2001. As part of this program, we have reduced the number of product
grades that we produce, focusing on those with wider applications. This program
has resulted in reduced total plant set-up times and further improved product
quality, product consistency, customer service and profitability.
4
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Competitive Strengths
Our company is characterized by the following strengths:
. Leading Market Positions in Attractive Industries--We are the second largest
producer of MDI and MDI-based polyurethane systems in the world, with an
estimated 24% worldwide market share. We are the largest TiO\\2\\ producer
in Europe and the third largest producer worldwide, with an estimated 13%
global market share. In addition, we are one of three North American
producers of PO. Each of the MDI, TiO\\2\\ and PO industries is
characterized by a small number of global competitors, significant
requirements for entry in the form of capital, time and technological know-
how and consistently attractive long-term growth rates.
. Low Cost Producer--According to Chem Systems and International Business
Management Associates, we are among the lowest cost producers of MDI, PO,
olefins and TiO\\2\\. Since 1996, we have invested over $500 million to
significantly enhance our production capabilities for polyurethane
chemicals. As a result of this investment, our polyurethane chemicals
business owns the world's two largest and most modern MDI manufacturing
facilities, which are back-integrated into the world's two largest aniline
facilities. Due to the scale and integration of our facilities, we are the
world's lowest cost MDI manufacturer. Our PO facility, because of its recent
construction and its proprietary production process, is one of the lowest
cost producers of PO. We are among the lowest cost olefins producers in
Europe and the second lowest cost TiO\\2\\ producer in the world. We believe
that these low cost positions provide us with a key competitive advantage
and allow us to achieve enhanced operating margins.
. Product and Process Innovation--We have a demonstrated track record of
technological expertise, continuous process innovation and new product
development. We have consistently increased the capacity of our existing
facilities with minimal capital investment, and believe opportunities for
further expansion exist within our current asset base. For example, over the
last two years, we increased our PO capacity by approximately 30% through a
series of low cost debottlenecking and process improvement projects. In
addition, we maintain extensive research and development capabilities
worldwide that have allowed us to generate a steady flow of new products and
enhancements to existing products. For example, approximately 30% of our
polyurethane chemicals sales are from products introduced over the past
three years.
. Global Presence--We have over 40 manufacturing and technical support
facilities located strategically in 18 countries worldwide, covering all the
major regional consumption areas for our products. We have extensive
worldwide operations in the production and marketing of MDI, MDI-based
polyurethane systems and TiO\\2\\. Our global reach in polyurethane
chemicals and TiO\\2\\ allows us to service local customers, as well as
globally oriented customers that require supplier proximity on a worldwide
basis.
. Diverse Revenue Base--Our four businesses generate revenue and cash flow
from a highly diverse base of products, customers, geographic regions and
end-use markets. We market products in over 60 countries to over 5,000
customers in a wide-variety of end-use markets and applications, including
automotive interiors, refrigeration and appliance insulation, construction
products, footwear, furniture cushioning, adhesives, packaging, food,
coatings, cleaning products, heat transfer fluids, solvents, synthetic
rubber, surfactants, paints, paper, printing inks, synthetic fibers,
ceramics and various other applications. We believe that this diversity
reduces our exposure to any particular industry, product market, customer or
geographic region. In addition, this diversity provides us with a broad base
from which to increase sales and expand customer relationships.
5
<PAGE>
Business Strategy
We intend to capitalize on opportunities that exist across and within each
of our four business segments as follows:
Company Strategies
. Improve Operating Efficiencies and Reduce Costs--In the past, ICI operated
our polyurethane chemicals, petrochemicals and TiO\\2\\ businesses as three
separate businesses. We intend to employ the management practices that
Huntsman Corporation has utilized historically in its acquired businesses by
leveraging its management capabilities, experience and entrepreneurial
culture to increase operating efficiencies and reduce costs. More
specifically, we intend to share services with Huntsman Corporation across
our business groups in the areas of manufacturing, purchasing, research and
development, human resources, finance, legal and environmental, health and
safety. We expect to realize significant cost savings in these and other
areas, as well as through the continuation of specific cost reduction
initiatives already underway in our businesses.
. Grow Through Technology and Innovation--We intend to continue to focus on
developing customized products to meet the needs of a growing number of
customer and end market demands. We are a recognized innovation leader in
the polyurethane chemicals business, and we have continually upgraded and
modified our TiO\\2\\ product range to serve our customers' needs and
increase product life cycles. Additionally, Huntsman Corporation management
has a proven track record in its specialty oriented business lines of
maintaining a low-cost production position while remaining a market and
product innovator. We will continue to maintain research and development
activities and investments to promote continued process and product
innovation and manufacturing efficiency.
Business Segment Strategies
. Polyurethane Chemicals and PO--We intend to optimize the integration
opportunities that exist between our polyurethane chemicals and PO
businesses in order to expand the product line that we offer to the
polyurethane industry. As our existing PO contracts expire, we intend to
evaluate selective opportunities to utilize our PO internally to increase
the scope and scale of our specialty polyol offerings at improved
profitability. We believe we will be able to use our PO production in this
manner as a platform for growth in MDI and TDI sales. Additionally, we
believe that by managing our products and technologies together with
Huntsman Corporation's existing polyurethane catalyst, polyol and amine
technologies, further benefits will be created for our company.
. Petrochemicals--We believe our olefins and aromatics facilities have been
historically underutilized and that a significant opportunity exists to
increase operating rates, expand output and reduce manufacturing costs at
these units. In many cases, Huntsman Corporation utilizes technologies and
facilities similar to those used at our olefins and aromatics facilities and
operates those assets at higher rates and at a lower cost. Moreover, the
olefins and aromatics businesses had been held for sale by ICI for a
significant period of time and, as a result, we believe new marketing
opportunities relative to these businesses had been limited. We believe that
under Huntsman Corporation management, these opportunities will be created
and captured.
6
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. TiO\\2\\--We intend to continue to improve our competitiveness and market
position by focusing on reducing costs, enhancing our product offerings and
strengthening our customer relationships through technical service and
customer support. Approximately $50 million of annualized cash cost savings
have been achieved since 1996 and further annualized cost savings of $30
million are expected to be achieved by the end of 2001, further improving
our low cost position. We believe that our TiO\\2\\ business will also be
able to improve the utilization of our assets by taking advantage of
opportunities to increase sales to manufacturers of paints and coatings,
some of whom may have been reluctant to purchase products from our TiO\\2\\
business when it was solely owned by ICI, a significant competitor in the
paints and coatings industry.
7
<PAGE>
Management and Ownership
Huntsman Corporation, one of the world's largest privately owned chemical
companies, which is controlled by Jon M. Huntsman and members of his family,
and its affiliates indirectly own 60% of our common equity interests. Huntsman
Corporation is a global, vertically integrated company distinguished by leading
market positions, breadth of product offerings, superior operating capabilities
and a track record of growth. Since 1983, Huntsman Corporation and its
predecessors have successfully completed over 35 acquisitions and investments
in joint ventures to build a global chemicals business. Imperial Chemical
Industries PLC, a U.K. publicly traded specialty products and paints company
that is referred to in this prospectus as "ICI", indirectly owns 30% of our
common equity interests. Since its incorporation in 1926, ICI has been one of
the major industrial chemical organizations in the world with an impressive
record of innovation. The remainder of our common equity interests is
indirectly owned collectively by BT Capital Investors, L.P., Chase Equity
Associates, L.P. and The Goldman Sachs Group, Inc.
The Transaction
At the close of business on June 30, 1999 pursuant to a contribution
agreement and ancillary agreements between our company, Huntsman Specialty
Chemicals Corporation, ICI and our parent, Huntsman ICI Holdings LLC, we
acquired assets and stock representing ICI's polyurethane chemicals, selected
petrochemicals (including ICI's 80% interest in the Wilton olefins facility)
and TiO\\2\\ businesses and Huntsman Specialty's PO business. In addition, at
the close of business on June 30, 1999, we also acquired the remaining 20%
ownership interest in the Wilton olefins facility from BP Chemicals Limited.
In exchange for transferring its business to us, Huntsman Specialty (1)
retained a 60% common equity interest in Huntsman ICI Holdings and (2) received
approximately $360 million in cash. In exchange for transferring its businesses
to us, ICI received (1) a 30% common equity interest in Huntsman ICI Holdings,
(2) approximately $2 billion in cash that was paid in a combination of U.S.
dollars and euros and (3) discount notes of Huntsman ICI Holdings with $508
million of accreted value at issuance. The obligations of the discount notes
from Huntsman ICI Holdings are non-recourse to us. BT Capital Investors, L.P.,
Chase Equity Associates, L.P. and The Goldman Sachs Group, Inc. acquired the
remaining 10% common equity interest in Huntsman ICI Holdings for $90 million
in cash.
Cash Sources (in millions)
<TABLE>
<S> <C>
Senior secured credit facilities... $1,685
The notes.......................... 807
Cash equity(b)..................... 90
------
Total cash sources................ $2,582
======
</TABLE>
Cash Uses
<TABLE>
<S> <C>
Cash to ICI and BP Chemicals...... $2,140
Cash to Huntsman Specialty(a).... 360
Transaction fees and expenses.... 82
------
Total cash uses.....................$2,582
======
</TABLE>
- --------
(a) Used for the repayment of Huntsman Specialty debt and the acquisition of
Huntsman Specialty preferred stock.
(b) Represents $90 million cash contribution for 10% of our common equity. This
implies a $900 million common equity value for our company.
8
<PAGE>
The Exchange Offer
Securities Offered.................. $600,000,000 aggregate principal amount
of new 10 1/8% Senior Subordinated Notes
due 2009 and (Euro)200,000,000 aggregate
principal amount of new 10 1/8% Senior
Subordinated Notes due 2009, all of which
have been registered under the Securities
Act of 1933. The terms of the notes
offered in the exchange offer are
substantially identical to those of the
outstanding notes, except that certain
transfer restrictions, registration
rights and liquidated damages provisions
relating to the outstanding notes do not
apply to the new registered notes.
The Exchange Offer.................. We are offering to issue registered notes
in exchange for a like principal amount
and like denomination of our outstanding
notes. We are offering to issue these
registered notes to satisfy our
obligations under an exchange and
registration rights agreement that we
entered into with the initial purchasers
of the outstanding notes when we sold
them in a transaction that was exempt
from the registration requirements of the
Securities Act. You may tender your
outstanding notes for exchange by
following the procedures described under
the heading "The Exchange Offer".
Tenders; Expiration Date; The exchange offer will expire at ,
Withdrawal.......................... New York City time, on , 1999,
unless we extend it. If you decide to
exchange your outstanding notes for new
notes, you must acknowledge that you are
not engaging in, and do not intend to
engage in, a distribution of the new
notes. You may withdraw any notes that
you tender for exchange at any time prior
to , 1999. If we decide for any
reason not to accept any notes you have
tendered for exchange, those notes will
be returned to you without cost promptly
after the expiration or termination of
the exchange offer. See "The Exchange
Offer--Terms of the Exchange Offer" for a
more complete description of the tender
and withdrawal provisions.
Conditions to the Exchange Offer.... The exchange offer is subject to
customary conditions, some of which we
may waive.
U.S. Federal Tax Consequences....... Your exchange of outstanding notes for
notes to be issued in the exchange offer
should not result
9
<PAGE>
in any gain or loss to you for U.S.
federal income tax purposes. See "Certain
U.S. Federal Tax Consequences" for a
general summary of material United States
federal income tax consequences
associated with the exchange of
outstanding notes for the notes to be
issued in the exchange offer and the
ownership and disposition of those new
notes.
Use of Proceeds..................... We will not receive any cash proceeds
from the exchange offer.
Exchange Agent...................... Bank One, N.A.
Consequences of Failure to Outstanding notes that are not tendered
Exchange............................ or that are tendered but not accepted
will continue to be subject to the
restrictions on transfer that are
described in the legend on those notes.
In general, you may offer or sell your
outstanding notes only if they are
registered under, or offered or sold
under an exemption from, the Securities
Act and applicable state securities laws.
We, however, will have no further
obligation to register the outstanding
notes. If you do not participate in the
exchange offer, the liquidity of your
notes could be adversely affected.
Consequences of Exchanging Your Based on interpretations of the staff of
Notes............................... the SEC, we believe that you may offer
for resale, resell or otherwise transfer
the notes that we issue in the exchange
offer without complying with the
registration and prospectus delivery
requirements of the Securities Act if
you:
. acquire the notes issued in the
exchange offer in the ordinary course
of your business;
. are not participating, do not intend
to participate, and have no
arrangement or undertaking with anyone
to participate, in the distribution of
the notes issued to you in the
exchange offer; and
. are not an "affiliate" of our company
as defined in Rule 405 of the
Securities Act.
If any of these conditions are not
satisfied and you transfer any notes
issued to you in the exchange offer
without delivering a proper prospectus or
without qualifying for a registration
exemption, you may incur liability under
the Securities Act. We will not be
responsible for or indemnify you against
any liability you may incur.
10
<PAGE>
Any broker-dealer that acquires notes in
the exchange offer for its own account in
exchange for outstanding notes, which it
acquired through market-making or other
trading activities, must acknowledge that
it will deliver a prospectus when it
resells or transfers any notes issued in
the exchange offer. See "Plan of
Distribution" for a description of the
prospectus delivery obligations of
broker-dealers in the exchange offer.
The Notes
The terms of the notes we are issuing in this exchange offer and the
outstanding notes are identical in all material respects, except:
(1) the notes issued in the exchange offer will have been registered under
the Securities Act;
(2) the notes issued in the exchange offer will not contain transfer
restrictions and registration rights that relate to the outstanding
notes; and
(3) the notes issued in the exchange offer will not contain provisions
relating to the payment of liquidated damages to be made to the holders
of the outstanding notes under circumstances related to the timing of
the exchange offer.
A brief description of the material terms of the notes follows:
Issuer.............................. Huntsman ICI Chemicals LLC.
Notes Offered....................... $600,000,000 aggregate principal amount
of dollar denominated 10 1/8% Senior
Subordinated Notes due 2009 and
(Euro)200,000,000 aggregate principal
amount of euro denominated 10 1/8% Senior
Subordinated Notes due 2009.
Maturity Date....................... July 1, 2009.
Interest Payment Dates.............. January 1 and July 1 of each year,
commencing January 1, 2000.
Guarantors.......................... The notes are guaranteed by some of our
subsidiaries. If we cannot make payments
on the notes when they are due, then our
guarantors are required to make payments
on our behalf.
Optional Redemption................. We may redeem the notes, in whole or in
part, at our option at any time on or
after July 1, 2004, at the redemption
prices listed in "Description of Notes--
Optional Redemption".
In addition, on or before July 1, 2002,
we may, at our option and subject to
certain requirements,
11
<PAGE>
use the net proceeds from one or more
public equity offerings to redeem up to
35% of the original aggregate principal
amount of the notes at 110.125% of their
face amount, plus accrued and unpaid
interest. Before July 1, 2004, we may
redeem some or all of the notes at a
redemption price equal to 100% of the
principal amount thereof plus a "make
whole" premium. See "Description of
Notes--Optional Redemption".
Sinking Fund........................ None.
Ranking............................. The notes rank junior to all of our
existing and future senior indebtedness,
and rank senior in right of payment to
all of our future indebtedness that is
expressly subordinated to the notes. See
"Description of Notes--Brief Description
of the Notes and the Guarantees--The
Notes".
The guarantees rank junior in right of
payment to all existing and future senior
indebtedness of our guarantors, and rank
senior in right of payment to all of
their future indebtedness that is
expressly subordinated to the guarantees.
See "Description of Notes--Brief
Description of the Notes and the
Guarantees--The Guarantees".
As of March 31, 1999, we would have had
approximately $1,696 million of senior
indebtedness outstanding if we had
completed our transactions with ICI and
Huntsman Specialty and with BP Chemicals
on that date.
Change of Control................... If we go through a change of control, we
must make an offer to repurchase the
notes at 101% of their face amount, plus
accrued and unpaid interest. See
"Description of Notes--Repurchase at the
Option of Holders upon Change of
Control".
Asset Sales......................... We may have to use the net proceeds from
asset sales to offer to repurchase notes
under certain circumstances at their face
amount, plus accrued and unpaid interest.
See "Description of Notes--Certain
Covenants--Limitation on Asset Sales".
Certain Covenants................... The indenture governing the notes
contains certain covenants that, among
other things, limit our ability and the
ability of certain of our subsidiaries
to:
. incur more debt;
. pay dividends, redeem stock or make
other distributions;
12
<PAGE>
. issue capital stock;
. make certain investments;
. create liens;
. enter into transactions with
affiliates;
. enter into sale and leaseback
transactions;
. merge or consolidate; and
. transfer or sell assets.
These covenants are subject to a number
of important qualifications and
limitations. See "Description of Notes--
Certain Covenants".
Registration Covenant; Exchange In connection with our agreement to
Offer............................... register the exchange notes under the
Securities Act by filing the registration
statement of which this prospectus forms
a part, we have agreed to:
. cause the registration statement to
become effective on or before January
27, 2000; and
. consummate the exchange offer within
45 days after the effective date of
the registration statement.
In addition, we have agreed, in certain
circumstances, to file a "shelf
registration statement" that would allow
some or all of the notes to be offered to
the public.
If we fail to meet any or all the targets
listed above (a "registration default"),
the annual interest rates on the notes
will increase by 0.25% during the first
90-day period during which the
registration default continues, and will
increase by an additional 0.25% for each
subsequent 90-day period during which the
registration default continues, up to a
maximum increase of 1.00% over the
interest rates that would otherwise apply
to the notes. As soon as we cure a
registration default, the interest rates
on the notes will revert to their
original levels.
Upon consummation of the exchange offer,
holders of notes will no longer have any
rights under the exchange and
registration rights agreement, except to
the extent that we have continuing
obligations to file a shelf registration
statement.
13
<PAGE>
For additional information concerning the
above, see "Description of Notes--Form,
Denomination, Transfer, Exchange and
Book-entry Procedures,--Registration
Covenant; Exchange Offer".
Use of Proceeds..................... We will not receive any proceeds from the
exchange offer. We used the net proceeds
from the sale of the notes to fund a
portion of the transfer of ICI's and
Huntsman Specialty's businesses to us and
related fees and expenses, and for
general corporate purposes. See "Use of
Proceeds".
Risk Factors
You should carefully consider all of the information set forth in this
prospectus and, in particular, the specific factors set forth under the "Risk
Factors" section before deciding to tender your outstanding notes in the
exchange offer.
14
<PAGE>
Summary Historical and Pro Forma Financial Data
The summary financial data set forth below presents the historical
financial data of Huntsman Specialty, our predecessor, and the predecessor of
Huntsman Specialty, as of the dates and for the periods indicated. In
accordance with U.S. GAAP, Huntsman Specialty is considered the acquiror of the
businesses transferred to us in connection with our transactions with ICI and
Huntsman Specialty and with BP Chemicals at the close of business on June 30,
1999 because the shareholders of Huntsman Specialty acquired majority control
of the businesses transferred to us. The summary financial and other data as of
December 31, 1996 has been derived from audited financial statements. The
summary financial and other data as of December 31, 1997 and 1998 and for the
year ended December 31, 1996, the two months ended February 28, 1997, the ten
months ended December 31, 1997 and the year ended December 31, 1998 has been
derived from the audited financial statements of Huntsman Specialty included
elsewhere in this prospectus. The summary financial and other data as of March
31, 1999 and for the three months ended March 31, 1998 and 1999 has been
derived from the unaudited financial statements of Huntsman Specialty included
elsewhere in this prospectus.
The summary unaudited pro forma financial data prepared by us and set forth
below gives effect to our transactions with ICI and Huntsman Specialty and with
BP Chemicals and the related financing thereof, including the offering of the
notes. The summary unaudited pro forma statement of operations data for the
three months ended March 31, 1999 and the year ended December 31, 1998 give
effect to our transaction with ICI and Huntsman Specialty and related financing
thereof, including the offering of the notes, as if they had occurred on
January 1, 1998. The summary unaudited pro forma balance sheet data as of March
31, 1999 gives effect to our transactions with ICI and Huntsman Specialty and
with BP Chemicals and related financing thereof, including the offering of the
notes, as if they had occurred on such date. The summary unaudited pro forma
financial data does not purport to be indicative of the combined financial
position or results of operations of future periods or indicative of results
that would have occurred had our transactions with ICI and Huntsman Specialty
and with BP Chemicals been consummated on the dates indicated. The pro forma
and other adjustments, as described in the accompanying notes to the summary
unaudited pro forma condensed balance sheet and statement of operations data,
are based on available information and certain assumptions that we believe are
reasonable.
You should read the summary historical and unaudited pro forma financial
data in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations", "Unaudited Pro Forma Financial Data", the
audited and unaudited financial statements of Huntsman Specialty and the
audited and unaudited combined financial statements of the polyurethane
chemicals, selected petrochemicals and TiO\\2\\ businesses of ICI, included
elsewhere in this prospectus.
15
<PAGE>
<TABLE>
<CAPTION>
Predecessor(1) Huntsman Specialty(1) Huntsman ICI Chemicals
------------------------- ---------------------------------------- -------------------------
Pro Forma
Two Months Ten Months Three Months Pro Forma Three Months
Year Ended Ended Ended Year Ended Ended Year Ended Ended
December 31, February 28, December 31, December 31, March 31, December 31, March 31,
------------ ------------ ------------ ------------ -------------- ------------ ------------
1996 1997 1997 1998 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------ ------ ------------ ------------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Sales-net: $405 $61 $ 348 $339 $ 86 $ 83 $3,671 $ 870
Cost of sales.......... 377 65 300 277 72 62 3,104 716
---- --- ----- ---- ----- ------ ------ ------
Gross profit (loss).... 28 (4) 48 62 14 21 567 154
Operating expenses..... 19 2 8 8 3 2 353 103
---- --- ----- ---- ----- ------ ------ ------
Operating income
(loss)................ 9 (6) 40 54 11 19 214 51
Interest expense-net.... -- -- 35 40 10 9 219 55
Other income............ 10 -- -- 1 -- -- (9) --
---- --- ----- ---- ----- ------ ------ ------
Income (loss) before
income tax and minority
interest............... 19 (6) 5 15 1 10 4 (4)
Income tax expense
(benefit).............. 7 (2) 2 6 -- 4 51 9
Minority Interest....... -- -- -- -- -- -- 2 --
---- --- ----- ---- ----- ------ ------ ------
Income (loss) from
continuing operations.. $ 12 $(4) $ 3 $ 9 $ 1 $ 6 $ (49) $ (13)
Other Data:
Depreciation and
amortization........... $ -- $ 1 $ 26 $ 31 $ 8 $ 8 $ 201 $ 52
EBITDA(1)(2)............ 49 1 66 86 19 27 424 103
Net cash provided by
(used in) operating
activities............. 48 (5) 37 46 -- 8
Net cash used in
investing activities... (1) (1) (510) (10) (2) (1)
Net cash provided by
(used in) financing
activities............. (47) 6 483 (43) -- --
Capital expenditures.... 1 1 2 10 2 1 232 71
Ratio of earnings to
fixed charges(3)....... 2.7x -- 1.1x 1.4x 1.1x 2.1x 1.0x --
Balance Sheet Data
(at period end):
Working capital(4)...... $ 39 $ 40 $ 28 $ 34 $ 402
Total assets............ 292 594 578 583 4,214
Long-term debt(5)....... -- 464 428 429 2,503
Total liabilities(6).... 287 569 547 548 3,167
Stockholders' equity.... 5 25 31 35 1,047
</TABLE>
(See footnotes on next page)
16
<PAGE>
(Footnotes from previous page)
- --------
(1) Effective March 1, 1997, Huntsman Specialty purchased from Texaco Chemical,
Inc. its PO business (see Note 1 to the audited financial statements of
Huntsman Specialty). Prior to March 1, 1997, Texaco Chemical leased
substantially all of the plant and equipment of the PO business under an
operating lease agreement. Also, Texaco Chemical received interest income
on net intercompany advances prior to the acquisition by Huntsman
Specialty. Historical rental expense for the year ended December 31, 1996
and the two months ended February 28, 1997 was $34 million and $6 million,
respectively. Interest income on net intercompany advances was $4 million
for the year ended December 31, 1996. No interest was charged or credited
during the two months ended February 28, 1997.
(2) EBITDA is defined as earnings from continuing operations before interest
expense, depreciation and amortization, and taxes. Prior to March 1, 1997,
EBITDA excludes interest income on net intercompany investments and
advances to Texaco Chemical and rental expense (see footnote (1) above).
EBITDA is included in this prospectus because it is a basis on which we
assess our financial performance and debt service capabilities, and because
certain covenants in our borrowing arrangements are tied to similar
measures. However, EBITDA should not be considered in isolation or viewed
as a substitute for cash flow from operations, net income or other measures
of performance as defined by GAAP or as a measure of a company's
profitability or liquidity. We understand that while EBITDA is frequently
used by security analysts, lenders and others in their evaluation of
companies, EBITDA as used herein is not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the method of calculation.
The following other adjustments to pro forma EBITDA do not qualify as pro
forma adjustments under the Securities and Exchange Commission's rules
(principally Article 11 of Regulation S-X), but are included to eliminate the
effect of nonrecurring items.
<TABLE>
<CAPTION>
Three Months
Year Ended Ended
December 31, March 31,
1998 1999
------------ ------------
(in millions)
<S> <C> <C>
EBITDA............................................ $405 $103
To conform the accounting policy for turnaround
and inspection costs of the petrochemicals
business........................................ 19 --
---- ----
Pro forma EBITDA.................................. 424 103
Net reduction in corporate overhead allocation
and insurance expenses.......................... 21 6
Impact of PO facility turnaround and inspection.. 19 --
Rationalization of TiO\\2\\ operations........... 17 2
---- ----
Pro forma Adjusted EBITDA......................... $481 $111
==== ====
</TABLE>
Pro forma Adjusted EBITDA does not include any amounts related to our
transaction with BP Chemicals on June 30, 1999. We believe that pro forma
Adjusted EBITDA for the year ended December 31, 1998 would have increased by
approximately $16 million to approximately $497 million had our transaction
with BP Chemicals at the close of business on June 30, 1999 been consummated
on January 1, 1998.
(3) The ratio of earnings to fixed charges has been calculated by dividing (1)
the sum of income before taxes plus fixed charges by (2) fixed charges.
Fixed charges are equal to interest expense (including amortization of
deferred financing costs), plus the portion of rent expense estimated to
represent interest. Earnings were insufficient to cover fixed charges by $6
million and $4 million for the two months ended February 28, 1997, and, on
a pro forma basis, for the three months ended March 31, 1999.
(4) Working capital represents total current assets, less total current
liabilities, excluding cash and the current maturities of long-term debt.
(5) Long-term debt includes the current portion of long-term debt.
(6) Total liabilities includes mandatorily redeemable preferred stock of $68
million and $72 million at December 31, 1997 and 1998, respectively.
17
<PAGE>
RISK FACTORS
You should carefully consider the risks described below in addition to all
other information provided to you in this prospectus before deciding whether to
participate in this exchange offer. The risk factors described below, other
than those which discuss the consequences of failing to exchange your
outstanding notes in the exchange offer, are generally applicable to both the
outstanding notes and the notes issued in the exchange offer.
You may have difficulty selling the notes that you do not exchange.
If you do not exchange your outstanding notes for the notes offered in this
exchange offer, you will continue to be subject to the restrictions on the
transfer of your notes. Those transfer restrictions are described in the
indenture governing the notes and in the legend contained on the outstanding
notes, and arose because we originally issued the outstanding notes under
exemptions from, and in transactions not subject to, the registration
requirements of the Securities Act.
In general, you may offer or sell your outstanding notes only if they are
registered under the Securities Act and applicable state securities laws, or if
they are offered and sold under an exemption from those requirements. We do not
intend to register the outstanding notes under the Securities Act.
If a large number of outstanding notes are exchanged for notes issued in
the exchange offer, it may be more difficult for you to sell your unexchanged
notes. In addition, if you do not exchange your outstanding notes in the
exchange offer, you will no longer be entitled to have those notes registered
under the Securities Act.
See "The Exchange Offer--Consequences of Failure to Exchange Outstanding
Notes" for a discussion of the possible consequences of failing to exchange
your notes.
Our ability to repay our debt depends upon the performance of our subsidiaries
and their ability to make distributions to us.
The notes are the exclusive obligations of our company and the guarantors
of the notes and not of any of our other subsidiaries. Because a significant
portion of our operations are conducted by our subsidiaries, our cash flow and
our ability to service indebtedness, including our ability to pay the interest
on and principal of the notes when due, are dependent to a large extent upon
cash dividends and distributions or other transfers from our subsidiaries. In
addition, any payment of dividends, distributions, loans or advances by our
subsidiaries to us could be subject to restrictions on dividends or
repatriation of earnings under applicable local law, monetary transfer
restrictions and foreign currency exchange regulations in the jurisdictions in
which our subsidiaries operate, and any restrictions imposed by the current and
future debt instruments of our subsidiaries. Our senior secured credit
facilities currently prohibit, and the indenture governing these notes
currently restricts, these types of payments by our subsidiaries. In addition,
payments to us by our subsidiaries are contingent upon our subsidiaries'
earnings.
Our subsidiaries are separate and distinct legal entities and, except for
the guarantors of the notes, have no obligation, contingent or otherwise, to
pay any amounts due pursuant to the notes or to make any funds available
therefor, whether by dividends, loans, distributions or other payments, and do
not guarantee the payment of interest on, or principal of, the notes. Any right
that we have to receive any assets of any of our subsidiaries that are not
guarantors upon the liquidation or reorganization of those subsidiaries, and
the consequent right of holders of notes to realize proceeds from the sale of
their assets, will be effectively subordinated to the claims of that
subsidiary's creditors, including trade creditors and holders of debt issued by
that subsidiary. In addition, the guarantees of the notes are subordinated to
all indebtedness of each guarantor that is either senior or secured.
18
<PAGE>
We have substantial debt that we may be unable to service and that restricts
our activities.
We have incurred substantial debt in connection with our transactions with
ICI and Huntsman Specialty and with BP Chemicals. As of March 31, 1999, we
would have had total outstanding indebtedness of $2,503 million on a pro forma
basis after giving effect to our transactions with ICI and Huntsman Specialty
and with BP Chemicals and the financing thereof. We require substantial capital
to finance our operations and continued growth, and we may incur substantial
additional debt from time to time for a variety of purposes, including
acquiring additional businesses. However, the terms of the indenture governing
the notes and the senior secured credit facilities contain restrictive
covenants. Among other things, these covenants limit or prohibit our ability to
incur more debt; make prepayments of other debt in whole or in part; pay
dividends, redeem stock or make other distributions; issue capital stock; make
investments; create liens; enter into transactions with affiliates; enter into
sale and leaseback transactions; and merge or consolidate and transfer or sell
assets. Also, if we undergo a change of control, the indenture governing the
notes may require us to make an offer to purchase the notes. Under these
circumstances, we may also be required to repay indebtedness under our credit
facilities prior to the notes. We cannot assure you that we will have the
financial resources necessary to purchase the notes in this event. See
"Description of Notes".
The degree to which we have outstanding debt could have important
consequences for our business, including:
. a substantial portion of our cash flow must be applied towards payment
of principal and interest on our debt, which will reduce funds available
for other purposes, including our operations and future business
opportunities;
. our ability to obtain additional financing may be constrained due to our
existing level of debt;
. a high degree of debt will make us more vulnerable to a downturn in our
business or the economy in general; and
. part of our debt is, and any future debt may be, subject to variable
interest rates, which might make us vulnerable to increases in interest
rates.
We are required to make scheduled principal payments under the credit
facilities commencing on June 30, 2000. Our ability to make scheduled payments
of principal and interest on, or to refinance, our debt depends on our future
financial performance, which, to a certain extent, is subject to economic,
competitive, regulatory and other factors beyond our control. We cannot
guarantee that we will have sufficient cash from our operations or other
sources to service our debt (including the notes). If our cash flow and capital
resources are insufficient to fund our debt service obligations, we may be
forced to reduce or delay capital expenditures, sell assets or seek to obtain
additional equity capital or restructure or refinance our debt. We cannot
guarantee that such alternative measures would be successful or would permit us
to meet our scheduled debt service obligations. In the absence of such
operating results and resources, we could face substantial liquidity problems
and might be required to dispose of material assets or operations to meet our
debt service obligations. We cannot guarantee our ability to consummate any
asset sales or that any proceeds from an asset sale would be sufficient to meet
the obligations then due.
If we are unable to generate sufficient cash flow and we are unable to
obtain the funds required to meet payments of principal and interest on our
indebtedness, or if we otherwise fail to comply with the various covenants in
the instruments governing our indebtedness, including those under the credit
facilities and the indenture governing the notes, we could be in default under
the terms of those agreements. In the event of a default by us, a holder of the
indebtedness could elect to declare all of the funds borrowed under those
agreements to be due and payable together with accrued and unpaid interest, the
lenders under the credit facilities could elect to terminate their commitments
thereunder and we could be forced into bankruptcy or liquidation. Any default
under the agreements
19
<PAGE>
governing our indebtedness could have a material adverse effect on our ability
to pay principal and interest on the notes and on the market value of the
notes.
Our ability to repay our debt may be affected by joint venture arrangements.
We conduct a substantial amount of our operations through our joint
ventures. Our ability to meet our debt service obligations depends, in part,
upon the operation of our joint ventures. If any of our joint venture partners
fails to observe its commitments, that joint venture may not be able to operate
according to its business plans or we may be required to increase our level of
commitment to give effect to such plans. In general, joint venture arrangements
may be affected by relations between the joint venture partners. Differences in
views among the partners may, for example, result in delayed decisions or in
failure to agree on significant matters. Such circumstances may have an adverse
effect on the business and operations of the joint ventures, adversely
affecting the business and operations of our company. There can be no assurance
that we and our joint venture partners will always agree on significant issues.
Any such differences in our views or problems with respect to the operations of
the joint ventures could have a material adverse effect on our business,
financial condition, results of operations or cash flows.
The notes are subordinated to senior debt.
The notes are general unsecured obligations and are subordinated in right
of payment to the prior payment of all our current and future senior debt. As
of March 31, 1999, after giving effect to our transaction with ICI and Huntsman
Specialty and the financing thereof, the aggregate principal amount of our
senior debt on a pro forma basis would have been $1,696 million. The effect of
this subordination is that if we were to undergo a bankruptcy, liquidation,
dissolution, reorganization or similar proceeding, our assets would be
available to pay our obligations on the notes only after all senior debt is
paid, and we cannot guarantee that there will be sufficient assets remaining to
pay amounts due on all or any of the notes. Our senior debt under the credit
facilities is secured by liens on substantially all our U.S. assets, including
the stock of certain of our subsidiaries. The notes are unsecured and therefore
do not have the benefit of this collateral. Accordingly, if an event of default
occurs under the credit facilities, the lenders under the credit facilities
will have a right to our assets and may foreclose upon the collateral. In that
case, our assets would first be used to repay in full amounts outstanding under
the credit facilities and may not be available to repay the notes.
Our success depends upon our ability to integrate our businesses.
Prior to our transactions with ICI and Huntsman Specialty and with BP
Chemicals, we did not own the majority of our assets. As you evaluate our
prospects, you should consider the many risks we will encounter during our
process of integrating these acquired businesses, including:
. our potential inability to successfully integrate acquired operations
and businesses or to realize anticipated synergies, economies of scale
or other value;
. diversion of our management's attention from business concerns;
. difficulties in increasing production at acquired sites and
coordinating management of operations at the acquired sites;
. delays in implementing consolidation plans;
. unanticipated legal liabilities; and
. loss of key employees of acquired operations.
The full benefit of the businesses transferred to us in connection with our
transactions with ICI and Huntsman Specialty and with BP Chemicals requires the
integration of administrative functions
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and the implementation of appropriate operations, financial and management
systems and controls. If we are unable to integrate our various businesses
effectively, our business, financial condition, results of operations and cash
flows may suffer.
Some of the assets comprising portions of the ICI businesses were not
transferred to us at the closing of our transaction with ICI and Huntsman
Specialty and may never be transferred to us.
Without breaching its obligations to transfer its businesses to us, ICI did
not transfer assets having an aggregate value of no more than 3% of the net
book value of all the assets that were scheduled to be transferred to us by
ICI. In addition, ICI's failure to transfer its joint venture interests in
Nippon Polyurethane Industry Co. Ltd. and Arabian Polyol Company Limited to us
did not constitute a breach of ICI's obligations under the contribution
agreement. Although (1) ICI is obligated to use its reasonable best efforts to
transfer these assets and joint venture interests to us within two years,
during which time ICI will hold the assets for our benefit, and (2) we are
entitled to a purchase price adjustment if ICI does not ultimately transfer
those assets, we can give no assurance as to when, if at all, these assets or
joint venture interests will be transferred to us or what effect the failure to
receive such assets or joint venture interests, and the related revenue
streams, will have on our business, financial condition, results of operations
or cash flows.
The chemicals industry is cyclical.
A substantial portion of our revenue is attributable to sales of products,
the prices of which have been historically cyclical and sensitive to relative
changes in supply and demand, the availability and price of feedstocks and
general economic conditions. Historically, the markets for some of our products
have experienced alternating periods of tight supply, causing prices and
margins to increase, followed by periods of capacity additions, resulting in
oversupply and declining prices and margins. We cannot guarantee that future
growth in demand for these products will be sufficient to alleviate any
existing or future conditions of excess industry capacity or that such
conditions will not be sustained or further aggravated by anticipated or
unanticipated capacity additions or other events. See "--We face significant
competition", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Competition".
There is significant price volatility for many of our raw materials.
The prices for a large portion of our raw materials are similarly cyclical.
While we attempt to match raw material price increases with corresponding
product price increases, our ability to pass on increases in the cost of raw
materials to our customers is, to a large extent, dependent upon market
conditions. There may be periods of time in which we are not able to recover
increases in the cost of raw materials due to weakness in demand for or
oversupply of our products. Therefore, increases in raw material prices may
have a material adverse effect on our business, financial condition, results of
operations or cash flows.
The industries in which we compete are highly competitive.
The industries in which we operate are highly competitive. Among our
competitors are some of the world's largest chemical companies and major
integrated petroleum companies that have their own raw material resources. Some
of these companies are able to produce products more economically than we can.
In addition, many of our competitors are larger and have greater financial
resources, which may enable them to invest significant capital into their
businesses, including expenditures for research and development. If any of our
current or future competitors develop proprietary technology that enables them
to produce products at a significantly lower cost, our technology could be
rendered uneconomical or obsolete. Moreover, certain of our businesses use
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technology that is widely available. Accordingly, barriers to entry, apart from
capital availability, are low in certain product segments of our business, and
the entrance of new competitors into the industry may reduce our ability to
capture improving profit margins in circumstances where overcapacity in the
industry is diminishing. Further, petroleum-rich countries have become more
significant participants in the petrochemical industry and may expand this role
significantly in the future. Any of these developments would have a significant
impact on our ability to enjoy higher margins during periods of increased
demand. See "--The chemicals industry is cyclical".
We depend on our key suppliers.
We obtain a significant portion of our raw materials from a few key
suppliers. If any of these suppliers is unable to meet its obligations under
present supply agreements, we may be forced to pay higher prices to obtain the
necessary raw materials and we may not be able to increase prices for our
finished products. In addition, some of the raw materials we use may become
unavailable within the geographic area from which we now source our raw
materials, and there can be no assurance that we will be able to obtain
suitable and cost effective substitutes. Any interruption of supply or any
price increase of raw materials could have a material adverse effect on our
business, financial condition, results of operations or cash flows.
Some of our supply contracts require the consent of the supplier for the
transfer of the contract to us in connection with our transactions with ICI and
Huntsman Specialty and with BP Chemicals. There can be no assurance that we
will receive those consents or that such suppliers will agree to continue to
provide the raw materials on the same terms. If we do not receive these
consents, we may be forced to pay higher prices to obtain necessary raw
materials and we may not be able to increase prices for our finished products.
This could have a material adverse effect on our business, financial condition,
results of operations or cash flows.
Our relationships with Huntsman Corporation and ICI are critical.
We have entered and will continue to enter into certain agreements,
including service, supply and purchase contracts with Huntsman Corporation and
ICI. A breach by Huntsman Corporation or ICI in performing its obligations
under any of these agreements could have a material adverse effect on our
business, financial condition, results of operations or cash flows. There can
be no assurance that we would be able to obtain similar service, supply or
purchase contracts on the same terms from third parties should Huntsman
Corporation or ICI terminate or breach any of these agreements. For example, we
have only one operating facility for our PO business, which is located in Port
Neches, Texas. The facility is dependent on Huntsman Corporation's existing
infrastructure and its adjacent facilities for certain utilities, raw
materials, product distribution systems and safety systems. In addition, we
depend upon employees of Huntsman Corporation to operate our Port Neches
facility. We purchase all of the propylene used in the production of PO through
Huntsman Corporation's pipeline, which is the only existing propylene pipeline
connected to our PO facility. If we were required to obtain propylene from
another source, we would need to make a substantial investment in an
alternative pipeline. This could have a material adverse effect on our
business, financial condition, results of operations or cash flows. See
"Certain Relationships and Related Transactions".
We are subject to many environmental and safety regulations.
The operation of any chemical manufacturing plant, the distribution of
chemical products and the related production of by-products and wastes, entail
risk of adverse environmental effects. We are subject to extensive federal,
state, local and foreign laws, regulations, rules and ordinances relating to
pollution, the protection of the environment and the generation, storage,
handling, transportation, treatment, disposal and remediation of hazardous
substances and waste materials. In the ordinary course of business, we are
subject continually to environmental inspections and
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monitoring by governmental enforcement authorities. We may incur substantial
costs, including fines, damages and criminal or civil sanctions, or experience
interruptions in our operations for actual or alleged violations arising under
any environmental laws. In addition, our production facilities require
operating permits that are subject to renewal, modification and, in some
circumstances, revocation. Violations of permit requirements can also result in
restrictions or prohibitions on plant operations, substantial fines and civil
or criminal sanctions. Our operations involve the generation, handling,
transportation, use and disposal of numerous hazardous substances. Changes in
regulations regarding the generation, handling, transportation, use and
disposal of hazardous substances could inhibit or interrupt our operations and
have a material adverse effect on our business. From time to time, these
operations may result in violations under environmental laws, including spills
or other releases of hazardous substances to the environment. In the event of a
catastrophic incident, we could incur material costs as a result of addressing
and implementing measures to prevent such incidents. In February 1999,
hydrochloric acid was accidentally released from the Greatham facility into a
nearby marsh that includes a conservation area. We have an indemnity from ICI
which we believe will cover, in large measure, our liability for this matter.
In addition, certain notices of violation relating to air emissions and waste
water issues have been issued to our Port Neches facility. While these matters
remain pending and could result in fines of over $100,000, we do not believe
any of these matters will be material to us. Given the nature of our business,
we cannot assure you that violations of environmental laws will not result in
restrictions imposed on our operating activities, substantial fines, penalties,
damages or other costs.
In addition, potentially significant expenditures could be necessary in
order to comply with existing or future environmental laws. Our costs and
operating expenses and capital expenditures relating to safety, health and
environmental matters totaled approximately $4 million in 1996, $3 million in
1997 and $3 million in 1998 for our PO business. Environmental expenses and
capital expenditures for our polyurethane chemicals, petrochemicals and
TiO\\2\\ businesses were approximately (Pounds)53 million, (Pounds)44 million
and (Pounds)42 million in 1996, 1997 and 1998, respectively. Costs in 1999 and
2000 are expected to remain at historical levels in order to cover, among other
things, our routine measures to prevent, contain and clean up spills of
materials that occur in the ordinary course of business. Our estimated capital
expenditures for environmental, safety and health matters in 1999 and 2000 are
expected to be similar to historical expenditures. Capital expenditures and, to
a lesser extent, costs and operating expenses relating to environmental matters
will be subject to evolving regulatory requirements and will depend on the
timing of the promulgation and enforcement of specific standards which impose
requirements on our operations. Therefore, we cannot assure you that additional
capital expenditures will not be required under environmental laws. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
Under certain environmental laws, we may be liable for the costs of
investigating and cleaning up environmental contamination on or from our
properties or at off-site locations where we disposed of or arranged for the
disposal or treatment of hazardous wastes. We are aware that there is or may be
soil or groundwater contamination at some of our facilities resulting from past
operations at these or neighboring facilities. Based on available information
and the indemnification rights that we possess (including indemnities provided
by Huntsman Specialty and ICI for the facilities each transferred in connection
with our transaction with them on June 30, 1999), we believe that the costs to
investigate and remediate known contamination will not have a material adverse
effect on our business, financial condition, results of operations or cash
flows; however, we cannot give any assurance that such indemnities will fully
cover the costs of investigation and remediation, that we will not be required
to contribute to such costs or that such costs will not be material. See
"Business--Environmental Regulations".
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Pending or future litigation or legislative initiatives may subject us to
products or environmental liability or materially adversely affect our MTBE
sales.
A co-product of our PO operations is MTBE. MTBE is an oxygenate that
petroleum refiners blend with gasoline to enhance the octane level of gasoline
and to reduce the emissions produced when gasoline is burned. MTBE is used in
many states to meet oxygenated fuels requirements applicable to certain
polluted areas under the federal Clean Air Act. The presence of MTBE in some
groundwater in California and other states (primarily due to gasoline leaking
from underground storage tanks) and in surface water (primarily from
recreational water craft) has led to public concern about MTBE's potential to
contaminate drinking water supplies. Because MTBE is partially soluble in
water, it has a tendency to dissolve more readily than most other gasoline
constituents, making groundwater cleanup more difficult and expensive.
Heightened public awareness regarding this issue has resulted in state and
federal initiatives to rescind the oxygenate requirements for reformulated
gasoline, or to restrict or prohibit the use of MTBE in particular. For
example, in March 1999, the Governor of California ordered that MTBE in
California gasoline be phased out by the end of 2002 and has requested that the
U.S. Environmental Protection Agency waive the federal oxygenated fuels
requirements for gasoline sold in California. Several bills have been
introduced in the U.S. Congress to accomplish similar goals of curtailing or
eliminating the oxygenated fuels requirements in the Clean Air Act, or of
curtailing MTBE use in particular. In November 1998, the EPA established a
committee to review and provide recommendations concerning the requirements for
oxygenated fuels in the Clean Air Act. The committee's findings were released
to the public on July 27, 1999, and include, among other things,
recommendations that (1) MTBE use be reduced substantially, (2) the U.S.
Congress clarify federal and state authority to regulate or eliminate gasoline
additives that threaten water supplies and (3) the U.S. Congress amend the
Clean Air Act to remove certain of the oxygenated fuels requirements for
reformulated gasoline. In a statement issued in response to these
recommendations on July 26, 1999, the administrator of the EPA stated that the
EPA would work with the U.S. Congress to craft a legislative solution that
would allow for a significant reduction in MTBE use, while maintaining air
quality. On August 4, 1999, the U.S. Senate passed a resolution calling for a
phase out of MTBE. While this resolution has no binding legislative effect,
there can be no assurance that future Congressional action will not result in a
ban or other restrictions on MTBE use. Ongoing debate regarding this issue is
continuing at all levels of federal and state government.
Any phase-out of or prohibition against the use of MTBE in California (in
which a significant amount of MTBE is consumed), in other states, or nationally
could result in a significant reduction in demand for our MTBE. In that event,
we believe we will be able to modify our PO production process to make
alternative co-products other than MTBE, though the necessary modifications may
require significant capital expenditures. There can be no assurance, however,
that we would not incur a material loss in revenues or material costs or
expenditures in the event of a widespread decrease or cessation of use of MTBE.
In addition to recent legislative challenges to the use of MTBE, various
citizens groups and municipalities have filed lawsuits against petroleum
refiners and trade associations involved with petroleum and oxygenated fuels,
including other manufacturers of MTBE. The plaintiffs in these lawsuits seek,
among other things, damages from the defendants for the costs of cleaning up
contamination. Neither we nor any of our affiliates have been named in any of
these lawsuits; however, we cannot give any assurance that we will not be named
in any future litigation or that such litigation will not have a material
adverse effect on our business, financial condition, results of operations or
cash flows.
We are controlled by a single beneficial owner.
Jon M. Huntsman, Chairman of the Board, Chief Executive Officer and a
Director of Huntsman Corporation, members of his immediate family and trusts
for the benefit of his family members own beneficially 100% of the common stock
of Huntsman Corporation, which with its affiliates indirectly
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own 60% of our common equity interests. In addition, all of the members of our
Board of Managers are members of the Huntsman family. See "Management--Managers
and Executive Officers" and "Prospectus Summary--Management and Ownership". As
a result of these relationships, the Huntsman family collectively, and Jon M.
Huntsman individually, substantially controls our affairs.
As a result of Huntsman Corporation's and ICI's ownership interests,
conflicts of interest could arise with respect to transactions involving
business dealings between us and them, potential acquisitions of businesses or
properties, the issuance of additional securities, the payment of dividends by
us and other matters. See "Description of Notes--Certain Covenants--Limitations
on Transactions with Affiliates". In addition, some of our executive officers
serve as executive officers and directors of various Huntsman companies and of
ICI and its affiliates. See "Management" and "Certain Relationships and Related
Transactions".
Our business may be adversely affected by international operations and
fluctuations in currency exchange rates.
We conduct a significant portion of our business outside the United States.
Our operations outside the United States are subject to risks normally
associated with international operations. These risks include the need to
convert currencies which we may receive for our products into currencies
required to pay our debt, or into currencies in which we purchase raw materials
or pay for services, which could result in a gain or loss depending on
fluctuations in exchange rates. Other risks of international operations include
trade barriers, tariffs, exchange controls, national and regional labor
strikes, social and political risks, general economic risks, required
compliance with a variety of foreign laws, including tax laws and the
difficulty of enforcing agreements and collecting receivables through foreign
legal systems.
We rely on patents and confidentiality agreements to protect our intellectual
property.
Proprietary protection of our processes, apparatuses, and other technology
is important to our business. Consequently, we rely on judicial enforcement for
protection of our patents. While a presumption of validity exists with respect
to patents issued to us in the U.S., there can be no assurance that any of our
patents will not be challenged, invalidated, circumvented or rendered
unenforceable. Furthermore, there can be no assurance that any pending patent
application filed by us will result in an issued patent, or that if patents do
issue to us, that such patents will provide meaningful protection against
competitors or against competitive technologies.
We also rely upon unpatented proprietary know-how and continuing
technological innovation and other trade secrets to develop and maintain our
competitive position. While it is our policy to enter into confidentiality
agreements with our employees and third parties to protect our intellectual
property, there can be no assurances that our confidentiality agreements will
not be breached, that they will provide meaningful protection for our trade
secrets or proprietary know-how, or that adequate remedies will be available in
the event of an unauthorized use or disclosure of such trade secrets and know-
how. In addition, there can be no assurances that others will not obtain
knowledge of such trade secrets through independent development or other access
by legal means. The failure of our patents or confidentiality agreements to
protect our processes, apparatuses, technology, trade secrets or proprietary
know-how could have a material adverse effect on our business, financial
condition, results of operations or cash flows.
Year 2000 issues could adversely affect our business.
Our business operations are dependent upon a large number of business
support and manufacturing distributive control software and systems including a
reliance on software and systems of third parties. Many existing computer
software programs and systems could fail or create
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erroneous results by or at the Year 2000. A degree of risk exists that we will
not adequately identify and remedy each Year 2000 problem that exists in our
business. We are also dependent on a limited number of internal professionals
with critical knowledge and expertise required for remedying Year 2000 issues.
Although we believe that our key management information systems and
manufacturing controls are or will be Year 2000 ready, unanticipated Year 2000
problems with respect to our internal software and systems or that of a third
party may arise which, depending on the nature and magnitude of the problem,
could adversely affect our business, financial condition, results of operations
or cash flows. In addition to the computer software and systems that we use
directly, our operations also depend upon the performance of computer software
and systems used by our significant service providers including services such
as utilities, telecommunications or banking services. These problems could
adversely affect our business. We are unable at this time to assess the
possible impact on our business of Year 2000 problems involving any third
party. However, where we consider the risks are high we have been developing
contingency plans to minimize these impacts.
There is no established market for the notes.
Although the notes are listed on the Luxembourg Stock Exchange, the notes
constitute a new issue of securities for which there is no established trading
market. The initial purchasers have advised us that they intend to make a
market in the notes, but they are not obligated to do so and may discontinue
market-making activities any time. Accordingly, we cannot give any assurance as
to (1) the likelihood that an active market for the notes will develop, (2) the
liquidity of any such market, (3) the ability of holders to sell their notes or
(4) the prices that holders may obtain for their notes upon any sale. Future
trading prices for the notes will depend on many factors, including, among
others, our operating results, the market for similar securities and interest
rates. Historically, the market for non-investment grade debt has been subject
to disruptions that have caused substantial volatility in the prices of
securities similar to the notes. We cannot guarantee that the market for the
notes will not be subject to similar disruptions or that any such disruptions
will not have an adverse effect on the value or marketability of the notes.
The notes and the guarantees may be void, avoided or subordinated under laws
governing fraudulent transfers, insolvency and financial assistance.
In connection with our transactions with ICI and Huntsman Specialty and
with BP Chemicals, we have incurred substantial debt, including debt under our
senior secured credit facilities and the notes. Various fraudulent conveyance
laws enacted for the protection of creditors may apply to our issuance of the
notes and the guarantors' issuance of the guarantees. To the extent that a
court were to find that (1) the notes were issued or a guarantee was incurred
with actual intent to hinder, delay or defraud any present or future creditor
or (2) we or a guarantor did not receive fair consideration or reasonably
equivalent value for issuing the notes or guarantee and we or a guarantor (A)
was insolvent, (B) was rendered insolvent by reason of the issuance of the
notes or a guarantee, (C) was engaged or about to engage in a business or
transaction for which our remaining assets or those of a guarantor constituted
unreasonably small capital to carry on its business or (D) intended to incur,
or believed that it would incur, debts beyond its ability to pay those debts as
they matured, the court could avoid the notes or the guarantee or subordinate
the notes or the guarantee in favor of our or the guarantor's creditors. To the
extent that the notes or a guarantee were avoided as a fraudulent conveyance or
held unenforceable for any other reason, claims of holders of the notes against
us or a guarantor would be adversely affected, the notes would be effectively
subordinated to all obligations of our creditors or the creditors of the
guarantor, and the other creditors would be entitled to be paid in full before
any payment could be made on the notes.
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If insolvency proceedings are commenced by or against Tioxide Group, our
English subsidiary that is a guarantor of the notes, the presiding court may
apply English insolvency laws. Under English insolvency laws, the liquidator or
administrator of Tioxide Group may, among other things, apply to the court to
rescind the guarantee if Tioxide Group received consideration of significantly
less value than the benefit of its guarantee provides to us, Tioxide Group was
insolvent (as defined in the English Insolvency Act 1986) at the time of, or
immediately after, entering into the guarantee and Tioxide Group enters into a
formal insolvency process before the second anniversary of the sale of the
notes.
Under applicable provisions of English company law, the giving of the
guarantee by Tioxide Group constitutes "financial assistance". Accordingly, if
the guarantee has reduced the net assets of Tioxide Group, the guarantee will
be void. In the event that a guarantee is void, avoided or subordinated, we can
give no assurance that after providing for all prior claims there would be
sufficient assets remaining to satisfy the claims of holders of the notes.
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THE EXCHANGE OFFER
Purpose of the Exchange Offer
When we sold the outstanding notes on June 30, 1999, we entered into an
exchange and registration rights agreement with the initial purchasers of those
notes. Under the exchange and registration rights agreement, we agreed to file
the registration statement of which this prospectus forms a part regarding the
exchange of the outstanding notes for notes which are registered under the
Securities Act of 1933. We also agreed to use our reasonable best efforts to
cause the registration statement to become effective with the SEC, and to
conduct this exchange offer after the registration statement is declared
effective. We will use our best efforts to keep this registration statement
effective until the exchange offer is completed. The exchange and registration
rights agreement provides that we will be required to pay liquidated damages to
the holders of the outstanding notes if:
. the registration statement is not declared effective by January 27,
2000; or
. the exchange offer has not been consummated within 45 days after the
effective date of the registration statement.
A copy of the exchange and registration rights agreement is filed as an
exhibit to the registration statement to which this prospectus is a part.
Terms of the Exchange Offer
This prospectus and the accompanying letter of transmittal together
constitute the exchange offer. Upon the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal, we will accept for
exchange outstanding notes which are properly tendered on or before the
expiration date and are not withdrawn as permitted below. The expiration date
for this exchange offer is p.m., New York City time, on , 1999, or such
later date and time to which we, in our sole discretion, extend the exchange
offer.
The form and terms of the notes being issued in the exchange offer are the
same as the form and terms of the outstanding notes, except that:
. the notes being issued in the exchange offer will have been registered
under the Securities Act;
. the notes issued in the exchange offer will not bear the restrictive
legends restricting their transfer under the Securities Act; and
. the notes being issued in the exchange offer will not contain the
registration rights and liquidated damages provisions contained in the
outstanding notes.
Notes tendered in the exchange offer must be in denominations of the
principal amount of $1,000 or (Euro)1,000 and any integral multiple thereof.
We expressly reserve the right, in our sole discretion:
. to extend the expiration date;
. to delay accepting any outstanding notes;
. if any of the conditions set forth below under "--Conditions to the
Exchange Offer" have not been satisfied, to terminate the exchange
offer and not accept any notes for exchange; and
. to amend the exchange offer in any manner.
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We will give oral or written notice of any extension, delay, non-
acceptance, termination or amendment as promptly as practicable by a public
announcement, and in the case of an extension, no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date.
During an extension, all outstanding notes previously tendered will remain
subject to the exchange offer and may be accepted for exchange by us. Any
outstanding notes not accepted for exchange for any reason will be returned
without cost to the holder that tendered them as promptly as practicable after
the expiration or termination of the exchange offer.
How to Tender Notes for Exchange
When the holder of outstanding notes tenders, and we accept, notes for
exchange, a binding agreement between us and the tendering holder is created,
subject to the terms and conditions set forth in this prospectus and the
accompanying letter of transmittal. Except as set forth below, a holder of
outstanding notes who wishes to tender notes for exchange must, on or prior to
the expiration date:
(1) transmit a properly completed and duly executed letter of transmittal,
including all other documents required by such letter of transmittal,
to Bank One, N.A. (the "exchange agent") at the address set forth
below under the heading "--The Exchange Agent"; or
(2) if notes are tendered pursuant to the book-entry procedures set forth
below, the tendering holder must transmit an agent's message to the
exchange agent at the address set forth below under the heading "--The
Exchange Agent."
In addition, either:
(1) the exchange agent must receive the certificates for the outstanding
notes and the letter of transmittal;
(2) the exchange agent must receive, prior to the expiration date, a
timely confirmation of the book-entry transfer of the notes being
tendered into the exchange agent's account at the Depository Trust
Company ("DTC"), Euroclear or Cedelbank, as applicable, in each case
along with the letter of transmittal or an agent's message; or
(3) the holder must comply with the guaranteed delivery procedures
described below.
The term "agent's message" means a message, transmitted to DTC, Euroclear
or Cedelbank, as applicable, and received by the exchange agent and forming a
part of a book-entry transfer (a "book-entry confirmation"), which states that
DTC, Euroclear or Cedelbank, as applicable, has received an express
acknowledgment that the tendering holder agrees to be bound by the letter of
transmittal and that we may enforce the letter of transmittal against such
holder.
The method of delivery of the outstanding notes, the letters of transmittal
and all other required documents is at the election and risk of the holders. If
such delivery is by mail, we recommend registered mail, properly insured, with
return receipt requested. In all cases, you should allow sufficient time to
assure timely delivery. No letters of transmittal or notes should be sent
directly to us.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the notes surrendered for exchange are
tendered:
(1) by a holder of outstanding notes who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or
(2) for the account of an eligible institution.
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An "eligible institution" is a firm which is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
If signatures on a letter of transmittal or notice of withdrawal are
required to be guaranteed, the guarantor must be an eligible institution. If
notes are registered in the name of a person other than the signer of the
letter of transmittal, the notes surrendered for exchange must be endorsed by,
or accompanied by a written instrument or instruments of transfer or exchange,
in satisfactory form as determined by us in our sole discretion, duly executed
by the registered holder with the holder's signature guaranteed by an eligible
institution.
We will determine all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of notes tendered for exchange in
our sole discretion. Our determination will be final and binding. We reserve
the absolute right to:
(1) reject any and all tenders of any note improperly tendered;
(2) refuse to accept any note if, in our judgment or the judgment of our
counsel, acceptance of the note may be deemed unlawful; and
(3) waive any defects or irregularities or conditions of the exchange
offer as to any particular note either before or after the expiration
date, including the right to waive the ineligibility of any holder who
seeks to tender notes in the exchange offer.
Our interpretation of the terms and conditions of the exchange offer as to
any particular notes either before or after the expiration date, including the
letter of transmittal and the instructions to it, will be final and binding on
all parties. Holders must cure any defects and irregularities in connection
with tenders of notes for exchange within such reasonable period of time as we
will determine, unless we waive such defects or irregularities. Neither we, the
exchange agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of notes
for exchange, nor shall any of us incur any liability for failure to give such
notification.
If a person or persons other than the registered holder or holders of the
outstanding notes tendered for exchange signs the letter of transmittal, the
tendered notes must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders that appear on the outstanding notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any notes or any power of attorney,
such persons should so indicate when signing, and you must submit proper
evidence satisfactory to us of such person's authority to so act unless we
waive this requirement.
By tendering, each holder will represent to us that, among other things,
that the person acquiring notes in the exchange offer is obtaining them in the
ordinary course of its business, whether or not such person is the holder, and
that neither the holder nor such other person has any arrangement or
understanding with any person to participate in the distribution of the notes
issued in the exchange offer. If any holder or any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of our company,
or is engaged in or intends to engage in or has an arrangement or understanding
with any person to participate in a distribution of such notes to be acquired
in the exchange offer, such holder or any such other person:
(1) may not rely on the applicable interpretations of the staff of the
SEC; and
(2) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction.
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Each broker-dealer who acquired its outstanding notes as a result of
market-making activities or other trading activities and thereafter receives
notes issued for its own account in the exchange offer, must acknowledge that
it will deliver a prospectus in connection with any resale of such notes issued
in the exchange offer. The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. See "Plan of Distribution" for a discussion of the exchange and
resale obligations of broker-dealers in connection with the exchange offer.
Acceptance of Outstanding Notes for Exchange; Delivery of Notes Issued in the
Exchange Offer
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all outstanding notes
properly tendered and will issue notes registered under the Securities Act. For
purposes of the exchange offer, we shall be deemed to have accepted properly
tendered outstanding notes for exchange when, as and if we have given oral or
written notice to the exchange agent, with written confirmation of any oral
notice to be given promptly thereafter. See "--Conditions to the Exchange
Offer" for a discussion of the conditions that must be satisfied before we
accept any notes for exchange.
For each outstanding note accepted for exchange, the holder will receive a
note registered under the Securities Act having a principal amount equal to,
and in the denomination of, that of the surrendered outstanding note.
Accordingly, registered holders of notes issued in the exchange offer on the
relevant record date for the first interest payment date following the
consummation of the exchange offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid on
the outstanding notes, from June 30, 1999. Outstanding notes that we accept for
exchange will cease to accrue interest from and after the date of consummation
of the exchange offer. Under the exchange and registration rights agreement, we
may be required to make additional payments in the form of liquidated damages
to the holders of the outstanding notes under circumstances relating to the
timing of the exchange offer.
In all cases, we will issue notes in the exchange offer for outstanding
notes that are accepted for exchange only after the exchange agent timely
receives:
(1) certificates for such outstanding notes or a timely book-entry
confirmation of such outstanding notes into the exchange agent's
account at DTC, Euroclear or Cedelbank, as applicable;
(2) a properly completed and duly executed letter of transmittal or an
agent's message; and
(3) all other required documents.
If for any reason set forth in the terms and conditions of the exchange
offer we do not accept any tendered outstanding notes, or if a holder submits
outstanding notes for a greater principal amount than the holder desires to
exchange, we will return such unaccepted or non-exchanged notes without cost to
the tendering holder. In the case of notes tendered by book-entry transfer into
the exchange agent's account at DTC, Euroclear or Cedelbank, as applicable,
such non-exchanged notes will be credited to an account maintained with DTC,
Euroclear or Cedelbank, as applicable. We will return the notes or have them
credited to DTC, Euroclear or Cedelbank account, as applicable, as promptly as
practicable after the expiration or termination of the exchange offer.
Book Entry Transfers
The exchange agent will make a request to establish an account at DTC with
respect to outstanding notes denominated in dollars and at Euroclear or
Cedelbank with respect to outstanding
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notes denominated in euros for purposes of the exchange offer within two (2)
business days after the date of this prospectus. Any financial institution that
is a participant in DTC's, Euroclear's or Cedelbank's systems, as applicable,
must make book-entry delivery of outstanding notes denominated in dollars by
causing DTC to transfer those outstanding notes denominated in dollars into the
exchange agent's account at DTC in accordance with DTC's procedures for
transfer and must make book-entry delivery of outstanding notes denominated in
euros by causing Euroclear or Cedelbank to transfer those outstanding notes
denominated in euros into the exchange agent's account at Euroclear or
Cedelbank in accordance with Euroclear's or Cedelbank's procedures, as
applicable. Such participant should transmit its acceptance to DTC, Euroclear
or Cedelbank, as applicable, on or prior to the expiration date or comply with
the guaranteed delivery procedures described below. DTC, Euroclear or
Cedelbank, as applicable, will verify such acceptance, execute a book-entry
transfer of the tendered outstanding notes into the exchange agent's account at
DTC, Euroclear or Cedelbank, as applicable, and then send to the exchange agent
confirmation of such book-entry transfer. The confirmation of such book-entry
transfer will include an agent's message confirming that DTC, Euroclear or
Cedelbank, as applicable, has received an express acknowledgment from such
participant that such participant has received and agrees to be bound by the
letter of transmittal and that we may enforce the letter of transmittal against
such participant. Delivery of notes issued in the exchange offer may be
effected through book-entry transfer at DTC, Euroclear or Cedelbank, as
applicable. However, the letter of transmittal or facsimile thereof or an
agent's message, with any required signature guarantees and any other required
documents, must:
(1) 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
(2) comply with the guaranteed delivery procedures described below.
Guaranteed Delivery Procedures
If a holder of outstanding notes desires to tender such notes and the
holder's notes are not immediately available, or time will not permit such
holder's 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:
(1) the holder tenders the notes through an eligible institution;
(2) prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed notice of
guaranteed delivery, substantially in the form we have provided, by
telegram, telex, facsimile transmission, mail or hand delivery,
setting forth the name and address of the holder of the notes being
tendered and the amount of the notes being tendered. The notice of
guaranteed delivery shall state that the tender is being made and
guarantee that within three (3) New York Stock Exchange trading days
after the date of execution of the notice of guaranteed delivery, the
certificates for all physically tendered notes, in proper form for
transfer, or a book-entry confirmation, as the case may be, together
with a properly completed and duly executed letter of transmittal or
agent's message with any required signature guarantees and any other
documents required by the letter of transmittal will be deposited by
the eligible institution with the exchange agent; and
(3) the exchange agent receives the certificates for all physically
tendered outstanding notes, in proper form for transfer, or a book-
entry confirmation, as the case may be, together with a properly
completed and duly executed letter of transmittal or agent's message
with any required signature guarantees and any other documents
required by the letter of transmittal, within three (3) New York Stock
Exchange trading days after the date of execution of the notice of
guaranteed delivery.
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Withdrawal Rights
You may withdraw tenders of your outstanding notes at any time prior to
p.m., New York City time, on the expiration date.
For a withdrawal to be effective, you must send a written notice of
withdrawal to the exchange agent at one of the addresses set forth below under
"--Exchange Agent." Any such notice of withdrawal must:
(1) specify the name of the person having tendered the outstanding notes
to be withdrawn;
(2) identify the outstanding notes to be withdrawn, including the
principal amount of such outstanding notes; and
(3) where certificates for outstanding notes are transmitted, specify the
name in which outstanding notes are registered, if different from that
of the withdrawing holder.
If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an eligible institution unless such holder is an
eligible institution. If notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC, Euroclear or Cedelbank, as applicable,
to be credited with the withdrawn notes and otherwise comply with the
procedures of such facility. We will determine all questions as to the
validity, form and eligibility (including time of receipt) of such notices and
our determination will be final and binding on all parties. Any tendered notes
so withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the exchange offer. Any 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. In the case of notes tendered by book-
entry transfer into the exchange agent's account at DTC, Euroclear or
Cedelbank, the notes withdrawn will be credited to an account maintained with
DTC, Euroclear or Cedelbank, as applicable, for the outstanding notes. The
notes will be returned or credited to DTC, Euroclear or Cedelbank account, as
applicable, as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn notes may be re-tendered
by following one of the procedures described under "--How to Tender Notes for
Exchange" above at anytime on or prior to p.m., New York City time, on the
expiration date.
Conditions to the Exchange Offer
We are not required to accept for exchange, or to issue notes in the
exchange offer for any outstanding notes. We may terminate or amend the
exchange offer, if at any time before the acceptance of such outstanding notes
for exchange:
(1) any federal law, statute, rule or regulation shall have been adopted
or enacted which, in our judgment, would reasonably be expected to
impair our ability to proceed with the exchange offer;
(2) any stop order shall be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or
the qualification of the indenture under the Trust Indenture Act of
1939, as amended;
(3) there shall occur a change in the current interpretation by staff of
the SEC which permits the notes issued in the exchange offer in
exchange for the outstanding notes to be offered for resale, resold
and otherwise transferred by such holders, other than broker-dealers
and any such holder which is an "affiliate" of our company within the
meaning of Rule 405 under the Securities Act, without compliance with
the registration and prospectus delivery
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provisions of the Securities Act, provided that such notes acquired in
the exchange offer are acquired in the ordinary course of such holder's
business and such holder has no arrangement or understanding with any
person to participate in the distribution of such notes issued in the
exchange offer;
(4) there has occurred any general suspension of or general limitation on
prices for, or trading in, securities on any national exchange or in
the over-the-counter market;
(5) any governmental agency creates limits that adversely affect our
ability to complete the exchange offer;
(6) there shall occur any declaration of war, armed hostilities or other
similar international calamity directly or indirectly involving the
United States, or the worsening of any such condition that existed at
the time that we commence the exchange offer;
(7) there shall have occurred a change (or a development involving a
prospective change) in our and our subsidiaries' businesses,
properties, assets, liabilities, financial condition, operations,
results of operations taken as a whole, that is or may be adverse to
us; or
(8) we shall have become aware of facts that, in our reasonable judgment,
have or may have adverse significance with respect to the value of the
outstanding notes or the notes to be issued in the exchange offer.
The preceding conditions are for our sole benefit and we may assert them
regardless of the circumstances giving rise to any such condition. We may waive
the preceding conditions in whole or in part at any time and from time to time
in our sole discretion. If we do so, the exchange offer will remain open for at
least three (3) business days following any waiver of the preceding conditions.
Our failure at any time to exercise the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which we may assert at any time and from time to time.
The Exchange Agent
Bank One, N.A. has been appointed as our exchange agent for the exchange
offer. All executed letters of transmittal should be directed to our exchange
agent at the address set forth below. Questions and requests for assistance,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for notices of guaranteed delivery should be directed
to the exchange agent addressed as follows:
Main Delivery To:
Bank One, N.A.
By hand delivery or overnight
courier: By mail:
Bank One Trust Company, NA Bank One Trust Company, NA
Corporate Trust Operations, Corporate Trust Operations
OH 10184 P.O. Box 710184
235 West Schrock Rd. Columbus, OH 43271-0184
Westerville, OH 43081 Attention: Lora Marsch--
Attention: Lora Marsch-- Confidential
Confidential
By facsimile transmission:
(for eligible institutions only)
614-248-9987
Confirm by Telephone:
800-346-5153
Delivery of the letter of transmittal to an address other than as set forth
above or transmission of such letter of transmittal via facsimile other than as
set forth above does not constitute a valid delivery of such letter of
transmittal.
Fees and Expenses
We will not make any payment to brokers, dealers, or others soliciting
acceptance of the exchange offer except for reimbursement of mailing expenses.
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The estimated cash expenses to be incurred in connection with the exchange
offer will be paid by us and are estimated in the aggregate to be approximately
$ .
Transfer Taxes
Holders who tender their outstanding notes for exchange will not be
obligated to pay any transfer taxes in connection with the exchange. If,
however, notes issued in the exchange offer are to be delivered to, or are to
be issued in the name of, any person other than the holder of the notes
tendered, or if a transfer tax is imposed for any reason other than the
exchange of outstanding notes in connection with the exchange offer, then the
holder must pay any such transfer taxes, whether imposed on the registered
holder or on any other person. If satisfactory evidence of payment of, or
exemption from, such taxes is not submitted with the letter of transmittal, the
amount of such transfer taxes will be billed directly to the tendering holder.
Consequences of Failure to Exchange Outstanding Notes
Holders who desire to tender their outstanding notes in exchange for notes
registered under the Securities Act should allow sufficient time to ensure
timely delivery. Neither the exchange agent nor our company is under any duty
to give notification of defects or irregularities with respect to the tenders
of notes for exchange.
Outstanding notes that are not tendered or are tendered but not accepted
will, following the consummation of the exchange offer, continue to be subject
to the provisions in the indenture regarding the transfer and exchange of the
outstanding notes and the existing restrictions on transfer set forth in the
legend on the outstanding notes and in the offering circular dated June 22,
1999, relating to the outstanding notes. Except in limited circumstances with
respect to specific types of holders of outstanding notes, we will have no
further obligation to provide for the registration under the Securities Act of
such outstanding notes. In general, outstanding notes, unless registered under
the Securities Act, may not be offered or sold except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. We do not currently anticipate that we will take any
action to register the outstanding notes under the Securities Act or under any
state securities laws.
Upon completion of the exchange offer, holders of the outstanding notes
will not be entitled to any further registration rights under the exchange and
registration rights agreement, except under limited circumstances.
Holders of the notes issued in the exchange offer and any outstanding notes
which remain outstanding after consummation of the exchange offer will vote
together as a single class for purposes of determining whether holders of the
requisite percentage of the class have taken certain actions or exercised
certain rights under the indenture.
Consequences of Exchanging Outstanding Notes
Based on interpretations of the staff of the SEC, as set forth in no-action
letters to third parties, we believe that the notes issued in the exchange
offer may be offered for resale, resold or otherwise transferred by holders of
such notes, other than by any holder which is an "affiliate" of our company
within the meaning of Rule 405 under the Securities Act. Such notes may be
offered for resale, resold or otherwise transferred without compliance with the
registration and prospectus delivery provisions of the Securities Act, if:
(1) such notes issued in the exchange offer are acquired in the ordinary
course of such holder's business; and
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(2) such holder, other than broker-dealers, has no arrangement or
understanding with any person to participate in the distribution of
such notes issued in the exchange offer.
However, the SEC has not considered the exchange offer in the context of a
no-action letter and we cannot guarantee that the staff of the SEC would make a
similar determination with respect to the exchange offer as in such other
circumstances.
Each holder, other than a broker-dealer, must furnish a written
representation, at our request, that:
(1) it is not an affiliate of ours;
(2) it is not engaged in, and does not intend to engage in, a distribution
of the notes issued in the exchange offer and has no arrangement or
understanding to participate in a distribution of notes issued in the
exchange offer;
(3) it is acquiring the notes issued in the exchange offer in the ordinary
course of its business; and
(4) it is not acting on behalf of a person who could not make
representations (1)-(3).
Each broker-dealer that receives notes issued in the exchange offer for its
own account in exchange for outstanding notes must acknowledge that such
outstanding notes were acquired by such broker-dealer as a result of market-
making or other trading activities and that it will deliver a prospectus in
connection with any resale of such notes issued in the exchange offer. See
"Plan of Distribution" for a discussion of the exchange and resale obligations
of broker-dealers in connection with the exchange offer.
In addition, to comply with state securities laws of certain jurisdictions,
the notes issued in the exchange offer may not be offered or sold in any state
unless they have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and complied with by
the holders selling the notes. We have agreed in the exchange and registration
rights agreement that, prior to any public offering of transfer restricted
securities, we will register or qualify the transfer restricted securities for
offer or sale under the securities laws of any jurisdiction requested by a
holder. Unless a holder requests, we currently do not intend to register or
qualify the sale of the notes issued in the exchange offer in any state where
an exemption from registration or qualification is required and not available.
"Transfer restricted securities" means each note until:
(1) the date on which such note has been exchanged by a person other than
a broker-dealer for a note in the exchange offer;
(2) following the exchange by a broker-dealer in the exchange offer of a
note for a note issued in the exchange offer, the date on which the
note issued in the exchange offer is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of
this prospectus;
(3) the date on which such note has been effectively registered under the
Securities Act and disposed of in accordance with a shelf registration
statement that we file in accordance with the exchange and
registration rights agreement; or
(4) the date on which such note is distributed to the public in a
transaction under Rule 144 of the Securities Act.
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THE TRANSACTION
Summary
At the close of business on June 30, 1999, we acquired assets and stock
representing ICI's polyurethane chemicals, selected petrochemicals (including
ICI's 80% interest in the Wilton olefins facility) and TiO\\2\\ businesses and
Huntsman Specialty Chemicals Corporation's PO business. In addition, at the
close of business on June 30, 1999, we also acquired the remaining 20%
ownership interest in the Wilton olefins facility from BP Chemicals Limited.
The chart below shows our company structure, together with common equity
ownership:
[Flow chart of Huntsman Corporation and affiliates]
Transaction Consideration
Initial Transaction Consideration
In exchange for transferring its business to us, Huntsman Specialty
. retained a 60% common equity interest in Huntsman ICI Holdings and
.received approximately $360 million in cash.
In exchange for transferring its businesses, ICI received
.a 30% common equity interest in Huntsman ICI Holdings,
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. approximately $2 billion in cash that was paid in a combination of U.S.
dollars and euros and
. discount notes of Huntsman ICI Holdings with $508 million of accreted
value at issuance.
The obligations of the discount notes from Huntsman ICI Holdings are non-
recourse to us.
Huntsman ICI Holdings issued discount notes to ICI in two classes, senior
discount notes with $242.7 million of accreted value at issuance and
subordinated discount notes with $265.3 million of accreted value at issuance,
neither of which require cash interest payments. The senior discount notes
accrete interest at a rate of 13.375%. The subordinated discount notes accrete
interest at a rate of 8% for approximately the first four years following their
issuance and will be reset to accrete at a market rate thereafter. The
covenants in the indentures governing the discount notes are not more
restrictive on us than the covenants contained in the indenture governing the
notes. In addition, without the consent of Huntsman ICI Holdings, ICI has
agreed not to sell the subordinated discount notes prior to the reset of the
interest rate on those notes. Both the senior and the subordinated discount
notes mature on December 31, 2009.
With the consent of Huntsman ICI Holdings, on August 2, 1999, ICI sold the
senior discount notes of Huntsman ICI Holdings in a private transaction under
Rule 144A and Regulation S of the Securities Act. Huntsman ICI Holdings has
also agreed to register substantially similar notes under the Securities Act to
be exchanged for the outstanding senior discount notes. Huntsman ICI Holding's
registration obligations are substantially similar to our obligations to
register the notes offered in this prospectus, except that ICI has agreed to
pay the fees and expenses of Huntsman ICI Holdings incurred in connection with
its registration of those notes.
Adjustments to Consideration
Because ICI failed to transfer less than 3% of the assets comprising the
businesses that it was obligated to transfer to us at the closing of our
transaction with them, we reduced the cash payable to ICI by an agreed amount.
ICI is now under a continuing obligation to use its reasonable endeavors to
transfer those assets to us. Until the assets are so transferred, ICI will hold
the assets for our benefit and we will indemnify ICI for any losses it incurs
in respect of those assets during that time. When and if ICI transfers any of
the excluded assets to us, then we will pay ICI the amount by which the cash
payable to ICI at the closing was reduced with respect to such assets. However,
after June 30, 2001, at our option, we may either (1) require ICI to maintain
the existing arrangement and pay ICI the portion of the purchase price that we
withheld with respect to any such excluded assets that have not been
transferred to us or (2) terminate the arrangement and require ICI to refund
the remaining portion of the purchase price attributable to those assets.
In addition, ICI failed to transfer its interests in Nippon Polyurethane
Industry Co. Ltd. and Arabian Polyol Company Limited to us at the closing.
Under the terms of the contribution agreement, we did not receive a purchase
price adjustment with respect to those retained joint venture interests, and
ICI has agreed to hold the retained joint venture interests for our benefit and
will pay to us any dividends received from the joint ventures, and we will
indemnify ICI for any losses relating to any such retained joint venture
interest from the closing until such time as such interests are transferred to
us or we are refunded the fair market value of such interests. ICI is required
to pay us an amount equal to the fair market value as of the closing of our
transaction with ICI of either of these joint venture interests if either (1)
any of the other joint venture partners exercise a right of first refusal to
acquire that joint venture interest or (2) on or before June 30, 2001, ICI has
not obtained all consents necessary to transfer that interest to us. We do not
believe the failure by ICI to transfer these interests will have a material
adverse impact on our results of operations or cash flows.
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Warranties and Indemnification
In connection with the transfer of the assets to us, both ICI and Huntsman
Specialty gave standard warranties to Huntsman ICI Holdings in connection with
the businesses being transferred, including warranties relating to
environmental liabilities and potential environmental liabilities; existence
of, or breaches in connection with, any material contracts and tax matters.
Each of ICI and Huntsman Specialty has agreed to indemnify Huntsman ICI
Holdings for certain specified matters and will be liable for damages in the
event of a breach of any of its warranties, other than nominal damages, as well
as for certain specific losses and claims. Generally, most claims for breaches
of warranty must be brought on or before June 30, 2001, while claims under
certain specific indemnities are subject to longer time limits. ICI generally
will not be liable for damages from any breach of warranty unless the aggregate
amount of damages in respect of its breaches of warranties exceeds (1)
(Pounds)10 million to the extent these breaches relate to events in existence
as of April 15, 1999 and (2) (Pounds)30 million to the extent these breaches
relate to events occurring between April 15, 1999 and June 30, 1999. Huntsman
Specialty will not generally be liable for damages from any breach of warranty
unless the aggregate amount of damages in respect of its breaches of warranties
exceeds $3.5 million. In addition to giving warranties, ICI and Huntsman
Specialty have also given specific indemnities to us in relation to liabilities
arising out of product liability claims for products manufactured before June
30, 1999, certain litigation existing prior to June 30, 1999, and certain
employee claims. ICI and Huntsman Specialty have also each given indemnities
with respect to certain environmental matters. In any event, neither ICI nor
Huntsman Specialty will be liable for any damages, whether arising from a
breach of warranty or under a specific indemnity that (with limited
exceptions), in the case of ICI, exceed (Pounds)650 million in the aggregate
and in the case of Huntsman Specialty exceed $225 million in the aggregate.
Description of Put and Call Options
Under the terms of the limited liability company agreement for Huntsman ICI
Holdings, Huntsman Specialty has the option to purchase, and ICI has the right
to require Huntsman Specialty to purchase, ICI's 30% interest in Huntsman ICI
Holdings between June 30, 2002 and June 30, 2003. The exercise price for each
of these put and call options will be based partially upon an agreed formula
and the parties' agreed value of our businesses or based upon a third party
valuation at the time of the exercise of a put or a call option. If the put or
call option is exercised and Huntsman Specialty does not purchase ICI's
interests in accordance with the terms of the put or call option, then ICI has
the right to sell its interest in Huntsman ICI Holdings in a public offering or
a private sale and, if the proceeds of the sale are less than the put or call
option exercise price, ICI has the right to require Huntsman Specialty to sell,
for the benefit of ICI, sufficient equity interests in Huntsman ICI Holdings
owned by Huntsman Specialty as are necessary to provide ICI with proceeds equal
to the shortfall.
Under the terms of an agreement between Huntsman Specialty and BT Capital
Investors, L.P., Chase Equity Associates, L.P. and The Goldman Sachs Group,
Inc., each of these institutional investors has the right to require Huntsman
Specialty to purchase its interest in Huntsman ICI Holdings contemporaneously
with any exercise of the Huntsman Specialty and ICI put and call arrangements
described above. In addition, each institutional investor has the right to
require Huntsman Specialty to purchase its equity interest in Huntsman ICI
Holdings at any time after June 30, 2004. Each institutional investor also has
an option to require Huntsman Specialty to purchase its equity interest in
Huntsman ICI Holdings following the occurrence of a change of control of
Huntsman ICI Holdings or Huntsman Corporation. Huntsman Specialty has the
option to purchase all outstanding interests owned by the institutional
investors at any time after June 30, 2006. The exercise price for each of these
put and call options will be the value of our business as agreed between
Huntsman Specialty and the institutional investors or as determined by a third
party at the
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time of the exercise of the put or call option. If Huntsman Specialty, having
used commercially reasonable efforts, does not purchase such interests, the
selling institutional investor will have the right to require Huntsman ICI
Holdings to register such interests for resale under the Securities Act.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. The net proceeds
from the sale of the notes to the initial purchasers was approximately $789
million, less fees and expenses. We used the net proceeds to fund a portion of
our transaction with ICI and Huntsman Specialty and related fees and expenses,
and for general corporate purposes. See "The Transaction".
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CAPITALIZATION
The following table sets forth the actual capitalization of Huntsman
Specialty as of March 31, 1999 and for our company as of March 31, 1999 on a
pro forma basis to give effect to our transactions with ICI and Huntsman
Specialty and with BP Chemicals and related financing thereof, including the
offering of the notes. The information set forth below is unaudited and should
be read in conjunction with "Unaudited Pro Forma Financial Data" and audited
and unaudited financial statements of Huntsman Specialty and the related notes
included elsewhere in this prospectus. Except as set forth in the pro forma
column below, there has been no material change in the capital of our company
since March 31, 1999.
<TABLE>
<CAPTION>
As of March 31, 1999
------------------------------
Actual Adjustments Pro Forma
------ ----------- ---------
(in millions)
<S> <C> <C> <C>
Cash............................................. $ 10 $ (10)(a) $ --
====== ====== ======
Long-term debt:
Senior secured credit facilities............... $ 357 $1,328 (b) $1,685
The notes...................................... -- 807 (c) 807
Other long-term debt........................... 72 (61)(d) 11
------ ------ ------
Total long-term debt............................. 429 2,074 2,503
Mandatorily redeemable preferred stock........... 73 (73)(e) --
Equity(f)........................................ 35 1,012 (g) 1,047
------ ------ ------
Total capitalization............................. $537.0 $3,013 $3,550
====== ====== ======
</TABLE>
- --------
(a) Reflects the net effect on cash of our transactions with ICI and Huntsman
Specialty and with BP Chemicals as follows:
<TABLE>
<S> <C>
Proceeds from the senior secured credit facilities................... $ 1,685
Proceeds from the sale of the notes.................................. 807
Cash contribution from Huntsman ICI Holdings of institutional
investors' equity................................................... 90
Cash contribution from Huntsman ICI Holdings from issuance of
discount notes...................................................... 508
Elimination of cash of Huntsman Specialty not included in our
transaction with ICI and Huntsman Specialty........................ (10)
Cash consideration paid to ICI and BP Chemicals...................... (1,250)
Repayment of intercompany debt to ICI................................ (1,398)
Cash consideration paid to Huntsman Specialty........................ (360)
Payment of estimated transaction fees and expenses................... (82)
-------
$ (10)
=======
(b) Reflects the sum of the following:
Borrowings under the senior secured credit facilities................ $ 1,685
Existing debt of Huntsman Specialty not included in our transaction
with ICI and Huntsman Specialty..................................... (357)
-------
$ 1,328
=======
(c) Reflects the proceeds from the sale of the notes.
(d) Reflects the sum of the following:
Other long-term debt of Huntsman Specialty not included in our
transaction with ICI and Huntsman Specialty........................ $ (72)
Other long-term debt of the ICI businesses transferred to us in our
transaction with ICI and Huntsman Specialty........................ 11
-------
$ (61)
=======
</TABLE>
(e) Reflects the elimination of mandatorily redeemable preferred stock of
Huntsman Specialty not included in our transaction with ICI and Huntsman
Specialty.
(f) As of March 31, 1999, Huntsman Specialty had an authorized capitalization
of 1,000 shares of common stock at par value of $0.01 per share and 65,000
shares of preferred stock with a liquidation value of $1.00 per share. At
such date 1,000
41
<PAGE>
shares of common stock and 65,000 shares of Series A Non-voting Cumulative
Redeemable stock with a liquidation value of $1.00 per share were issued and
outstanding. At June 30, 1999, our total authorized ownership interests
consisted of 1,000 units.
(g)Reflects the sum of the following:
<TABLE>
<S> <C>
Cash contribution from Huntsman ICI Holdings of institutional
investors' equity................................................... $ 90
Cash contribution from Huntsman ICI Holdings from issuance of
discount notes...................................................... 508
Distribution of cash to Huntsman Specialty........................... (360)
Distribution of cash to ICI.......................................... (250)
Contribution of U.S. polyurethane chemicals business by ICI.......... 520
Elimination of assets, liabilities and retained earnings of Huntsman
Specialty not included in our transaction with ICI and Huntsman
Specialty........................................................... 504
------
$1,012
======
</TABLE>
42
<PAGE>
UNAUDITED PRO FORMA
FINANCIAL DATA
The unaudited pro forma financial data of our company set forth below gives
effect to our transactions with ICI and Huntsman Specialty and with BP
Chemicals and the related financing thereof, including the offering of the
notes. The unaudited pro forma condensed statement of operations data for the
year ended December 31, 1998 and the three months ended March 31, 1999 gives
effect to our transactions with ICI and Huntsman Specialty and with BP
Chemicals at the close of business on June 30, 1999 as if they had occurred on
January 1, 1998. The unaudited pro forma condensed balance sheet data as of
March 31, 1999 gives effect to our transactions with ICI and Huntsman Specialty
and with BP Chemicals as if they had occurred on such date. The unaudited pro
forma financial data does not purport to be indicative of the combined
financial position or results of operations of future periods or indicative of
results that would have occurred had our transactions with ICI and Huntsman
Specialty and with BP Chemicals referred to above been consummated on the dates
indicated. The pro forma and other adjustments, as described in the
accompanying notes to the unaudited pro forma condensed balance sheet and
statements of operations, are based on available information and certain
assumptions that management believes are reasonable. You should read the
unaudited pro forma financial data in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the audited
and unaudited financial statements of Huntsman Specialty and the audited and
unaudited combined financial statements of the polyurethane chemicals, selected
petrochemicals and TiO\\2\\ businesses of ICI, included elsewhere in this
prospectus.
43
<PAGE>
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF MARCH 31, 1999
<TABLE>
<CAPTION>
ICI Businesses Combined Pro Forma
------------------------------------------- Huntsman Huntsman ICI Huntsman ICI
U.S. GAAP Specialty Chemicals Pro Forma Chemicals
(U.K. GAAP) Adjustments(a) (U.S. GAAP)(a) (U.S. GAAP) Adjustments(b) (U.S. GAAP) Adjustments (U.S. GAAP)
------------- -------------- -------------- ----------- -------------- ------------ ----------- ------------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents.... (Pounds) 35 $ 57 $ 10 $ (67) $ -- $ -- (c) $ --
Accounts
receivable..... 248 400 48 448 448
Due from
affiliates..... 27 44 5 49 49
Other
receivables.... 33 53 -- (11) 42 42
Inventories..... 256 413 23 436 20 (d) 456
------------- ---------- ------ ---- ----- ------ ------- ------
Total current
assets......... 599 -- 967 86 (78) 975 20 995
------------- ---------- ------ ---- ----- ------ ------- ------
Plant and
equipment, net.. 1,051 (Pounds)69 1,808 381 2,189 782 (d) 2,971
Investments in
unconsolidated
affiliates...... 6 10 -- 10 10
Intangible
assets.......... -- 30 48 116 164 74 (d) 238
------------- ---------- ------ ---- ----- ------ ------- ------
Total assets..... (Pounds)1,656 (Pounds)99 $2,833 $583 $ (78) $3,338 $ 876 $4,214
============= ========== ====== ==== ===== ====== ======= ======
Current
liabilities:
Short-term
borrowings and
current portion
of long-term
debt........... (Pounds) 13 $ 21 $ -- $ (21) $ -- $ --
Accounts
payable........ 190 307 15 322 322
Accrued
liabilities.... 143 (Pounds)23 268 11 (84) 195 $ 25 (d) 220
Due to
affiliates..... 25 40 11 51 51
Intercompany
debt........... 866 1,398 -- 1,398 (1,398)(e) --
Deferred income
taxes.......... -- -- 5 (5) -- --
------------- ---------- ------ ---- ----- ------ ------- ------
Total current
liabilities.... 1,237 23 2,034 42 (110) 1,966 (1,373) 593
------------- ---------- ------ ---- ----- ------ ------- ------
Long-term debt:
Long-term debt.. 7 11 429 (429) 11 11
Senior secured
credit
facilities..... -- -- -- -- 1,685 (f) 1,685
The notes....... -- -- -- -- 807 (f) 807
------------- ---------- ------ ---- ----- ------ ------- ------
Total long-term
debt........... 7 -- 11 429 (429) 11 2,492 2,503
------------- ---------- ------ ---- ----- ------ ------- ------
Deferred income
and other
liabilities.... 19 31 -- 31 31
Deferred income
taxes.......... 43 68 179 4 (183) -- 40 (g) 40
Mandatorily
redeemable
preferred
stock........... -- -- 73 (73) -- --
Equity........... 350 8 578 35 717 1,330 (283)(h) 1,047
------------- ---------- ------ ---- ----- ------ ------- ------
Total liabilities
and equity...... (Pounds)1,656 (Pounds)99 $2,833 $583 $ (78) $3,338 $ 876 $4,214
============= ========== ====== ==== ===== ====== ======= ======
</TABLE>
(See footnotes on next page)
44
<PAGE>
(Footnotes from previous page)
- --------
(a) To adjust the financial information of the businesses transferred to us by
ICI from U.K. GAAP to U.S. GAAP. See Note 31 to the unaudited interim
condensed combined financial statements of the polyurethane chemicals,
selected petrochemicals and TiO\\2\\ businesses of ICI contained elsewhere
in this prospectus. The exchange rate used to translate the balances is
1.6143 at March 31, 1999.
(b) To eliminate the following assets and liabilities of Huntsman Specialty
and of the businesses transferred to us by ICI that were not included in
our transaction with ICI and Huntsman Specialty:
<TABLE>
<CAPTION>
ICI
Huntsman Transferred
Specialty Businesses Total
--------- ----------- -----
(in millions)
<S> <C> <C> <C>
Cash and cash equivalents.................... $(10) $(57) $(67)
Other receivables............................ -- (11) (11)
Short-term borrowings and current portion of
long-term debt.............................. -- 21 21
Accrued liabilities.......................... 3 81 84
Deferred income taxes--current............... 5 -- 5
Long-term debt............................... 429 -- 429
Deferred income taxes--long-term............. 4 179 183
Mandatorily redeemable preferred stock....... 73 -- 73
---- ---- ----
$504 $213 $717
==== ==== ====
</TABLE>
(c) To reflect the net effect on cash of our transactions with ICI and
Huntsman Specialty and with BP Chemicals as follows:
<TABLE>
<S> <C>
Proceeds from the senior secured credit facilities.............. $ 1,685
Proceeds from the sale of the notes (euro to dollar exchange
rate of 1.0336)................................................ 807
Cash contribution from Huntsman ICI Holdings of institutional
investors' equity.............................................. 90
Cash contribution from Huntsman ICI Holdings from issuance of
discount notes................................................. 508
Cash consideration paid to ICI and BP Chemicals................. (1,250)
Repayment of intercompany debt to ICI........................... (1,398)
Cash consideration paid to Huntsman Specialty................... (360)
Payment of estimated transaction fees and expenses.............. (82)
-------
$ 0
=======
(d) To adjust the assets and liabilities of the businesses transferred to us
by ICI and BP Chemicals to the fair market value based upon management
estimates in accordance with the purchase method of accounting.
Inventories..................................................... $ 20
Property and equipment.......................................... 782
Intangible assets............................................... 74
Accrued liabilities............................................. (25)
-------
$ 851
=======
(e) To reflect the repayment of intercompany debt to ICI.
(f) To record the debt resulting from our transactions with ICI and Huntsman
Specialty and with BP Chemicals.
(g) To record the estimated deferred taxes resulting from our transactions
with ICI and Huntsman Specialty and with BP Chemicals.
(h) To record the impact on equity as a result of our transactions with ICI
and Huntsman Specialty and with BP Chemicals:
Cash contribution from Huntsman ICI Holdings of institutional
investors' equity.............................................. $ 90
Cash contribution from Huntsman ICI Holdings from issuance of
discount notes................................................. 508
Distribution of cash to ICI..................................... (250)
Contribution of U.S. polyurethane chemicals business............ 520
Cash consideration paid to Huntsman Specialty................... (360)
Elimination of equity of ICI businesses prior to our transaction
with ICI and Huntsman Specialty................................ (791)
-------
$ (283)
=======
</TABLE>
45
<PAGE>
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
ICI Businesses Combined Pro Forma
-------------------------------------------- Huntsman Huntsman ICI Huntsman ICI
U.S. GAAP Specialty Chemicals Pro Forma Chemicals
(U.K. GAAP) Adjustments(a) (U.S. GAAP)(a) (U.S. GAAP) Adjustments(b) (U.S. GAAP) Adjustments (U.S. GAAP)
------------- -------------- -------------- ----------- -------------- ------------ ----------- ------------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales--net....... (Pounds)2,011 $3,332 $339 $3,671 $ $3,671
Cost of sales.... 1,687 (Pounds) 12 2,815 277 $(19)(b) 3,073 31 (d) 3,104
------------- ----------- ------ ---- ---- ------ ----- ------
Gross profit.... 324 12 517 62 19 598 (31) 567
Operating
expenses........ 211 (3) 345 8 353 353
------------- ----------- ------ ---- ---- ------ ----- ------
Operating
income......... 113 (9) 172 54 19 245 (31) 214
Interest
expense--net.... 71 (12) 97 40 (40)(c) 97 122 (e) 219
Other income..... (5) -- (8) (1) (9) (9)
------------- ----------- ------ ---- ---- ------ ----- ------
Income before
income tax and
minority
interest........ 47 3 83 15 59 157 (153) 4
Income tax
expense
(benefit)....... (12) 13 2 6 8 43 (f) 51
Minority
interest........ 1 -- 2 -- 2 2
------------- ----------- ------ ---- ---- ------ ----- ------
Income (loss)
from continuing
operations...... (Pounds) 58 (Pounds)(10) $ 79 $ 9 $ 59 $ 147 $(196) $ (49)
============= =========== ====== ==== ==== ====== ===== ======
Other Data:
Depreciation and
amortization... (Pounds) 76 $ 139 $ 31 $ 170 $ 201
EBITDA.......... 194 319 86 424 424 (g)
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999
<CAPTION>
ICI Businesses Combined Pro Forma
-------------------------------------------- Huntsman Huntsman ICI Huntsman ICI
U.S. GAAP Specialty Chemicals Pro Forma Chemicals
(U.K. GAAP) Adjustments(a) (U.S. GAAP)(a) (U.S. GAAP) Adjustments(b) (U.S. GAAP) Adjustments (U.S. GAAP)
------------- -------------- -------------- ----------- -------------- ------------ ----------- ------------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales--net....... (Pounds) 482 $ 787 $ 83 $ 870 $ $ 870
Cost of sales.... 394 (Pounds) 4 651 62 713 3 (d) 716
------------- ----------- ------ ---- ------ ----- ------
Gross profit.... 88 136 21 157 (3) 154
Operating
expenses........ 61 1 101 2 103 103
------------- ----------- ------ ---- ------ ----- ------
Operating
income......... 27 (5) 35 19 54 (3) 51
Interest
expense--net.... 16 (2) 23 9 $ (9)(c) 23 32 (e) 55
------------- ----------- ------ ---- ---- ------ ----- ------
Income (loss)
before income
tax ............ 11 (3) 12 10 9 31 (35) (4)
Income tax
expense
(benefit)....... 4 (2) 3 4 7 2 (f) 9
------------- ----------- ------ ---- ---- ------ ----- ------
Income (loss)
from continuing
operations...... (Pounds) 7 (Pounds) (1) $ 9 $ 6 $ 9 $ 24 $ (37) $ (13)
============= =========== ====== ==== ==== ====== ===== ======
Other Data:
Depreciation and
amortization... (Pounds) 22 $ 41 $ 8 $ 49 $ 52
EBITDA.......... 49 76 27 103 103
</TABLE>
(See footnotes on next page)
46
<PAGE>
(Footnotes from previous page)
- --------
(a) To adjust the financial information of the businesses transferred to us by
ICI from U.K. GAAP to U.S. GAAP. See Note 31 to the unaudited interim
condensed combined financial statements of the polyurethane chemicals,
selected petrochemicals and TiO\\2\\ businesses of ICI contained elsewhere
in this prospectus. The average exchange rates used to translate the
statement of operations are 1.6570 for the year ended December 31, 1998
and 1.6335 for the three months ended March 31, 1999.
(b) To change the accounting policy for turnaround and inspection costs to
conform to Huntsman Specialty's policy of capitalizing and amortizing such
costs.
(c) Reflects the reduction in interest expense for debt of Huntsman Specialty
that is not included in our transaction with ICI and Huntsman Specialty.
(d) Reflects the additional depreciation and amortization expense of the
assets transferred to us by ICI and by BP Chemicals. Plant and equipment
is depreciated over 15 years and intangible assets, primarily finance
costs, intellectual property, and non-compete agreements, are amortized
over 5 to 15 years.
<TABLE>
<CAPTION>
Three Months
Year Ended Ended
December 31, 1998 March 31, 1999
----------------- --------------
(in millions)
<S> <C> <C>
Original depreciation expense recorded by
ICI..................................... $(147) $(41)
Pro forma depreciation expense on stepped
up assets............................... 178 44
----- ----
$ 31 $ 3
===== ====
(e) Reflects the sum of the following:
<CAPTION>
Three Months
Year Ended Ended
December 31, 1998 March 31, 1999
----------------- --------------
(in millions)
<S> <C> <C>
Interest on the notes (10.125%).......... $ 82 $ 21
Interest on the senior secured credit
facilities at LIBOR (5.2875%) plus
applicable margin....................... 137 34
Interest on ICI debt repaid.............. (97) (23)
----- ----
$ 122 $ 32
===== ====
</TABLE>
If the interest rate changes by one-eighth of one percent, the amount of
interest expense would change by $2 million annually.
(f) Reflects the elimination of the historic U.S. tax provision for Huntsman
Specialty and ICI's polyurethane chemicals business and the foreign tax
effect of certain pro forma adjustments at an estimated effective rate of
35%.
(g) Pro Forma EBITDA does not include any amounts related to our transaction
with BP Chemicals. We believe pro forma EBITDA for the year ended December
31, 1998 would have increased by approximately $16 million to
approximately $440 million had our transaction with BP Chemicals been
consummated on January 1, 1998.
47
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The selected financial data set forth below presents the historical
financial data of Huntsman Specialty, our predecessor, and the predecessor of
Huntsman Specialty, as of the dates and for the periods indicated. The selected
financial data as of December 31, 1994 and 1995 and for the years ended have
been derived from audited financial statements. The selected financial data as
of December 31, 1996 has been derived from audited financial statements. The
selected financial data as of December 31, 1997 and 1998 and for the year ended
December 31, 1996, the two months ended February 28, 1997, the ten months ended
December 31, 1997 and the year ended December 31, 1998 has been derived from
the audited financial statements of Huntsman Specialty included elsewhere in
this prospectus. The selected financial data as of March 31, 1999 and for the
three months ended March 31, 1998 and 1999 has been derived from the unaudited
financial statements of Huntsman Specialty included elsewhere in this
prospectus. You should read the selected financial data in conjunction with
"Unaudited Pro Forma Financial Data", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our audited historical
financial statements of Huntsman Specialty and its predecessor and the
accompanying notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Predecessor(1) Huntsman Specialty(1)
-------------------------------- ------------------------------------
Three
Months
Year Ended Two Ten Ended
December 31, Months Ended Months Ended Year Ended March 31,
------------------ February 28, December 31, December 31, ----------
1994(2) 1995 1996 1997 1998 1998 1998 1999
------- ---- ---- ------------ ------------ ------------ ---- ----
(dollars in millions) (dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Sales--net............. $ 81 $316 $405 $61 $348 $339 $86 $ 83
Cost of sales.......... 88 309 377 65 300 277 72 62
---- ---- ---- --- ---- ---- --- ----
Gross profit (loss).... (7) 7 28 (4) 48 62 14 21
Operating expenses...... 14 20 19 2 8 8 3 2
---- ---- ---- --- ---- ---- --- ----
Operating income
(loss)................ (21) (13) 9 (6) 40 54 11 19
Interest expense--net.. -- -- -- -- 35 40 10 9
Other income........... 12 11 10 -- -- 1 -- --
---- ---- ---- --- ---- ---- --- ----
Income (loss) before
income tax............ (9) (2) 19 (6) 5 15 1 10
Income tax, expense
(benefit)............. (3) (1) 7 (2) 2 6 -- 4
---- ---- ---- --- ---- ---- --- ----
Income (loss) from
continuing
operations............ $ (6) $ (1) $ 12 $(4) $ 3 $ 9 $ 1 $ 6
==== ==== ==== === ==== ==== === ====
Other Data:
Depreciation and
amortization.......... $ 1 $ 1 $ -- $ 1 $ 26 $ 31 $ 8 $ 8
EBITDA(3).............. (8) 7 49 1 66 86 19 27
Net cash provided by
(used in) operating
activities............ (5) (73) 48 (5) 37 46 -- 8
Net cash used in
investing activities.. -- -- (1) (1) (510) (10) (2) (1)
Net cash provided by
(used in) financing
activities............ 5 73 (47) 6 483 (43) -- --
Capital expenditures... -- -- 1 1 2 10 2 1
Ratio of earnings to
fixed charges(4)...... -- -- 2.7x -- 1.1x 1.4x 1.1x 2.1x
Balance Sheet Data (at
period end):
Working capital(5)..... $ 45 $ 44 $ 39 $ 40 $ 28 $ 34
Total assets........... 199 243 292 594 578 583
Long-term debt(6)...... -- -- -- 464 428 429
Total liabilities(7)... 205 250 287 569 547 548
Stockholders' equity... (6) (7) 5 25 31 35
</TABLE>
(See footnotes on next page)
48
<PAGE>
(Footnotes from previous page)
- --------
(1) Effective March 1, 1997, Huntsman Specialty purchased from Texaco
Chemical, Inc. its PO business (see Note 1 to the financial statements of
Huntsman Specialty). Prior to March 1, 1997, Texaco Chemical leased
substantially all of the plant and equipment of the PO business under an
operating lease agreement. Also, Texaco Chemical received interest income
on net intercompany advances prior to the acquisition by Huntsman
Specialty. Historical rental expense for the years ended December 31,
1994, 1995, and 1996 and the two months ended February 28, 1997 was $0,
$14, $34 and $6 million, respectively. Depreciation and amortization is
net of $2 million, $6 million, $6 million and $0 million of amortization
of deferred income and suspense credits related to the lease for the two
years ended December 31, 1994, 1995 and 1996 and the two months ended
February 28, 1997. Interest income (expense) on net intercompany advances
was $(1) million, $4 million and $4 million for the years ended December
31, 1994, 1995, and 1996, respectively. No interest was charged or
credited during the two months ended February 28, 1997.
(2) The PO facility commenced operations in August 1994.
(3) EBITDA is defined as earnings from continuing operations before interest
expense, depreciation and amortization, and taxes. Prior to March 1, 1997,
EBITDA excludes interest income on net intercompany investments and
advances to Texaco Chemical and rental expenses (see footnote (1) above).
EBITDA is included in this prospectus because it is a basis on which we
assess our financial performance and debt service capabilities, and
because certain covenants in our borrowing arrangements are tied to
similar measures. However, EBITDA should not be considered in isolation or
viewed as a substitute for cash flow from operations, net income or other
measures of performance as defined by GAAP or as a measure of a company's
profitability or liquidity. We understand that while EBITDA is frequently
used by security analysts, lenders and others in their evaluation of
companies, EBITDA as used herein is not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the method of calculation.
(4) The ratio of earnings to fixed charges has been calculated by dividing (A)
income before income taxes plus fixed charges by (B) fixed charges. Fixed
charges are equal to interest expense (including amortization of deferred
financing costs), plus the portion of rent expense estimated to represent
interest. Earnings were insufficient to cover fixed charges by $2 million
and $6 million for the year ended December 31, 1995 and the two months
ended February 28, 1997. There were no fixed charges for the year ended
December 31, 1994.
(5) Working capital represents total current assets, less total current
liabilities, excluding cash and the current maturities of long-term debt.
(6) Long-term debt includes the current portion of long-term debt.
(7) Total liabilities includes mandatorily redeemable preferred stock of $68
million and $72 million at December 31, 1997 and 1998, respectively.
49
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
We derive revenues, earnings and cash flow from the sale of a wide variety
of specialty and commodity chemicals through our four principal businesses:
polyurethane chemicals, PO, petrochemicals and TiO\\2\\. These products are
manufactured at facilities located in the Americas, Europe, Asia and Africa,
and are sold throughout the world.
Our four principal businesses are impacted to varying degrees by economic
conditions, prices of raw materials and global supply and demand pressures.
Generally, the demand for our polyurethane chemicals products has been
relatively resistant to changes in global economic conditions because of the
industry's growth through continuing innovation and product substitution. Sales
have also been resistant to specific industry cycles due to the wide variety of
end markets for polyurethane chemicals. As a result, sales volumes of our
polyurethane chemicals have grown at rates in excess of global GDP growth. The
global PO market is influenced by supply and demand imbalances. However, prices
and margins for PO in North America, the primary market in which our PO
business operates, have been relatively stable due to the limited number of
producers, the tendency of producers to consume a substantial amount of the PO
that they produce internally and the tendency of producers to enter into long-
term contracts with customers. PO demand is largely driven by the polyurethane
industry, and as a result, growth rates for PO have generally exceeded GDP
growth rates as well.
Petrochemicals and TiO\\2\\ sales have generally grown at rates that are
approximately equal to GDP growth. Many of the markets for our petrochemicals
and TiO\\2\\ products are cyclical and sensitive to changes in the balance
between supply and demand, the price of raw materials and the level of general
economic activity. Historically, the petrochemicals and TiO\\2\\ markets have
experienced alternating periods of tight supply and rising prices and profit
margins, followed by periods of capacity additions resulting in over-capacity
and falling prices and profit margins. Due to differing factors affecting
supply and demand, the cycles for the petrochemicals and TiO\\2\\ markets are
generally independent of one another. According to Chem Systems, the
petrochemical industry is at or near its cyclical trough following a period of
oversupply in the last few years and supply and demand characteristics are
expected to improve in coming years, resulting in improved profitability.
TiO\\2\\ prices have historically been driven by industry-wide operating
rates but have typically lagged behind movements in these rates by up to twelve
months due to the effects of product stocking and destocking by customers and
suppliers, contract arrangements and cyclicality. The industry experiences some
seasonality in its sales because sales of paints, the primary end use for
TiO\\2\\, are generally highest in the spring and summer months in the northern
hemisphere. This results in greater sales volumes in the first half of the year
because the proportion of our TiO\\2\\ products sold in Europe and North
America is greater than that sold in Asia and the rest of the world.
We conduct our businesses on a global basis using a number of currencies,
primarily the U.S. dollar and the deutschemark. For financial reporting
purposes, the results of the businesses transferred to us by ICI have been
reported in Sterling. See the audited and unaudited combined financial
statements of the businesses transferred to us by ICI included elsewhere in
this prospectus. As a result of the translation of our results of operations to
Sterling, operating costs have been impacted by movements in the value of the
Sterling relative to other currencies. Historically, the impacts on sales from
these currency translations have generally been offset by corresponding impacts
in expenses which has tended to mitigate the overall impact of currency
translations. In the future, we will be reporting our results of operations in
U.S. dollars and, because a greater portion of our business operations are
conducted in U.S. dollars, management believes a smaller proportion of our
sales and expenses will be subject to the impacts of currency translations.
50
<PAGE>
Discussion of Huntsman Specialty Financial Data
General
The domestic market for PO has historically experienced less cyclicality
than the commodity petrochemical markets in general. However, we believe that
the PO market in the future may experience periods of tight supply, higher
prices and higher margins followed by capacity additions, oversupply and
declining or flat prices. We sell substantially all of our PO under multi-year
contracts and tolling agreements primarily in the domestic market. These
contracts generally use formulas to link PO prices to the underlying price of
propylene, PO's main raw material, thereby affording our margins some
protection from propylene price volatility.
We supply certain customers with PO under tolling agreements. Under these
agreements, the customer is obligated to deliver the propylene required to
produce the PO and we receive a toll fee which is adjusted for changes in
production costs. We sold approximately 62%, 42% and 42% of our PO under
tolling arrangements in 1996, 1997 and 1998, respectively.
The market for MTBE is cyclical, with prices and production rising or
falling based on changes in global supply and demand, raw material prices, the
cost structure of various producers and the price of gasoline. Historically,
the market for MTBE has been strongly influenced by changes in government
regulation in the U.S. and elsewhere, and could be further influenced by recent
proposed changes. See "Business--Propylene Oxide--Recent Developments". We
expect that the market for MTBE will continue to be influenced by government
regulation as the federal government and the states contemplate the future role
of MTBE in environmental policy and as foreign governments enact standards
limiting motor vehicle emissions. We sell the majority of our MTBE under long-
term contracts. Our emphasis on contractual, high-volume sales allows us to
obtain generally higher and more stable prices than are typically available on
the spot market.
The financial information for the years ended December 31, 1996 and 1997
discussed below are presented on a pro forma basis as if the acquisition by
Huntsman Specialty of the PO business from Texaco Chemical had occurred on
January 1, 1996. Prior to the acquisition on March 31, 1997, Texaco Chemical
leased substantially all of the plant and equipment of the PO business under an
operating lease agreement. The pro forma adjustments consist primarily of
adjustments to reflect the plant and equipment as if owned and not leased,
interest expense related to the financing to acquire Texaco Chemical and
related income tax adjustments.
The pro forma results for the years ended December 31, 1996 and 1997, the
actual results for the year ended December 31, 1998 and the three months ended
March 31, 1998 and 1999 are illustrated below.
<TABLE>
<CAPTION>
Pro Forma Three Months
Year Ended Year Ended
December 31, Ended March 31,
-------------- December 31, -------------
1996 1997 1998 1998 1999
------ ------ ------------ ------ ------
(in millions)
<S> <C> <C> <C> <C> <C>
Sales--net.......................... $ 405 $ 409 $339 $ 86 $ 83
Cost of sales....................... 363 364 277 72 62
------ ------ ---- ----- ------
Gross profit........................ 42 45 62 14 21
Selling, general and administrative
expenses (including research and
development expenses).............. 19 10 8 3 2
------ ------ ---- ----- ------
Income from operations.............. 23 35 54 11 19
Interest expense--net............... 42 42 40 10 9
Other income........................ - - 1 - -
------ ------ ---- ----- ------
Income (loss) before income tax..... (19) (7) 15 1 10
Income tax expense (benefit)........ (8) (2) 6 - 4
------ ------ ---- ----- ------
Net income (loss)................... $ (11) $ (5) $ 9 $ 1 $ 6
====== ====== ==== ===== ======
</TABLE>
51
<PAGE>
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998
Revenues. Revenues for our PO business in the first quarter of 1999
decreased by $3 million, or 3%, to $83 million from $86 million in the
comparable period in 1998. Lower revenues from the sale of PO and MTBE were
partially offset by higher revenues from the sale of PG and certain by-
products. Lower PO revenues were a result of a 7% decline in sales volumes
together with a 6% decline in the average sales price. Sales volumes declined
as a larger volume of PO production was used in the downstream manufacture of
PG. PO average sales prices declined as a result of a decline in the cost of
propylene, the primary raw material for PO. Lower MTBE revenues were a result
of a 23% decline in average sales prices as compared to the comparable period
in 1998, somewhat offset by a 19% increase in MTBE sales volume.
Gross profit. Gross profit in the first quarter of 1999 increased by $7
million, or 50%, to $21 million from $14 million in the comparable period in
1998. The increase was a result of lower costs of raw materials used to produce
MTBE as the cost of isobutane and methanol declined significantly as compared
to the comparable period in 1998.
Selling, general and administrative expenses (including research and
development expenses). Selling, general and administrative expenses (including
research and development expenses) ("SG&A") in the first quarter of 1999
remained relatively unchanged from the comparable period in of 1998.
Interest expense. Net interest expense in the first quarter of 1999
declined by $1 million, or 10%, to $9 million from $10 million in the
comparable period in 1998. Lower interest expense was a result of the repayment
of debt and lower interest rates during the period as compared to the
comparable period in 1998.
Net Income. Net income in the first quarter of 1999 increased by $5 million
to $6 million from $1 million during the comparable period in 1998 as a result
of the factors discussed above.
Year Ended December 31, 1998 (Actual) Compared to Year Ended December 31, 1997
(Pro Forma)
Revenues. Revenues for our PO business in 1998 decreased by $70 million, or
17%, to $339 million from $409 million in 1997. Lower revenues from the sale of
MTBE and by-products were partially offset by higher PG revenues. MTBE revenues
declined as a result of a 25% decline in average sales prices and a 10% decline
in sales volumes. Higher PG revenues were a result of a 68% increase in sales
volumes, partially offset by a 10% decline in average selling prices. Revenues
from the sale of PO remained essentially unchanged as a 1% decline in sales
volume was offset by a 1% increase in average sales prices. Higher average PO
sales prices were a result of higher tolling fees. PO and MTBE sales volumes
were negatively impacted by a 49 day turnaround and inspection ("T&I") period
which occurred during 1998.
Gross profit. Gross profit in 1998 increased by $17 million, or 38%, to $62
million from $45 million in 1997. The increase was a result of significantly
lower costs of raw materials used to produce MTBE as the cost of isobutane and
methanol declined significantly as compared to 1997. Gross margin was
negatively impacted by the T&I mentioned above.
Selling, general and administrative expenses (including research and
development expenses). SG&A in 1998 decreased by $2 million, or 20%, to $8
million from $10 million in 1997. Lower SG&A expenses were a result of ongoing
expense reduction initiatives which have been instituted since the acquisition
of the PO business by Huntsman Specialty in March 1997.
Interest expense. Net interest expense in 1998 declined by $2 million, or
5%, to $40 million from $42 million in 1997. Lower interest expense was a
result of the repayment of debt and lower interest rates during 1998 as
compared to 1997.
52
<PAGE>
Net income. Net income in 1998 increased by $14 million to $9 million as
compared to a net loss of $5 million in 1997 as a result of the factors
discussed above.
Year Ended December 31, 1997 (Pro Forma) Compared to Year Ended December 31,
1996 (Pro Forma)
Revenues. Revenues for our PO business in 1997 increased by $4 million, or
1%, to $409 million from $405 million in 1996. Higher PO revenue was offset by
lower revenues from the sale of MTBE, PG and by-products. Higher PO revenue was
due to a 11% increase sales volume and a 17% increase in average selling prices
during 1997 as compared to 1996. Higher sales volume was a result of an
increase in PO production during 1997 resulting from internal engineering
efforts and higher capacity utilization. Higher average PO sales prices were a
result of higher tolling fees and higher customer contract prices. The decrease
in MTBE revenue was due to a 13% decline in sales volume partially offset by a
2% increase in average selling price during 1997 as compared to 1996. The
reduction in MTBE sales volume was primarily due to elimination of MTBE spot
sales purchased under contractual obligations not assumed by Huntsman Specialty
in connection with the acquisition of the PO business from Texaco.
Gross profit. Gross profit in 1997 increased by $3 million, or 7%, to $45
million from $42 million in 1996. The increase was primarily due to lower
quantities of PO, MTBE and PG purchased for resale in 1997 as compared to 1996.
Selling, general and administrative expenses (including research and
development expenses). SG&A in 1997 decreased by $9 million, or 47%, to $10
million from $19 million in 1996. Lower SG&A expenses were a result of the
elimination of certain expenses incurred by the company's predecessor.
Interest expense. Net interest expense was $42 million in both 1997 and
1996.
Net income. Net income in 1997 increased by $6 million to a loss of $5
million as compared to a net loss of $11 million in 1996 as a result of the
factors discussed above.
53
<PAGE>
Discussion of ICI Businesses Combined Financial Data
The financial data and discussion presented below aggregates the financial
information of the polyurethane chemicals, petrochemicals and TiO\\2\\
businesses transferred to us by ICI. The financial information for these
businesses was historically prepared by ICI under U.K. GAAP in Sterling. The
financial data below has been derived from the U.K. GAAP financial statements
included elsewhere in this prospectus and adjusted for certain differences
between U.K. GAAP and U.S. GAAP. These adjustments have not generally been
significant for these businesses, but where there are significant differences
between U.K. GAAP and U.S. GAAP, these differences are discussed. Information
regarding adjustments from U.K. GAAP to U.S. GAAP is set forth in the combined
financial statements of the businesses transferred to us by ICI included
elsewhere in this prospectus. The financial data does not include any
information concerning the 20% interest in the Wilton olefins facility that BP
Chemicals owned during these periods. The following table presents combined
financial data for the polyurethane chemicals, petrochemicals and TiO\\2\\
businesses for the years ended December 31, 1996, 1997 and 1998 and for the
three months ended March 31, 1998 and 1999.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
------------------------------------------- ----------------------------
1996 1997 1998 1998 1999
------------- -------------- ------------- ----------- -----------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Turnover................ (Pounds)2,534 (Pounds)2, 337 (Pounds)2,011 (Pounds)532 (Pounds)482
------------- -------------- ------------- ----------- -----------
Operating costs and
other operating in-
come(1)................ 2,374 2,301 1,888 497 460
Operating exceptional
items.................. 11 56 10 -- --
Non-operating
exceptional items--
(profit)/loss on sale
or closure of
operations............. -- (23) 4 4 --
------------- -------------- ------------- ----------- -----------
Total................. 2,385 2,334 1,902 501 460
------------- -------------- ------------- ----------- -----------
Profit on ordinary ac-
tivities before inter-
est.................... 149 3 109 31 22
Net interest payable.... 66 55 59 18 14
Taxation on profit on
ordinary activities.... 39 (3) 1 (2) 2
Attributable to minori-
ties................... 3 1 1 -- --
------------- -------------- ------------- ----------- -----------
Net profit/(loss)....... (Pounds) 41 (Pounds) (50) (Pounds) 48 (Pounds) 15 (Pounds) 6
============= ============== ============= =========== ===========
</TABLE>
- --------
(1)Includes income from fixed asset investments.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998
Turnover. Turnover in the first quarter of 1999 decreased by (Pounds)50
million, or 9%, to (Pounds)482 million from (Pounds)532 million in the
comparable period of 1998. The decline was primarily attributable to a
(Pounds)56 million decline in petrochemicals turnover resulting from lower
prices and volumes and from lower turnover from our feedstock procurement
activities. As part of our normal ongoing operations, we engage in feedstock
procurement activities which include the buying and selling of naphtha and
other feedstocks with the primary objective of ensuring a reliable and cost
competitive raw material supply. Polyurethane chemicals and TiO\\2\\ turnover
were essentially unchanged.
Operating costs and other operating income. Operating costs and other
operating income in the first quarter of 1999 decreased by (Pounds)37 million,
or 7%, to (Pounds)460 million from (Pounds)497 million in the comparable period
in 1998. This decline is due primarily to lower raw material costs for
petrochemicals and from lower product costs relating to our petrochemicals
feedstock procurement activities.
54
<PAGE>
Non-operating exceptional items. There were no non-operating exceptional
items in the first quarter of 1999 compared with non-operating exceptional
losses of (Pounds)4 million in the comparable period in 1998 which related to
minor disposals in that period.
Net interest payable. Net interest payable in the first quarter of 1999
decreased by (Pounds)4 million, or 22%, to (Pounds)14 million from (Pounds)18
million in the comparable period in 1998. This decrease was primarily due to a
decrease in the weighted average interest rate to 7.3% in the first quarter of
1999 from 9.0% in the first quarter of 1998.
Taxation. The tax charge of (Pounds)2 million for the first quarter of 1999
compares with a credit of (Pounds)2 million for the comparable period of 1998.
Net profit. The net profit for the first quarter of 1999 of (Pounds)6
million compares with a net profit of (Pounds)15 million for the comparable
period of 1998, a decrease in profit of (Pounds)9 million, which resulted from
the factors described above.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Turnover. Turnover in 1998 decreased by (Pounds)326 million, or 14%, to
(Pounds)2,011 million from (Pounds)2,337 million in 1997. The decrease was due
primarily to petrochemicals turnover which was lower by (Pounds)309 million
resulting from a significant decrease in the turnover of our feedstocks
procurement activities, and lower average selling prices for our olefins and
aromatics products. Additionally, polyurethane chemicals turnover declined due
to MDI price erosion in Asia and the impact of unfavorable currency
translations. These declines were marginally offset by an increase of
(Pounds)27 million in TiO\\2\\ turnover due to higher average selling prices.
Turnover was further reduced by a continuation of the 1997 decrease in
paraxylene demand, reflecting weakness in the PTA market. Overall sales volumes
in TiO\\2\\ decreased 6% in 1998 as compared to 1997, primarily due to
significantly lower demand in Asia. However, these declines were partially
offset by an increase in polyurethane sales volumes, which was driven by an 8%
increase in sales volumes for MDI.
Operating costs and other operating income. Operating costs and other
operating income in 1998 decreased by (Pounds)413 million, or 18%, to
(Pounds)1,888 million from (Pounds)2,301 million in 1997. The decrease was
primarily due to lower raw material costs for petrochemicals and polyurethane
chemicals. Specifically, the price of naphtha declined, affecting manufacturing
cost for petrochemicals, and the price of benzene declined, affecting
manufacturing costs for polyurethane chemicals.
Operating exceptional items. Operating exceptional items in 1998 decreased
by (Pounds)46 million, to (Pounds)10 million from (Pounds)56 million in 1997.
The 1998 charge was comprised of rationalization expenditures for our TiO\\2\\
business.
Non-operating exceptional items. Net non-operating exceptional losses from
disposal of businesses of (Pounds)4 million in 1998 compared with net gains of
(Pounds)23 million in the previous year.
Net interest payable. Net interest payable increased by (Pounds)4 million,
or 7%, to (Pounds)59 million in 1998 from (Pounds)55 million in 1997. The
increase was primarily due to an increase in the weighted average interest rate
to 8.0% in 1998 from 7.6% in 1997. Net interest payable under U.K. GAAP was
(Pounds)71 million in 1998 compared with (Pounds)69 million in 1997. The
difference between the U.K. and U.S. GAAP amounts resulted from the U.S. GAAP
requirement to capitalize interest incurred as part of the cost of constructing
fixed assets.
Taxation. Under U.S. GAAP, there was a tax charge of (Pounds)1 million in
1998 compared to a tax credit of (Pounds)3 million in 1997. This represents an
effective tax rate of 2% in 1998 and 6% in 1997. In
55
<PAGE>
1998, the effective rate was relatively low due to brought forward trading
losses being utilized against current year profits. The 1997 effective rate
reflects the net impact of a non-deductible write down of the aromatics assets
within petrochemicals and deferred tax assets recognized for TiO\\2\\ carried
forward trading losses. Under U.S. GAAP, deferred taxation is provided on a
full provision basis, whereas under U.K. GAAP, provision is only made for taxes
payable or recoverable in the foreseeable future. The effective tax rates under
U.K. GAAP were 26% in 1998 and 32% in 1997. The differences between U.S. and
U.K. GAAP are primarily driven by the fact that benefit for carried forward
trading losses was taken in 1997 for U.S. GAAP and in 1998 for U.K. GAAP
purposes.
Net profit. The net profit for 1998 of (Pounds)48 million compares with a
net loss of (Pounds)50 million for 1997, an improvement in profit of (Pounds)98
million, which resulted from the factors described above.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Turnover. Turnover in 1997 decreased by (Pounds)197 million, or 8%, to
(Pounds)2,337 million from (Pounds)2,534 million in 1996. The decline was
primarily attributable to the impact of unfavorable currency translations.
Additionally, average MDI sales prices in our polyurethane chemicals business
declined due to price erosion in Asia and TiO\\2\\ average sales prices
declined due to destocking by customers in 1997. In our petrochemicals
business, paraxylene prices fell in local currency terms by 16%. In our
polyurethane chemicals business, MDI volumes increased 13%; TiO\\2\\ volumes
increased 6%; and petrochemicals volumes decreased 13% for olefins, 10% for
paraxylene.
Operating costs and other operating income. Operating costs and other
operating income in 1997 decreased by (Pounds)73 million, or 3%, to
(Pounds)2,301 million from (Pounds)2,374 million in 1996 due primarily to lower
raw material costs, resulting from the impact of favorable currency
translations, partially offset by the increase in costs due to higher sales of
polyurethane chemicals.
Operating exceptional items. Operating exceptional items increased by
(Pounds)45 million to (Pounds)56 million from (Pounds)11 million in 1996. The
1997 charge included (Pounds)14 million for our TiO\\2\\ business
rationalization program, (Pounds)17 million to settle a raw material supplier
dispute, and (Pounds)25 million to write down the book value of our aromatics
assets.
Non-operating exceptional items. Net non-operating exceptional items in
1997 of (Pounds)23 million comprised a (Pounds)25 million profit on the sale of
our Australian polyurethane chemicals business, offset by a (Pounds)2 million
loss on other asset disposals. There were no non-operating exceptional items in
1996.
Net interest payable. Net interest payable in 1997 decreased by (Pounds)11
million, or 17%, to (Pounds)55 million in 1997 from (Pounds)66 million in 1996.
This decrease was primarily due to a decrease in the weighted average interest
rate to 7.6% in 1997 from 8.5% in 1996. Net interest payable under U.K. GAAP
was (Pounds)69 million in 1997 compared with (Pounds)78 million in 1996. The
difference between the U.K. and U.S. GAAP amounts resulted from the U.S. GAAP
requirement to capitalize interest incurred as part of the cost of constructing
fixed assets.
Taxation. Under U.S. GAAP, there was a tax credit of (Pounds)3 million in
1997 compared to a tax charge of (Pounds)39 million in 1996. This represents an
effective tax rate of 6% in 1997 and 47% in 1996. The 1997 effective rate
reflects the net impact of a non-deductible write down of the aromatics assets
within petrochemicals and deferred tax assets recognized for TiO\\2\\ carried
forward trading losses. The 1996 effective rate is primarily caused by TiO\\2\\
trading losses not being recognized in that year as utilization in future
periods was uncertain. Under U.S. GAAP, deferred taxation is provided on a full
provision basis, whereas under U.K. GAAP, provision is only made for taxes
payable or recoverable in the foreseeable future. The effective tax rates under
U.K. GAAP are 32% in 1997 and 34% in
56
<PAGE>
1996. The significant difference in 1997 between U.S. and U.K. GAAP is
primarily driven by the fact that no deferred tax asset was recognized under
U.K. GAAP for trading losses.
Net profit/(loss). The net loss for 1997 of (Pounds)50 million compares
with a net profit of (Pounds)41 million for 1996, a reduction in profit of
(Pounds)91 million which resulted from the factors described above.
Discussion of Polyurethane Chemicals, Petrochemicals and TiO\\2\\ Businesses
Financial Data
The financial data and discussion presented below for each of the
polyurethane chemicals, petrochemicals and TiO\\2\\ businesses has been derived
from financial statements prepared under U.K. GAAP in Sterling and adjusted for
certain differences between U.K. GAAP and U.S. GAAP. The financial data does
not include any information concerning 20% interest in the Wilton olefins
facility that BP Chemicals owned during these periods.
Polyurethane Chemicals
The results for the years ended December 31, 1996, 1997 and 1998 and for
the three months ended March 31, 1998 and 1999 are illustrated below. The
financial information for the polyurethane chemicals business was historically
prepared by ICI under U.K. GAAP in Sterling. The financial data presented below
has been derived from the U.K. GAAP financial statements included elsewhere in
this prospectus, adjusted for certain significant differences between U.K. GAAP
and U.S. GAAP and translated into U.S. dollars at average exchange rates of
1.6570 and 1.6335 for the year ended December 31, 1998 and the three months
ended March 31, 1999, respectively. This translation does not necessarily
result in the same U.S. dollar amounts as would have arisen if the translation
had been performed in accordance with U.S. GAAP.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
-------------------------------- ---------------------
1996 1997 1998 1998 1999
-------- -------- -------------- -------- ------------
(Pounds) (Pounds) (Pounds) $ (Pounds) (Pounds) $
-------- -------- -------- ----- -------- -------- ---
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales................... 907 860 816 1,352 198 206 336
Cost of sales, operating
expenses and other
income, net............ 795 762 727 1,204 185 188 308
--- --- --- ----- --- --- ---
Income before interest
and income tax......... 112 98 89 148 13 18 28
=== === === ===== === === ===
</TABLE>
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998
Sales. Sales of polyurethane chemicals in the first quarter of 1999
increased by (Pounds)8 million, or 4%, to (Pounds)206 million from (Pounds)198
million in the comparable period in 1998 primarily due to increased sales
volumes in the U.S. and Asia.
Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in the first quarter of 1999 increased
by (Pounds)3 million, or 2%, to (Pounds)188 million from (Pounds)185 million in
the comparable period in 1998.
Income before interest and income tax. Income before interest and income
tax in the first quarter of 1999 of (Pounds)18 million compares with (Pounds)13
million for the comparable period of 1998, an increase in income before
interest and tax of (Pounds)5 million as a result of the factors described
above.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Sales. Sales of polyurethane chemicals in 1998 decreased by (Pounds)44
million, or 5%, to (Pounds)816 million from (Pounds)860 million in 1997 due
primarily to a decrease in the average sales price of MDI
57
<PAGE>
resulting from lower underlying raw material prices, price pressures in Asia
and the impact of unfavorable currency translations. The price declines and
unfavorable currency translations were partially offset by increased MDI
volumes of 8%. This volume growth was driven by a 14% sales volume increase in
the U.S. resulting primarily from continued growth in wood binders and a 10%
growth in European sales volumes. These volume gains were partially offset by a
volume decline of 19% in the Asian market related to a weakening of the Asian
economy.
Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1998 decreased by (Pounds)35
million, or 5%, to (Pounds)727 million from (Pounds)762 million in 1997. This
decline was largely attributable to a decline in the price of benzene, MDI's
primary raw material. Additionally, operating expenses declined due to lower
manufacturing costs which resulted from improvements in our production process
following a restructuring of our European manufacturing assets.
Income before interest and income tax. Income before interest and income
tax for 1998 of (Pounds)89 million compares with (Pounds)98 million for 1997, a
decrease in income before interest and income tax of (Pounds)9 million as a
result of the factors described above.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Sales. Sales of polyurethane chemicals in 1997 decreased by (Pounds)47
million, or 5%, to (Pounds)860 million from (Pounds)907 million in 1996. This
decrease was attributable primarily to a decline in average MDI sales prices
and the substantial impact of unfavorable currency translations which more than
offset sales volume increases. MDI prices declined primarily as a result of
general pricing pressures in Asia. Lower Asian prices reflected the addition of
significant global capacity, coupled with a weakening of the Asian economy. In
1997, MDI sales volumes increased 13% from 1996 due to significant growth of
MDI in the U.S. of 19%. This increase was driven by demand for the MDI based
wood binder applications and insulation panels used in construction. MDI sales
volumes in Europe grew at 9%, while sales volumes in Asia declined by 2%.
Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1997 decreased by (Pounds)33
million, or 4%, to (Pounds)762 million from (Pounds)795 million in 1996
including a one-time gain of (Pounds)25 million resulting from the sale of our
Australian polyurethane chemicals business. Excluding the impact of the one-
time gain, costs of sales, operating expenses and other income/expense in 1997
decreased by (Pounds)8 million.
Income before interest and income tax. Income before interest and income
tax in 1997 of (Pounds)98 million compares with (Pounds)112 million for 1996, a
decrease in income before interest and income tax of (Pounds)14 million as a
result of the factors described above.
Petrochemicals
The results for the years ended December 31, 1996, 1997, and 1998 and for
the three months ended March 31, 1998 and 1999 are illustrated below. The
financial data does not include any information concerning BP Chemicals'
interest in the Wilton olefins facility. The financial information for the
petrochemicals business was historically prepared by ICI under U.K. GAAP in
Sterling. The financial data presented below has been derived from the U.K.
GAAP financial statements included elsewhere in this Offering Circular,
adjusted for certain significant differences between U.K. GAAP and U.S. GAAP
and translated into U.S. dollars at average exchange rates of 1.6570 and 1.6335
for the year ended December 31, 1998 and the three months ended March 31, 1999,
respectively. This
58
<PAGE>
translation does not necessarily result in the same U.S. dollar amounts as
would have arisen if the translation had been performed in accordance with U.S.
GAAP.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
-------------------------------- ---------------------
1996 1997 1998 1998 1999
-------- -------- -------------- -------- ------------
(Pounds) (Pounds) (Pounds) $ (Pounds) (Pounds) $
-------- -------- -------- ----- -------- -------- ---
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales................... 1,009 930 621 1,029 191 135 221
Cost of sales, operating
expenses and other
income, net............ 954 964 653 1,082 184 143 234
----- --- --- ----- --- --- ---
Income (loss) before
interest and income
tax.................... 55 (34) (32) (53) 7 (8) (13)
===== === === ===== === === ===
</TABLE>
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998
Sales. Sales of petrochemicals in the first quarter of 1999 decreased by
(Pounds)56 million, or 29%, to (Pounds)135 million from (Pounds)191 million in
the comparable period in 1998. This decrease was primarily a result of lower
revenues from sales of both olefins and aromatics and a reduction in sales
related to our feedstock procurement activities. As part of our normal ongoing
operations, we engage in feedstock procurement activities, which include the
buying and selling of naphtha and other feedstocks with the primary objective
of ensuring a reliable and cost competitive raw material supply. Revenues from
our sales of olefins and aromatics decreased as a result of lower average sales
prices, partially offset by the impact of favorable currency translations.
Average sales prices decreased due primarily to a weakening in the European
petrochemical sector and lower raw material costs. Sales decreases from our
feedstock procurement activities were substantially offset by a reduction in
our cost of sales as a result of a reduction in crude oil and feedstock prices.
Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in the first quarter of 1999 decreased
by (Pounds)41 million, or 22%, to (Pounds)143 million from (Pounds)184 million
in the comparable period in 1998. This decrease was primarily attributable to a
decline in raw material costs and a reduction in our cost of sales related to
our feedstock procurement activities.
Income (loss) before interest and income tax. The loss before interest and
income tax in the first quarter of 1999 of (Pounds)8 million compares with a
profit of (Pounds)7 million for the comparable period in 1998, a decrease in
income before interest and income tax of (Pounds)15 million as a result of the
factors described above.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Sales. Sales of petrochemicals in 1998 decreased by (Pounds)309 million, or
33%, to (Pounds)621 million from (Pounds)930 million in 1997. This decrease was
primarily a result of lower revenues from sales of olefins and aromatics and a
reduction in sales related to our feedstock procurement activities. Revenues
from our sales of olefins and aromatics decreased primarily as a result of
decreases in average sales prices and, to a lesser extent, decreases in sales
volumes. For example, average sales prices for two of our primary petrochemical
products, ethylene and paraxylene, declined by 16% and 20%, respectively. Sales
related to our feedstock procurement activities accounted for nearly half of
our sales decrease and were substantially offset by a reduction in our cost of
sales due to a substantial reduction in crude oil and feedstock prices.
Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1998 decreased by (Pounds)311
million, or 32%, to (Pounds)653 million from
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(Pounds)964 million in 1997. This decrease was primarily attributable to a
decline in raw material costs and lower volumes of finished product purchased
for resale. The average cost for our primary raw material, naphtha, declined by
31%. Additionally, operating expenses were (Pounds)25 million lower due to the
absence of a one-time write down which was expensed in 1997.
Income (loss) before interest and income tax. The loss before interest and
income tax for 1998 of (Pounds)32 million compares with a loss of (Pounds)34
million for 1997, a reduction in loss before interest and income tax of
(Pounds)2 million as a result of the factors described above.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Sales. Sales of petrochemicals in 1997 decreased by (Pounds)79 million, or
8%, to (Pounds)930 million from (Pounds)1,009 million in 1996. The decrease was
attributable to a decline in the average sales price and sales volumes of
paraxylene and the significant impact of unfavorable currency fluctuations.
Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1997 increased by (Pounds)10
million, or 1%, to (Pounds)964 million from (Pounds)954 million in 1996. This
increase was primarily attributable to a one-time charge of (Pounds)25 million
related to the write down of the book value of our aromatics facility. The
increase was partially offset by the impact of favorable currency translations
impacting the cost of our primary feedstock, naphtha.
Income (loss) before interest and income tax. The loss before interest and
income tax for 1997 of (Pounds)34 million compares with income before interest
and tax of (Pounds)55 million for 1996, a decrease in income before interest
and income tax of (Pounds)89 million as a result of the factors described
above.
Titanium Dioxide
The results for the years ended December 31, 1996, 1997 and 1998 and for
the three months ended March 31, 1998 and 1999 are illustrated below. The
financial information for the TiO\\2\\ business was historically prepared by
ICI under U.K. GAAP in Sterling. The financial data presented below has been
derived from the U.K. GAAP financial statements included elsewhere in this
Offering Circular, adjusted for certain significant differences between U.K.
GAAP and U.S. GAAP and translated into U.S. dollars at average exchange rates
of 1.6570 and 1.6335 for the year ended December 31, 1998 and the three months
ended March 31, 1999, respectively. This translation does not necessarily
result in the same U.S. dollar amounts as would have arisen if the translation
had been performed in accordance with U.S. GAAP.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
------------------------------ ---------------------
1996 1997 1998 1998 1999
-------- -------- ------------ -------- ------------
(Pounds) (Pounds) (Pounds) $ (Pounds) (Pounds) $
-------- -------- -------- --- -------- -------- ---
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales.................... 618 547 574 951 143 141 230
Cost of sales, operating
expenses and other
income, net............. 636 608 522 865 132 129 210
--- --- --- --- --- --- ---
Income (loss) before
interest and income
tax..................... (18) (61) 52 86 11 12 20
=== === === === === === ===
</TABLE>
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998
Sales. Sales of TiO\\2\\ in the first quarter of 1999 decreased by
(Pounds)2 million, or 1%, to (Pounds)141 million from (Pounds)143 million in
the comparable period in 1998. The decline was primarily attributable to lower
sales volumes due to weakened demand in Europe, substantially offset by higher
average sales prices in the first quarter of 1999 resulting from price
increases implemented in 1998.
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Cost of sales, operating costs and other income, net. Cost of sales,
operating costs and other income, net in the first quarter of 1999 decreased by
(Pounds)3 million, or 2%, to (Pounds)129 million from (Pounds)l32 million in
the comparable period in 1998. This decline was primarily a result of lower
sales volumes and a reduction in operating expenses resulting from our ongoing
cost reduction initiatives.
Income (loss) before interest and income tax. Income before interest and
income tax for the three months ended March 31, 1999 of (Pounds)l2 million
compares with (Pounds)ll million for the same period in 1998, an increase in
income before interest and income tax of (Pounds)l million as a result of the
factors described above.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Sales. Sales of TiO\\2\\ in 1998 increased by (Pounds)27 million, or 5%, to
(Pounds)574 million from (Pounds)547 million in 1997. The increase was
primarily a result of higher average local selling prices in Europe and North
America. This increase was partially offset by the impact of unfavorable
currency translations, and, to a lesser extent, lower sales volumes in Asia.
Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1998 decreased by (Pounds)86
million, or 14%, to (Pounds)522 million from (Pounds)608 million in 1997. The
decline was a result of lower operating costs, primarily due to favorable
currency translations, and a reduction in operating expenses resulting from our
ongoing cost reduction initiatives. Additionally, during 1998, we recognized
exceptional charges of (Pounds)10 million, as compared to an exceptional charge
of (Pounds)31 million in 1997. The 1998 charge included severance costs
relating to the continued implementation of our ongoing cost reduction
initiatives.
Income (loss) before interest and income tax. Income before interest and
income tax for 1998 of (Pounds)52 million compares with a loss of (Pounds)61
million in 1997, an increase in income before interest and taxation of
(Pounds)113 million as a result of the factors described above.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Sales. Sales of TiO\\2\\ in 1997 decreased by (Pounds)71 million, or 11%,
to (Pounds)547 million from (Pounds)618 million in 1996. The decrease was
primarily attributable to lower average selling prices and unfavorable currency
translations, partially offset by increased sales volumes. Prices dropped
sharply in the second half of 1996 as customers reduced their stock levels in
response to falling demand in Europe. Although prices stabilized and improved
from April 1997 onwards, the overall average selling price was approximately 7%
lower than the average selling price in 1996. Excluding the impact of currency
translations, sales would have been substantially the same as 1996.
Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1997 decreased by (Pounds)28
million, or 4%, to (Pounds)608 million from (Pounds)636 million in 1996. The
decrease was primarily attributable to favorable currency translations,
partially offset by an increase in exceptional charges of (Pounds)20 million
which were (Pounds)31 million in 1997 compared with (Pounds)ll million in 1996.
The exceptional charges for 1997 were comprised of (Pounds)17 million to settle
a supplier dispute, (Pounds)l0 million in severance charges in connection with
our ongoing cost reduction initiative and (Pounds)4 million of other charges.
Income (loss) before interest and income tax. The loss before interest and
income tax for 1997 of (Pounds)61 million compares with a loss of (Pounds)18
million in 1996, an increase of (Pounds)43 million as a result of the factors
described above.
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Recent Developments
Concurrently with our acquisition of ICI's and Huntsman Specialty's
businesses, we also acquired BP Chemicals's 20% ownership interest in the
Wilton olefins facility. In connection with our acquisition of this interest
from BP Chemicals, BP Chemicals has agreed to become a significant long-term
customer of our petrochemicals business. We believe that pro forma Adjusted
EBITDA for the year ended December 31, 1998 would have increased by
approximately $16 million to approximately $497 million had our acquisition of
BP Chemicals's interest in the Wilton olefins facility been consummated on
January 1, 1998.
Liquidity and Capital Resources
Liquidity
We are highly leveraged as a result of the debt that we incurred to fund
the transfer of ICI's and Huntsman Specialty's businesses to us.
Contemporaneously with the closing of the transfer of those businesses, our
company and Huntsman ICI Holdings took the following actions:
. We issued the outstanding notes.
. We entered into the senior secured credit facilities which provide for
borrowings of up to $2,070 million, including $400 million under a
revolving facility, a substantial portion of which remains available as
of the date of this Prospectus. The credit facilities are secured by a
first priority perfected lien on substantially all of our assets. See
"Description of Credit Facilities".
. Huntsman ICI Holdings issued the senior discount notes and the senior
subordinated discount notes to ICI. See "The Transaction--Transaction
Consideration".
Our senior secured credit facilities currently prohibit, and the indenture
governing the notes currently restricts, payment of dividends, distributions,
loans or advances to us by our subsidiaries. We do, however, anticipate that
borrowings under the credit facilities and cash flow from operations will be
sufficient for us to make required payments of principal and interest on our
debt when due, as well as to fund capital expenditures.
Capital Expenditures
Our capital expenditures for our PO business for the three months ended
March 31, 1999 were $1 million, a decrease of $1 million from the comparable
period in the prior year; combined capital expenditures for our polyurethane
chemicals, petrochemicals and TiO\\2\\ businesses collectively were (Pounds)20
million and (Pounds)43 million in the first quarter of 1998 and 1999,
respectively. Capital expenditures for the years ended December 31, 1996, 1997
and 1998 were $1 million, $3 million and $10 million, respectively, for our PO
business. Combined capital expenditures for our polyurethane chemicals,
petrochemicals and TiO\\2\\ businesses collectively were (Pounds)190 million,
(Pounds)170 million and (Pounds)134 million for the years ended December 31,
1996, 1997 and 1998, respectively. The increases reflect expenditures relating
to extensive production process improvements, primarily for our polyurethane
chemicals and TiO\\2\\ businesses. For our polyurethane chemicals business,
these improvements, expected to be completed in 1999, included the closure of
our Hillhouse, U.K. facility in 1997, the construction of our nitrobenzene
facility at Wilton, U.K. completed in 1997, the capacity expansion at
Rozenburg, Netherlands completed in 1997, and the capacity expansion program at
our Geismar, Louisiana facility which is expected to be completed in 1999. We
expect to incur an additional (Pounds)115 million during 1999 to complete the
capacity expansion at the Geismar facility, approximately (Pounds)87 million of
which had been expended at June 30, 1999. Aside from the completion of the
expansion program at the Geismar facility, we do not have any planned
extraordinary capital expenditures in the near-term. We estimate our total
capital expenditures for 1999 and 2000, including expenditures relating to
environmental compliance, to be between $200 million and $250 million in each
year.
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Environmental Regulation
The operations of any chemical manufacturing plant and the distribution of
chemical products, and the related production of co-products and wastes, entail
risk of adverse environmental effects, and therefore, we are subject to
extensive federal, state, local and foreign laws, regulations, rules and
ordinances relating to pollution, the protection of the environment and the
generation, storage, handling, transportation, treatment, disposal and
remediation of hazardous substances and waste materials. In the ordinary course
of business, we are subject continually to environmental inspections and
monitoring by governmental enforcement authorities. The ultimate costs under
environmental laws and the timing of such costs are difficult to predict;
however, potentially significant expenditures could be required in order to
comply with existing or future environmental laws.
Our costs and operating expenses and capital expenditures relating to
safety, health and environmental matters totaled approximately $4 million in
1996, $3 million in 1997 and $3 million in 1998 for our PO business.
Environmental expenses and capital expenditures for our polyurethane chemicals,
petrochemicals and TiO\\2\\ businesses were approximately (Pounds)53 million,
(Pounds)44 million and (Pounds)42 million in 1996, 1997 and 1998, respectively.
Costs in 1999 and 2000 are expected to remain at historical levels in order to
cover, among other things, our routine measures to prevent, contain and clean
up spills of materials that occur in the ordinary course of business. Our
estimated capital expenditures for environmental, safety and health matters in
1999 and 2000 are expected to be similar to historical expenditures. Capital
expenditures are planned, for example, under national legislation, implementing
the European Union Directive on Integrated Pollution Prevention and Control.
Under this directive, the majority of our plants will, over the next few years,
be required to obtain governmental authorizations which will regulate air and
water discharges, waste management and other matters relating to the impact of
operations on the environment, and to conduct site assessments to evaluate
environmental conditions. Although the implementing legislation in most Member
States is not yet in effect, it is likely that additional expenditures may be
necessary in some cases to meet the requirements of authorizations under this
directive. In particular, we believe that related expenditures to upgrade our
wastewater treatment facilities at several sites may be necessary and
associated costs could be material. Wastewater treatment upgrades unrelated to
this initiative also are planned at certain facilities. In addition, we may
incur material expenditures in complying with the European Union Directive on
Hazardous Waste Incineration beyond currently anticipated expenditures,
particularly in relation to our Wilton facility. It is also possible that
additional expenditures to reduce air emissions at two of our U.K. facilities
may be material. Capital expenditures and, to a lesser extent, costs and
operating expenses relating to environmental matters will be subject to
evolving regulatory requirements and will depend on the timing of the
promulgation of specific standards which impose requirements on our operations.
Therefore, we cannot assure you that material capital expenditures beyond those
currently anticipated will not be required under environmental laws. See
"Business--Environmental Regulations".
Risk Management
We are exposed to market risk, including changes in interest rates,
currency exchange rates, and certain commodity prices. To manage the volatility
relating to these exposures, we enter into various derivative transactions. We
do not hold or issue derivative financial instruments for trading purposes.
Our cash flows and earnings are subject to fluctuations due to exchange
rate variation. Historically, the businesses transferred to us by ICI have
managed the majority of their foreign currency exposures by entering into
short-term forward foreign exchange contracts with ICI. In addition, short-term
exposures to changing foreign currency exchange rates at certain of our foreign
subsidiaries are managed through financial market transactions, principally
through the purchase of forward foreign exchange contracts (with maturities of
six months or less) with various financial
63
<PAGE>
institutions. Huntsman Specialty did not hedge its foreign currency exposure in
a manner that would entirely eliminate the impact of currency fluctuations on
our cash flows and earnings. While we do not expect that our foreign currency
hedging activities will significantly change, the scope of our hedging
activities may change due to the currency denominations of the indebtedness
that we incurred to fund our transaction with ICI and Huntsman Specialty.
Historically, Huntsman Specialty used interest rate swaps, caps and collar
transactions entered into with various financial institutions to hedge against
the movements in market interest rates associated with our floating rate debt
obligations. We do not hedge our interest rate exposure in a manner that would
entirely eliminate the effects of changes in market interest rates on our cash
flow and earnings. Under the terms of our senior secured credit facilities, we
will be required to hedge a significant portion of our floating rate debt. As a
result, we expect that our interest rate hedging activities will increase in
the future.
In order to reduce our overall raw material costs, our petrochemical
business engages in feedstock procurement activities. From time-to-time, we
have entered into short-term (with a maturity less than one year) forward
purchase agreements for various feedstocks, including crude oil, naphtha, and
LPGs. From time to time, we also purchase and sell crude oil futures. We do not
hedge our commodity exposure in a manner that would entirely eliminate the
effects of changes in commodity prices on our cash flows and earnings.
Recently Issued Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No.133
established accounting and reporting standards for derivative instruments and
hedging activities. It requires that an entity recognize all derivatives as
assets or liabilities in the balance sheet and measure those instruments at
fair value. SFAS No.133 is effective for our financial statements for the year
ending December 31, 2001. We are currently evaluating the effects of SFAS
No.133 on our financial statements.
Year 2000 Preparations
The "Year 2000 problem" is the result of computer programs being designed
to read and store dates using only the last two digits of the year rather than
four digits to define the applicable year and therefore may not correctly
recognize date changes such as the change from December 31, 1999 to January 1,
2000. This could result in a system failure. The Year 2000 problem is believed
to affect virtually all companies and organizations which include us as well as
our key suppliers and customers. Our failure, or the failure of our key
suppliers or customers, to address this issue could adversely affect our
operations.
We aim to have our businesses "Year 2000 ready" by September 30, 1999. In
conjunction with external advisers, we have identified various IT systems, such
as our distributed control systems that we consider to be "mission critical"
and have developed a Year 2000 plan including remediation and contingency
planning for converting these systems for our Year 2000 readiness. More
specifically, this plan includes identifying all material information
technology components, embedded chips, and facilities that are exclusively or
predominantly used in the businesses. All key components dedicated in the
manufacturing process have been inventoried and prioritized, and will be
remediated to Year 2000 readiness. Additionally, we have successfully conducted
confirmation testing in relation to all commercial business systems and
infrastructure provided by Huntsman Specialty or ICI for our businesses and
have reason to believe that key functionality relating to these businesses will
be Year 2000 ready, as determined by such confirmation testing.
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We are dependent upon a large number of business support and manufacturing
distributive control systems in our business operations. A degree of risk
exists that we will not adequately identify and remedy each Year 2000 problem
that exists. However, we believe that we have minimized our risks through
prioritizing our efforts to focus on "mission critical" systems first and
verifying our approach with an objective third party. Another concern is our
dependency on and demands for a limited number of internal professionals with
critical knowledge and expertise required to remedy Year 2000 issues. We have
tried to minimize these concerns through supplementing critical internal
personnel with systems and Year 2000 readiness consultants to assist in the
remediation effort.
The economy in general may be adversely affected by risks associated with
the Year 2000 issue. Our business, financial condition, results of operations
or cash flows could be adversely affected if systems on which we rely,
including systems that are operated by third parties with whom we do business,
are not Year 2000 ready in time. Our operations are dependent on a continuous
supply of key services from raw material suppliers and utility and
transportation providers. Accordingly, as an integral part of our Year 2000
preparations we are evaluating key third party and single-source suppliers of
utilities and feedstocks. While we are evaluating third party customers and
suppliers, there can be no assurance that third parties with whom we have a
significant business relationship will successfully test, reprogram, and
replace all of their information technology, manufacturing and operational and
non-information technology systems so that they will continue to properly
function and interface with and support our business operations on a timely
basis. Our approach is to avoid material interruption of core business
operations through the Year 2000 and beyond, while ensuring safe operations and
responsible financial performance. The contingency planning involves
identifying options we can control. Examples are the building of feedstock
inventories and the arranging of alternative supplies. Given the uncertainty in
the Year 2000 problem, we are unable, at this time, to assess the extent and
resulting materiality of the impact of possible Year 2000 failures on our
business, financial condition, results of operations or cash flows. For
example, controlled plant shutdowns using our standard shutdown procedures
might be necessitated by failures of our suppliers or utility providers or by
internal conditions affecting plant operability. Such events could have a
material adverse effect on our business, financial condition, results of
operations or cash flows.
As of March 31, 1999, in accordance with our Year 2000 preparations, we had
spent approximately $156,000 for our PO business and (Pounds)11.4 million for
our petrochemicals, polyurethane chemicals and TiO\\2\\ businesses combined. We
expect to have additional expenses of approximately $4 million for the
remainder of 1999 and in 2000. The costs of our Year 2000 program and the dates
on which we believe we will complete such program are based on our current best
estimates, which were derived using numerous assumptions regarding future
events, including the continued availability of certain resources and the
continued progression toward the implementation of procedures at various
facilities. There can be no assurance that these estimates will prove to be
accurate and, therefore, actual results could differ materially from those
anticipated. Specific factors that could cause material differences with actual
results include, but are not limited to, the results of testing and the
timeliness and effectiveness of remediation efforts of third parties.
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BUSINESS
General
We are a leading global manufacturer and marketer of specialty and
commodity chemicals through our four principal businesses: polyurethane
chemicals, propylene oxide, petrochemicals and titanium dioxide. Our company is
characterized by leading market positions; superior low cost operating
capabilities; a high degree of technological expertise; a diversity of
products, end markets and geographic regions served; significant product
integration; and strong growth prospects.
. Our global polyurethane chemicals business is the world's second
largest producer of MDI, and MDI-based polyurethane systems. Our
customers use our products in a wide variety of polyurethane
applications, including automotive interiors, refrigeration and
appliance insulation, construction products, footwear, furniture
cushioning and adhesives.
. Our propylene oxide business is one of three North American producers
of PO. PO is used in a variety of applications, the largest of which is
the production of polyols sold into the polyurethane chemicals market.
. Our petrochemicals business produces olefins and aromatics at world-
scale, highly integrated facilities in northern England. These products
are the key building blocks for the petrochemical industry and are used
in plastic, synthetic fibers, packaging materials and a wide variety of
other applications.
. Our TiO\\2\\ business, which operates under the trade name "Tioxide",
is the largest TiO\\2\\ producer in Europe and the third largest
producer in the world. TiO\\2\\ is a white pigment used to impart
whiteness, brightness and opacity to products such as paints, plastics,
paper, printing inks, synthetic fibers and ceramics.
For the twelve months ended March 31, 1999, we had pro forma revenues of
$3.6 billion, pro forma EBITDA of $424 million and pro forma Adjusted EBITDA of
$483 million (see footnote 2 to "Prospectus Summary--Summary Historical and Pro
Forma Financial Data"). For the year ended December 31, 1998, we derived 54%,
33%, 9% and 4% of our pro forma revenues in Europe, the Americas, Asia and the
rest of the world, respectively. For the year ended December 31, 1998, our
polyurethane chemicals, PO, petrochemicals and TiO\\2\\ businesses represented
37%, 9%, 28% and 26%, respectively, of pro forma revenues.
Polyurethane Chemicals
General
We are one of the leading polyurethane chemicals producers in the world. We
market a complete line of polyurethane chemicals, including MDI, TDI, polyols,
polyurethane systems and aniline, with an emphasis on MDI-based chemicals. We
are the world's second largest producer of MDI and MDI-based polyurethane
systems, with an estimated 24% global MDI market share. Our customers produce
polyurethane products through the combination of an isocyanate, such as MDI or
TDI, with polyols, which are derived largely from PO and ethylene oxide.
Primary polyurethane end-uses include automotive interiors, refrigeration and
appliance insulation, construction products, footwear, furniture cushioning,
adhesives and other specialized engineering applications. According to Chem
Systems, global consumption of MDI was approximately 4.6 billion pounds in
1998, growing from 2.9 billion pounds in 1992, which represents an 8.1%
compound annual growth rate. This high growth rate is the result of the broad
end-uses for MDI and its superior performance characteristics relative to other
polymers.
Our polyurethane chemicals business is widely recognized as an industry
leader in utilizing state-of-the-art application technology to develop new
polyurethane chemical products and
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applications. Approximately 30% of our 1998 polyurethane chemicals sales were
generated from products and applications introduced in the last three years.
Our rapid rate of new product and application development has led to a high
rate of product substitution, which in turn has led to MDI sales volume growth
for our business of approximately 9.2% per year over the past 10 years, a rate
in excess of the industry growth rate. Largely as a result of our technological
expertise and history of product innovation, we have enjoyed long-term
relationships with a diverse customer base, including BMW, Weyerhaeuser, Ford,
Nike, Louisiana Pacific, DaimlerChrysler, Whirlpool, Bosch-Siemens and
Electrolux.
We own the world's two largest MDI production facilities, located in
Rozenburg, Netherlands and Geismar, Louisiana, which are back-integrated into
the world's two largest aniline facilities, located in Wilton, U.K. and
Geismar, Louisiana. Since 1996, we have invested over $500 million to
significantly enhance our production capabilities through the rationalization
of our older, less efficient facilities and the modernization of our newer
facilities listed above. According to Chem Systems, we are the lowest cost MDI
producer in the world, largely due to the scale of our operations, our modern
facilities and our back-integration into primary raw materials.
Industry Overview
The polyurethane chemicals industry is a $24 billion global market,
consisting primarily of the manufacture and marketing of MDI, TDI and polyols.
Polyurethane chemicals are used to develop a broad range of products utilized
in many industries, including the appliance, automotive, footwear, furniture,
construction and coatings and adhesives industries. Product applications for
polyurethanes are diverse, including automotive seating, dash boards, steering
wheels, refrigeration and appliance insulation, wood binders, athletic shoe
soles, rollerblade wheels, furniture cushions, adhesives and other specialized
applications.
In 1998, MDI, TDI, polyols and other products, such as specialized
additives and catalysts, accounted for 28%, 17%, 46% and 9% of industry-wide
polyurethane chemicals sales, respectively. MDI is used primarily in rigid
polyurethane foam and other specialty non-foam applications. Conversely, TDI is
used primarily in flexible foam applications that are generally sold as
commodities. Polyols, including polyether and polyester polyols, are used in
conjunction with MDI and TDI in rigid foam, flexible foam and other non-foam
applications. The following chart illustrates the range of product types and
end uses for polyurethane chemicals:
[GRAPH APPEARS HERE]
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Polyurethane products are created through the reaction of MDI or TDI with a
polyol. Polyurethane chemicals are sold to customers who react the chemicals to
produce polyurethane products. Depending on their needs, customers will use
either commodity polyurethane chemicals produced for mass sales or specialty
polyurethane chemicals tailored for their specific requirements. By varying the
blend, additives and specifications of the polyurethane chemicals,
manufacturers are able to produce and develop a breadth and variety of
polyurethane products. The following table sets forth information regarding the
three principal polyurethane chemicals markets:
[GRAPH APPEARS HERE]
As reflected in the chart above, MDI has a substantially larger market size
and a higher growth rate than TDI. TDI was the first isocyanate invented and
produced, but it has been steadily replaced by MDI in many applications. MDI's
leadership in the polyurethane chemicals market primarily results from its
ability to be used in a more diverse range of polyurethane applications than
TDI. In addition, because MDI has a lower toxicity than TDI, many polyurethane
product manufacturers have begun substituting MDI for TDI in their products. As
a result, TDI is now used primarily in the production of low-density foam for
furniture and automotive seating cushions, mattresses and inexpensive footwear.
According to Chem Systems, future growth of MDI is expected to be driven by the
continued substitution of MDI for fiberglass and other materials currently used
in insulation foam for construction. Other high growth markets, such as binders
for reconstituted wood board products, are expected to further contribute to
the continued growth of MDI.
MDI. Since 1992, the global consumption of MDI has grown at an average rate
of 8.1%, which exceeds both GDP growth and TDI consumption growth during the
same period. The U.S. and European markets consume the largest quantities of
MDI. We believe the Asian market will become an increasingly important market
for MDI as the market continues to recover from recent macro-economic
difficulties, and the less developed economies in Asia continue to mature.
There are four major producers of MDI: Bayer, Huntsman ICI Chemicals, BASF
and Dow, which have global market shares of 29%, 24%, 19% and 19%,
respectively. We believe it is unlikely that any new major producers of MDI
will emerge due to the substantial requirements for entry such as the limited
availability of licenses for MDI technology and the substantial capital
commitment that is required to develop both the necessary technology and the
infrastructure to manufacture and market MDI.
The price of MDI tends to vary by region and by product type. In the
Americas, where our polyurethane chemicals business is the market leader, the
margin between MDI prices and raw material costs has remained relatively stable
over the last ten years. In Europe, where we have the second largest MDI market
share, these margins have tended to be higher on average but with slightly
greater volatility due to occasional supply and demand imbalances. The
volatility in margins
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has been highest in Asia primarily due to the region's status as a net importer
of MDI. As a result, Asia has the most severe excess supply in times of surplus
in the Americas and Europe, and the most severe shortage in times of strong
global demand. Historically, oversupply of MDI has been rapidly absorbed due to
the high growth rate of MDI consumption.
TDI. The TDI market generally grows at a rate consistent with GDP and
exhibits relatively stable prices. The four largest TDI producers supply
approximately 60% of global TDI demand. The consumers of TDI consist primarily
of numerous small producers that manufacture flexible foam blocks sold as
commodities for use as furniture cushions and mattresses. Flexible foam is
typically the first polyurethane market to become established in developing
countries, and, as a result, development of TDI demand typically precedes MDI
demand. Accordingly, as the Asian economy continues to improve, we expect TDI
demand in the developing Asian nations to increase, followed thereafter by
increasing demand for MDI.
Polyols. Polyols are reacted with isocyanates, primarily MDI and TDI, to
produce finished polyurethane products. Approximately 67% of all polyols
produced are used in polyurethane applications. In 1998, approximately 50% of
polyols were used to produce flexible foam blocks sold as commodities and the
remaining 50% were sold as specialty products for use in various applications
that meet the specific needs of individual customers. The creation of a broad
spectrum of polyurethane products is made possible through the different
combinations of the various polyols with MDI, TDI and other isocyanates. The
market for specialty polyols that are reacted with MDI has been growing at
approximately the same rate at which MDI consumption has been growing. The
growth of consumption of commodity polyols has paralleled the growth of global
GDP.
Aniline. Aniline is an intermediate chemical used primarily as a raw
material to manufacture MDI. Approximately 80% of all aniline produced is
consumed by MDI producers, while the remaining 20% is consumed by synthetic
rubber and dye producers. According to Chem Systems, global capacity for
aniline is approximately 4.3 billion pounds per year. Approximately 97% of all
aniline produced is either consumed downstream by the producers of the aniline
or is sold to third parties under long-term, sole supply contracts. The lack of
a significant spot market for aniline means that in order to remain
competitive, MDI manufacturers must either be integrated with an aniline
manufacturing facility or have a long-term cost-competitive aniline supply
contract.
Key Strengths
Our polyurethane chemicals business is characterized by the following
strengths:
. Leading Market Share in an Attractive Industry--We are the world's
second largest producer of MDI and MDI-based polyurethane systems, with
a 24% global MDI market share. Since 1992, global MDI consumption has
grown at an average rate of 8.1% per year. The high growth rate,
relatively stable margins and substantial technological and capital
requirements for entry make the MDI market attractive.
. Technological Leader--We are recognized as an industry leader in
developing new polyurethane chemical products and applications through
the utilization of state-of-the-art application technology.
Approximately 30% of our 1998 sales of polyurethane chemicals were
generated from products and applications introduced in the last three
years. This rapid rate of new product and application development has
led to a high rate of materials substitution, and correspondingly high
MDI sales volume growth of approximately 9.2% per year over the past 10
years, which is in excess of the industry growth rate.
. Low Cost Producer--We are the lowest cost MDI producer in the world,
according to Chem Systems. This is largely due to the scale of our
modern facilities and their back-integration into our primary raw
materials. We own the world's two largest MDI production
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<PAGE>
facilities, which are back-integrated into the world's two largest
aniline facilities. Since 1996, we have invested over $500 million in
order to significantly enhance our production capabilities through the
rationalization of older, less efficient facilities and the
modernization of newer facilities.
. Strength and Quality of Customer Relationships--Our polyurethane
chemicals business custom blends our products to meet each customer's
specifications. We employ regionally focused and experienced sales
forces and technical support personnel trained to service highly
differentiated end markets. By assisting our customers to overcome
production obstacles at their facilities, we have strengthened our
relationships with them and created new opportunities to develop
products for them.
Strategy
The strategy for our polyurethane chemicals business is based on the
following initiatives:
. Leverage our Technological Expertise for Growth--We intend to leverage
our technological expertise to strengthen our relationships with
existing customers and create opportunities to service new customers
and end-markets. In particular, we are focused on developing products
that will allow us to better serve high-value, high-growth markets such
as the automotive interiors, footwear, and coatings, adhesives,
sealants and elastomers ("CASE") markets.
. Maintain Low Cost Leadership--We will continue to focus on process
innovation and invest in low-cost debottlenecking and process
improvement projects to incrementally expand our facilities and
maintain our low-cost position. In addition to our large-scale capacity
expansions, we have historically been able to increase the capacities
of our existing MDI, aniline and nitrobenzene facilities for minimal
capital investment. We believe that similar opportunities exist within
our newly-modernized asset base, and we intend to identify and capture
these opportunities going forward.
. Capitalize on Product Synergies--We intend to evaluate selective
opportunities to utilize our PO internally to increase the scope and
scale of our specialty polyol offerings at improved profitability. We
believe we will be able to use our PO production in this manner as a
platform for growth in MDI and TDI sales. Additionally, we believe that
by managing our products and technologies together with Huntsman
Corporation's existing polyurethane catalyst, polyol, and amine
technologies, further benefits will be created for our company.
Sales and Marketing
We manage a global sales force at 43 locations with a presence in 32
countries, which sells our polyurethane chemicals to over 2,000 customers in 67
countries. Our sales and technical resources are organized to support major
regional markets, as well as key end-use markets which require a more global
approach. These key end-use markets include the appliance, automotive,
footwear, furniture, construction, binders and CASE industries. Some of our
major customers in these end markets include:
<TABLE>
<CAPTION>
End Market Customers
---------- ---------
<C> <S>
Appliances Bosch-Siemens, Electrolux, General Electric, Sharp, Whirlpool
Automotive BMW, DaimlerChrysler, Ford, Collins & Aikman
Footwear Adidas, Nike, Reebok
Binders B.F. Goodrich, Clarks
Construction Louisiana Pacific, Kingspan
CASE Henkel, Marten, Weyerhaeuser
Furniture IKEA, Recticel
</TABLE>
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<PAGE>
Approximately 50% of our polyurethane chemicals sales are in the form of
"systems" in which we provide the total isocyanate and polyol formulation to
our customers in a ready-to-use form. Our ability to supply polyurethane
systems is a critical factor in our overall strategy to offer comprehensive
product solutions to our customers. We have strategically located our polyol
blending facilities, commonly referred to in the chemicals industry as
"systems houses", close to our customers, enabling us to focus on customer
support and technical service. We believe this customer support and technical
service system contributes to customer retention and also provides
opportunities for identifying further product and service needs of customers.
We intend to increase the utilization of our systems houses to produce and
market greater volumes of polyols and MDI polyol blends.
Manufacturing and Operations
Our primary polyurethane chemicals facilities are located at Geismar,
Louisiana, Rozenburg, Netherlands and Wilton, U.K. Our Wilton facility is
currently the largest producer of nitrobenzene and aniline in the world.
Following the completion of an expansion project expected in the fourth
quarter of 1999, the Geismar facility is expected to become the largest
producer of nitrobenzene, aniline and MDI in the world.
The following chart provides information regarding the capacities of our
primary facilities:
<TABLE>
<CAPTION>
Annual Capacities
-------------------------------------------------
Location MDI TDI Polyols Aniline Nitrobenzene
-------- ----- --- ------- ------- ------------
(millions of pounds)
<S> <C> <C> <C> <C> <C>
Geismar, Louisiana(a)...... 550(a)(b) 90 150 500(b)(c) 660(b)(c)
Wilton, U.K. .............. 640 880
Rozenburg, Netherlands..... 550 -- 100 -- --
----- --- --- ----- -----
Total.................... 1,100 90 250 1,140 1,540
===== === === ===== =====
</TABLE>
- --------
(a) The Geismar facility is owned as follows: we own 100% of the MDI, TDI and
polyol facilities, and Rubicon, Inc., a manufacturing joint venture with
Uniroyal in which we own 50%, owns the aniline and nitrobenzene
facilities. Rubicon is a separate legal entity that operates both the
assets that we own jointly with Uniroyal and our wholly-owned assets at
Geismar.
(b) Following an expansion project that is scheduled to be completed in the
fourth quarter of 1999, the annual capacity of the Geismar facility is
expected to increase to approximately 835 million pounds of MDI, 825
million pounds of aniline and 1,100 million pounds of nitrobenzene.
(c) We have the right to approximately 73% of this capacity under the Rubicon
joint venture arrangements.
Since 1996, we have invested over $500 million to improve and expand our
polyurethane chemicals production facilities. In 1996, we substantially
restructured our manufacturing assets by constructing new world-class aniline
and nitrobenzene production facilities at Wilton, expanding our MDI capacity
at Rozenburg from approximately 200 million pounds per year to approximately
550 million pounds per year and closing our older MDI facility at Hillhouse,
U.K. (approximately 130 million pounds of annual capacity). We effected this
restructuring without increasing our manufacturing fixed cost base.
Subsequently in 1998, we commenced capital projects at our Geismar facility
designed to increase its total production capacity with respect to MDI,
aniline and nitrobenzene. The total budgeted cost for the Geismar facility MDI
expansion is estimated to be $198 million, the majority of which was spent on
or before June 30, 1999. We expect to pursue future plant expansions and
capacity modification projects when justified by market conditions.
We also produce TDI and polyols at our Geismar facility and polyols and
polyol blends at our Rozenburg facility. We manufacture TDI and polyols
primarily to support our MDI customers' requirements. We believe the
combination of our PO business, which produces the major feedstock for
polyols, with our polyols business creates an opportunity to expand our
polyols business and market greater volumes of polyols through our existing
sales network and customer base.
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<PAGE>
Rubicon Joint Venture. We are a 50% joint venture owner, along with
Uniroyal, of Rubicon, Inc., which owns aniline, nitrobenzene and diphenlylamine
("DPA") manufacturing facilities in Geismar, Louisiana. In addition to
operating our 100% owned MDI, TDI and polyol facilities at Geismar, Rubicon
also operates the jointly-owned aniline, nitrobenzene and DPA facilities and is
responsible for providing other auxiliary services to the entire Geismar
complex. We are entitled to approximately 73% of the nitrobenzene and aniline
production capacity of Rubicon, and Uniroyal is entitled to 100% of the DPA
production. As a result of this joint venture, we are able to achieve greater
scale and lower costs for our products than we would otherwise have been able
to obtain.
Raw Materials. The primary raw materials for polyurethane chemicals are
benzene and PO. Benzene is a widely-available commodity that is the primary
feedstock for the production of MDI. Approximately one-third of the raw
material costs of MDI is attributable to the cost of benzene. Our back-
integration into benzene, nitrobenzene and aniline provides us with a
competitively priced supply of feedstocks and reduces our exposure to supply
interruption. We believe that this back-integration contributes to our status
as the world's lowest cost producer of MDI.
Approximately 60% of the raw material costs of polyols is attributable to
the costs of PO. We believe that the integration of our PO business with our
polyurethane chemicals business will give us access to a competitively priced,
strategic source of PO and the opportunity to further expand into the polyol
market. See "--Propylene Oxide--Industry Overview--PO Market".
Competition
The polyurethane chemicals business is characterized by a small number of
competitors, including BASF, Bayer, Dow and Lyondell. While these competitors
produce various types and quantities of polyurethane chemicals, we focus on MDI
and MDI-based polyurethane systems. We compete based on technological
innovation, technical assistance, customer service, product reliability and
price. In addition, our polyurethane chemicals business also differentiates
itself from its competition in the MDI market in two ways: (1) where price is
the dominant element of competition, our polyurethane chemicals business
differentiates itself by its high level of customer support including
cooperation on technical and safety matters; and (2) elsewhere, we compete on
the basis of product performance and our ability to react to customer needs,
with the specific aim of obtaining new business through the solution of
customer problems.
Propylene Oxide
General
We are one of three North American producers of PO. Our customers process
PO into derivative products such as polyols for polyurethane products,
propylene glycol, which is commonly referred to in the chemicals industry as
"PG", and various other chemical products. End uses for these derivative
products include applications in the home furnishings, construction, appliance,
packaging, automotive and transportation, food, paints and coatings and
cleaning products industries. Our PO business is also the third largest U.S.
marketer of PG which is used primarily to produce unsaturated polyester resins
for bath and shower enclosures and boat hulls, and to produce heat transfer
fluids and solvents. As a co-product of our PO manufacturing process, we also
produce methyl tertiary butyl ether which is commonly referred to in the
chemicals industry as "MTBE". MTBE is an oxygenate that is blended with
gasoline to reduce harmful vehicle emissions and to enhance the octane rating
of gasoline.
Our PO business utilizes our proprietary technology to manufacture PO and
MTBE at our state-of-the-art facility in Port Neches, Texas. This facility,
which is the most recently built PO manufacturing facility in North America,
was designed and built under the supervision of Texaco and
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<PAGE>
began commercial operations in August 1994. According to Chem Systems, we are
the lowest cost PO producer in North America largely due to our proprietary
production process. Since acquiring the facility in 1997, we have increased its
PO capacity by approximately 30% through a series of low cost debottlenecking
and process improvement projects. The current capacity of the PO facility is
approximately 525 million pounds of PO per year. We produce PG under a tolling
arrangement with Huntsman Corporation, which has the capacity to produce
approximately 120 million pounds of PG per year at a neighboring facility.
Industry Overview
PO Market. Demand for PO depends largely on overall economic demand,
especially that of consumer durables. Consumption of PO in the U.S. represents
approximately 40% of global consumption. According to Chem Systems, U.S.
consumption of PO was approximately 3.7 billion pounds in 1998, growing from
2.8 billion pounds in 1992, which represents a 4.9% compound annual growth
rate. The following chart illustrates the primary end markets and applications
for PO, and their respective percentages of total PO consumption:
[GRAPH APPEARS HERE]
Two U.S. producers, Lyondell and Dow, account for approximately 90% of
North American PO production. We believe that Lyondell and Dow consume
approximately 50% and 70%, respectively, of their North American PO production
in their North American downstream operations. Because both Dow and Lyondell
consume large amounts of their PO production in their downstream operations,
and because of the relatively high transportation costs relating to imports,
the development of a merchant PO market has been limited.
MTBE Market. MTBE is an oxygenate that is blended with gasoline to reduce
harmful vehicle emissions and to enhance the octane rating of gasoline.
Historically, the refining industry utilized tetra
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<PAGE>
ethyl lead as the primary additive to increase the octane rating of gasoline
until health concerns resulted in the removal of tetra ethyl lead from
gasoline. This led to the increasing use of MTBE as a component in gasoline
during the 1980s. U.S. consumption of MTBE, which was approximately 290,000
barrels per day in 1998, has grown at a compound annual rate of 15.2% in the
1990s due primarily to the implementation of federal environmental standards
that require improved gasoline quality through the use of oxygenates. MTBE has
experienced strong growth due to its ability to satisfy the oxygenation
requirement of the Clean Air Act Amendments of 1990 with respect to exhaust
emissions of carbon monoxide and hydrocarbon emissions from automobile engines.
Some regions of the U.S. have adopted this oxygenate requirement to improve air
quality even though they may not be mandated to do so by the Clean Air Act.
While this trend has further increased MTBE consumption, the continued use of
MTBE is becoming increasingly controversial. See "Business--Propylene Oxide--
Recent Developments".
Key Strengths
Our PO business is characterized by the following strengths:
. Low Cost Producer--According to Chem Systems, our proprietary
production process makes us one of the lowest cost producers of PO.
Furthermore, because our Port Neches, Texas facility is less than five
years old, we expect our annual maintenance-related capital
expenditures to be minimal for the next several years.
. Attractive Industry--The U.S. PO market is attractive to existing
manufacturers for a number of reasons, including significant
technological requirements for entry, a limited number of producers in
the U.S. and the stability of PO demand. As a result, producers in the
U.S. PO market have enjoyed relatively stable margins and growth, and
have been able to expand capacity to capture the substantial growth in
the PO market.
. Long-Term Customer Contracts--Currently, we enjoy the benefit of long-
term contracts under which 100% of our annual PO production,
approximately 95% of our annual MTBE production and over 70% of our
annual PG production is sold to various consumers, including Huntsman
Corporation. Additionally, our principal PO contracts are structured to
effectively reduce our exposure to price volatility in propylene, the
principal raw material in PO, by providing for a variable processing
fee plus the market value of propylene consumed in PO production.
. Broad Range of End-Use Products for PO--PO is a versatile chemical used
to produce derivative products for a wide array of end-use applications
in a variety of industries, including the home furnishings,
construction, appliance, packaging, automotive and transportation,
food, paint, CASE and cleaning product industries.
Strategy
The strategy for our PO business is based upon the following:
. Capitalize on Product Synergies--As our existing PO contracts expire,
we intend to evaluate selective opportunities to utilize our PO
internally to increase the scope and scale of our specialty polyol
offerings at improved profitability. We believe we will be able to use
our PO production in this manner as a platform for growth in MDI and
TDI sales.
. Continue to Increase Capacity--Since acquiring our PO facility in 1997,
we have increased our PO capacity by approximately 30% through a series
of low cost debottlenecking and process improvement projects. We
believe further debottlenecking and process improvement opportunities
exist and we will continuously work to implement further low cost
projects in these areas.
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<PAGE>
Sales and Marketing
We have entered into contractual arrangements with Huntsman Corporation
under which Huntsman Corporation provides us with all of the management, sales,
marketing and production personnel required to operate our PO business. See
"Certain Relationships and Related Transactions". We believe that the extensive
market knowledge and industry experience of the sales executives and technical
experts provided to us by Huntsman Corporation, in combination with our strong
emphasis on customer relationships, has facilitated our ability to establish
and maintain long-term customer contracts. Due to the specialized nature of our
markets, our sales force must possess technical knowledge of our products and
their applications. Our strategy is to continue to increase sales to existing
customers and to attract new customers by providing quality products, reliable
supply, competitive prices and superior customer service.
Based on current production levels, we have entered into long-term
contracts to sell 100% of our PO to customers including BASF, Arch Chemicals,
Inc. and Huntsman Corporation through 2007. Other contracts provide for the
sale of 95% of our annual MTBE production through 1999 to Texaco and BP Amoco,
63% of our annual MTBE production in 2000 to Texaco and 51% of our annual MTBE
production from 2001 through March 2007 to Texaco. In addition, over 70% of our
current annual PG production is sold pursuant to long-term contracts.
Manufacturing and Operations
We manufacture both PO and its co-product, MTBE, at our facility in Port
Neches, Texas. We produce PG under a tolling arrangement with Huntsman
Corporation. Our Port Neches facility has a current capacity of approximately
525 million pounds of PO per year and 260 million gallons of MTBE per year and
the neighboring Huntsman Corporation facility at which our PG is produced has a
capacity of 120 million pounds of PG per year.
We use a proprietary production process to manufacture PO. This technology
was commercialized at our facility in Port Neches, Texas. We own or license all
technology, know-how and patents developed and utilized at this facility.
Technology is a significant requirement for entry into the PO market. Our
process reacts isobutane and oxygen in proprietary oxidation (peroxidation)
reactors, thereby forming tertiary butyl hydroperoxide ("TBHP") and tertiary
butyl alcohol ("TBA"). The TBHP is separated from the TBA using fractionation
techniques. The separated TBHP is further reacted with propylene in the
presence of a proprietary catalyst in epoxidation reactors to form PO and TBA
as a by-product. The PO is separated from the TBA via fractionation and is then
purified for final processing. The TBA produced as a PO by-product is combined
with the TBA from peroxidation and purified by fractionation. We produce MTBE
by reacting the purified TBA with methanol over a catalyst in the MTBE reaction
section of our Port Neches facility. This is a patented one-step reaction which
is unique in the industry because it allows for the direct conversion of the
TBA to MTBE without going through expensive dehydration steps that our
competitors utilize.
While all PO technologies create significant volumes of co-product which
affect the overall profitability of the process, we believe that our technology
possesses several distinct advantages over its alternatives. For example, the
reactors for our PO production process are less expensive relative to other
technologies, and our feedstock and overall investment costs are lower than for
the PO/styrene monomer technology. As compared to the chlorohydrin technology,
our process produces significantly less waste effluent and avoids the disposal
of chlorinated waste products which must be incinerated or used in the
manufacture of chlorinated solvents. Finally, all of our PO co-products can be
processed into saleable materials or used as fuels in our production process.
Raw Materials. The primary raw materials used in our PO production process
are isobutane, propylene, methanol and oxygen, which accounted for 60%, 21%,
15% and 4%, respectively, of total raw material costs in 1998. We purchase our
raw materials primarily under long-term contracts. While
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<PAGE>
most of these feedstocks are commodity materials generally available to us from
a wide variety of suppliers at competitive prices in the spot market, we
purchase all of the propylene used in the production of our PO from Huntsman
Corporation, through Huntsman Corporation's pipeline, which is the only
propylene pipeline connected to our PO facility.
Recent Developments
The presence of MTBE in some groundwater supplies in California and other
states (primarily due to gasoline leaking from underground storage tanks) and
in surface water (primarily from recreational watercraft) has led to public
concern about MTBE's potential to contaminate drinking water supplies.
Heightened public awareness regarding this issue has resulted in state and
federal initiatives to rescind the federal oxygenate requirements for
reformulated gasoline, including the recent issuance of an executive order in
California seeking to phase-out MTBE by 2002 and the introduction of several
bills in the U.S. Congress that would phase-out or curtail the use of MTBE. In
November 1998, the EPA established a committee to review and provide
recommendations concerning the requirements for oxygenated fuels in the Clean
Air Act. The committee's findings were released to the public on July 27, 1999,
and include, among other things, recommendations that (1) MTBE use be reduced
substantially, (2) the U.S. Congress clarify federal and state authority to
regulate or eliminate gasoline additives that threaten water supplies and (3)
the U.S. Congress amend the Clean Air Act to remove certain of the oxygenated
fuels requirements for reformulated gasoline. In a statement issued in response
to these recommendations on July 26, 1999, the administrator of the EPA stated
that the EPA would work with the U.S. Congress to craft a legislative solution
that would allow for a significant reduction in MTBE use, while maintaining air
quality. On August 4, 1999, the U.S. Senate passed a resolution calling for a
phase out of MTBE. While this resolution has no binding legislative effect,
there can be no assurance that future Congressional action will not result in a
ban or other restrictions on MTBE use. Ongoing debate regarding this issue is
continuing at all levels of federal and state government. Any phase-out of or
prohibition against the use of MTBE in California (in which a significant
amount of MTBE is consumed), in other states, or nationally could result in a
significant reduction in demand for our MTBE. While the environmental benefits
of the inclusion of MTBE in gasoline is widely debated, we believe that there
is no reasonable replacement for MTBE as an octane enhancer and, while its use
may no longer be mandated, we believe that it will continue to be used as an
octane enhancer as long as its use is not prohibited. If demand for MTBE does
decline, we believe that our low cost position will put us in a favorable
position relative to other higher cost sources of MTBE (primarily imports and
on-purpose manufacturing facilities). In the event that there should be a
phase-out, however, we believe we will be able to modify our PO production
process to use our co-product TBA stream to produce saleable products other
than MTBE, though the necessary modifications may require significant capital
expenditures. See "Risk Factors--Pending or future litigation or future
legislative initiatives may subject us to products or environmental liability
or materially adversely affect our MTBE sales".
Competition
Total North American PO production capacity was approximately 5.0 billion
pounds per year as of December 31, 1998, according to Chem Systems. Nearly all
of this capacity is located in the U.S. and controlled by three producers:
Lyondell with a capacity of approximately 2.5 billion pounds per year, Dow with
a capacity of approximately 2.0 billion pounds per year and our company with a
capacity of 525 million pounds per year. We compete based on price, product
performance and service.
Petrochemicals
General
We are a leading, highly-integrated European olefins and aromatics
producer. Olefins, principally ethylene and propylene, are the largest volume
basic petrochemicals and are the key
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<PAGE>
building blocks from which many other chemicals are made. For example, olefins
are used to manufacture most plastics, resins, adhesives, synthetic rubber and
surfactants which are used in a variety of end-use applications. Aromatics are
basic petrochemicals used in the manufacture of polyurethane chemicals, nylon,
polyester fiber and a variety of plastics.
Our olefins facility at Wilton, U.K. is one of Europe's largest and lowest
cost olefins facilities. Our Wilton facility has the capacity to produce
approximately 1.9 billion pounds of ethylene, 880 million pounds of propylene
and 200 million pounds of butadiene per year. We sell over 84% of our olefins
volume through long-term contracts with Union Carbide, European Vinyls
Corporation (through contractual arrangements with ICI), ICI, Targor, BASF, BP
Chemicals and others and over 80% of our total volume is transported via direct
pipelines to our customers or consumed internally. The Wilton olefins facility
benefits from its feedstock flexibility and superior logistics, which allows
for the processing of naphthas, condensates and LPGs.
We produce aromatics at our two integrated manufacturing facilities located
in Wilton, U.K. and North Tees, U.K. We are Europe's largest cyclohexane
producer with 605 million pounds of annual capacity, Europe's second largest
paraxylene producer with 730 million pounds of annual capacity and Europe's
third largest benzene producer with 990 million pounds of annual capacity.
Additionally, we have the annual capacity to produce 275 million pounds of
cumene. We use all of the benzene produced by our aromatics business internally
in the production of nitrobenzene for our polyurethane chemicals business and
for the production of cyclohexane and cumene. The balance of our aromatics
products are sold to several key customers, including DuPont, BASF and
Phenolchemie. Our aromatics business has recently entered into a contract to
purchase reformate feedstock from Shell Trading International Limited which
will allow us to shut down a portion of our aromatics facilities and
permanently reduce fixed production costs while maintaining production of key
products. We believe that this contract will improve the future profitability
of our aromatics business.
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Industry Overview
Petrochemical markets are essentially global commodity markets. However,
the olefins market is subject to some regional price differences due to the
limited inter-regional trade resulting from the high costs of product
transportation. The global petrochemicals market is cyclical and is subject to
pricing swings due to supply and demand imbalances, feedstock prices (primarily
driven by crude oil prices) and general economic conditions.
As shown in the following table, both globally and in Western Europe, our
primary market, ethylene is the largest petrochemicals market and paraxylene
has been the fastest growing:
<TABLE>
<CAPTION>
1998 Global Historic
Market size W. Europe as Growth,
(billions of a % of Global W. Europe
Product pounds) Market (1992-1998) Markets Applications
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Polyethylene, Packaging
ethylene materials,
oxide, plastics,
Ethylene 177 23% 3.3% polyvinyl housewares,
chloride, beverage
alpha olefins containers,
personal care
- ---------------------------------------------------------------------------------------
Polypropylene, Clothing fibers,
propylene plastics,
Propylene 101 28% 4.5% oxide, automotive parts,
acrylonitrile, foams for bedding &
isopropanol furniture
- ---------------------------------------------------------------------------------------
Polyurethanes, Appliances,
polystyrene, automotive
cyclohexane, components,
Benzene 64 24% 4.2% cumene detergents,
personal care,
packaging
materials, carpet
- ---------------------------------------------------------------------------------------
Polyester, Fibers, textiles,
Paraxylene 29 11% 5.2% purified beverage containers
terephthalic
acid ("PTA")
- ---------------------------------------------------------------------------------------
</TABLE>
Source: Chem Systems
In Western Europe, there are 22 producers of ethylene who collectively
operate 53 plants with an annual production capacity of approximately 44.5
billion pounds. No single Western European ethylene producer has a capacity
share greater than 10%. The top three Western European producers of ethylene
are Dow, Enichem and Elf Atochem. Western European ethylene consumption in 1998
is estimated at 42.0 billion pounds, representing an average industry operating
rate of 93%. Propylene capacity in Western Europe is approximately 30 billion
pounds per year. Western European propylene consumption in 1998 is estimated at
28.5 billion pounds, representing an average industry operating rate of 95%.
Olefins capacity in Western Europe has expanded moderately in recent years
primarily through implementation of debottlenecking and process improvement
projects at existing units. No greenfield olefins capacity has been constructed
in Western Europe since 1994. Based upon the three to five year development and
construction cycle for a new olefins plant and the fact that no new olefins
plants have been announced, capacity additions in Western Europe over the next
few years are expected to be limited.
Since 1997, olefins margins have fallen, primarily due to lower economic
growth in Asia and industry overcapacity. Although olefins prices in Western
Europe have risen in recent months as a result of the recovery in crude oil and
other raw material feedstock prices from 1998 lows, margins
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have yet to recover. According to Chem Systems the petrochemical industry is at
or near its cyclical trough following a period of oversupply in the last few
years and supply and demand characteristics are expected to improve in coming
years, resulting in improved profitability.
The aromatics market in Western Europe has 27 producers of benzene and 10
producers of paraxylene. Annual Western European benzene production capacity is
approximately 17 billion pounds and consumption was estimated at 15.5 billion
pounds in 1998. The five largest Western European producers of benzene are Dow,
Shell, Huntsman ICI Chemicals, Enichem and Exxon. Paraxylene production
capacity in Western Europe in 1998 was approximately 3.9 billion pounds and
consumption was estimated at 3.1 billion pounds. Demand for paraxylene in
Western Europe is expected to increase as producers of PTA, for which
paraxylene is primarily used, have added capacity in Spain, the Netherlands and
Belgium in the last three years.
Both the benzene and paraxylene markets are currently in a period of
overcapacity. The increasing restrictions imposed by regulatory authorities on
the aromatics content of gasoline in general, and the benzene content in
particular, have affected the supply side of the aromatics industry in recent
years. In 1998, global paraxylene demand fell by 1.2% largely as a result of
the recent Asian economic downturn, while global capacity rose by 15%. As a
result of these dynamics, according Chem Systems, margins in the aromatics
industry, particularly those in paraxylene, are expected to continue to exhibit
characteristic cyclicality and recover from currently depressed cyclical lows
early in the next decade as polyester growth drives a rebalancing of supply and
demand.
Key Strengths
Our petrochemicals business is characterized by the following strengths:
. Raw Material Supply and Integration--Our petrochemicals facilities are
strategically located in northeastern England with pipeline and
waterborne access to the vast hydrocarbon supplies from the North Sea.
The dramatic rise in gas processing in the Teesside area is expected to
provide a growing availability of LPGs and other liquid feedstocks at
favorable prices. We also benefit from internal integration whereby a
local third party refinery and our olefins facility provide a
significant amount of feedstock for our aromatics facilities, which in
turn provides a significant amount of feedstock for our olefins
facility, all of which are transferred via pipeline to minimize
transportation and handling costs.
. Distribution & Storage Infrastructure--We have a unique supporting
infrastructure comprising liquefied ethylene terminals at both
Teesside, U.K. (principally for export) and Wilhelmshaven, Germany (for
import); a propylene terminal at Teesside (principally for export);
extensive cavern storage facilities in the Teesside area for storage of
naphtha and LPG feedstocks, ethylene, propylene, crude butadiene and
hydrogen; extensive above ground storage and jetty facilities to allow
both import and export of feedstocks and products; and an ethylene
pipeline grid linking our facilities to customers in northwestern
England, northeastern England and Grangemouth, Scotland. We believe
such infrastructure assets provide us with a competitive advantage and
will allow us to be creative in the sourcing of raw materials and in
the development and maintenance of strategic customers.
. Low Cost Producer--According to Chem Systems, we are one of the lowest
cost olefins producers in Europe. Our scale of olefins production, the
location of our olefins facility within the larger chemical
manufacturing complex at Wilton and the proximity of all of our
petrochemical facilities to abundant supplies of raw materials provide
significant cost advantages over other European olefins producers.
. Strong Customer Relationships--We have several strong customer
relationships in diverse markets which create attractive outlets for
our products, many of which are linked
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<PAGE>
via direct pipeline to our facilities. The primary customers for our
ethylene business are European Vinyls Corporation (through contractual
arrangements with ICI), Union Carbide, BP Chemicals and ICI. A large
majority of our propylene is sold via pipeline and waterborne delivery
to Targor for the production of polypropylene both at Wilton and in
continental Europe. Nearly all of our paraxylene production is sold via
pipeline to Dupont for the production of PTA, an intermediate chemical
used in the production of polyester.
Strategy
The strategy of our petrochemicals business is based on the following
initiatives:
. Improve Asset Utilization and Reduce Costs--We plan to continue to
reduce costs and improve production processes through focused
improvement programs. The most recent such program was initiated in
late 1998, with a target of reducing annual costs by $20 million. We
also intend to aggressively pursue additional improvements to operating
efficiencies, thereby increasing asset utilization and further reducing
costs.
. Further Develop Our Customer Base--We intend to leverage Huntsman
Corporation's customer and supplier relationships to further develop
our Western European customer base. Moreover, the olefins and aromatics
businesses have been held for sale by ICI for a significant period of
time and, as a result, we believe new marketing opportunities relative
to these businesses have been limited. We believe that under Huntsman
Corporation management, these opportunities will be created and
captured.
. Reposition the Aromatics Business--We intend to reduce our operating
costs and improve cash flows by repositioning our aromatics business as
an extractor of aromatics as opposed to an on-purpose manufacturer of
aromatics. We have recently formed a strategic alliance with Shell to
purchase substantial volumes of their refinery by-product streams which
are rich in aromatics, and will enable us to close the high cost
reformer unit at our aromatics complex at the North Tees site. The
benefits of this alliance will begin in the fourth quarter of 1999 and
we believe that this will significantly improve the profitability of
our aromatics business.
Sales and Marketing
In recent years, our sales and marketing efforts have focused on developing
long-term contracts with customers to minimize our selling expenses and
administration costs. In 1998, over 80% of our primary petrochemicals sales
were made under long-term contracts. We delivered over 75% of our petrochemical
products in 1998 by pipeline, and we delivered the balance of our products by
road and ship to either the U.K. or export markets, primarily in continental
Western Europe.
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Manufacturing and Operations
We produce olefins at our facility in Wilton, U.K. In addition, we own and
operate two integrated aromatics manufacturing facilities at our Wilton and
North Tees sites at Teesside, U.K. Information regarding these facilities is
set forth in the following chart:
<TABLE>
<CAPTION>
Location Product Annual Capacity
-------- ------------- --------------------
(millions of pounds)
<S> <C> <C>
Wilton, U.K. ............................. Ethylene 1,900
Propylene 880
Butadiene 200
Paraxylene 730
North Tees, U.K. ......................... Benzene 990
Mixed xylenes 870
Cyclohexane 605
Cumene 275
Ethylbenzene 90
</TABLE>
The Wilton olefins facility's flexible feedstock capability, which permits
it to process naphtha, condensates and LPG feedstocks, allows us to take
advantage of favorable feedstock prices arising from seasonal fluctuations or
local availability. According to Chem Systems, the Wilton olefins facility is
one of Europe's most cost efficient olefins manufacturing facilities on a cash
cost of production basis. In addition to our manufacturing operations, we also
operate an extensive logistics operations infrastructure in North Tees. This
infrastructure includes both above and below ground storage facilities, jetties
and logistics services on the River Tees. These operations reduce our raw
material costs by providing greater access and flexibility for obtaining
feedstocks.
In order to reduce costs and improve the cash performance of our aromatics
business, we have recently entered into a supply contract with Shell to
purchase large volumes of refinery by-product streams which are rich in
aromatics. Beginning in the fourth quarter of 1999, we intend to cease
production at our existing aromatics reformer unit and utilize the remaining
assets to extract aromatics from purchased by-product streams and by-product
streams produced at the Wilton olefins facility. As a result of this
arrangement, we expect to realize a significant improvement in the cash
performance of our aromatics business in the near term.
Raw Materials. Teesside, situated on the northeast coast of England, is one
of the most cost effective locations in Europe due to its proximity to the
local supply of oil, gas and chemical feedstocks. Due to our strategic
location, we have the option to purchase feedstocks from a variety of sources.
However, we have elected to procure the majority of our naphtha, condensates
and LPGs from local producers, as they have been the most economical sources.
In order to secure the optimal mix of the required quality and type of
feedstock for our petrochemical operations at fully competitive prices, we
regularly engage in the purchase and sale of feedstocks.
Competition
The markets in which our petrochemicals business operates are highly
competitive. Our competitors in the olefins and aromatics business are
frequently some of the world's largest chemical companies such as BP Amoco,
Dow, Exxon and Shell. The primary factors for competition in this business are
price, service and reliability of supply. The technology used in these
businesses is widely available and licensed, though new entrants must make
significant capital expenditures in order to participate in this market.
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Titanium Dioxide
General
Our TiO\\2\\ business, which operates under the tradename "Tioxide", is the
largest manufacturer of TiO\\2\\ in Europe, with an estimated 24% market share,
and the third largest in the world, with an estimated market share of 13%.
TiO\\2\\ is a white pigment used to impart whiteness, brightness and opacity to
products such as paints, plastics, paper, printing inks, synthetic fibers and
ceramics. In addition to its optical properties, TiO\\2\\ possesses traits such
as stability, durability and non-toxicity, making it superior to other white
pigments. According to International Business Management Associates, global
consumption of TiO\\2\\ was approximately 3.5 million tonnes in 1998, growing
from 3.0 million tonnes in 1992, representing a 2.8% compound annual growth
rate which approximates global GDP growth.
We offer an extensive range of products that are sold worldwide to over
3,000 customers in all major TiO\\2\\ end markets and geographic regions. The
geographic diversity of our manufacturing facilities allows our TiO\\2\\
business to service local customers, as well as global customers that require
multiple delivery points. Our major customers include Akzo Nobel, Cabot,
Schulman, ICI Paints and General Electric. Our TiO\\2\\ business has an
aggregate annual capacity of approximately 570,000 tonnes (approximately
515,000 tonnes of effective capacity in 1998) at our nine production
facilities. Five of our TiO\\2\\ manufacturing plants are located in Europe,
two are in North America, including a 50% interest in a manufacturing joint
venture with NL Industries, one is in Asia, and one is in South Africa (a 60%
owned subsidiary).
We are the second lowest cost TiO\\2\\ producer worldwide, according to
International Business Management Associates. To further enhance our low-cost
position, we have embarked on a comprehensive cost reduction program which has
eliminated approximately $50 million of annualized cash costs since 1996, with
an additional $30 million of annualized savings expected to be achieved by the
end of 2001. As part of this program, we have reduced the number of product
grades we produce, focusing on those with wider applications. This program has
resulted in reduced total plant set-up times and further improved product
quality, product consistency, customer service and profitability.
Industry Overview
Global consumption of TiO\\2\\ was 3.5 million tonnes in 1998 according to
International Business Management Associates. The historical long-term growth
rate for global TiO\\2\\ consumption has been generally consistent with global
GDP growth. Although short-term influences such as customer and producer
stocking and de-stocking activities in response to changes in capacity
utilization and price may distort this trend, over the long-term, GDP growth is
the primary underlying factor influencing growth in TiO\\2\\ demand. The
TiO\\2\\ industry experiences some seasonality in its sales because paint sales
generally peak during the spring and summer months in the northern hemisphere,
resulting in greater sales volumes during the first half of the year.
The global TiO\\2\\ market is characterized by a small number of large
global producers. The TiO\\2\\ industry has six major producers, the top four
of which (DuPont, Millennium Chemicals, Huntsman ICI Chemicals and NL
Industries) account for 64% of the global market share. There has been recent
industry consolidation as large global producers have acquired smaller, local
producers. The TiO\\2\\ industry has substantial requirements for entry,
including proprietary production technology and world scale assets requiring
significant capital investment. No greenfield TiO\\2\\ capacity has been
announced in the last few years. Based upon current price levels and the long
lead times for planning, governmental approvals and construction, additional
greenfield capacity is not expected in the near future. According to
International Business Management Associates, prices of TiO\\2\\ are expected
to be positively affected by limited investment in new capacity.
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<PAGE>
There are two manufacturing processes for the production of TiO\\2\\, the
sulfate process and the chloride process. Most recent capacity additions have
employed the chloride process technology and, currently, the chloride process
accounts for approximately 58% of global production capacity according to
International Business Management Associates. However, the global distribution
of sulfate and chloride-based TiO\\2\\ capacity varies by region, with the
sulfate process being predominant in Europe, our primary market. The chloride
process is the predominant process used in North America and both processes are
used in Asia. According to International Business Management Associates,
approximately 85% of end-use applications can use pigments produced by either
process.
Key Strengths
Our TiO\\2\\ business is characterized by the following strengths:
. Leading Market Position in an Attractive Industry--We are the largest
TiO\\2\\ producer in Europe, with an estimated 24% market share, and
the third largest producer worldwide, with an estimated 13% market
share. We believe that we are well positioned in an attractive industry
which has high technological and capital requirements for entry,
limited expectations for new greenfield capacity in the near term and
growth rates generally consistent with global GDP.
. Low Cost Producer--According to International Business Management
Associates, our TiO\\2\\ business is the second lowest cost producer in
the world. We achieved this position through our pursuit of process
efficiencies and managed cost reductions, which have resulted in an 11%
decline in our average manufacturing cash costs since 1995.
. Strong Global Reach Through Local Presence--We have a leading market
share in most of the countries in which we manufacture TiO\\2\\,
including the U.K., France, South Africa, Spain, Malaysia and Italy.
The global reach of our TiO\\2\\ business allows us to service both
globally-oriented customers requiring the capacity and reach to meet
their needs on a worldwide basis and local customers who value local
presence.
. Strong Customer Relationships--Through our extensive global sales force
we have a local presence in each of the markets in which we
participate, which contributes to our strong links with major
customers. We have long-term relationships with major customers such as
Akzo Nobel, ICI Paints, PPG and General Electric, who we believe value
our product offerings, local presence and our ability to meet their
worldwide needs.
. Competitive Product Range and Continuing Product Development--Through
incremental improvements to existing products and new product
innovations, we offer a full range of competitive products, including
the leading coatings grade in Europe. Our successful development and
marketing of new grades of TiO\\2\\ has long-term benefits because of
the long life cycle of our products. We also continue to develop new
products to capitalize on market opportunities. For example, we
recently introduced a product grade that we believe has the potential
to be a world leader in the plastics segment, the fastest growing
TiO\\2\\ market.
Strategy
The strategy of our TiO\\2\\ business is based on the following
initiatives:
. Leverage Customer Relationships for Growth--We intend to leverage our
association with Huntsman Corporation, our leading market positions and
our strong customer relationships to expand our customer base. We
believe that our TiO\\2\\ business will also be able to improve the
utilization of our assets by taking advantage of opportunities to
expand
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our customer base through increasing sales to manufacturers of paints
and coatings, some of whom may have been previously reluctant to
purchase products from our TiO\\2\\ business when it was solely owned
by ICI, a significant competitor in the paints and coatings industry.
. Improve Asset Utilization and Reliability--We intend to improve our
asset utilization and product quality by continuing to align our
product range with our production capabilities. We will continue to
optimize our number of product lines and emphasize newer "universal"
product lines which can be used across a greater number of
applications. We will also attempt to identify further opportunities
for low cost capacity expansion as justified by market conditions.
. Continue to Improve Cost Structure--We will continue our comprehensive
cost improvement program which concentrates on permanent cost
reduction, improved product quality and increased productivity. This
four year program, currently in its third year, has achieved total
annualized savings of approximately $50 million and has targeted
additional annual savings totaling $30 million. We intend to further
improve our cost competitiveness by aggressively developing and
marketing the co-products of our operations.
Sales and Marketing
Approximately 95% of our TiO\\2\\ sales are made through our direct sales
and technical services network, enabling us to cooperate more closely with our
customers and to respond to our increasingly global customer base. Our
concentrated sales effort and local manufacturing presence have allowed us to
achieve our leading market shares in a number of the countries where we
manufacture TiO\\2\\, including the U.K., France, South Africa, Spain,
Malaysia and Italy.
In addition, we have focused on marketing products to higher growth
industries. For example, we believe that our TiO\\2\\ business is well-
positioned to benefit from the projected growth in the plastics sector, which,
according to International Business Management Associates, is expected to grow
faster than the overall TiO\\2\\ market over the next several years. The table
below summarizes the major end markets for our TiO\\2\\ products and our
representative customers:
<TABLE>
<CAPTION>
% of 1998
End Markets Sales Volume Major Customers
--------------------- ------------ ---------------------------------------
<C> <C> <S>
Paints and Coatings.. 58% ICI Paints, Akzo Nobel, PPG, Kalon
Plastics............. 26% Cabot, Schulman, General Electric, Geon
Paper................ 5% Arjo Wiggins, Munskjo
Inks................. 5% BASF/Inmont, Sun/DIC, Converters Ink
</TABLE>
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<PAGE>
Manufacturing and Operations
Our TiO\\2\\ business has nine manufacturing sites in eight countries with
a total estimated capacity of 570,000 tonnes per year (approximately 515,000
tonnes of effective capacity in 1998). Approximately 75% of our TiO\\2\\
capacity is located in Western Europe. Our manufacturing plant in Tracy, Canada
is a "finishing" plant, which finishes products from certain of our other
plants to specific customer requirements. The following table presents
information regarding our TiO\\2\\ facilities:
<TABLE>
<CAPTION>
Region Site Annual Capacity Process
- ------------------------ ----------------------------- --------------- ---------
(tonnes)
<S> <C> <C> <C>
Western Europe.......... Calais, France 100,000 Sulfate
Greatham, U.K. 80,000 Chloride
Grimsby, U.K. 80,000 Sulfate
Huelva, Spain 80,000 Sulfate
Scarlino, Italy 80,000 Sulfate
North America........... Lake Charles, Louisiana(1) 60,000(1) Chloride
Tracy, Canada N/A Finishing
Asia.................... Teluk Kalung, Malaysia 50,000 Sulfate
Southern Africa......... Umbogintwini, South Africa(2) 40,000(2) Sulfate
-------
570,000
=======
</TABLE>
- --------
(1) This facility is owned and operated by Louisiana Pigment Company, L.P., a
manufacturing joint venture that is owned 50% by us and 50% by Kronos
Louisiana, Inc., a subsidiary of NL Industries, Inc. The capacity shown
reflects our 50% interest in Louisiana Pigment Company.
(2) This facility is owned by Tioxide Southern Africa (Pty) Limited, a company
that is owned 60% by us and 40% by AECI. We operate this facility and are
responsible for marketing 100% of the production.
In recent years, we have invested significant capital to optimize and
modernize our facilities, enhance our production capabilities and maintain
compliance with evolving environmental regulations. We have rationalized our
product range in order to concentrate on product grades that can be used in
multiple applications, yielding benefits in product quality and consistency. As
a result of these programs, our facilities are modern and highly cost-
effective.
Joint Ventures. We own a 50% interest in a manufacturing joint venture
located in Lake Charles, Louisiana. The remaining 50% interest is held by our
joint venture partner Kronos Louisiana, Inc., a wholly-owned subsidiary of NL
Industries, Inc. We share production offtake and operating costs of the plant
equally with Kronos, though we market our share of the production
independently. The operations of the joint venture are under the direction of a
supervisory committee on which each partner has equal representation.
We also own a 60% interest in Tioxide Southern Africa (Pty) Limited, based
in Umbogintwini, near Durban, South Africa. The remaining 40% interest is owned
by AECI, a major South African chemicals and minerals company. We operate this
facility and are responsible for marketing 100% of the production.
Raw Materials. The primary raw materials used to produce TiO\\2\\ are
titanium-bearing ores. There are a limited number of ore suppliers and we
purchase ore under long-term supply contracts. The cost of titanium-bearing
ores has been relatively stable in comparison to TiO\\2\\ prices. Titanium-
bearing ore represents approximately 40% of TiO\\2\\ pigment production costs.
TiO\\2\\ producers extract titanium from ores and process it into
pigmentary TiO\\2\\ using either the chloride or sulfate process. Once an
intermediate TiO\\2\\ pigment has been produced, it is "finished" into a
product with specific performance characteristics for particular end-use
applications. The
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finishing process is common to both the sulfate and chloride processes and is a
major determinant of the final product's performance characteristics. The vast
majority of end-use applications can use product from either process.
The sulfate process generally uses less-refined ores which are cheaper to
purchase but produce more co-product than the chloride process. Co-products
from both processes require treatment prior to disposal in order to comply with
environmental regulations. In order to reduce our disposal costs and to
increase our cost competitiveness, we have aggressively developed and marketed
the co-products of our TiO\\2\\ business.
Competition
The global markets in which our TiO\\2\\ business operates are highly
competitive. The primary factors of competition are price, product quality and
service. The TiO\\2\\ industry has recently undergone a consolidation process,
where larger global producers have acquired smaller, regional producers. The
major producers against whom we compete are DuPont, Millennium Chemicals and NL
Industries. Our low production costs, combined with our presence in numerous
local markets, give us a competitive advantage, particularly with respect to
those global customers demanding presence in the various regions in which they
conduct business.
Research and Development
Our PO business spent approximately $4 million, $3 million and $3 million
on research and development for our products in 1996, 1997 and 1998,
respectively. In 1996, 1997 and 1998, an aggregate of approximately (Pounds)51
million, (Pounds)49 million and (Pounds)39 million, respectively, was spent by
our polyurethane chemicals, petrochemicals and TiO\\2\\ businesses for research
and development. We expect to spend a total of $67 million in 1999 and $68
million in 2000 on research and development for all our businesses combined. We
principally conduct our research and development at Huntsman Corporation's
research facilities located in Austin, Texas for our PO business; at our
facilities located in Billingham, England for our TiO\\2\\ business; at our
facilities located in Everberg, Belgium, West Deptford, New Jersey and Sterling
Heights, Michigan for our polyurethane chemicals business and at our facilities
located in Wilton, U.K. for our petrochemicals business. We are engaged at
these research facilities in discovering and developing new processes and test
methods, and applications for existing products to meet the needs of the
marketplace.
Intellectual Property Rights
Proprietary protection of our processes, apparatuses, and other technology
and inventions is important to our businesses. For our PO business, we own
approximately 150 U.S. patents, approximately 10 patent applications (including
provisionals) currently pending at the United States Patent and Trademark
Office, and approximately 525 foreign counterparts, including both issued
patents and pending patent applications. For our TiO\\2\\ business, we have
approximately 50 U.S. patents and pending patent applications, and
approximately 700 foreign counterparts. For our polyurethane chemicals
business, we own approximately 200 U.S. patents and pending patent
applications, and approximately 1,900 foreign counterparts. For our
petrochemicals business, we own five patents and pending applications (both
U.S. and foreign). We also rely upon unpatented proprietary know-how and
continuing technological innovation and other trade secrets to develop and
maintain our competitive position.
In addition to our own patents and patent applications and proprietary
trade secrets and know-how, we have entered into certain licensing arrangements
which authorize us to use certain trade secrets, know-how and related
technology and/or operate within the scope of certain patents owned by other
entities. Our petrochemicals business primarily uses technology licensed from a
number of
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suppliers. We have operated several generations of petrochemicals plants and
have accumulated well developed proprietary know-how, some of which is
patented, and technology which we apply to maintain and improve the performance
of our existing asset base. We also license and sub-license certain
intellectual property rights to affiliates and to third parties. In connection
with our transaction with ICI and Huntsman Specialty (under the terms of a
technology transfer agreement and a PO/MTBE technology transfer agreement), we
have licensed back to ICI and Huntsman Corporation (on a non-exclusive basis)
certain intellectual property rights for use in their respective retained
businesses, and ICI and Huntsman Corporation have each licensed certain
retained intellectual property to us.
For our polyurethane chemicals business, we have brand names for a number
of our products, and we own approximately 25 U.S. trademark registrations and
applications for registration currently pending at the United States Patent and
Trademark Office, and approximately 1,200 foreign counterparts, including both
registrations and applications for registration. For our TiO\\2\\ business, we
have approximately 200 trademark registrations and pending applications,
approximately 150 of which relate to the trademark "Tioxide". Our PO business
and petrochemicals business are not dependent on the use of trademarks. We have
entered into a trademark license agreement with each of Huntsman Corporation
and ICI under which we have obtained, respectively, the rights to use the
trademark "Huntsman" and the trademark "ICI", subject to certain restrictions,
including, in the case of the "ICI" mark, that it will only be used as part of
the combination "Huntsman ICI". The license to use the trademark "ICI" expires
on June 30, 2000.
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Properties
We own or lease chemical manufacturing and research facilities in the
locations indicated in the list below. We own or lease office space and storage
facilities throughout the U.S. and many foreign countries. Our principal
executive offices, which are leased from Huntsman Corporation, are located at
500 Huntsman Way, Salt Lake City, Utah 84108. The following is a list of our
material owned or leased properties where manufacturing, blending, research and
main office facilities are located.
<TABLE>
<CAPTION>
Location Description of Facility
-------- -----------------------
<S> <C>
Geismar, Louisiana................ MDI, TDI, Nitrobenzene(1), Aniline(1) and
Polyols Manufacturing Facilities
Rozenburg, Netherlands(2)......... MDI Manufacturing Facility, Polyols
Manufacturing Facilities and Systems House
Wilton, U.K. ..................... Aniline and Nitrobenzene Manufacturing
Facilities
Shepton Mallet, U.K. ............. Polyester Polyols Manufacturing Facility
Peel, Canada(2)................... Polyurethane Systems House
West Deptford, New Jersey......... Polyurethane Systems House, Research
Facility and U.S. Regional Headquarters
Sterling Heights, Michigan(2)..... Polyurethane Research Facility
Auburn Hills, Michigan(2)......... Polyurethane Office Space and Research
Facility
Cartagena, Colombia............... Polyurethane Systems House
Deggendorf, Germany............... Polyurethane Systems House
Ternate, Italy.................... Polyurethane Systems House
Shanghai, China(2)................ Polyurethane Systems House
Samuprakam, Thailand(2)........... Polyurethane Systems House
Kuan Yin, Taiwan(2)............... Polyurethane Systems House
Everberg, Belgium................. Polyurethane Research Facility, Global
Headquarters and European Headquarters
Gateway West, Singapore........... Polyurethane Regional Headquarters
Port Neches, Texas................ PO Manufacturing Facility
Austin, Texas(2).................. PO/TBA Pilot Plant Facility
Wilton, U.K. ..................... Olefins and Aromatics Manufacturing
Facilities
North Tees, U.K.(2)............... Aromatics Manufacturing Facility
Teesport, U.K.(2)................. Logistics/Storage Facility
Saltholme, U.K. .................. Brine Reservoirs for Cavity Operations
Teesside, U.K..................... Brinefields Cavity Operation and Development
Saltholme, U.K.(2)................ Salt Mines
North Tees, U.K.(2)............... Shipping and Logistics Facility
Grimsby, U.K. .................... TiO\\2\\ Manufacturing Facility
Greatham, U.K. ................... TiO\\2\\ Manufacturing Facility
Calais, France.................... TiO\\2\\ Manufacturing Facility
Huelva, Spain..................... TiO\\2\\ Manufacturing Facility
Scarlino, Italy................... TiO\\2\\ Manufacturing Facility
Teluk Kalung, Malaysia............ TiO\\2\\ Manufacturing Facility
Lake Charles, Louisiana(3)........ TiO\\2\\ Manufacturing Facility
Umbogintwini, South Africa(4)..... TiO\\2\\ Manufacturing Facility
Tracy, Canada..................... TiO\\2\\ Finishing Plant
Billingham, U.K................... TiO\\2\\ Research and Technical Facility
</TABLE>
- --------
(1) 50% owned manufacturing joint venture with Uniroyal, Inc.
(2) Leased property.
(3) 50% owned manufacturing joint venture with Kronos Louisiana, Inc., a
subsidiary of NL Industries, Inc.
(4) 60% owned subsidiary.
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Employees
We employ over 6,000 people. Approximately 85% of our employees work
outside the U.S. We have over 950 employees located in the U.S., approximately
2,100 employees in the U.K. and 3,200 employees elsewhere most of whom are
subject to collective bargaining agreements. A collective bargaining agreement
for our facility at Scarlino, Italy will be negotiated this year, with a second
collective bargaining agreement at Scarlino to be renegotiated next year.
Overall, we believe that our relations with our employees are good. In
addition, Huntsman Corporation is providing operating, management and
administrative services to us for our PO business similar to the services that
it provided to Huntsman Specialty with respect to the PO business before it was
transferred to us. See "Certain Relationships and Related Transactions".
Environmental Regulations
We are subject to extensive environmental laws. In the ordinary course of
business, we are subject continually to environmental inspections and
monitoring by governmental enforcement authorities. We may incur substantial
costs, including fines, damages, and criminal or civil sanctions, for actual or
alleged violations arising under environmental laws. In addition, our
production facilities require operating permits that are subject to renewal,
modification, and, in certain circumstances, revocation. Our operations involve
the handling, transportation and use of numerous hazardous substances. From
time to time, these operations may result in violations under environmental
laws including spills or other releases of hazardous substances into the
environment. In the event of a catastrophic incident, we could incur material
costs or experience interruption in our operations as a result of addressing
and implementing measures to prevent such incidents in the future. In February
1999, hydrochloric acid was accidentally released from the Greatham facility
into a nearby marsh that includes a conservation area. We have an indemnity
from ICI which we believe will cover, in large measure, our liability for this
matter. In addition, certain notices of violation relating to air emissions and
wastewater issues have been issued to the Port Neches facility. While these
matters remain pending and could result in fines of over $100,000, we do not
believe any of these matters will be material to us. Given the nature of our
business, we cannot assure you, however, that violations of environmental laws
will not result in restrictions imposed on our activities, substantial fines,
penalties, damages or other costs.
Under some environmental laws, we may be jointly and severally liable for
the costs of environmental contamination on or from our properties and at off-
site locations where we disposed of or arranged for the disposal or treatment
of hazardous wastes. For example, in the United States under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
similar state laws, a current owner or operator of real property may be liable
for such costs regardless of whether the owner or operator owned or operated
the real property at the time of the release of the hazardous substances and
regardless of whether the release or disposal was in compliance with law at the
time it occurred. In addition, under the United States Resource Conservation
and Recovery Act of 1976, as amended ("RCRA"), and similar state laws, as the
holder of permits to treat or store hazardous wastes, we may, under some
circumstances, be required to remediate contamination at our properties
regardless of when the contamination occurred. Similar laws are being developed
or are in effect to varying degrees in other parts of the world, most notably
in the European Union. For example, in the U.K., a new contaminated land regime
is expected to come into effect shortly which will provide a detailed framework
for the identification, management and remediation of contaminated sites. This
law may increase governmental scrutiny of our U.K. facilities.
We are aware that there is or may be soil or groundwater contamination at
some of our facilities resulting from past operations at these or neighboring
facilities. Based on available information and the indemnification rights that
we possess (including indemnities provided by Huntsman Specialty
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and ICI for the facilities that each of them transferred to us), we believe
that the costs to investigate and remediate known contamination will not have a
material adverse effect on our business, financial condition, results of
operations or cash flows; however, we cannot give any assurance that such
indemnities will fully cover the costs of investigation and remediation, that
we will not be required to contribute to such costs or that such costs will not
be material.
We may also incur costs for capital improvements and general compliance
under environmental laws, including costs to acquire, maintain and repair
pollution control equipment. Capital expenditures are planned, for example,
under national legislation implementing the Integrated Pollution Prevention and
Control Directive in the EU. Under this directive the majority of our plants
will, over the next few years, be required to obtain governmental
authorizations which will regulate air and water discharges, waste management
and other matters relating to the impact of operations on the environment, and
to conduct site assessments to evaluate environmental conditions. Although the
implementing legislation in most Member States is not yet in effect, it is
likely that additional expenditures may be necessary in some cases to meet the
requirements of authorizations under this directive. In particular, we believe
that related expenditures to upgrade our wastewater treatment facilities at
several sites may be necessary and associated costs may be material. Wastewater
treatment upgrades unrelated to this initiative also are planned at certain
facilities. In addition, we may also incur material expenditures in complying
with the EU Directive on Hazardous Waste Incineration beyond currently
anticipated expenditures, particularly in relation to our Wilton facility. It
is also possible that additional expenditures to reduce air emissions at two of
our U.K. facilities may be material. Capital expenditures and, to a lesser
extent, costs and operating expenses relating to environmental matters will be
subject to evolving regulatory requirements and will depend on the timing of
the promulgation and enforcement of specific standards which impose
requirements on our operations. Therefore, we cannot assure you that material
capital expenditures beyond those currently anticipated will not be required
under environmental laws. See "Management's Discussion and Analysis of
Financial Conditions and Results of Operations--Environmental Regulation".
Legal Matters
We are a party to various proceedings instituted by governmental
authorities and others arising under provisions of applicable laws, including
various environmental laws. Based in part on the indemnities provided to us by
ICI and Huntsman Specialty in connection with their transfer of businesses to
us and our insurance coverage, we do not believe that the outcome of any of
these matters will have a material adverse effect on our financial condition or
results of operations.
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MANAGEMENT
Managers and Executive Officers
Members of our current Board of Managers and executive officers are listed
below. The members of the Board of Managers are appointed by the owner of our
common equity interests and hold office until their successors are duly
appointed and qualified. All officers serve at the pleasure of our Board of
Managers.
Board of Managers and Executive Officers
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Jon M. Huntsman*........ 62 Chairman of the Board of Managers, Chief
Executive Officer and Manager
Jon M. Huntsman, Jr.*... 39 Vice Chairman and Manager
Peter R. Huntsman*...... 36 President, Chief Operating Officer and Manager
Karen H. Huntsman*...... 61 Executive Vice President
J. Kimo Esplin.......... 37 Executive Vice President and Chief Financial
Officer
Patrick W. Thomas....... 41 President--Polyurethane Chemicals Division
Douglas A. L. Coombs.... 57 President--Tioxide Division
Thomas G. Fisher........ 50 Executive Vice President--Tioxide
Michael J. Kern......... 49 Executive Vice President--Manufacturing
Robert B. Lence......... 42 Executive Vice President, General Counsel and
Secretary
Donald J. Stanutz....... 49 Executive Vice President--Polyurethane Chemicals
L. Russell Healy........ 43 Senior Vice President and Financial Director
William M. Chapman, 57
Jr. ................... Vice President--Human Resources
Curtis C. Dowd.......... 39 Vice President--Corporate Development
James A. Huffman*....... 31 Vice President--Strategic Planning
Kevin J. Ninow.......... 36 Vice President--Petrochemicals Manufacturing
Martin F. Petersen...... 38 Vice President and Treasurer
John B. Prows........... 45 Vice President--Petrochemicals
Samuel D. Scruggs....... 39 Vice President--Deputy General Counsel
</TABLE>
- --------
* Such persons are related as follows: Karen H. Huntsman is the wife of Jon M.
Huntsman. Jon M. Huntsman and Karen H. Huntsman are the parents of Jon M.
Huntsman, Jr. and Peter R. Huntsman. James A. Huffman is a son-in-law of Jon
M. Huntsman and Karen H. Huntsman and brother-in-law of Jon M. Huntsman, Jr.
and Peter R. Huntsman.
Jon M. Huntsman is Chairman of the Board of Managers and Chief Executive
Officer. He has been Chairman of the Board and Chief Executive Officer of
Huntsman Corporation and all Huntsman companies since he founded his first
company in 1970. In addition, Mr. Huntsman serves or has served on numerous
corporate and industry boards, the Chemical Manufacturers Association and the
American Polymers Council. Mr. Huntsman was selected in 1994 as the chemical
industry's top CEO for all businesses in Europe and North America. Mr.
Huntsman formerly served as Special Assistant to the President of the United
States and as Vice Chairman of the U.S. Chamber of Commerce.
Jon M. Huntsman, Jr. is Vice Chairman and a Manager. Mr. Huntsman, Jr.
serves as Vice Chairman and Director of Huntsman Corporation. Mr. Huntsman
serves on the Board of Directors of Owens-Corning Corporation and on numerous
corporate and not-for-profit boards. Previously, Mr. Huntsman, Jr. was Senior
Vice President and General Manager of Huntsman Chemical Corporation. Later he
served as U.S. Deputy Assistant Secretary of Commerce in the International
Trade Administration, U.S. Deputy Assistant Secretary for East Asia and
Pacific Affairs and as the United States Ambassador to the Republic of
Singapore. Mr. Huntsman, Jr. also serves as President of the Huntsman Cancer
Foundation.
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Peter R. Huntsman is President, Chief Operating Officer and a Manager. He
also serves as President, Chief Operating Officer and a Director of Huntsman
Corporation. Previously, Mr. Huntsman was Senior Vice President of Huntsman
Chemical Corporation and a Senior Vice President of Huntsman Packaging
Corporation. Mr. Huntsman also served as Vice President-- Purchasing for
Huntsman Polypropylene Corporation, and Senior Vice President and General
Manager of Huntsman Polypropylene Corporation.
Karen H. Huntsman is Executive Vice President. Mrs. Huntsman performs an
active role in all the Huntsman Corporation businesses and currently serves as
an officer and/or board member for many of the Huntsman companies. By
appointment of the Governor of the State of Utah, Mrs. Huntsman serves as a
member of the Utah State Board of Regents. She also serves on the Boards of
Directors of various corporate and not-for-profit entities, including First
Security Corporation.
J. Kimo Esplin is Executive Vice President and Chief Financial Officer. Mr.
Esplin also serves as Senior Vice President and Chief Financial Officer of
Huntsman Corporation. Previously, Mr. Esplin served as Treasurer of Huntsman
Corporation. Prior to joining Huntsman in 1994, Mr. Esplin was a Vice President
in the Investment Banking Division of Bankers Trust Company, where he worked
for seven years.
Patrick W. Thomas is President--Polyurethane Chemicals Division. Since
joining ICI in 1982, Mr. Thomas has held numerous management positions with
ICI, including Polyurethanes Business Director, Europe from 1993 to 1997,
Polyurethanes International Marketing and Planning Manager from 1991 to 1993
and Polyurethanes Business Engineering & Investment Manager from 1989 to 1991.
Douglas A. L. Coombs is expected to be President--Tioxide Division. Mr.
Coombs currently is Chairman & Chief Executive Officer of Tioxide Group PLC, a
position he has held since 1996. Mr. Coombs has held a number of management
positions with ICI over the last 35 years.
Thomas G. Fisher is Executive Vice President--Tioxide. Mr. Fisher also
serves as Senior Vice President of Huntsman Corporation. Mr. Fisher has held
several positions with Huntsman that have included the overall management for
Huntsman's PO, maleic anhydride, ethylene oxide, ethylene glycol and butadiene
businesses. Prior to joining Huntsman in 1994, Mr. Fisher served in a variety
of management positions with Texaco Chemical Company.
Michael J. Kern is Executive Vice President--Manufacturing. Mr. Kern also
serves as Senior Vice President--Manufacturing for Huntsman Corporation. Prior
to joining Huntsman, Mr. Kern held a variety of positions within Texaco
Chemical Company, including Area Manager--Jefferson County Operations from
April 1993 until joining the Company, Plant Manager of Port Neches facility
from August 1992 to March 1993, Manager of the PO/MTBE project from October
1989 to July 1992, and Manager of Oxides and Olefins from April 1988 to
September 1989.
Robert B. Lence is Executive Vice President, General Counsel and Secretary.
Mr. Lence also serves as Senior Vice President and General Counsel of Huntsman
Corporation. Mr. Lence joined Huntsman in December 1991 from Van Cott, Bagley,
Cornwall & McCarthy, a Salt Lake City law firm, where he was a partner.
Donald J. Stanutz is Executive Vice President--Polyurethane Chemicals. Mr.
Stanutz also serves as Senior Vice President of Huntsman Corporation. Mr.
Stanutz has held several positions with Huntsman that have included the overall
management for Huntsman's performance chemicals business, specialty polymers
business and olefins, oxides and glycols business. Prior to joining Huntsman in
1994, Mr. Stanutz served in a variety of senior positions with Texaco Chemical
Company.
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L. Russell Healy is Senior Vice President and Financial Director. Mr. Healy
also serves as Vice President--Finance for Huntsman Corporation. Previously,
Mr. Healy served as Vice President--Taxation for Huntsman Corporation. Prior to
joining Huntsman in 1995, Mr. Healy was a partner in the tax department of
Deloitte and Touche, LLP. Mr. Healy is a CPA and holds a masters degree in
accounting.
William M. Chapman, Jr. is Vice President--Human Resources. Mr. Chapman
also serves as Vice President--Human Resources for Huntsman Corporation.
Previously, Mr. Chapman has served as Vice President--Human Resources for
Huntsman Petrochemical Corporation and as Director--Human Resources for
Huntsman's Jefferson County, Texas operations. Prior to joining Huntsman in
1994, Mr. Chapman was Assistant General Manager--Services for Texaco Chemical
Company.
Curtis C. Dowd is Vice President--Corporate Development. Mr. Dowd also
serves as Vice President--Corporate Development for Huntsman Corporation. Mr.
Dowd previously served as Vice President and General Counsel of Huntsman
Petrochemical Corporation from 1994 to 1998. From 1991 to 1994, Mr. Dowd was an
associate with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. Prior
to attending law school, Mr. Dowd was a CPA with the accounting firm of Price
Waterhouse for over six years.
James A. Huffman is Vice President--Strategic Planning. Mr. Huffman also
serves as Vice President--Strategic Planning for Huntsman Corporation, a
position which he has held since 1998. Prior to joining Huntsman in 1998, Mr.
Huffman worked for the global management consulting firm of McKinsey & Company
as an engagement manager. Mr. Huffman also worked for Huntsman in a variety of
positions from 1991 to 1994, including Director--New Business Development and
Manager--Credit for Huntsman Packaging.
Kevin J. Ninow is Vice President--Petrochemicals Manufacturing. Since
joining Huntsman in 1989, Mr. Ninow has served in a variety of manufacturing
and engineering positions including Vice President of Manufacturing, Plant
Manager--Oxides and Olefins, Plant Manager--C4's, Operations Manager--C4's,
Manager of Technology, Process Control Group Leader, and Project Engineer.
Martin F. Petersen is Vice President and Treasurer. Mr. Petersen also
serves as Vice President and Treasurer of Huntsman Corporation. Prior to
joining Huntsman in 1997, Mr. Petersen was a Vice President in the Investment
Banking Division of Merrill Lynch & Co., where he worked for seven years.
John B. Prows is Vice President--Petrochemicals. Since joining Huntsman in
1994, Mr. Prows has served as Plant Manager--Polypropylene, Plant Manager--
Polystyrene, and Operations Manager--Styrene Monomer. Previously, Mr. Prows
worked for Dupont for 13 years in a number of management and engineering roles
in polyethylene, PVC and other manufacturing processes.
Samuel D. Scruggs is Vice President--Deputy General Counsel. Mr. Scruggs
also serves as Vice President--Associate General Counsel for Huntsman
Corporation. Prior to joining Huntsman in 1995, Mr. Scruggs was an associate
with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.
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Executive Compensation
Summary of Compensation
The following Summary Compensation Table sets forth information concerning
compensation earned in the fiscal year ended December 31,1998, by our chief
executive officer and our remaining four most highly compensated executive
officers (the "Named Executive Officers") as of the end of the last fiscal
year.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation(1)(2)
-------------------------
Options
Name and Principal (Number All Other
Position Year Salary Bonus of Shares) Compensation
------------------ ---- -------------------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Jon M. Huntsman,
Chairman of the Board,
Director and Chief
Executive Officer..... 1998 $ 66,000 $ 375,000 -- $44,227(3)
Peter R. Huntsman,
President and
Director.............. 1998 $ 40,170 $ 75,000 -- $11,595(4)
Jon M. Huntsman, Jr.,
Vice Chairman and
Director.............. 1998 $ 32,156 $ 60,000 -- $ 9,216(5)
J. Kimo Esplin,
Senior Vice President
and Chief Financial
Officer............... 1998 $ 18,938 $ 30,000 -- $ 1,233(6)
Robert B. Lence,
Senior Vice President
and General Counsel... 1998 $ 14,479 $ 18,750 -- $ 3,325(7)
</TABLE>
- --------
(1) All compensation of the above-named executive officers was paid entirely by
Huntsman Corporation, our parent company; no charge with respect to this
compensation was made to our company. Compensation figures for the
executives listed above represent a prorated percentage of Huntsman
Corporation compensation attributable to services rendered to our company.
(2) Perquisites and other personnel benefits, securities or property are less
than either $50,000 or 10% of the total annual salary and bonus reported
for the named executive officer.
(3) Consists of $8,845 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $35,382 for 1998.
(4) Consists of $2,319 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $9,276 for 1998.
(5) Consists of $1,843 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $7,373 for 1998.
(6) Consists of $986 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $247 for 1998.
(7) Consists of $665 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $2,660 for 1998.
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<PAGE>
The following table shows the estimated annual benefits payable under the
Huntsman Corporation's tax-qualified defined benefit pension plan (the
"Huntsman Corporation Pension Plan") and supplemental pension plan ("SERP") in
specified final average earnings and years-of-service classifications.
Huntsman Corporation Pension Plan Table
<TABLE>
<CAPTION>
Years of Benefit Service at Retirement
Final Average -------------------------------------------------------------
Compensation 5 10 15 20 25 30 35 40
- ------------- ------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 25,000 1,800 3,500 5,300 7,000 8,800 10,500 12,300 14,000
$ 50,000 3,500 7,000 10,500 14,000 17,500 21,000 24,500 28,000
$ 75,000 5,300 10,500 15,800 21,000 26,300 31,500 36,800 42,000
$100,000 7,000 14,000 21,000 28,000 35,000 42,000 49,000 56,000
$125,000 8,800 17,500 26,300 35,000 43,800 52,500 61,300 70,000
$150,000 10,500 21,000 31,500 42,000 52,500 63,000 73,500 84,000
$175,000 12,300 24,500 36,800 49,000 61,300 73,500 85,800 98,000
$200,000 14,000 28,000 42,000 56,000 70,000 84,000 98,000 112,000
$300,000 21,000 42,000 63,000 84,000 105,000 126,000 147,000 168,000
$400,000 28,000 56,000 84,000 112,000 140,000 168,000 196,000 224,000
$500,000 35,000 70,000 105,000 140,000 175,000 210,000 245,000 280,000
$600,000 42,000 84,000 126,000 168,000 210,000 252,000 294,000 336,000
</TABLE>
The current Huntsman Corporation Pension Plan benefit is based on the
following formula: 1.4% of final average compensation multiplied by years of
credited service, minus 1.4% of estimated Social Security benefits multiplied
by years of credited service (with a maximum of 50% of Social Security
benefits). Final Average compensation is based on the highest average of three
consecutive years of compensation. Messrs. Jon M. Huntsman, Peter R. Huntsman,
Jon M. Huntsman, Jr., J. Kimo Esplin and Robert B. Lence were participants in
the Huntsman Corporation Pension Plan in 1998. For the foregoing named
executive officers, covered compensation consists of base salary and is
reflected in the "Salary" column of the Summary Compensation Table. Federal
regulations require that for the 1998 plan year, no more than $160,000 in
compensation be considered for the calculation of retirement benefits under the
Huntsman Corporation Pension Plan, and the maximum annual benefit paid from a
qualified defined benefit plan cannot exceed $125,000. Benefits are calculated
on a straight life annuity basis. The benefit amounts under the Huntsman
Corporation Pension Plan are offset for Social Security as described above.
The SERP is a nonqualified supplemental pension plan for designated
executive officers, that provides benefits based on certain compensation
amounts not included in the calculation of benefits payable under the Huntsman
Corporation Pension Plan. Messrs. Jon. M. Huntsman, Peter R. Huntsman, Jon M.
Huntsman, Jr., J. Kimo Esplin and Robert B. Lence were participants in the SERP
in 1998. The compensation amounts taken into account for these named executive
officers under the SERP include bonuses (as reflected in the "Bonus" columns of
the summary compensation Table) and base salary in excess of the qualified plan
limitations. The SERP benefit is calculated as the difference between (1) the
benefit determined using the Huntsman Corporation Pension Plan formula with
unlimited base salary plus bonus, and (2) the benefit determined using base
salary as limited by federal regulations.
The number of completed years of credited service as of December 31, 1998
under the Huntsman Corporation Pension Plan and SERP for the named executive
officers participating in the plans were 28, 15, 15, 4 and 13 years for each of
Messrs. Jon. M. Huntsman, Peter R. Huntsman, Jon M. Huntsman, Jr., J. Kimo
Esplin and Robert B. Lence, respectively.
Compensation of Managers
The managers do not receive any additional compensation for their service
as managers.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We share numerous services and resources with Huntsman Corporation and ICI.
We also rely on Huntsman Corporation and ICI to supply some of our raw
materials and to purchase a significant portion of our products.
General
We expect to enter into several agreements with Huntsman Corporation under
which Huntsman Corporation will provide us with administrative support and a
range of services, including treasury and risk management, human resources,
technical and legal services for our businesses in the U.S. and elsewhere. In
connection with these arrangements, we participate in Huntsman Corporation's
worldwide insurance program. Furthermore, we expect to enter into one or more
agreements under which we will provide to Huntsman Corporation a range of
support services, including treasury, human resources, technical and legal
services for Huntsman Corporation's businesses in Europe and elsewhere. These
agreements will provide for fees based on an equitable allocation of the
general and administrative costs and expenses. In addition, we have paid an
aggregate fee of $10 million to cover non-reimbursed expenses incurred in
connection with our transaction with ICI and Huntsman Specialty to Huntsman
Specialty, ICI and the institutional investors in proportion to their common
equity interests in Huntsman ICI Holdings.
Polyurethane Chemicals Business
Supply Contracts
We intend to enter into one or more agreements with ICI for the supply of
caustic soda, chlorine and sulphuric acid to us. We expect the terms and
conditions of these agreements to be substantially the same as agreements or
non-contractual arrangements existing prior to the closing of the transfer of
ICI's businesses to us, which generally reflect market prices.
Utilities Contracts
We intend to enter into several agreements with ICI relating to our supply
of general utilities, including steam, electricity and water to ICI at our
Rozenburg, Netherlands facility. We will also enter into reciprocal agreements
relating to the supply by ICI to us of certain utilities. The terms and
conditions of these agreements to be substantially the same as agreements or
non-contractual arrangements existing prior to the closing of the transfer of
ICI's businesses to us, which generally reflect market prices or prices based
upon cost plus a reasonable fee.
Services Contracts
We intend to enter into one or more agreements with ICI relating to a wide
range of operational services both to and from ICI. These operational services
include the operation and maintenance of various infrastructure, effluent
disposal, storage and distribution assets. We expect the terms of these
agreements to be substantially the same as agreements or non-contractual
arrangements existing prior to the closing of the transfer of ICI's businesses
to us, which generally, reflect market prices or prices based upon cost plus a
reasonable fee.
In addition, we expect to enter into agreements relating to the provision
both to and from ICI of a range of support services for the efficient
transition of business ownership. These services may include various human
resource, occupational health, analytical, engineering or purchasing services.
We expect the terms of these agreements to be substantially the same as
existing agreements or non-contractual arrangements existing prior to the
closing of the transfer of ICI's businesses to us, which generally reflect
market price or prices based upon cost plus a reasonable fee.
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<PAGE>
PO Business
PO Supply Agreement
Pursuant to an existing agreement with Huntsman Corporation that expires in
2012, we are obligated to sell, and Huntsman Corporation is obligated to buy,
all PO produced at our PO facility in Port Neches, Texas which is not purchased
by our other customers. We are entitled to receive market prices for the PO
purchased by Huntsman Corporation. Based on current market price and the
current commitments of our other customers to purchase our PO, we anticipate
that Huntsman Corporation will spend at least $36 million per year under this
agreement.
Propylene Supply Agreement
Pursuant to an existing agreement that expires in 2012, Huntsman
Corporation is obligated to provide 100% of the propylene required by us for
operation of our PO facility, up to a maximum of 350 million pounds per year.
We pay market prices for the propylene supplied by Huntsman Corporation. These
agreements each have terms of 15 years. Based on current market prices, we
anticipate that we will spend approximately $44 million per year under these
agreements.
Supply Contracts
We are interdependent with Huntsman Corporation with respect to the supply
of certain other feedstock, utilities and products. Under a supply agreement
that expires in 2012, we are required to sell, and Huntsman Corporation is
required to purchase, all of the steam that we generate at our PO facility.
Huntsman Corporation reimburses us for the cost of the steam that it purchases
from us. Under separate supply agreements, we have agreed to purchase our
requirements of mono-ethylene glycol and tri-ethylene glycol from Huntsman
Corporation at market prices for use in our PO operations. Furthermore, in
exchange for Huntsman Corporation's PG tolling services, we pay Huntsman
Corporation a reservation fee, adjusted annually for inflation, plus a variable
toll fee equal to Huntsman Corporation's cost of operating the PG plant. Based
on current market prices, we anticipate that we will spend approximately $5
million per year, and that Huntsman Corporation will spend approximately $6
million per year, under these agreements.
Services Contracts
In order to operate the PO business, we have entered into a series of
contracts with Huntsman Corporation that expire in 2012 under which Huntsman
Corporation operates and maintains the PO facility, including the provision of
management, personnel, transportation, information systems, accounting, tax and
legal services, and research and development to our PO business. Generally,
under these agreements, we pay Huntsman Corporation an amount equal to its
actual costs for providing us with each of these services plus, in some cases,
an additional fee. Based on current market prices, we anticipate that we will
spend approximately $38 million per year under these agreements.
Petrochemicals Business
Naphtha Supply Agreement
We will enter into a product supply agreement with ICI, which will require
ICI to supply and us to buy the entire naphtha output (up to 2.98 billion
pounds per year) of the Phillips Imperial Petroleum Limited refinery at
Teesside and specified amounts of other feedstock available to ICI from
operations at Teesside. This naphtha supply agreement will continue until ICI
is no longer a shareholder in Phillips Imperial Petroleum Limited or until the
refinery is permanently shut down. We will purchase these products on terms and
conditions which reflect market prices.
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<PAGE>
Supply Contracts
We intend to enter into one or more agreements with ICI for the supply of
ethylene to ICI and the supply of hydrogen to and from ICI. We expect the terms
and conditions of these agreements to be substantially the same as agreements
or non-contractual arrangements existing prior to the closing of the transfer
of ICI's businesses to us, which generally reflect market prices.
Utilities Contracts
We intend to enter into one or more agreements with ICI relating to the
provision of certain utilities, including steam, fuel gas, potable water,
electricity, water and compressed air by us to ICI. We will also enter into
reciprocal agreements relating to the supply by ICI to us of certain utilities.
We expect the terms and conditions of these agreements to be substantially the
same as agreements or non-contractual arrangements existing prior to the
closing of the transfer of ICI's businesses to us, which generally reflect
market prices or prices based upon cost plus a reasonable fee.
Services Contracts
We expect to enter into several agreements with ICI relating to a wide
range of operational services both to and from ICI, primarily at Teesside.
These operational services will include the operation and maintenance of
various infrastructure, effluent disposal, storage, jetty, and distribution
assets. We expect the terms and conditions of these agreements to be
substantially the same as agreements or non-contractual arrangements existing
prior to the closing of the transfer of ICI's businesses to us, which generally
reflect market prices or prices based upon cost plus a reasonable fee.
In addition, we expect to enter into agreements relating to the provision
by ICI to us of a range of support services for the efficient transition of the
change of business ownership. These services may include various human
resources, occupational health, analytical, engineering or purchasing services.
We expect the terms and conditions of these agreements to be substantially the
same as agreements or non-contractual arrangements existing prior to the
closing of the transfer of ICI's businesses to us, which generally reflect
market prices or prices based on cost plus a reasonable fee.
Tioxide Business
Supply Agreement with ICI Paints
We have extended an existing agreement with the paints business of ICI to
supply TiO\\2\\. At the current level of commitment, we supply approximately
60,000 tonnes of TiO\\2\\ per year at market prices. The extended agreement
expires no earlier than June 30, 2001 upon at least twelve months' notice. In
addition, we have entered into a separate agreement to supply ICI with further
quantities of TiO\\2\\ up to a maximum amount of 15,000 tonnes per year at
market prices. Based on current market prices, we anticipate that ICI will
spend approximately $100 million per year under these agreements.
Feedstock Supply Contracts
We have entered into several agreements with ICI for the supply of sulphur
and sulphuric acid to us, and we intend to enter into one or more agreements
with ICI for the supply of caustic soda and chlorine to us. We have also
entered into reciprocal agreements with ICI relating to the supply of certain
products to ICI, including sodium hypochlorite. The terms and conditions of
these new agreements with ICI are, and we expect the terms and conditions of
the proposed agreements with ICI to be, substantially the same as agreements or
non-contractual arrangements existing prior to the closing of the transfer of
ICI's businesses to us, which generally reflect market prices. The
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agreements with ICI into which we have already entered have terms of years
and, based on current market prices, we anticipate that we will spend
approximately million per year, and that ICI will spend approximately
million per year, under these existing agreements.
Utilities Contracts
We intend to enter into one or more agreements with ICI relating to the
supply of certain utilities including steam, water and electricity by ICI to us
at Billingham. We also expect to enter into reciprocal agreements relating to
the provision of certain utilities by us to ICI. We expect that the terms and
conditions of these agreements to be substantially the same as agreements or
non-contractual arrangements existing prior to the closing of the transfer of
ICI's businesses to us, which generally reflect market prices or prices based
upon cost plus a reasonable fee.
Services Contracts
We intend to enter into one or more agreements with ICI relating to a wide
range of operational services both to and from ICI. These operational services
will include the operation and maintenance of various infrastructure, effluent
disposal, storage and distribution assets. We expect the terms and conditions
of these agreements to be substantially the same as agreements or non-
contractual arrangements existing prior to the closing of the transfer of ICI's
businesses to us, which generally reflect market prices or prices based upon
cost plus a reasonable fee.
In addition, we intend to enter into agreements relating to the provision
by ICI to us of a range of support services for the efficient transition of
business ownership. These services may include various human resources,
occupational health, analytical, engineering or purchasing services. We expect
the terms and conditions of these agreements to be substantially the same as
agreements or non-contractual arrangements existing prior to the closing of the
transfer of ICI's businesses to us, which generally reflect market prices or
prices based upon cost plus a reasonable fee.
Continuing Arrangements Not Yet Entered Into
Under the contribution agreement, until we are able to agree upon the terms
of the product, supply or utilities agreements described above:
. with respect to (1) the existing supply of any product or utility, or
(2) the supply of any existing service which is material to the
continuing operation of our or ICI's business after closing, we or ICI
may, if we fail to agree on the relevant terms before January 1, 2000,
refer the matter for dispute resolution. Until resolution, the provider
of products, utilities or services will provide the relevant product,
utility or service until June 30, 2001, with the option to terminate
with twelve months' notice at any time after closing. A further twelve
month extension is possible in limited circumstances; and
. with respect to all other existing provisions of product, utilities and
services, we or ICI may, if we fail to agree on the relevant terms
before October 1, 1999, refer the matter for dispute resolution. Until
resolution, the provider of products, utilities or services will
provide the relevant product, utility or service until June 30, 2000,
with the option to terminate with three months' notice at any time
after closing. A further six month extension is possible in limited
circumstances.
If we are unable to agree on the pricing of any product, utility or service
for the period from June 30, 1999 until December 31, 1999, it will be supplied
at the price prevailing at December 31, 1998. For the subsequent twelve month
period an arms-length market price is to be agreed upon, with a price review to
be conducted after each successive twelve month period.
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Tax Sharing Arrangement
Pursuant to our Limited Liability Company Agreement and the Limited
Liability Company Agreement of Huntsman ICI Holdings, we have a tax sharing
arrangement with all of our and Huntsman ICI Holdings' common equity holders.
Under the arrangement, because we are treated as a partnership for U.S. income
tax purposes, we will make quarterly payments (with appropriate annual
adjustments) to our parent, Huntsman ICI Holdings, which will in turn make
payments to its common equity holders, in an amount equal to the U.S. federal
and state income taxes we and Huntsman ICI Holdings would have paid had
Huntsman ICI Holdings been a consolidated or unitary group for federal tax
purposes. The arrangement also provides that we will receive cash payments from
the common equity holders (through Huntsman ICI Holdings) in amounts equal to
the amount of U.S. federal and state income tax refunds or benefit against
future tax liabilities equal to the amount we would have received from the use
of net operating losses or tax credits generated by us.
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DESCRIPTION OF CREDIT FACILITIES
Senior Credit Facilities. In order to fund the closing of the transfer of
ICI's and Huntsman Specialty's businesses to us, we borrowed funds under a
senior secured credit agreement (the "Credit Agreement") with Bankers Trust
Company, as Administrative Agent, Goldman Sachs Credit Partners L.P., The Chase
Manhattan Bank and Warburg Dillon Read LLC, and a group of lenders (the
"Lenders"). Under the Credit Agreement, the Lenders have provided an aggregate
of $2.07 billion of senior secured credit facilities (the "Senior Secured
Credit Facilities"), comprised of:
. a $400 million revolving loan facility,
. a $240 million term A loan facility,
. a $300 million term A loan facility in the euro equivalent of $300
million,
. a $565 million term B loan facility, and
. a $565 million term C loan facility.
In addition, a letter of credit facility of $75 million and a swing line
loan facility of $25 million are available to us as subfacilities under the
revolving loan facility. At the close of business on June 30, 1999, we borrowed
$1.67 billion under the Senior Secured Credit Facilities. The revolving loan
facility is available to us for working capital and general corporate purposes.
Our obligations under the Senior Secured Credit Facilities are supported by
guarantees of Huntsman ICI Holdings LLC, which is our direct parent, our
domestic subsidiaries (other than unrestricted subsidiaries under the Credit
Agreement) and of Tioxide Group and Tioxide Americas Inc., both of which are
non-U.S. subsidiaries that are disregarded as entities for U.S. tax purposes.
We have secured our obligations under the Senior Secured Credit Facilities with
the pledge of substantially all of our assets, including the stock of our
domestic subsidiaries and of Tioxide Group. Our obligations under the Senior
Secured Credit Facilities are also secured by the pledge by Huntsman ICI
Holdings LLC of its membership interests in us, the pledge by the domestic
subsidiary guarantors of their assets, the pledge by Tioxide Group of 65% of
the voting stock of Huntsman ICI (Holdings) U.K. and the pledge by Tioxide
Americas Inc. of its assets, in each case, with specified exceptions. The
Senior Secured Credit Facilities also require that certain intercompany notes
by foreign subsidiaries in favor of Huntsman ICI (Holdings) U.K. be secured.
Both the term A dollar loan facility and the term A euro loan facility
mature on June 30, 2005 and are payable in semi-annual installments commencing
December 31, 2000 with the amortization increasing over time. The term B loan
facility matures on June 30, 2007 and is payable in annual installments of
$5,650,000 commencing June 30, 2000 with the remaining unpaid balance due on
final maturity. The term C loan facility matures on June 30, 2008 and is
payable in annual installments of $5,650,000 commencing June 30, 2000 with the
remaining unpaid balance due on final maturity. The revolving loan facilities
mature on June 30, 2005 with no scheduled commitment reductions.
Interest rates for the Senior Secured Credit Facilities are based upon, at
our option, either the applicable eurocurrency rate (for dollars or euros, as
applicable) adjusted for reserves or the applicable base rate. The applicable
spreads vary based on a pricing grid, in the case of adjusted eurocurrency
based loans, from 1.25% to 3.50% per annum depending on the loan facility and
whether specified conditions have been satisfied and, in the case of the
applicable base rate based loans, from 0.25% to 2.25% per annum.
The Senior Secured Credit Facilities require mandatory prepayments in
specified circumstances involving the incurrence of indebtedness, asset
dispositions where the net cash proceeds are not
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reinvested in additional assets, a specified percentage of excess cash flow,
specified capital stock offerings, additional specified subordinated
indebtedness and specified purchase price adjustments under the contribution
agreement.
The Senior Secured Credit Facilities contain representations and
warranties, affirmative covenants, financial covenants, negative covenants and
events of default that are usual and customary for facilities similar to the
Senior Secured Credit Facilities. The negative covenants include restrictions,
among others, on the incurrence of indebtedness and liens, dividends and other
distributions, consolidations and mergers, the purchase and sale of assets,
issuance of stock, loans and investments, voluntary payments and modifications
of indebtedness, and affiliate transactions. The financial covenants require us
to maintain financial ratios, including a leverage ratio and an interest
coverage ratio, and minimum consolidated net worth and require us to limit the
amount of our capital expenditures.
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DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions". In this description, the word
"Huntsman ICI Chemicals" refers only to Huntsman ICI Chemicals LLC and not to
any of its subsidiaries.
The terms of the notes to be issued in the exchange offer are identical in
all material respects to the terms of the outstanding notes, except for the
transfer restrictions relating to the outstanding notes. Any outstanding notes
that remain outstanding after the exchange offer, together with notes issued in
the exchange offer, will be treated as a single class of securities under the
indenture for voting purposes. When we refer to the term "note" or "notes", we
are referring to both the outstanding notes and the notes to be issued in the
exchange offer. When we refer to "holders" of the notes, we are referring to
those persons who are the registered holders of notes on the books of the
registrar appointed under the indenture.
The notes were issued under an indenture, dated June 30, 1999, among
Huntsman ICI Chemicals, the Guarantors and Bank One, N.A., as trustee, in a
private transaction that was not subject to the registration requirements of
the Securities Act. See "Notice to Investors." 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 amended (the "Trust Indenture Act").
The following description is a summary of the material provisions of the
indenture and the registration rights agreement dated June 30, 1999. It does
not restate those agreements in their entirety. We urge you to read the
indenture and the registration rights agreement because they, and not this
description, define your rights as holders of these notes. A copy of the
indenture and registration rights agreement has been filed as an exhibit to the
registration statement which includes this prospectus and is available to you
upon request. See "Where You Can Find More Information".
Brief Description of the Notes and the Guarantees
The Notes
The notes are:
. general unsecured senior subordinated obligations of Huntsman ICI
Chemicals;
. subordinated in right of payment to all existing and future Senior Debt
of Huntsman ICI Chemicals and to all liabilities (including trade
payables) of Huntsman ICI Chemicals's subsidiaries which are not
Guarantors (except to the extent of indebtedness owed to Huntsman ICI
Chemicals or Guarantors);
. equal in right of payment to all existing and senior subordinated
Indebtedness of Huntsman ICI Chemicals;
. senior in right of payment to any subordinated Indebtedness of Huntsman
ICI Chemicals; and
. unconditionally guaranteed by the Guarantors on a senior subordinated
basis.
The Guarantees
As of the date of this prospectus, Tioxide Group, Tioxide Americas Inc. and
Huntsman ICI Financial LLC (the "Guarantors") are our only subsidiaries that
guarantee Huntsman ICI Chemicals's obligations under these notes. The
obligations of the Guarantors under their guarantees are limited as necessary
to minimize the risk that such guarantees would constitute a fraudulent
conveyance
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under applicable law. See "Risk Factors--The Notes and Guarantees may be void,
avoided or subordinated under laws governing fraudulent transfers, insolvency
and financial assistance."
The guarantees of the notes:
. are general unsecured senior subordinated obligations of the
Guarantors;
. are effectively subordinated in right of payment to all existing and
future Senior Debt of the Guarantors,
. are equal in right of payment to all existing and future senior
subordinated Indebtedness of the Guarantors, and
. are senior in right of payment to any subordinated Indebtedness of the
Guarantors.
Assuming we had completed the offering of these notes and applied the net
proceeds as intended, as of December 31,1998, Huntsman ICI Chemicals and the
Guarantors would have had $1,686 million of Senior Debt outstanding, and
Huntsman ICI Chemicals's subsidiaries which are not Guarantors would have had
approximately $13 million of Indebtedness outstanding.
Tioxide Group, Tioxide America Inc. and Huntsman ICI Financial LLC were
incorporated on July 26, 1930, August 11, 1971, and May 19, 1999, respectively.
The address of each of the Guarantors is: c/o Huntsman ICI Chemicals LLC, 500
Huntsman Way, Salt Lake City, Utah 84108.
As of the date of this prospectus, all the subsidiaries of Huntsman ICI
Chemicals are "Restricted Subsidiaries." However, under certain circumstances
we will be permitted to designate certain of our subsidiaries as "Unrestricted
Subsidiaries." Unrestricted Subsidiaries will not be subject to the restrictive
covenants in the indenture.
We and our Domestic Subsidiaries will make investments in our Foreign
Subsidiaries either directly or by advancing funds to Huntsman ICI Financial
LLC or Tioxide Group, each of whom will in turn advance the funds to the
Foreign Subsidiaries, either as a capital contribution or as an intercompany
loan. At July 1, 1999, Huntsman ICI Financial held approximately $1.3 billion
of unsecured indebtedness from our Foreign Subsidiaries. In addition, Huntsman
ICI Holdings (UK) ("Holdings U.K."), a direct wholly owned Restricted
Subsidiary of Tioxide Group, held approximately $700 million of secured
Indebtedness from our Foreign Subsidiaries. However, in the event of a
bankruptcy, liquidation or reorganization of a Foreign Subsidiary, there can be
no assurance that the intercompany loans it owes to Holdings U.K. or Tioxide
Group will not be declared unenforceable, equitably subordinated to other
obligations of such Foreign Subsidiary or recharacterized as equity. In such an
event, creditors of such Foreign Subsidiary will have a prior claim to all
assets of such Foreign Subsidiary.
Subordination
The payment of principal, premium and interest, if any, on these notes is
subordinated to the prior payment in full in cash of all Senior Debt of
Huntsman ICI Chemicals.
The holders of Senior Debt are entitled to receive payment in full in cash
of Obligations due in respect of Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt) before the holders of notes are entitled to receive any payment
with respect to the notes (except that holders of notes may receive and retain
Permitted Junior Securities and payments made from the trust described under
"--Legal Defeasance and Covenant Defeasance"), in the event of any distribution
to creditors of Huntsman ICI Chemicals:
(1) in a liquidation or dissolution of Huntsman ICI Chemicals;
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(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Huntsman ICI Chemicals or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of Huntsman ICI Chemicals' assets and liabilities.
Huntsman ICI Chemicals also may not make any payment in respect of the
notes (except in Permitted Junior Securities or from the trust described under
"--Legal Defeasance and Covenant Defeasance") if:
(1) a payment default on Designated Senior Debt occurs and is continuing
beyond any applicable grace period; or
(2) any other default occurs and is continuing on Designated Senior Debt
that permits holders of the Designated Senior Debt to accelerate its
maturity and the trustee receives a notice of such default (a "Payment
Blockage Notice") from Huntsman ICI Chemicals or the holders of any
Designated Senior Debt.
Payments on the notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default
is cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 180 days.
Huntsman ICI Chemicals must promptly notify holders of Senior Debt if
payment of the notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of Huntsman ICI Chemicals,
holders of these notes may recover less ratably than creditors of Huntsman ICI
Chemicals who are holders of Senior Debt. See "Risk Factors--The notes are
subordinated to senior debt".
Principal, Maturity and Interest of Notes
The notes denominated in dollars are limited in aggregate principal amount
to $600,000,000 and were issued by Huntsman ICI Chemicals in denominations of
$1,000 and integral multiples of $1,000. The notes denominated in euros are
limited in aggregate principal amount to (Euro)200,000,000 and were issued by
Huntsman ICI Chemicals in denominations of (Euro)1,000 and integral multiples
of (Euro)1,000. The notes will mature on July 1, 2009 at the principal amount,
plus accrued and unpaid interest to the maturity date.
Interest on the notes will accrue at the rate of 10.125% per annum and will
be payable semi-annually in arrears on January 1 and July 1, commencing on
January 1, 2000. Huntsman ICI
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Chemicals will make each interest payment to the holders of record of the notes
on the immediately preceding December 15 and June 15.
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
Optional Redemption
At any time prior to July 1, 2002, Huntsman ICI Chemicals may on any one or
more occasions redeem up to 35% of the aggregate principal amount of the notes
denominated in dollars and/or notes denominated in euros originally issued, at
a redemption price of 110.125% of the principal amount thereof, plus accrued
and unpaid interest to the redemption date, with the net cash proceeds of one
or more Equity Offerings; provided that
(1) at least 65% of the aggregate principal amount of each of the notes
denominated in dollars and notes denominated in euros originally
issued remains outstanding immediately after the occurrence of such
redemption (excluding notes held by Huntsman ICI Chemicals and its
subsidiaries); and
(2) the redemption must occur within 120 days of the date of the closing
of such Equity Offering.
Notice of any such redemption must be given within 90 days after the date
of such Equity Offering. Huntsman ICI Chemicals will publish a copy of such
notice in accordance with the procedures described under "--Notices".
As used in the preceding paragraph, "Equity Offering" means any sale of
Qualified Capital Stock of Huntsman ICI Chemicals or any capital contribution
to the equity of Huntsman ICI Chemicals.
At any time on or prior to July 1, 2004, the notes may be redeemed, in
whole or in part, at the option of Huntsman ICI Chemicals, upon not less than
30 nor more than 60 days' notice, at a redemption price (the "Make-Whole
Price") equal to the greater of (1) 100% of the principal amount thereof or (2)
as determined by an Independent Investment Banker, the present value of (A) the
redemption price of such notes at July 1, 2004 (as set forth below) plus (B)
all required interest payments due on such notes through July 1, 2004
(excluding accrued interest), discounted to the redemption date on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at, in the
case of the notes denominated in dollars, the Adjusted Treasury Rate, and, in
the case of notes denominated in euros, the Adjusted Bund Rate, plus in each
case accrued interest to the redemption date.
"Adjusted Bund Rate" means with respect to any redemption date, the mid-
market yield, under the heading which represents the average for the
immediately prior week, appearing on Reuters page AABBUND01, or its successor,
for the maturity corresponding to July 1, 2009 (if no maturity date is within
three months before or after July 1, 2009, yields for the two published
maturities most closely corresponding to July 1, 2009 shall be determined and
the Bund yield shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month), plus 0.50%. The Bund Rate
shall be calculated on the third Business Day preceding such redemption date.
"Adjusted Treasury Rate" means with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a
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price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date, plus 0.50%.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of the notes.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the trustee obtains fewer than three such Reference Treasury Dealer Quotations,
the average of all such Quotations.
"Independent Investment Banker" means any Reference Treasury Dealer
appointed by the trustee after consultation with Huntsman ICI Chemicals.
"Reference Treasury Dealer" means each of Goldman, Sachs & Co., Deutsche
Bank Securities Inc., Chase Securities Inc. and Warburg Dillon Read LLC and
their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), Huntsman ICI Chemicals shall substitute therefor
another Reference Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average as determined by
the trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
After July 1, 2004, Huntsman ICI Chemicals may redeem all or a part of the
notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon, if any, to the applicable redemption date,
if redeemed during the twelve-month period beginning on July 1 of the years
indicated below:
<TABLE>
<CAPTION>
Redemption Redemption
price of notes price of notes
Year denominated in dollars denominated in euros
---- ---------------------- --------------------
<S> <C> <C>
2004............................. 105.063% 105.063%
2005............................. 103.375% 103.375%
2006............................. 101.688% 101.688%
2007 and thereafter.............. 100.000% 100.000%
</TABLE>
Huntsman ICI Chemicals will publish a redemption notice in accordance with
the procedures described under "--Notices".
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Repurchase at the Option of Holders upon Change of Control
If a Change of Control occurs, each holder of notes will have the right to
require Huntsman ICI Chemicals to repurchase all or any part (equal to $1,000
or (Euro)1,000, as the case may be, or an integral multiple thereof) of that
holder's notes pursuant to the Change of Control Offer. In the Change of
Control Offer, Huntsman ICI Chemicals will offer a Change of Control Payment
in cash equal to 101% of the aggregate principal amount of notes repurchased
plus accrued and unpaid interest thereon, if any, to the date of purchase.
Within 30 days following any Change of Control, Huntsman ICI Chemicals will
mail a notice to each holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase notes on the
Change of Control Payment Date (as defined below) specified in such notice,
pursuant to the procedures required by the indenture and described in such
notice. Huntsman ICI Chemicals will also publish a notice of the offer
repurchase in accordance with the procedures described under "--Notices".
Huntsman ICI Chemicals will comply with the requirements of Rule 14e-1 under
the Exchange Act (or any successor rules) and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable
in connection with the repurchase of the notes as a result of a Change of
Control.
On the Change of Control Payment Date, Huntsman ICI Chemicals will, to the
extent lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Principal Paying Agent an amount equal to the Change
of Control Payment in respect of all notes or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the trustee the notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions thereof being purchased by Huntsman ICI
Chemicals.
The Principal Paying Agent will promptly mail to each holder of notes so
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered, if any; provided that each such new note will be in the
same currency as the tendered note and in a principal amount of $1,000 or
(Euro)1,000, as the case may be, or an integral multiple thereof.
The provisions described above that require Huntsman ICI Chemicals to make
a Change of Control Offer following a Change of Control are applicable
regardless of whether or not any other provisions of the indenture are
applicable. Except as described above with respect to a Change of Control, the
indenture does not contain provisions that permit the holders of the notes to
require that Huntsman ICI Chemicals repurchase or redeem the notes in the
event of a takeover, recapitalization or similar transaction.
Huntsman ICI Chemicals is required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the indenture applicable to a Change of Control Offer made by
Huntsman ICI Chemicals and purchases all notes validly tendered and not
withdrawn under such Change of Control Offer.
The definition of "Change of Control" includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the assets of Huntsman ICI Chemicals and its
subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
holder of notes to require Huntsman ICI Chemicals to repurchase
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such notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of Huntsman ICI Chemicals and its
subsidiaries taken as a whole to another Person or group may be uncertain.
The indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control,
Huntsman ICI Chemicals covenants to:
. repay in full and terminate all commitments under Indebtedness under
the Credit Facilities and all other Senior Debt the terms of which
require repayment upon a Change of Control or offer to repay in full
and terminate all commitments under all Indebtedness under the Credit
Facilities and all other such Senior Debt and to repay the Indebtedness
owed to each lender which has accepted such offer or
. obtain the requisite consents under the Credit Facilities and all other
Senior Debt to permit the repurchase of the notes as provided below.
Huntsman ICI Chemicals shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase notes
pursuant to the provisions described below. Huntsman ICI Chemicals's failure to
comply with the covenant described in the immediately preceding sentence shall
constitute an Event of Default described in clause (3) and not in clause (2)
under "Events of Default" below.
Within 30 days following the date upon which the Change of Control
occurred, Huntsman ICI Chemicals must send, by first class mail, a notice to
each holder of notes, with a copy to the trustee, which notice shall govern the
terms of the Change of Control Offer. Such notice shall state, among other
things, the purchase date, which must be no earlier than 30 days nor later than
60 days from the date such notice is mailed, other than as may be required by
law (the "Change of Control Payment Date"). Huntsman ICI Chemicals will also
publish a notice of the offer to repurchase in accordance with the procedures
described under "--Notices". 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 third business day prior to the Change of Control
Payment Date.
Huntsman ICI Chemicals will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the indenture, Huntsman ICI Chemicals shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the "Change of Control" provisions of the
indenture by virtue thereof.
Selection and Notice
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:
. if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed;
or
. if the notes are not so listed, on a pro rata basis, by lot or by such
method as the trustee shall deem fair and appropriate.
No notes of $1,000 or (Euro)1,000, as the case may be, or less shall be
redeemed in part. Notices of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before
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the redemption date to each holder of notes to be redeemed at its registered
address. Huntsman ICI Chemicals will also publish a notice of redemption in
accordance with the procedures described under "--Notices".
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the holder thereof upon
cancellation of the original note. Notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.
Certain Covenants
Set forth below are summaries of certain covenants contained in the
indenture.
Limitation on Incurrence of Additional Indebtedness. Huntsman ICI Chemicals
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, Huntsman ICI Chemicals and its Restricted
Subsidiaries which are Guarantors may incur Indebtedness (including, without
limitation, Acquired Indebtedness), and Restricted Subsidiaries which are not
Guarantors may incur Acquired Indebtedness, in each case if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
the Consolidated Fixed Charge Coverage Ratio of Huntsman ICI Chemicals is
greater than 2.0 to 1.0.
Limitation on Restricted Payments. Huntsman ICI Chemicals will not, and
will not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, (1) declare or pay any dividend or make any distribution (other
than dividends or distributions payable in Qualified Capital Stock of Huntsman
ICI Chemicals) on or in respect of shares of Huntsman ICI Chemicals's Capital
Stock to holders of such Capital Stock, (2) purchase, redeem or otherwise
acquire or retire for value any Capital Stock of Huntsman ICI Chemicals or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (3) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness of Huntsman ICI Chemicals that is subordinate or
junior in right of payment to the notes or (4) make any Investment (other than
Permitted Investments) (each of the foregoing actions set forth in clauses (1),
(2), (3) and (4) being referred to as a "Restricted Payment"), if at the time
of such Restricted Payment or immediately after giving effect thereto, (A) a
Default or an Event of Default shall have occurred and be continuing or (B)
Huntsman ICI Chemicals is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant or (C) the
aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to June 30, 1999 (the amount expended for such
purposes, if other than in cash, being the fair market value of such property
as determined reasonably and in good faith by the Board of Managers of Huntsman
ICI Chemicals) shall exceed the sum of: (x) 50% of the cumulative Consolidated
Net Income (or if cumulative Consolidated Net Income shall be a loss, minus
100% of such loss) of Huntsman ICI Chemicals earned from June 30, 1999 through
the last day of the last full fiscal quarter immediately preceding the date the
Restricted Payment occurs (the "Reference Date") (treating such period as a
single accounting period); plus (y) 100% of the aggregate net cash proceeds
received by Huntsman ICI Chemicals from any Person (other than a subsidiary of
Huntsman ICI Chemicals) from the
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issuance and sale subsequent to June 30, 1999 and on or prior to the Reference
Date of Qualified Capital Stock of Huntsman ICI Chemicals (other than Specified
Venture Capital Stock); plus (z) without duplication of any amounts included in
clause (C)(y) above, 100% of the aggregate net cash proceeds of any equity
contribution received by Huntsman ICI Chemicals from a holder of Huntsman ICI
Chemicals' Capital Stock.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of such dividend if the dividend would have been permitted
on the date of declaration;
(2) the acquisition of any shares of Capital Stock of Huntsman ICI
Chemicals, either (A) solely in exchange for shares of Qualified
Capital Stock of Huntsman ICI Chemicals or (B) if no Default or Event
of Default shall have occurred and be continuing, through the
application of net proceeds of a substantially concurrent sale for
cash (other than to a subsidiary of Huntsman ICI Chemicals) of shares
of Qualified Capital Stock of Huntsman ICI Chemicals;
(3) the acquisition of any Indebtedness of Huntsman ICI Chemicals that is
subordinate or junior in right of payment to the notes either (A)
solely in exchange for shares of Qualified Capital Stock of Huntsman
ICI Chemicals, or (B) if no Default or Event of Default shall have
occurred and be continuing, through the application of net proceeds of
a substantially concurrent sale or incurrence for cash (other than to
a subsidiary of Huntsman ICI Chemicals) of (x) shares of Qualified
Capital Stock of Huntsman ICI Chemicals or (y) Refinancing
Indebtedness;
(4) so long as no Default or Event of Default shall have occurred and be
continuing, repurchases by Huntsman ICI Chemicals of, or dividends to
Huntsman ICI Holdings to permit repurchases by Huntsman ICI Holdings
of, Common Stock of Huntsman ICI Chemicals or Huntsman ICI Holdings
from employees of Huntsman ICI Chemicals or any of its subsidiaries or
their authorized representatives upon the death, disability or
termination of employment of such employees, in an aggregate amount
not to exceed $4 million in any calendar year;
(5) the redemption or repurchase of any Common Stock of Huntsman ICI
Chemicals held by a Restricted Subsidiary of Huntsman ICI Chemicals
which obtained such Common Stock directly from Huntsman ICI Chemicals;
(6) distributions to the members of Huntsman ICI Chemicals in accordance
with the Tax Sharing Agreement;
(7) payments to Huntsman ICI Holdings for legal, audit, and other expenses
directly relating to the administration of Huntsman ICI Holdings
(including fees and expenses relating to the Huntsman ICI Holdings
Zero Coupon Notes) which when aggregated with loans made to Huntsman
ICI Holdings in accordance with clause (xvii) under the definition of
"Permitted Investments", will not exceed $3.0 million in any fiscal
year;
(8) the payment of consideration by a third party to equity holders of
Huntsman ICI Chemicals;
(9) additional Restricted Payments in an aggregate amount not to exceed
$10 million since June 30, 1999;
(10) payments of dividends on Disqualified Capital Stock issued in
accordance with "Limitation on Incurrence of Additional Indebtedness"
above and
(11) distributions and Investments in connection with our transaction with
ICI and Huntsman Specialty and the financing thereof.
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In determining the aggregate amount of Restricted Payments made subsequent to
June 30, 1999 in accordance with clause (C) of the immediately preceding
paragraph, cash amounts expended pursuant to clauses (A), (B), and (D) shall be
included in such calculation.
Not later than the date of making any Restricted Payment pursuant to clause
(C) of the second preceding paragraph or clause (9) of the immediately
preceding paragraph, Huntsman ICI Chemicals shall deliver to the trustee an
officers' certificate stating that such Restricted Payment complies with the
indenture and setting forth in reasonable detail the basis upon which the
required calculations were computed, which calculations may be based upon
Huntsman ICI Chemicals' quarterly financial statements last provided to the
trustee pursuant to "--Reports to Holders".
Limitation on Asset Sales. Huntsman ICI Chemicals will not, and will not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless
(1) Huntsman ICI Chemicals or the applicable Restricted Subsidiary, as the case
may be, receives consideration 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 Huntsman ICI Chemicals' Board of Managers), (2) at
least 75% of the consideration received by Huntsman ICI Chemicals or the
Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the
form of cash or Cash Equivalents (provided that the amount of any liabilities
(as shown on the most recent applicable balance sheet) of Huntsman ICI
Chemicals or any such Restricted Subsidiary (other than liabilities that are by
their terms subordinated to the notes) that are assumed by the transferee of
any such assets shall be deemed to be cash for purposes of this provision) and
is received at the time of such disposition; and (3) upon the consummation of
an Asset Sale, Huntsman ICI Chemicals shall apply, or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within
365 days of receipt thereof either (A) to prepay any Senior Debt, Guarantor
Senior Debt or Indebtedness of a Restricted Subsidiary that is not a Guarantor
and, in the case of any such Indebtedness under any revolving credit facility,
effect a permanent reduction in the availability under such revolving credit
facility, (B) to either (x) make an investment in or expenditures for
properties and assets (including Capital Stock of any entity) that replace the
properties and assets that were the subject of such Asset Sale or in properties
and assets (including Capital Stock of any entity) that will be used in the
business of Huntsman ICI Chemicals and its subsidiaries as existing on June 30,
1999 or in businesses reasonably related thereto ("Replacement Assets") or (y)
the acquisition of all of the capital stock or assets of any Person or division
conducting a business reasonably related to that of Huntsman ICI Chemicals or
its subsidiaries; provided that Net Cash Proceeds in excess of $30 million in
the aggregate since June 30, 1999 from Asset Sales involving assets of Huntsman
ICI Chemicals or a Guarantor (other than the Capital Stock of a Foreign
Subsidiary) shall only be reinvested in (x) assets which will be owned by
Huntsman ICI Chemicals or a Guarantor and not constituting an Investment or (y)
in the capital stock of a Person that becomes a Guarantor, or (C) a combination
of prepayment and investment permitted by the foregoing clauses (3)(A) or
(3)(B). On the 366th day after an Asset Sale or such earlier date, if any, as
the Board of Managers of Huntsman ICI Chemicals or board of directors of such
Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to
such Asset Sale as set forth in clauses (3)(A), (3)(B) or (3)(C) of the next
preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate
amount of Net Cash Proceeds which have not been applied on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (3)(A), (3)(B) and (3)(C)
of the next preceding sentence (each a "Net Proceeds Offer Amount") shall be
applied by Huntsman ICI Chemicals or such Restricted Subsidiary to make an
offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer
Payment Date") not less than 30 nor more than 45 days following the applicable
Net Proceeds Offer Trigger Date, from all holders of notes and all holders of
other indebtedness that is pari passu with the notes containing provisions
requiring offers to purchase with the proceeds of sales of assets, on a pro
rata basis, that amount of notes equal to the Net Proceeds Offer Amount at a
price equal to 100% of the principal amount of the notes to be purchased, plus
accrued and unpaid interest thereon, if any, to
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the date of purchase; provided, however, that if at any time any non-cash
consideration received by Huntsman ICI Chemicals or any Restricted Subsidiary
of Huntsman ICI Chemicals, as the case may be, in connection with any Asset
Sale is converted into or sold or otherwise disposed of for cash (other than
interest received with respect to any such non-cash consideration), then such
conversion or disposition shall be deemed to constitute an Asset Sale hereunder
and the Net Cash Proceeds thereof shall be applied in accordance with this
covenant. Huntsman ICI Chemicals shall not be required to make a Net Proceeds
Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to
or in excess of $30 million resulting from one or more Asset Sales, at which
time, the unutilized Net Proceeds Offer Amount, shall be applied as required
pursuant to this paragraph, provided, however, that the first $30 million of
Net Proceeds Offer Amount need not be applied as required pursuant to this
paragraph.
In the event of the transfer of substantially all (but not all) of the
property and assets of Huntsman ICI Chemicals and its Restricted Subsidiaries
as an entirety to a Person in a transaction permitted under "--Merger,
Consolidation and Sale of Assets," and as a result thereof Huntsman ICI
Chemicals is no longer an obligor on the notes, the successor corporation shall
be deemed to have sold the properties and assets of Huntsman ICI Chemicals and
its Restricted Subsidiaries not so transferred for purposes of this covenant,
and shall comply with the provisions of this covenant with respect to such
deemed sale as if it were an Asset Sale. In addition, the fair market value of
such properties and assets of Huntsman ICI Chemicals or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this covenant.
Notwithstanding the two immediately preceding paragraphs, Huntsman ICI
Chemicals and its Restricted Subsidiaries will be permitted to consummate an
Asset Sale without complying with such paragraphs to the extent (1) at least
80% of the consideration for such Asset Sale constitutes Replacement Assets and
(2) such Asset Sale is for fair market value; provided that any consideration
not constituting Replacement Assets received by Huntsman ICI Chemicals or any
of its Restricted Subsidiaries in connection with any Asset Sale permitted to
be consummated under this paragraph shall constitute Net Cash Proceeds subject
to the provisions of the two preceding paragraphs.
Each Net Proceeds Offer will be mailed to the record holders as shown on
the register of holders within 30 days following the Net Proceeds Offer Trigger
Date, with a copy to the trustee, and shall comply with the procedures set
forth in the indenture. Upon receiving notice of the Net Proceeds Offer,
holders may elect to tender their notes in whole or in part in integral
multiples of $1,000 or (Euro)1,000, as the case may be, in exchange for cash.
To the extent holders properly tender notes in an amount exceeding the Net
Proceeds Offer Amount, notes of tendering holders will be purchased on a pro
rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open
for a period of 20 business days or such longer period as may be required by
law.
Huntsman ICI Chemicals will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Limitation
on Asset Sale" provisions of the indenture, Huntsman ICI Chemicals shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the "Limitation on Asset Sale" provisions
of the indenture by virtue thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. Huntsman ICI Chemicals will not, and will not cause or permit
any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary of
Huntsman ICI Chemicals to (A) pay dividends or make any other distributions on
or in respect of its Capital Stock; (B) make
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loans or advances or to pay any Indebtedness or other obligation owed to
Huntsman ICI Chemicals or any other Restricted Subsidiary of Huntsman ICI
Chemicals; or (C) transfer any of its property or assets to Huntsman ICI
Chemicals or any other Restricted Subsidiary of Huntsman ICI Chemicals, except
for such encumbrances or restrictions existing under or by reason of:
(1) applicable law;
(2) the indenture relating to these notes;
(3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of Huntsman ICI Chemicals or any
Restricted Subsidiary of Huntsman ICI Chemicals;
(4) any agreements existing at the time of acquisition of any Person or
the properties or assets of the Person so acquired (including
agreements governing Acquired Indebtedness), which encumbrance or
restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or
assets of the Person so acquired;
(5) agreements existing on June 30, 1999 to the extent and in the manner
such agreements are in effect on June 30, 1999;
(6) restrictions imposed by any agreement to sell assets or Capital Stock
permitted under the indenture to any Person pending the closing of
such sale;
(7) any agreement or instrument governing Capital Stock of any Person that
is acquired;
(8) Indebtedness or other contractual requirements of a Securitization
Entity in connection with a Qualified Securitization Transaction;
provided that such restrictions apply only to such Securitization
Entity;
(9) Liens incurred in accordance with the covenant described under "--
Limitation on Liens";
(10) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business;
(11) the Credit Facilities;
(12) any restriction under an agreement governing Indebtedness of a
Foreign Subsidiary permitted under "--Limitation on Incurrence of
Additional Indebtedness";
(13) customary restrictions in Capitalized Lease Obligations, security
agreements or mortgages securing Indebtedness of Huntsman ICI
Chemicals or a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such Capitalized
Lease Obligations, security agreements or mortgages;
(14) customary provisions in joint venture agreements and other similar
agreements (in each case relating solely to the respective joint
venture or similar entity or the equity interests therein) entered
into in the ordinary course of business;
(15) contracts entered into in the ordinary course of business, not
relating to Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of Huntsman
ICI Chemicals or any Restricted Subsidiary in any manner material to
Huntsman ICI Chemicals or any Restricted Subsidiary; and
(16) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clause (2), (4), (5), (8), (11), (12) or (13), above;
provided, however, that the provisions relating to such encumbrance or
restriction contained in any such Indebtedness are no less favorable to
Huntsman ICI Chemicals in any material respect as
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determined by the Board of Managers of Huntsman ICI Chemicals in their
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(2), (4), (5), (8), (11), (12) or (13).
Limitation on Preferred Stock of Restricted Subsidiaries. Huntsman ICI
Chemicals will not permit any of its Restricted Subsidiaries to issue any
Preferred Stock (other than to Huntsman ICI Chemicals or to a Restricted
Subsidiary of Huntsman ICI Chemicals) or permit any Person (other than Huntsman
ICI Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals) to own any
Preferred Stock of any Restricted Subsidiary of Huntsman ICI Chemicals;
provided, however, that
. Class A Shares and Class B Shares may be issued pursuant to the terms
of the Contribution Agreement;
. any Person which is not a Restricted Subsidiary of Huntsman ICI
Chemicals may issue Preferred Stock to equity holders of such Person in
exchange for equity interests if after such issuance such Person
becomes a Restricted Subsidiary and
. Tioxide Southern Africa (Pty) Limited may issue Preferred Stock to its
equity holders in exchange for its equity interests.
Limitation on Liens. Huntsman ICI Chemicals shall not, and shall not
permit any of its Restricted Subsidiaries to, create, incur or otherwise cause
or suffer to exist or become effective any Liens of any kind upon any property
or assets of Huntsman ICI Chemicals or any Restricted Subsidiary, now owned or
hereafter acquired, which secures Indebtedness pari passu with or subordinated
to the notes unless
. if such Lien secures Indebtedness which is pari passu with the notes,
then the notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligation is no longer
secured by a Lien or
. if such Lien secures Indebtedness which is subordinated to the notes,
any such Lien shall be subordinated to a Lien granted to the holders of
the notes in the same collateral as that securing such Lien to the same
extent as such subordinated Indebtedness is subordinated to the notes.
Prohibition on Incurrence of Senior Subordinated Debt. Huntsman ICI
Chemicals will not incur or suffer to exist Indebtedness that is senior in
right of payment to the notes and subordinate in right of payment to any other
Indebtedness of Huntsman ICI Chemicals.
Merger, Consolidation and Sale of Assets. Huntsman ICI Chemicals will not,
in a single transaction or series of related transactions, consolidate or merge
with or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Restricted Subsidiary of Huntsman ICI
Chemicals to sell, assign, transfer, lease, convey or otherwise dispose of) all
or substantially all of Huntsman ICI Chemicals's assets (determined on a
consolidated basis for Huntsman ICI Chemicals and Huntsman ICI Chemicals's
Restricted Subsidiaries) whether as an entirety or substantially as an entirety
to any Person unless: (A) either (1) Huntsman ICI Chemicals shall be the
surviving or continuing corporation or (2) the Person (if other than Huntsman
ICI Chemicals) formed by such consolidation or into which Huntsman ICI
Chemicals is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of Huntsman
ICI Chemicals and of Huntsman ICI Chemicals's Restricted Subsidiaries
substantially as an entirety (the "Surviving Entity") (x) shall be an entity
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (y) shall expressly assume, by
supplemental indenture (in form and substance satisfactory to the trustee),
executed and delivered to the trustee, the due and punctual payment of the
principal of, and
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premium, if any, and interest on all of the notes and the performance of every
covenant of the notes and the indenture on the part of Huntsman ICI Chemicals
to be performed or observed; (B) immediately after giving effect to such
transaction and the assumption contemplated by clause (A)(2)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred in connection with or in respect of such
transaction), Huntsman ICI Chemicals or such Surviving Entity, as the case may
be, shall be able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the "--Limitation on Incurrence of
Additional Indebtedness" covenant; (C) immediately before and immediately after
giving effect to such transaction and the assumption contemplated by clause
(A)(2)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred
and any Lien granted in connection with or in respect of the transaction), no
Default or Event of Default shall have occurred or be continuing; and (D)
Huntsman ICI Chemicals or the Surviving Entity shall have delivered to the
trustee an officers' certificate and an opinion of counsel, each stating that
such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with the applicable
provisions of the indenture and that all conditions precedent in the indenture
relating to such transaction have been satisfied.
The indenture provides that upon any consolidation, combination or merger
or any transfer of all or substantially all of the assets of Huntsman ICI
Chemicals in accordance with the foregoing, in which Huntsman ICI Chemicals is
not the continuing corporation, the successor Person formed by such
consolidation or into which Huntsman ICI Chemicals is merged or to which such
conveyance, lease or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, Huntsman ICI Chemicals under the
indenture and the notes with the same effect as if such surviving entity had
been named as such.
Each Guarantor (other than any Guarantor whose guarantee is to be released
in accordance with the terms of the guarantee and the indenture in connection
with any transaction complying with the provisions of "--Limitation on Asset
Sales") will not, and Huntsman ICI Chemicals will not cause or permit any
Guarantor to, consolidate with or merge with or into any Person other than
Huntsman ICI Chemicals or any other Guarantor unless: (1) the entity formed by
or surviving any such consolidation or merger (if other than the Guarantor) or
to which such sale, lease, conveyance or other disposition shall have been made
assumes by supplemental indenture all of the obligations of the Guarantor on
the guarantee; (2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and (3)
immediately after giving effect to such transaction and the use of any net
proceeds therefrom on a pro forma basis, Huntsman ICI Chemicals could satisfy
the provisions of clause (2) of the first paragraph of this covenant. Any
merger or consolidation of a Guarantor with and into Huntsman ICI Chemicals
(with Huntsman ICI Chemicals being the surviving entity) or another Guarantor
need not comply with the first paragraph of this covenant.
Notwithstanding anything in this section to the contrary, (1) Huntsman ICI
Chemicals may merge with an Affiliate that has no material assets or
liabilities and that is incorporated or organized solely for the purpose of
reincorporating or reorganizing Huntsman ICI Chemicals in another state of the
United States or the District of Columbia without complying with clause (B) of
the first paragraph of this covenant and (2) any transaction characterized as a
merger under applicable state law where each of the constituent entities
survives, shall not be treated as a merger for purposes of this covenant, but
shall instead be treated as (A) an Asset Sale, if the result of such
transaction is the transfer of assets by Huntsman ICI Chemicals or a Restricted
Subsidiary, or (B) an Investment, if the result of such transaction is the
acquisition of assets by Huntsman ICI Chemicals or a Restricted Subsidiary.
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Limitations on Transactions with Affiliates. (A) Huntsman ICI Chemicals
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, enter into or permit to exist any transaction or series of
related transactions (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than
(1) Affiliate Transactions permitted under paragraph (B) below and (2)
Affiliate Transactions on terms that are no less favorable than those that
might reasonably have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate of Huntsman ICI
Chemicals or such Restricted Subsidiary. All Affiliate Transactions (and each
series of related Affiliate Transactions which are similar or part of a common
plan) involving aggregate payments or other property with a fair market value
in excess of $5 million shall be approved by the Board of Managers of Huntsman
ICI Chemicals or board of directors of such Restricted Subsidiary, as the case
may be, such approval to be evidenced by a board resolution stating that such
Board of Managers or board of directors has determined that such transaction
complies with the foregoing provisions. If Huntsman ICI Chemicals or any
Restricted Subsidiary of Huntsman ICI Chemicals enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than $10 million,
Huntsman ICI Chemicals or such Restricted Subsidiary, as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as to the
fairness of such transaction or series of related transactions to Huntsman ICI
Chemicals or the relevant Restricted Subsidiary, as the case may be, from a
financial point of view, from an Independent Financial Advisor and file the
same with the trustee.
(B) The restrictions set forth in clause (A) do not apply to (1) reasonable
fees and compensation paid to and indemnity provided on behalf of, officers,
directors, manager, employees or consultants of Huntsman ICI Chemicals or any
Restricted Subsidiary of Huntsman ICI Chemicals as determined in good faith by
Huntsman ICI Chemicals' Board of Managers or senior management; (2)
transactions exclusively between or among Huntsman ICI Chemicals and any of its
Restricted Subsidiaries or exclusively between or among such Restricted
Subsidiaries, provided such transactions are not otherwise prohibited by the
indenture; (3) any agreement as in effect as of June 30, 1999 or contemplated
under the contribution agreement or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the holders in any material respect
than the original agreement; (4) Permitted Investments and Restricted Payments
made in compliance with "--Limitation on Restricted Payments"; (5) transactions
between or among any of Huntsman ICI Chemicals, any of its subsidiaries and any
Securitization Entity in connection with a Qualified Securitization
Transaction, in each case provided that such transactions are not otherwise
prohibited by the indenture; and (6) transactions with distributors or other
purchases or sales of goods or services, in each case in the ordinary course of
business and otherwise in compliance with the terms of the indenture which when
taken together are fair to Huntsman ICI Chemicals or the Restricted
Subsidiaries as applicable, in the reasonable determination of the Board of
Managers of Huntsman ICI Chemicals or the senior management thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party.
Limitation of Guarantees by Restricted Subsidiaries. Huntsman ICI Chemicals
will not permit any of its Restricted Subsidiaries, directly or indirectly, by
way of the pledge of any intercompany note or otherwise, to assume, guarantee
or in any other manner become liable with respect to any Indebtedness of
Huntsman ICI Chemicals or any other Restricted Subsidiary (other than (A)
Indebtedness under Currency Agreements in reliance on clause (5) of the
definition of "Permitted Indebtedness", (B) Interest Swap Obligations and
Commodity Agreements incurred in reliance on clause (4) of the definition of
"Permitted Indebtedness" or (C) any guarantee by a Foreign Subsidiary of
Indebtedness of another Foreign Subsidiary permitted under "--Limitation on
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Incurrence of Additional Indebtedness"), unless, in any such case (1) such
Restricted Subsidiary that is not a Guarantor executes and delivers a
supplemental indenture to the indenture, providing a guarantee of payment of
the notes by such Restricted Subsidiary and (2) (x) if any such assumption,
guarantee or other liability of such Restricted Subsidiary is provided in
respect of Senior Debt, the guarantee or other instrument provided by such
Restricted Subsidiary in respect of such Senior Debt may be superior to the
guarantee pursuant to subordination provisions no less favorable in any
material respect to the holders than those contained in the indenture and (y)
if such assumption, guarantee or other liability of such Restricted Subsidiary
is provided in respect of Indebtedness that is expressly subordinated to the
notes, the guarantee or other instrument provided by such Restricted Subsidiary
in respect of such subordinated Indebtedness shall be subordinated to the
guarantee pursuant to subordination provisions no less favorable in any
material respect to the holders than those contained in the indenture.
Notwithstanding the foregoing, any such guarantee by a Restricted
Subsidiary of the notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged, without any further
action required on the part of the trustee or any holder, upon: (1) the
unconditional release of such Restricted Subsidiary from its liability in
respect of the Indebtedness in connection with which such guarantee was
executed and delivered pursuant to the preceding paragraph; or (2) any sale or
other disposition (by merger or otherwise) to any Person which is not a
Restricted Subsidiary of Huntsman ICI Chemicals of all of the Capital Stock in,
or all or substantially all of the assets of, such Restricted Subsidiary or the
parent of such Restricted Subsidiary; provided that (A) such sale or
disposition of such Capital Stock or assets is otherwise in compliance with the
terms of the indenture and (B) such assumption, guarantee or other liability of
such Restricted Subsidiary has been released by the holders of the other
Indebtedness so guaranteed or (3) such Guarantor becoming an Unrestricted
Subsidiary in accordance with the indenture.
Capital Stock of Certain Subsidiaries. Huntsman ICI Chemicals will at all
times hold directly, or indirectly through a wholly owned Restricted
Subsidiary, (1) all issued and outstanding Capital Stock of Tioxide Group,
other than shares of Class A Shares issued pursuant to the terms of the
contribution agreement, which will be held by an ICI Affiliate and (2) all
issued and outstanding Capital Stock of Holdings U.K., other than shares of
Class B Shares issued pursuant to the terms of the Contribution Agreement,
which will be held by a Huntsman Affiliate. Neither Tioxide Group nor Holdings
U.K. will issue any Capital Stock (or any direct or indirect rights, options or
warrants to acquire such Capital Stock) to any Person other than Huntsman ICI
Chemicals or a wholly owned Restricted Subsidiary of Huntsman ICI Chemicals
except to qualify directors if required by applicable law or other similar
legal requirements and the Class A Shares and Class B Shares described in the
preceding sentence. Tioxide Group will not make any direct or indirect
distribution with respect to its Capital Stock to any Person other than
Huntsman ICI Chemicals or a wholly owned Restricted Subsidiary of Huntsman ICI
Chemicals except that after the UK Holdco Notes have been paid in full,
dividends may be paid on the Class A Shares of Tioxide Group in an amount not
to exceed 1% of the dividends paid by Tioxide Group. Holdings U.K. will not
make any direct or indirect distribution with respect to its Capital Stock to
any Person other than Huntsman ICI Chemicals or a wholly owned Restricted
Subsidiary of Huntsman ICI Chemicals and other than nominal dividends on the
Class B Shares.
Conduct of Business. Huntsman ICI Chemicals and its Restricted Subsidiaries
(other than a Securitization Entity) will not engage in any businesses which
are not the same, similar or related to the businesses in which Huntsman ICI
Chemicals and its Restricted Subsidiaries were engaged on June 30, 1999, except
to the extent that after engaging in any new business, Huntsman ICI Chemicals
and its Restricted Subsidiaries, taken as a whole, remain substantially engaged
in similar lines of business as were conducted by them on June 30, 1999.
Huntsman ICI Financial shall only conduct the business of holding Indebtedness
of Restricted Subsidiaries of Huntsman ICI Chemicals
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and shall not incur or be liable for any Indebtedness other than guarantees
otherwise permitted under the indenture. Tioxide Group shall only conduct the
business of holding the equity interests in Restricted Subsidiaries and shall
not incur or be liable for any Indebtedness other than guarantees otherwise
permitted under the indenture. Holdings U.K. shall only conduct the business of
holding equity interests and Indebtedness of Restricted Subsidiaries and shall
not incur or be liable for any Indebtedness other than Indebtedness owing to
Huntsman ICI Chemicals or Huntsman ICI Financial. Funds directly or indirectly
advanced to any Foreign Subsidiary by Huntsman ICI Chemicals or any Domestic
Subsidiary may only be so advanced if such funds are (1) advanced directly by
Huntsman ICI Chemicals or a Domestic Subsidiary, (2) contributed to Huntsman
ICI Financial as common equity and Huntsman ICI Financial loans such funds,
directly or indirectly through wholly owned Restricted Subsidiaries, to such
Foreign Subsidiary or (3) contributed to Tioxide Group as common equity and
Tioxide Group invests such funds in such Foreign Subsidiary.
Reports to Holders. Whether or not required by the SEC, so long as any
notes are outstanding, after the date that this exchange offer is required to
be consummated, Huntsman ICI Chemicals will furnish to the holders of notes,
within the time periods specified in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if
Huntsman ICI Chemicals were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report on the annual financial statements by Huntsman ICI
Chemicals' certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC on
Form 8-K if Huntsman ICI Chemicals were required to file such reports.
If Huntsman ICI Chemicals has designated any of its subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the
footnotes or schedules thereto, and in Management's Discussion and Analysis of
Financial Condition and Results of Operations, of the financial condition and
results of operations of Huntsman ICI Chemicals and its Restricted Subsidiaries
separate from the financial condition and results of operations of the
Unrestricted Subsidiaries of Huntsman ICI Chemicals.
In addition, whether or not required by the SEC, Huntsman ICI Chemicals
will file a copy of all of the information and reports referred to in clauses
(1) and (2) above with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request.
Events of Default
The following events are defined in the indenture as "Events of Default":
(1) the failure to pay interest on any notes when the same becomes due and
payable and the default continues for a period of 30 days (whether or
not such payment shall be prohibited by the subordination provisions
of the indenture);
(2) the failure to pay the principal on any notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer)
(whether or not such payment shall be prohibited by the subordination
provisions of the indenture);
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(3) a default in the observance or performance of any other covenant or
agreement contained in the indenture which default continues for a
period of 60 days after Huntsman ICI Chemicals receives written notice
specifying the default (and demanding that such default be remedied)
from the trustee or the holders of at least 25% of the outstanding
principal amount of the notes (except in the case of a default with
respect to the "Merger, Consolidation and Sale of Assets" covenant,
which will constitute an Event of Default with such notice requirement
but without such passage of time requirement);
(4) the failure to pay at final maturity (giving effect to any applicable
grace periods and any extensions thereof) the principal amount of any
Indebtedness of Huntsman ICI Chemicals or any Restricted Subsidiary of
Huntsman ICI Chemicals, or the acceleration of the final stated
maturity of any such Indebtedness if the aggregate principal amount of
such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at final
maturity or which has been accelerated, aggregates $25 million or more
at any time and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of
such final maturity or acceleration;
(5) one or more judgments in an aggregate amount in excess of $25 million
(which are not covered by indemnities or third party insurance as to
which the Person giving such indemnity or such insurer has not
disclaimed coverage) shall have been rendered against Huntsman ICI
Chemicals or any of its Restricted Subsidiaries and such judgments
remain undischarged, unpaid or unstayed for a period of 60 days after
such judgment or judgments become final and non-appealable;
(6) certain events of bankruptcy affecting Huntsman ICI Chemicals or any
of its Significant Subsidiaries; or
(7) any guarantee of a Significant Subsidiary ceases to be in full force
and effect or any such guarantee is declared to be null and void and
unenforceable or any of such guarantee is found to be invalid or any
of the Guarantors denies its liability under its guarantee (other than
by reason of release of a Guarantor in accordance with the terms of
the indenture).
If an Event of Default (other than an Event of Default specified in clause
(vi) above with respect to Huntsman ICI Chemicals) shall occur and be
continuing, the trustee or the holders of at least 25% in principal amount of
outstanding notes may declare the principal of and accrued interest on all the
notes to be due and payable by notice in writing to Huntsman ICI Chemicals and
the trustee specifying the respective Event of Default and that it is a "notice
of acceleration" (the "Acceleration Notice"), and the same (1) shall become
immediately due and payable or (2) if there are any amounts outstanding under
the Designated Senior Debt, shall become immediately due and payable upon the
first to occur of an acceleration under the Designated Senior Debt or five
business days after receipt by Huntsman ICI Chemicals and the Representative
under the Designated Senior Debt of such Acceleration Notice. If an Event of
Default specified in clause (6) above with respect to Huntsman ICI Chemicals
occurs and is continuing, then all unpaid principal of, and premium, if any,
and accrued and unpaid interest on all of the outstanding notes 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 indenture provides that, at any time after a declaration of
acceleration with respect to the notes as described in the preceding paragraph,
the holders of a majority in principal amount of the notes may rescind and
cancel such declaration and its consequences (1) if the rescission would not
conflict with any judgment or decree, (2) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (3) to the extent the payment of
such interest is lawful, interest on overdue installments of interest
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and overdue principal, which has become due otherwise than by such declaration
of acceleration, has been paid, (4) if Huntsman ICI Chemicals has paid the
trustee its reasonable compensation and reimbursed the trustee for its
expenses, disbursements and advances and (5) in the event of the cure or waiver
of an Event of Default of the type described in clause (6) of the description
above of Events of Default, the trustee shall have received an officers'
certificate and an opinion of counsel that such Event of Default has been cured
or waived. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
The holders of a majority in principal amount of the notes may waive any
existing Default or Event of Default under the indenture, and its consequences,
except a default in the payment of the principal of or interest on any notes.
Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture and under the Trust Indenture Act. Subject to the
provisions of the indenture relating to the duties of the trustee, the trustee
is under no obligation to exercise any of its rights or powers under the
indenture at the request, order or direction of any of the holders, unless such
holders have offered to the trustee reasonable indemnity. Subject to all
provisions of the indenture and applicable law, the holders of a majority in
aggregate principal amount of the then outstanding notes have the right to
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 the
trustee. The trustee may withhold from holders of the notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, premium or interest) if it determines
that withholding notice is in their interest.
Under the indenture, Huntsman ICI Chemicals is required to provide an
officers' certificate to the trustee promptly upon any such officer obtaining
knowledge of any Default or Event of Default (provided that such officers shall
provide such certification at least annually whether or not they know of any
Default or Event of Default) that has occurred and, if applicable, describe
such Default or Event of Default and the status thereof.
Legal Defeasance and Covenant Defeasance
Huntsman ICI Chemicals may, at its option and at any time, elect to have
its obligations and the obligations of the Guarantors discharged with respect
to the outstanding notes ("Legal Defeasance"). Such Legal Defeasance means that
Huntsman ICI Chemicals shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding notes, except for (1) the rights of
holders to receive, solely from the trust fund described below, payments in
respect of the principal of, premium, if any, and interest on the notes when
such payments are due, (2) Huntsman ICI Chemicals' obligations with respect to
the notes concerning issuing temporary notes, registration of notes, mutilated,
destroyed, lost or stolen notes and the maintenance of an office or agency for
payments, (3) the rights, powers, trust, duties and immunities of the trustee
and Huntsman ICI Chemicals' obligations in connection therewith and (4) the
Legal Defeasance provisions of the indenture. In addition, Huntsman ICI
Chemicals may, at its option and at any time, elect to have the obligations of
Huntsman ICI Chemicals released with respect to certain covenants that are
described in the indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Huntsman ICI Chemicals must irrevocably deposit with the trustee, in
trust, for the benefit of the holders cash in U.S. dollars or non-
callable U.S. government obligations (in the case
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of notes denominated in dollars), euros or non-callable government
obligations of any member nation of the European Union whose official
currency is the euro, rated AAA or better by S&P and Aaa or better by
Moody's (in the case of notes denominated in euros), or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay
the principal of, premium, if any, and interest on the notes on the
stated date for payment thereof or on the applicable redemption date,
as the case may be;
(2) in the case of Legal Defeasance, Huntsman ICI Chemicals shall have
delivered to the trustee an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that (A) Huntsman ICI
Chemicals has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since June 30, 1999, there
has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion of counsel
shall confirm that, the holders will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred; provided, however,
such opinion of counsel shall not be required if all the notes will
become due and payable on the maturity date within one year or are to
be called for redemption within one year under arrangements
satisfactory to the trustee);
(3) in the case of Covenant Defeasance, Huntsman ICI Chemicals shall have
delivered to the trustee an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that the holders will
not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under the indenture or
any other material agreement or instrument to which Huntsman ICI
Chemicals or any of its subsidiaries is a party or by which Huntsman
ICI Chemicals or any of its subsidiaries is bound;
(6) Huntsman ICI Chemicals shall have delivered to the trustee an
officers' certificate stating that the deposit was not made by
Huntsman ICI Chemicals with the intent of preferring the holders over
any other creditors of Huntsman ICI Chemicals or with the intent of
defeating, hindering, delaying or defrauding any other creditors of
Huntsman ICI Chemicals or others;
(7) Huntsman ICI Chemicals shall have delivered to the trustee an
officers' certificate and an opinion of counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; and
(8) Huntsman ICI Chemicals shall have delivered to the trustee an opinion
of counsel to the effect that (A) either (x) Huntsman ICI Chemicals
has assigned all its ownership interest in the trust funds to the
trustee or (y) the trustee has a valid perfected security interest in
the trust funds and (B) assuming no intervening bankruptcy of Huntsman
ICI Chemicals between the date of the deposit and the 124th day
following the perfection of a security interest in the deposit and
that no holder is an insider of Huntsman ICI Chemicals, after the
124th day following the perfection of a security interest in the
deposit, the trust funds will not be subject to avoidance as a
preference under Section 547 of the Federal Bankruptcy Code.
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Satisfaction and Discharge
The indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
notes, as expressly provided for in the indenture) as to all outstanding notes
when (1) either (A) all the notes theretofore authenticated and delivered
(except lost, stolen or destroyed notes which have been replaced or paid and
notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by Huntsman ICI Chemicals and thereafter repaid to
Huntsman ICI Chemicals or discharged from such trust) have been delivered to
the trustee for cancellation or (B) all notes not theretofore delivered to the
trustee for cancellation have become due and payable and Huntsman ICI Chemicals
has irrevocably deposited or caused to be deposited with the trustee funds in
an amount sufficient to pay and discharge the entire Indebtedness on the notes
not theretofore delivered to the trustee for cancellation, for principal of,
premium, if any, and interest on the notes to the date of deposit together with
irrevocable instructions from Huntsman ICI Chemicals directing the trustee to
apply such funds to the payment thereof at maturity or redemption, as the case
may be; (2) Huntsman ICI Chemicals has paid all other sums payable under the
indenture by Huntsman ICI Chemicals; and (3) Huntsman ICI Chemicals has
delivered to the trustee an officers' certificate and an opinion of counsel
stating that all conditions precedent under the indenture relating to the
satisfaction and discharge of the indenture have been complied with. All funds
that remain unclaimed for one year will be paid to Huntsman ICI Chemicals, and
thereafter holders of notes must look to Huntsman ICI Chemicals for payment as
general creditors.
Cancellation
All notes which are redeemed by or on behalf of Huntsman ICI Chemicals will
be cancelled and, accordingly, may not be reissued or resold. If Huntsman ICI
Chemicals purchases any notes, such acquisition shall not operate as a
redemption unless such notes are surrendered for cancellation.
Withholding Taxes
Under certain circumstances, a holder of notes may be subject to
withholding taxes and Huntsman ICI Chemicals will not be required to pay any
additional amounts to cover such withholding taxes. See "Certain U.S. Federal
Tax Consequences--Certification Requirements".
Modification of the Indenture
From time to time, Huntsman ICI Chemicals, the Guarantors and the trustee,
without the consent of the holders, may amend the indenture for certain
specified purposes, including curing ambiguities, defects or inconsistencies,
so long as such change does not, in the opinion of the trustee, adversely
affect the rights of any of the holders in any material respect. In formulating
its opinion on such matters, the trustee will be entitled to rely on such
evidence as it deems appropriate, including, without limitation, solely on an
opinion of counsel. Other modifications and amendments of the indenture may be
made with the consent of the holders of a majority in principal amount of the
then outstanding notes issued under the indenture, except that, without the
consent of each holder affected thereby, no amendment may:
(1) reduce the amount of notes whose holders must consent to an amendment;
(2) reduce the rate of or change or have the effect of changing the time
for payment of interest, including defaulted interest, on any notes;
(3) reduce the principal of or change or have the effect of changing the
fixed maturity of any notes, or change the date on which any notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor;
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(4) make any notes payable in money other than that stated in the notes;
(5) make any change in provisions of the indenture protecting the right of
each holder to receive payment of principal of and interest on such
note on or after the due date thereof or to bring suit to enforce such
payment, or permitting holders of a majority in principal amount of
notes to waive Defaults or Events of Default;
(6) amend, change or modify in any material respect the obligation of
Huntsman ICI Chemicals to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate a Net
Proceeds Offer with respect to any Asset Sale that has been
consummated or modify in any material respect any of the provisions or
definitions with respect thereto;
(7) modify or change any provision of the indenture or the related
definitions affecting the subordination or ranking of the notes or any
guarantee in a manner which adversely affects the holders; or
(8) release any Guarantor from any of its obligations under its guarantee
or the indenture otherwise than in accordance with the terms of the
indenture.
Governing Law
The indenture will provide that it, the notes and the guarantees will be
governed by, and construed in accordance with, the laws of the State of New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the law of another jurisdiction would be
required thereby.
The Trustee
The indenture will provide that, except during the continuance of an Event
of Default, the trustee will perform only such duties as are specifically set
forth in the indenture. During the existence of an Event of Default, the
trustee will exercise such rights and powers vested in it by the indenture, and
use the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
The indenture and the provisions of the Trust Indenture Act contain certain
limitations on the rights of the trustee, should it become a creditor of
Huntsman ICI Chemicals, to obtain payments of claims in certain cases or to
realize on certain property received in respect of any such claim as security
or otherwise. Subject to the Trust Indenture Act, the trustee will be permitted
to engage in other transactions; provided that if the trustee acquires any
conflicting interest as described in the Trust Indenture Act, it must eliminate
such conflict or resign.
Notices
All notices shall be deemed to have been given (1) the mailing by first
class mail, postage prepaid, of such notices to holders of the notes at their
registered addresses as recorded in the Register; and (2) so long as the notes
are listed on the Luxembourg Stock Exchange and it is required by the rules of
the Luxembourg Stock Exchange, publication of such notice to the holders of the
notes in English in a leading newspaper having general circulation in
Luxembourg (which is expected to be the Luxemburger Wort) or, if such
publication is not practicable, in one other leading English language daily
newspaper with general circulation in Europe, such newspaper being published on
each business day in morning editions, whether or not it shall be published on
Saturday, Sunday or holiday editions.
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Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
indenture. Reference is made to the indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
subsidiaries existing at the time such Person becomes a Restricted Subsidiary
of Huntsman ICI Chemicals or at the time it merges or consolidates with
Huntsman ICI Chemicals or any of its Restricted Subsidiaries or assumed in
connection with the acquisition of assets from such Person and in each case not
incurred by such Person in connection with, or in anticipation or contemplation
of, such Person becoming a Restricted Subsidiary of Huntsman ICI Chemicals or
such acquisition, merger or consolidation, except for Indebtedness of a Person
or any of its subsidiaries that is repaid at the time such Person becomes a
Restricted Subsidiary of Huntsman ICI Chemicals or at the time it merges or
consolidates with Huntsman ICI Chemicals or any of its Restricted Subsidiaries.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the
foregoing; provided however that none of the Initial Purchasers or their
Affiliates shall be deemed to be an Affiliate of Huntsman ICI Chemicals.
"Asset Acquisition" means:
. an Investment by Huntsman ICI Chemicals or any Restricted Subsidiary of
Huntsman ICI Chemicals in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of Huntsman ICI Chemicals
or of any Restricted Subsidiary of Huntsman ICI Chemicals, or shall be
merged with or into Huntsman ICI Chemicals or of any Restricted
Subsidiary of Huntsman ICI Chemicals, or
. the acquisition by Huntsman ICI Chemicals or any Restricted Subsidiary
of Huntsman ICI Chemicals of the assets of any Person (other than a
Restricted Subsidiary of Huntsman ICI Chemicals) which constitute all
or substantially all of the assets of such Person or comprises any
division or line of business of such Person or any other properties or
assets of such Person other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by Huntsman ICI
Chemicals or any of its Restricted Subsidiaries (including any Sale and
Leaseback Transaction) to any Person other than Huntsman ICI Chemicals or a
Restricted Subsidiary of Huntsman ICI Chemicals of (A) any Capital Stock of any
Restricted Subsidiary of Huntsman ICI Chemicals; or (B) any other property or
assets of Huntsman ICI Chemicals or any Restricted Subsidiary of Huntsman ICI
Chemicals other than in the ordinary course of business; provided, however,
that Asset Sales shall not include (1) a transaction or series of related
transactions for which Huntsman ICI Chemicals or its Restricted Subsidiaries
receive aggregate consideration of less than $5 million, (2) sales of accounts
receivable and related assets (including contract rights) of the type specified
in the definition of "Qualified Securitization Transaction" to a Securitization
Entity for the fair market value thereof, (3) sales or grants of licenses to
use the patents, trade secrets, know-how and other intellectual property of
Huntsman ICI Chemicals or any of its Restricted Subsidiaries to the extent that
such license does not prohibit Huntsman ICI Chemicals or any of its Restricted
Subsidiaries from using the technologies licensed or require Huntsman ICI
Chemicals or any of its Restricted Subsidiaries to pay any fees for any such
use, (4) the sale, lease,
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conveyance, disposition or other transfer of all or substantially all of the
assets of Huntsman ICI Chemicals as permitted under "Merger, Consolidation and
Sale of Assets", of any Capital Stock or other ownership interest in or assets
or property of an Unrestricted Subsidiary or a Person which is not a
subsidiary, pursuant to any foreclosure of assets or other remedy provided by
applicable law to a creditor of Huntsman ICI Chemicals or any subsidiary of
Huntsman ICI Chemicals with a Lien on such assets, which Lien is permitted
under the indenture; provided that such foreclosure or other remedy is
conducted in a commercially reasonable manner or in accordance with any
bankruptcy law, involving only Cash Equivalents, Foreign Cash Equivalents or
inventory in the ordinary course of business or obsolete equipment in the
ordinary course of business consistent with past practices of Huntsman ICI
Chemicals or including only the lease or sublease of any real or personal
property in the ordinary course of business, (5) the consummation of any
transaction in accordance with the terms of "--Limitation on Restricted
Payments", and (6) Permitted Investments.
"Capital Stock" means:
. with respect to any Person that is a corporation, any and all shares,
interests, participations or other equivalents (however designated and
whether or not voting) of corporate stock, including each class of
Common Stock and Preferred Stock of such Person and
. with respect to any Person that is not a corporation, any and all
partnership, membership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means:
(1) a marketable obligation, maturing within two years after issuance
thereof, issued or guaranteed by the United States of America or an
instrumentality or agency thereof,
(2) a certificate of deposit or banker's acceptance, maturing within one
year after issuance thereof, issued by any lender under the Credit
Facilities, or a national or state bank or trust company or a
European, Canadian or Japanese bank, in each case having capital,
surplus and undivided profits of at least $100,000,000 and whose long-
term unsecured debt has a rating of "A" or better by S&P or A2 or
better by Moody's or the equivalent rating by any other nationally
recognized rating agency (provided that the aggregate face amount of
all Investments in certificates of deposit or bankers' acceptances
issued by the principal offices of or branches of such European or
Japanese banks located outside the United States shall not at any time
exceed 33 1/3% of all Investments described in this definition),
(3) open market commercial paper, maturing within 270 days after issuance
thereof, which has a rating of A1 or better by S&P or P1 or better by
Moody's, or the equivalent rating by any other nationally recognized
rating agency,
(4) repurchase agreements and reverse repurchase agreements with a term
not in excess of one year with any financial institution which has
been elected primary government securities dealers by the Federal
Reserve Board or whose securities are rated AA- or better by S&P or
Aa3 or better by Moody's or the equivalent rating by any other
nationally recognized rating agency relating to marketable direct
obligations issued or unconditionally guaranteed by the United States
of America or any agency or instrumentality thereof and backed by the
full faith and credit of the United States of America,
(5) "Money Market" preferred stock maturing within six months after
issuance thereof or municipal bonds issued by a corporation organized
under the laws of any state of the
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United States, which has a rating of "A" or better by S&P or Moody's or
the equivalent rating by any other nationally recognized rating agency,
(6) tax exempt floating rate option tender bonds backed by letters of
credit issued by a national or state bank whose long-term unsecured
debt has a rating of AA or better by S&P or Aa2 or better by Moody's
or the equivalent rating by any other nationally recognized rating
agency, and
(7) shares of any money market mutual fund rated at least AAA or the
equivalent thereof by S&P or at least Aaa or the equivalent thereof by
Moody's or any other mutual fund holding assets consisting (except for
de minimus amounts) of the type specified in clauses (1) through (6)
above.
"Change of Control" means (1) prior to the initial public equity offering
of Huntsman ICI Chemicals, the failure by Mr. Jon M. Huntsman, his spouse,
direct descendants, an entity controlled by any of the foregoing and/or by a
trust of the type described hereafter, and/or a trust for the benefit of any of
the foregoing (the "Huntsman Group"), collectively to have the power, directly
or indirectly, to vote or direct the voting of securities having at least a
majority of the ordinary voting power for the election of directors (or the
equivalent) of Huntsman ICI Chemicals or (2) after the initial public equity
offering, the occurrence of the following: (A) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one
or more members of the Huntsman Group, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of 35% or more of
the then outstanding voting capital stock of Huntsman ICI Chemicals other than
in a transaction having the approval of the Board of Managers of Huntsman ICI
Chemicals at least a majority of which members are Continuing Managers; or (B)
Continuing Managers shall cease to constitute at least a majority of the
managers constituting the Board of Managers of Huntsman ICI Chemicals.
"Class A Shares" means the Class A Shares of Tioxide Group which have
voting rights but no rights to dividends and a nominal liquidation preference.
"Class B Shares" means the Class B Shares of Holdings U.K. which have
voting rights, a rights to nominal dividends and a nominal liquidation
preference.
"Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by Huntsman ICI
Chemicals or any of its Restricted Subsidiaries designed to protect Huntsman
ICI Chemicals or any of its Restricted Subsidiaries against fluctuations in the
price of commodities actually at that time used in the ordinary course of
Huntsman ICI Chemicals or its Restricted Subsidiaries.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on June 30,
1999 or issued after June 30, 1999, and includes, without limitation, all
series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (1) Consolidated Net Income, (2) to the extent
Consolidated Net Income has been reduced thereby, (A) all income taxes of such
Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP
for such period (other than income taxes attributable to extraordinary, unusual
or nonrecurring gains or losses or taxes attributable to sales or dispositions
outside the ordinary course of business) and Permitted Tax Distributions paid
during such period, (B) Consolidated Interest Expense and (C) Consolidated Non-
cash Charges less any non-cash items
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increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for such Person and its Restricted Subsidiaries in
accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters for which financial statements are available under "--Reports
to Holders" (the "Four Quarter Period") ending on or prior to the date of the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such
Person for the Four Quarter Period.
In addition to and without limitation of the foregoing, for purposes of
this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall
be calculated after giving effect on a pro forma basis for the period of such
calculation to:
(1) the incurrence or repayment of any Indebtedness of such Person or any
of its Restricted Subsidiaries (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of
the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital
purposes pursuant to working capital facilities, occurring during the
Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and prior to June 30, 1999, as if such incurrence
or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and
(2) any Asset Sales or Asset Acquisitions (including, without limitation,
any Asset Acquisition giving rise to the need to make such calculation
as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result
of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and also including any Consolidated
EBITDA (provided that such Consolidated EBITDA shall be included only
to the extent includible pursuant to the definition of "Consolidated
Net Income") attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period)
occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such
Acquired Indebtedness) occurred on the first day of the Four Quarter
Period.
If such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a Person other than Huntsman ICI Chemicals or a
Restricted Subsidiary, the preceding sentence shall give effect to the
incurrence of such guaranteed Indebtedness as if such Person or any Restricted
Subsidiary of such Person had directly incurred or otherwise assumed such
guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
a eurocurrency interbank offered rate, or other rates, then the interest rate
in effect on the Transaction Date will be deemed to have been in effect during
the Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
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"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (1) Consolidated Interest Expense,
plus (2) the product of (A) the amount of all dividend payments on any series
of Preferred Stock of such Person and its Restricted Subsidiaries (other than
dividends paid in Qualified Capital Stock and other than dividends paid to such
Person or to a Restricted Subsidiary of such Person) paid, accrued or scheduled
to be paid or accrued during such period times (B) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (1) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (A) any amortization of debt discount and amortization or write-off
of deferred financing costs, (B) the net costs under Interest Swap Obligations,
(C) all capitalized interest and (D) the interest portion of any deferred
payment obligation; and (2) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any
period, the sum of (1) aggregate net income (or loss) of such Person and its
Restricted Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP plus (2) cash dividends or distributions paid to such
Person by any other Person (the "Payor") other than a Restricted Subsidiary of
the referent Person, to the extent not otherwise included in Consolidated Net
Income, which have been derived from operating cash flow of the Payor; provided
that there shall be excluded therefrom (A) after-tax gains from Asset Sales or
abandonments or reserves relating thereto, (B) after-tax items classified as
extraordinary or nonrecurring gains, (C) the net income of any Person acquired
in a "pooling of interests" transaction accrued prior to the date it becomes a
Restricted Subsidiary of the referent Person or is merged or consolidated with
the referent Person or any Restricted Subsidiary of the referent Person, (D)
the net income (but not loss) of any Restricted Subsidiary of the referent
Person to the extent that the declaration of dividends or similar distributions
by that Restricted Subsidiary of that income is restricted; provided, however,
that the net income of Foreign Subsidiaries shall only be excluded in any
calculation of Consolidated Net Income of Huntsman ICI Chemicals as a result of
application of this clause (D) if the restriction on dividends or similar
distributions results from consensual restrictions, (E) the net income or loss
of any Person, other than a Restricted Subsidiary of the referent Person,
except to the extent of cash dividends or distributions paid to the referent
Person or to a wholly owned Restricted Subsidiary of the referent Person by
such Person, (F) any restoration to income of any contingency reserve, except
to the extent that provision for such reserve was made out of Consolidated Net
Income accrued at any time following June 30, 1999, (G) income or loss
attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), (H) in the case of a successor to the referent
Person by consolidation or merger or as a transferee of the referent Person's
assets, any earnings of the successor corporation prior to such consolidation,
merger or transfer of assets, (I) all gains or losses from the cumulative
effect of any change in accounting principles and (J) the net amount of all
Permitted Tax Distributions made during such period.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity (or equivalent) of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash charges of
such Person and its Restricted
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Subsidiaries reducing Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such charges constituting an extraordinary item or
loss or any such charge which requires an accrual of or a reserve for cash
charges for any future period).
"Continuing Managers" means, as of any date, the collective reference to:
. all members of the Board of Managers of Huntsman ICI Chemicals who have
held office continuously since a date no later than twelve months prior
to Huntsman ICI Chemicals's initial public equity offering, and
. all members of the Board of Managers of Huntsman ICI Chemicals who
assumed office after such date and whose appointment or nomination for
election by Huntsman ICI Chemicals's shareholders was approved by a
vote of at least 50% of the Continuing Managers in office immediately
prior to such appointment or nomination or by the Huntsman Group.
"Contribution Agreement" means the Contribution Agreement, dated April 15,
1999, among Huntsman Specialty, ICI and Huntsman ICI Holdings, as such
agreement is in effect on June 30, 1999.
"Credit Facilities" means the senior secured Credit Agreement, dated as of
April 15, 1999 among Huntsman ICI Chemicals and the financial institutions
party thereto, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented, extended or otherwise modified from time to time, and
any one or more debt facility, indenture or other agreement refinancing,
replacing (whether or not contemporaneously) or otherwise restructuring
(including increasing the amount of available borrowings thereunder (provided
that such increase in borrowings is permitted by the "Limitation on Incurrence
of Additional Indebtedness" covenant above) or making Restricted Subsidiaries
of Huntsman ICI Chemicals a borrower, additional borrower or guarantor
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether including any additional
obligors or with the same or any other agent, lender or group of lenders or
with other financial institutions or lenders.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect
Huntsman ICI Chemicals or any Restricted Subsidiary of Huntsman ICI Chemicals
against fluctuations in currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of
Default.
"Designated Senior Debt" means:
. Indebtedness under or in respect of the Credit Facilities and
. any other Indebtedness constituting Senior Debt which, at the time of
determination, has an aggregate principal amount of at least
$100,000,000 and is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt" by Huntsman ICI
Chemicals.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the sole option of the holder thereof on or prior to the
final maturity date of the notes.
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"Domestic Subsidiary" means any subsidiary other than a Foreign Subsidiary.
"Environmental Lien" means a Lien in favor of any governmental authority
arising in connection with any environmental laws.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Managers of Huntsman ICI Chemicals
acting reasonably and in good faith and shall be evidenced by a board
resolution of the Board of Managers of Huntsman ICI Chemicals delivered to the
trustee.
"Foreign Cash Equivalents" means:
. debt securities with a maturity of 365 days or less issued by any
member nation of the European Union, Switzerland or any other country
whose debt securities are rated by S&P and Moody's A-1 or P-1, or the
equivalent thereof (if a short-term debt rating is provided by either)
or at least AA or AA2, or the equivalent thereof (if a long-term
unsecured debt rating is provided by either) (each such jurisdiction,
an "Approved Jurisdiction") or any agency or instrumentality of an
Approved Jurisdiction, provided that the full faith and credit of the
Approved Jurisdiction is pledged in support of such debt securities or
such debt securities constitute a general obligation of the Approved
Jurisdiction and
. debt securities in an aggregate principal amount not to exceed $25
million with a maturity of 365 days or less issued by any nation in
which Huntsman ICI Chemicals or its Restricted Subsidiaries has cash
which is the subject of restrictions on export or any agency or
instrumentality of such nation, provided that the full faith and credit
of such nation is pledged in support of such debt securities or such
debt securities constitute a general obligation of such nation.
"Foreign Subsidiary" means any subsidiary of Huntsman ICI Chemicals (other
than a Guarantor) organized under the laws of, and conducting a substantial
portion of its business in, any jurisdiction other than the United States of
America or any state thereof or the District of Columbia.
"GAAP" means generally accepted 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 or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which were in effect as of June 30, 1999.
"Guarantor" means:
. each of Tioxide Group, Huntsman ICI Financial and Tioxide Americas Inc.
and
. each of Huntsman ICI Chemicals's Restricted Subsidiaries that in the
future executes a supplemental indenture in which such Restricted
Subsidiary agrees to be bound by the terms of the indenture as a
Guarantor;
provided that any Person constituting a Guarantor as described above shall
cease to constitute a Guarantor when its respective guarantee is released in
accordance with the terms of the indenture.
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"Guarantor Senior Debt" means with respect to any Guarantor, the principal
of, premium, if any, and interest (including any interest accruing subsequent
to the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law) on any Indebtedness of a Guarantor, whether
outstanding on June 30, 1999 or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
guarantee of such Guarantor. Without limiting the generality of the foregoing,
"Guarantor Senior Debt" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (w) all
monetary obligations of every nature of a Guarantor in respect of the Credit
Facilities, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses
and indemnities, (x) all monetary obligations of every nature of a Guarantor
evidenced by a promissory note and which is, directly or indirectly, pledged
as security for the obligations of Huntsman ICI Chemicals under the Credit
Facilities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on June 30, 1999 or
thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt"
shall not include (1) any Indebtedness of such Guarantor to a Restricted
Subsidiary of such Guarantor or any Affiliate of such Guarantor or any of such
Affiliate's subsidiaries other than as described in clause (x), (2)
Indebtedness to, or guaranteed on behalf of, any shareholder, director,
officer or employee of such Guarantor or any Restricted Subsidiary of such
Guarantor (including, without limitation, amounts owed for compensation), (3)
Indebtedness to trade creditors and other amounts incurred in connection with
obtaining goods, materials or services, (4) Indebtedness represented by
Disqualified Capital Stock, (5) any liability for federal, state, local or
other taxes owed or owing by such Guarantor, (6) Indebtedness incurred in
violation of the indenture provisions set forth under "Limitation on
Incurrence of Additional Indebtedness," (7) Indebtedness which, when incurred
and without respect to any election under Section 1111(b) of Title 11, United
States Code, is without recourse to Huntsman ICI Chemicals and (8) any
Indebtedness which is, by its express terms, subordinated in right of payment
to any other Indebtedness of such Guarantor.
"Holdings U.K." means, Huntsman ICI Holdings (UK), a private unlimited
company incorporated under the laws of England and Wales.
"Huntsman Affiliate" means Huntsman Corporation or any of its Affiliates
(other than Huntsman ICI Holdings and its subsidiaries).
"Huntsman Corporation" means Huntsman Corporation, a Utah corporation.
"Huntsman ICI Holdings Zero Coupon Notes" means, collectively, the Senior
Discount Notes due 2009 and the Subordinated Discount Notes due 2009 issued by
Huntsman ICI Holdings, and any notes into which any such Huntsman ICI Holdings
Zero Coupon Notes may be exchanged or replaced pursuant to the terms of the
indenture pursuant to which such Huntsman ICI Holdings Zero Coupon Notes are
issued.
"Huntsman Specialty" means Huntsman Specialty Chemicals Corporation, a
Utah corporation.
"ICI Affiliate" means ICI or any Affiliate of ICI.
"Indebtedness" means with respect to any Person, without duplication,
(1) all Obligations of such Person for borrowed money,
(2) all Obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments,
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(3) all Capitalized Lease Obligations of such Person,
(4) all Obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
Obligations under any title retention agreement (but excluding trade
accounts payable and other accrued liabilities arising in the ordinary
course of business that are not overdue by 90 days or more or are
being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted),
(5) all Obligations for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction,
(6) guarantees in respect of Indebtedness referred to in clauses (1)
through (5) above and clause (8) below,
(7) all Obligations of any other Person of the type referred to in clauses
(1) through (6) which are secured by any lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the
lesser of the fair market value of such property or asset or the
amount of the Obligation so secured,
(8) all Obligations under Currency Agreements and Interest Swap Agreements
of such Person and
(9) all Disqualified Capital Stock issued by such Person with the amount
of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding
accrued dividends, if any.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in
good faith by the board of directors of the issuer of such Disqualified Capital
Stock; provided, however, that notwithstanding the foregoing, "Indebtedness"
shall not include:
(A) advances paid by customers in the ordinary course of business for
services or products to be provided or delivered in the future,
(B) deferred taxes or
(C) unsecured indebtedness of Huntsman ICI Chemicals and/or its Restricted
Subsidiaries incurred to finance insurance premiums in a principal
amount not in excess of the insurance premiums to be paid by Huntsman
ICI Chemicals and/or its Restricted Subsidiaries for a three year
period beginning on the date of any incurrence of such indebtedness.
"Independent Financial Advisor" means a firm:
. which does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in
Huntsman ICI Chemicals and
. which, in the judgment of the Board of Managers of Huntsman ICI
Chemicals, is otherwise independent and qualified to perform the task
for which it is to be engaged.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive
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from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for payments
made by such other Person calculated by applying a fixed or a floating rate of
interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) 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 by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit by
Huntsman ICI Chemicals and its Restricted Subsidiaries on commercially
reasonable terms in accordance with normal trade practices of Huntsman ICI
Chemicals or such Restricted Subsidiary, as the case may be. For the purposes
of the "Limitation on Restricted Payments" covenant, (1) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (2) the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by Huntsman ICI Chemicals or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced
by the payment of dividends or distributions in connection with such Investment
or any other amounts received in respect of such Investment; provided that no
such payment of dividends or distributions or receipt of any such other amounts
shall reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If Huntsman ICI Chemicals or any Restricted Subsidiary of Huntsman
ICI Chemicals sells or otherwise disposes of any Common Stock of any direct or
indirect Restricted Subsidiary of Huntsman ICI Chemicals such that, after
giving effect to any such sale or disposition, Huntsman ICI Chemicals no longer
owns, directly or indirectly, greater than 50% of the outstanding Common Stock
of such Restricted Subsidiary, Huntsman ICI Chemicals shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the
fair market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement to
give any security interest), but not including any interests in accounts
receivable and related assets conveyed by Huntsman ICI Chemicals or any of its
subsidiaries in connection with any Qualified Securitization Transaction.
"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
(other than the portion of any such deferred payment constituting interest)
received by Huntsman ICI Chemicals or any of its Restricted Subsidiaries from
such Asset Sale net of (A) all 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 after taking
into account any reduction in consolidated tax liability due to available tax
credits or deductions and any tax sharing arrangements, (C) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale,
(D) the decrease in proceeds from Qualified Securitization Transactions which
results from such Asset Sale and (E) appropriate amounts to be provided by
Huntsman ICI Chemicals or any Restricted Subsidiary, as the case may be, as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by Huntsman ICI Chemicals or any Restricted Subsidiary,
as the case may be, after
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such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters
and liabilities under any indemnification obligations associated with such
Asset Sale.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Organizational Documents" means, with respect to any Person, such Person's
memorandum, articles or certificate of incorporation, bylaws, partnership
agreement, joint venture agreement, limited liability company agreement or
other similar governing documents and any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such Person's Capital Stock.
"Permitted Indebtedness" means, without duplication, each of the following:
(1) Indebtedness under the notes, the indenture and the guarantees;
(2) Indebtedness incurred pursuant to the Credit Facilities in an
aggregate principal amount not exceeding $2.4 billion at any one time
outstanding less the amount of any payments made by Huntsman ICI
Chemicals under the Credit Facilities with the Net Cash Proceeds of
any Asset Sale (which are accompanied by a corresponding permanent
commitment reduction) pursuant to clause (3)(A) of the first sentence
of "--Limitation on Asset Sales";
(3) other Indebtedness of Huntsman ICI Chemicals and its Restricted
Subsidiaries outstanding on June 30, 1999 reduced by the amount of any
prepayments with Net Cash Proceeds of any Asset Sale (which are
accompanied by a corresponding permanent commitment reduction)
pursuant to "--Limitation on Asset Sales";
(4) Interest Swap Obligations of Huntsman ICI Chemicals relating to
Indebtedness of Huntsman ICI Chemicals or any of its Restricted
Subsidiaries (or Indebtedness which Huntsman ICI Chemicals or any of
its Restricted Subsidiaries reasonably intends to incur within six
months) and Interest Swap Obligations of any Restricted Subsidiary of
Huntsman ICI Chemicals relating to Indebtedness of such Restricted
Subsidiary (or Indebtedness which such Restricted Subsidiary
reasonably intends to incur within six months); provided, however,
that such Interest Swap Obligations are entered into to protect
Huntsman ICI Chemicals and its Restricted Subsidiaries from
fluctuations in interest rates on Indebtedness permitted under with
the indenture to the extent the notional principal amount of such
Interest Swap Obligation, when incurred, does not exceed the principal
amount of the Indebtedness to which such Interest Swap Obligation
relates;
(5) Indebtedness under Commodity Agreements and Currency Agreements;
provided that in the case of Currency Agreements which relate to
Indebtedness, such Currency Agreements do not increase the
Indebtedness of Huntsman ICI Chemicals and its Restricted Subsidiaries
outstanding other than as a result of fluctuations in foreign currency
exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(6) Indebtedness of a Restricted Subsidiary of Huntsman ICI Chemicals to
Huntsman ICI Chemicals or to a Restricted Subsidiary of Huntsman ICI
Chemicals for so long as such Indebtedness is held by Huntsman ICI
Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals, in
each case subject to no Lien held by a Person other than Huntsman ICI
Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals (other
than the pledge of intercompany notes under the Credit Facilities);
provided that if as of any date any Person other than Huntsman ICI
Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals owns or
holds any such Indebtedness or holds a Lien in respect of such
Indebtedness
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(other than the pledge of intercompany notes under the Credit
Facilities), such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by the issuer of such
Indebtedness;
(7) Indebtedness of Huntsman ICI Chemicals to a Restricted Subsidiary for
so long as such Indebtedness is held by a Restricted Subsidiary, in
each case subject to no Lien (other than Liens securing intercompany
notes pledged under the Credit Facilities); provided that (A) any
Indebtedness of Huntsman ICI Chemicals to any Restricted Subsidiary
(other than pursuant to notes pledged under the Credit Facilities) is
unsecured and subordinated, pursuant to a written agreement, to
Huntsman ICI Chemicals' obligations under the indenture and the notes
and (B) if as of any date any Person other than a Restricted
Subsidiary owns or holds any such Indebtedness or any Person holds a
Lien in respect of such Indebtedness (other than pledges securing the
Credit Facilities), such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by Huntsman ICI
Chemicals;
(8) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;
(9) Indebtedness of Huntsman ICI Chemicals or any of its Restricted
Subsidiaries represented by letters of credit for the account of
Huntsman ICI Chemicals or such Restricted Subsidiary, as the case may
be, in order to provide security for workers' compensation claims,
payment obligations in connection with self-insurance or similar
requirements in the ordinary course of business;
(10) Refinancing Indebtedness;
(11) Indebtedness arising from agreements of Huntsman ICI Chemicals or a
subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection
with the disposition of any business, assets or subsidiary, other
than guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or subsidiary for the purpose
of financing such acquisition; provided that the maximum aggregate
liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds actually received by Huntsman ICI Chemicals and
the subsidiary in connection with such disposition;
(12) Obligations in respect of performance bonds and completion,
guarantee, surety and similar bonds provided by Huntsman ICI
Chemicals or any subsidiary in the ordinary course of business;
(13) Guarantees by Huntsman ICI Chemicals or a Restricted Subsidiary of
Indebtedness incurred by Huntsman ICI Chemicals or a Restricted
Subsidiary so long as the incurrence of such Indebtedness by Huntsman
ICI Chemicals or any such Restricted Subsidiary is otherwise
permitted by the terms of the indenture;
(14) Indebtedness of Huntsman ICI Chemicals or any subsidiary incurred in
the ordinary course of business not to exceed $35 million at any time
outstanding (A) representing Capitalized Lease Obligations or (B)
constituting purchase money Indebtedness incurred to finance property
or assets of Huntsman ICI Chemicals or any Restricted Subsidiary of
Huntsman ICI Chemicals acquired in the ordinary course of business;
provided, however, that such purchase money Indebtedness shall not
exceed the cost of such property or assets and shall not be secured
by any property or assets of Huntsman ICI Chemicals or any Restricted
Subsidiary of Huntsman ICI Chemicals other than the property and
assets so acquired;
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(15) Indebtedness of Foreign Subsidiaries that are Restricted Subsidiaries
to the extent that the aggregate outstanding amount of Indebtedness
incurred by such Foreign Subsidiaries under this clause (15)does not
exceed at any one time an amount equal to the sum of (A) 80% of the
consolidated book value of the accounts receivable of all Foreign
Subsidiaries and (B) 60% of the consolidated book value of the
inventory of all Foreign Subsidiaries; provided, however, that
notwithstanding the foregoing limitation, Foreign Subsidiaries may
incur in the aggregate up to $50 million of Indebtedness outstanding
at any one time;
(16) Indebtedness of Huntsman ICI Chemicals and its Domestic Subsidiaries
pursuant to overdraft lines or similar extensions of credit in an
aggregate amount not to exceed $20 million at any one time
outstanding and Indebtedness of Foreign Subsidiaries pursuant to
over-draft lines or similar extensions of credit in an aggregate
principal amount not to exceed $60 million at any one time
outstanding;
(17) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is not recourse to Huntsman
ICI Chemicals or any subsidiary of Huntsman ICI Chemicals (except for
Standard Securitization Undertakings);
(18) So long as no Event of Default or Potential Event of Default exists,
Indebtedness of Huntsman ICI Chemicals to BASF or its Affiliates in
an aggregate outstanding amount not in excess of $50 million for the
purpose of financing up to 50% of the cost of installation,
construction or improvement of property relating to the manufacture
of PO/MTBE;
(19) Indebtedness of Huntsman ICI Chemicals to a Huntsman Affiliate or an
ICI Affiliate constituting Subordinated Indebtedness;
(20) Indebtedness consisting of take-or-pay obligations contained in
supply agreements entered into in the ordinary course of business;
(21) Indebtedness of Huntsman ICI Chemicals to any to any of its
subsidiaries incurred in connection with the purchase of accounts
receivable and related assets by Huntsman ICI Chemicals from any such
subsidiary which assets are subsequently conveyed by Huntsman ICI
Chemicals to a Securitization Entity in a Qualified Securitization
Transaction; and
(22) additional Indebtedness of Huntsman ICI Chemicals and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $25
million at any one time outstanding.
"Permitted Investments" means:
(1) Investments by Huntsman ICI Chemicals or any Restricted Subsidiary of
Huntsman ICI Chemicals in any Person that is or will become
immediately after such Investment a Restricted Subsidiary of Huntsman
ICI Chemicals or that will merge or consolidate into Huntsman ICI
Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals;
provided that this clause (1) shall not permit any Investment by
Huntsman ICI Chemicals or a Domestic Restricted Subsidiary in a
Foreign Subsidiary consisting of a capital contribution by means of a
transfer of property other than cash, Cash Equivalents or Foreign Cash
Equivalents other than transfers of property of nominal value in the
ordinary course of business;
(2) Investments in Huntsman ICI Chemicals by any Restricted Subsidiary of
Huntsman ICI Chemicals; provided that any Indebtedness evidencing such
Investment is unsecured and subordinated (other than pursuant to
intercompany notes pledged under the Credit Facilities), pursuant to a
written agreement, to Huntsman ICI Chemicals' obligations under the
notes and the indenture;
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(3) investments in cash and Cash Equivalents;
(4) loans and advances to employees and officers of Huntsman ICI Chemicals
and its Restricted Subsidiaries in the ordinary course of business for
travel, relocation and related expenses;
(5) Investments in Unrestricted Subsidiaries or joint ventures not to
exceed $75 million, plus (A) the aggregate net after-tax amount
returned in cash on or with respect to any Investments made in
Unrestricted Subsidiaries and joint ventures whether through interest
payments, principal payments, dividends or other distributions or
payments, (B) the net after-tax cash proceeds received by Huntsman ICI
Chemicals or any Restricted Subsidiary from the disposition of all or
any portion of such Investments (other than to a Restricted Subsidiary
of Huntsman ICI Chemicals), (C) upon redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the fair market value of such
subsidiary and (D) the net cash proceeds received by Huntsman ICI
Chemicals from the issuance of Specified Venture Capital Stock;
(6) Investments in securities received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of any debtors of Huntsman ICI Chemicals or its Restricted
Subsidiaries;
(7) Investments made by Huntsman ICI Chemicals or its Restricted
Subsidiaries as a result of consideration received in connection with
an Asset Sale made in compliance with the "Limitation on Asset Sales"
covenant;
(8) Investments existing on June 30, 1999;
(9) any Investment by Huntsman ICI Chemicals or a wholly owned subsidiary
of Huntsman ICI Chemicals, or by Tioxide Group or Holdings U.K., in a
Securitization Entity or any Investment by a Securitization Entity in
any other Person in connection with a Qualified Securitization
Transaction; provided that any Investment in a Securitization Entity
is in the form of a Purchase Money Note or an equity interest;
(10) Investments by Huntsman ICI Chemicals in Rubicon, Inc. and Louisiana
Pigment Company (each a "Joint Venture"), so long as: (A) such Joint
Venture does not have any Indebtedness for borrowed money at any time
on or after the date of such Investment (other than Indebtedness
owing to the equity holders of such Joint Venture), (B) the
documentation governing such Joint Venture does not contain a
restriction on distributions to Huntsman ICI Chemicals, and (C) such
Joint Venture is engaged only in the business of manufacturing
product used or marketed by Huntsman ICI Chemicals and its Restricted
Subsidiaries and/or the joint venture partner, and businesses
reasonably related thereto;
(11) Investments by Foreign Subsidiaries in Foreign Cash Equivalents;
(12) loans to Huntsman ICI Holdings for the purposes described in clause
(7) of the second paragraph of "Certain Covenants--Limitation on
Restricted Payments") which, when aggregated with the payment made
under such clause, will not exceed $3 million in any fiscal year;
(13) any Indebtedness of Huntsman ICI Chemicals to any of its subsidiaries
incurred in connection with the purchase of accounts receivable and
related assets by Huntsman ICI Chemicals from any such subsidiary
which assets are subsequently conveyed by Huntsman ICI Chemicals to a
Securitization Entity in a Qualified Securitization Transaction; and
(14) additional Investments in an aggregate amount not exceeding $25
million at any one time outstanding.
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"Permitted Junior Securities" means: (1) Capital Stock in Huntsman ICI
Chemicals or any Guarantor; or (2) debt securities of Huntsman ICI Chemicals or
any Guarantor that (A) are subordinated to all Senior Debt and any debt
securities issued in exchange for Senior Debt to substantially the same extent
as, or to a greater extent than, the notes and the related guarantees are
subordinated to Senior Debt pursuant to the terms of the indenture and (B) have
a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the notes.
"Permitted Tax Distribution" for any fiscal year means any payments made in
compliance with clause (6) of the second paragraph under "Certain Covenants--
Limitation on Restricted Payments."
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Qualified Securitization Transaction" means any transaction or series of
transactions that may be entered into by Huntsman ICI Chemicals or any of its
subsidiaries pursuant to which Huntsman ICI Chemicals or any of its
subsidiaries may sell, convey or otherwise transfer pursuant to customary terms
to (1) a Securitization Entity or to Huntsman ICI Chemicals which subsequently
transfers to a Securitization Entity (in the case of a transfer by Huntsman ICI
Chemicals or any of its subsidiaries) and (2) any other Person (in the case of
transfer by a Securitization Entity), or may grant a security interest in any
accounts receivable (whether now existing or arising or acquired in the future)
of Huntsman ICI Chemicals or any of its subsidiaries, and any assets related
thereto including, without limitation, all collateral securing such accounts
receivable, all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets (including contract rights) which are customarily
transferred or in respect of which security interests are customarily granted
in connection with asset securitization transactions involving accounts
receivable.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by Huntsman ICI Chemicals
or any Restricted Subsidiary of Huntsman ICI Chemicals of Indebtedness incurred
in accordance with the "Limitation on Incurrence of Additional Indebtedness"
covenant or Indebtedness described in clause (3) of the definition of
"Permitted Indebtedness", in each case that does not (1) result in an increase
in the aggregate principal amount of Indebtedness of such Person as of the date
of such proposed Refinancing (plus the amount of any premium required to be
paid under the terms of the instrument governing such Indebtedness and plus the
amount of reasonable expenses incurred by Huntsman ICI Chemicals in connection
with such Refinancing) or (2) create Indebtedness with (A) a Weighted Average
Life to Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness of Huntsman ICI Chemicals, then
such Refinancing Indebtedness shall be Indebtedness solely of Huntsman ICI
Chemicals and (y) if such Indebtedness being Refinanced is subordinate or
junior to the notes, then
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such Refinancing Indebtedness shall be subordinate to the notes at least to the
same extent and in the same manner as the Indebtedness being Refinanced.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt in respect of any Designated Senior Debt.
"Restricted Subsidiary" of any Person means any subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to Huntsman ICI Chemicals or a Restricted Subsidiary of any property,
whether owned by Huntsman ICI Chemicals or any Restricted Subsidiary on June
30, 1999 or later acquired, which has been or is to be sold or transferred by
Huntsman ICI Chemicals or such Restricted Subsidiary to such Person or to any
other Person from whom funds have been or are to be advanced by such Person on
the security of such Property.
"Securitization Entity" means a wholly owned subsidiary of Huntsman ICI
Chemicals (or Tioxide Group, Holdings U.K. another Person in which Huntsman ICI
Chemicals or any subsidiary of Huntsman ICI Chemicals makes an Investment and
to which Huntsman ICI Chemicals or any subsidiary of Huntsman ICI Chemicals
transfers accounts receivable or equipment and related assets) which engages in
no activities other than in connection with the financing of accounts
receivable or equipment and which is designated by the Board of Managers of
Huntsman ICI Chemicals (as provided below) as a Securitization Entity
(1) no portion of the Indebtedness or any other Obligations (contingent or
otherwise) of which
. is guaranteed by Huntsman ICI Chemicals or any subsidiary of
Huntsman ICI Chemicals (other than the Securitization Entity)
(excluding guarantees of Obligations (other than the principal of,
and interest on, Indebtedness)) pursuant to Standard Securitization
Undertakings,
. is recourse to or obligates Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals (other than the Securitization
Entity) in any way other than pursuant to Standard Securitization
Undertakings or
. subjects any property or asset of Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals (other than the Securitization
Entity), directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to Standard
Securitization Undertakings and other than any interest in the
accounts receivable or equipment and related assets being financed
(whether in the form of an equity interest in such assets or
subordinated indebtedness payable primarily from such financed
assets) retained or acquired by Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals,
(2) with which neither Huntsman ICI Chemicals nor any subsidiary of
Huntsman ICI Chemicals has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to
Huntsman ICI Chemicals or such subsidiary than those that might be
obtained at the time from Persons that are not Affiliates of Huntsman
ICI Chemicals, other than fees payable in the ordinary course of
business in connection with servicing receivables of such entity, and
(3) to which neither Huntsman ICI Chemicals nor any subsidiary of Huntsman
ICI Chemicals has any obligation to maintain or preserve such entity's
financial condition or cause such
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entity to achieve certain levels of operating results. Any such
designation by the Board of Managers of Huntsman ICI Chemicals shall be
evidenced to the trustee by filing with the trustee a certified copy of
the resolution of the Board of Managers of Huntsman ICI Chemicals
giving effect to such designation and an officers' certificate
certifying that such designation complied with the foregoing
conditions.
"Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of Huntsman ICI Chemicals, whether outstanding on June 30, 1999
or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the notes. Without
limiting the generality of the foregoing, "Senior Debt" shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, (1) all monetary obligations of every nature of Huntsman ICI Chemicals
under the Credit Facilities, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit,
fees, expenses and indemnities, (2) all Interest Swap Obligations and (3) all
Obligations under Currency Agreements and Commodity Agreements, in each case
whether outstanding on June 30, 1999 or thereafter incurred. Notwithstanding
the foregoing, "Senior Debt" shall not include (1) any Indebtedness of
Huntsman ICI Chemicals to a Restricted Subsidiary of Huntsman ICI Chemicals or
any Affiliate of Huntsman ICI Chemicals or any of such Affiliate's
subsidiaries, (2) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals (including, without limitation, amounts
owed for compensation), (3) Indebtedness to trade creditors and other amounts
incurred in connection with obtaining goods, materials or services, (4)
Indebtedness represented by Disqualified Capital Stock, (5) any liability for
federal, state, local or other taxes owed or owing by Huntsman ICI Chemicals,
(6) Indebtedness incurred in violation of the indenture provisions set forth
under "Limitation on Incurrence of Additional Indebtedness," (7) Indebtedness
which, when incurred and without respect to any election under Section 1111(b)
of Title 11, United States Code, is without recourse to Huntsman ICI Chemicals
and (8) any Indebtedness which is, by its express terms, subordinated in right
of payment to any other Indebtedness of Huntsman ICI Chemicals.
"Significant Subsidiary" means any Restricted Subsidiary of Huntsman ICI
Chemicals which, at the date of determination, is a "Significant Subsidiary"
as such term is defined in Regulation S-X under the Exchange Act.
"Specified Venture Capital Stock" means Qualified Capital Stock of
Huntsman ICI Chemicals or holdings issued to a Person who is not an Affiliate
of Huntsman ICI Chemicals and the proceeds from the issuance of which are
applied within 180 days after the issuance thereof to an Investment in an
Unrestricted Subsidiary or joint venture.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals which are reasonably customary in an
accounts receivable securitization transaction.
"Subordinated Indebtedness" means Indebtedness of Huntsman ICI Chemicals
or any Guarantor which is expressly subordinated in right of payment to the
notes or the guarantee of such Guarantor, as the case may be.
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"Tax Sharing Agreement" means the provisions contained in the Limited
Liability Company Agreements of Huntsman ICI Chemicals and Huntsman ICI
Holdings as in existence on June 30, 1999 relating to distributions to be made
to the members thereof with respect to such members' income tax liabilities.
"UK Holdco Note" means that certain unsecured promissory note issued by
Holdings U.K. in favor of Huntsman ICI Financial.
"Unrestricted Subsidiary" of any Person means (1) any subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary in the manner provided below, and (2) any subsidiary
of an Unrestricted Subsidiary. The Board of Managers of Huntsman ICI Chemicals
may designate any subsidiary (including any newly acquired or newly formed
subsidiary) to be an Unrestricted Subsidiary unless such subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, Huntsman ICI
Chemicals or any other subsidiary of Huntsman ICI Chemicals that is not a
subsidiary of the subsidiary to be so designated; provided that (A) Huntsman
ICI Chemicals certifies to the trustee that such designation complies with the
"Limitation on Restricted Payments" covenant and (B) each subsidiary to be so
designated and each of its Subsidiaries has not at the time of designation, and
does not thereafter, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any Indebtedness pursuant
to which the lender has recourse to any of the assets of Huntsman ICI Chemicals
or any of its Restricted subsidiaries. The Board of Managers of Huntsman ICI
Chemicals may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if (A) immediately after giving effect to such designation,
Huntsman ICI Chemicals is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant and (B)
immediately before and immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Managers of Huntsman ICI Chemicals shall be
evidenced to the trustee by promptly filing with the trustee a copy of the
board resolution giving effect to such designation and an officers' certificate
certifying that such designation complied with the foregoing provisions.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (A) the then outstanding
aggregate principal amount of such Indebtedness into (B) the sum of the total
of the products obtained by multiplying (1) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (2) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
Listing
The outstanding notes are listed on the Luxembourg Stock Exchange and we
have applied to list the exchange notes on the Luxembourg Stock Exchange. The
legal notice relating to the issue of the exchange notes and our limited
liability company agreement will be registered prior to the listing with the
Registrar of the District Court in Luxembourg, where such documents are
available for inspection and where copies thereof can be obtained upon request.
As long as any notes are listed on the Luxembourg Stock Exchange and as long as
the rules of such exchange so require, an agent for making payments on, and
transfer of, notes will be maintained in Luxembourg. We have initially
designated Banque Generale du Luxembourg as our agent for such purposes.
Form, Denomination, Book-Entry Procedures and Transfer
Except as set forth below, the notes issued in the exchange offer will be
issued in registered, global form in minimum denominations of $1,000 or
(Euro)1,000 and integral multiples of $1,000 or (Euro)1,000.
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The notes which are denominated in dollars to be issued in the exchange
offer will be represented by one or more global notes in definitive, fully
registered form without interest coupons (collectively, the "Dollar Global
Note") and will be deposited with the trustee as custodian for the Depository
Trust Company ("DTC") and registered in the name of a nominee of DTC. The notes
denominated in euros to be issued in the exchange offer will be represented by
one global note in fully registered form without interest coupons (the "Euro
Global Note") and will be deposited with The First National Bank of Chicago,
London Branch as common depositary for Euroclear (the "Common Depositary") and
registered in the name of a nominee of the Common Depositary. All holders of
notes denominated in euros who exchange their outstanding notes denominated in
euros in the exchange offer will hold their interests through the Euro Global
Note, regardless of whether they purchased their interests pursuant to Rule
144A or Regulation S.
Except in the limited circumstances described below, owners of beneficial
interests in global notes will not be entitled to receive physical delivery of
certificated notes. Transfers of beneficial interests in the global notes will
be subject to the applicable rules and procedures of DTC, Euroclear and
Cedelbank and their respective direct or indirect participants which rules and
procedures may change from time to time.
Global Notes. The following description of the operations and procedures of
DTC, Euroclear and Cedelbank are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time.
Huntsman ICI Chemicals takes no responsibility for these operations and
procedures and urges investors to contact the system or their participants
directly to discuss these matters.
Upon the issuance of the Dollar Global Note, DTC will credit, on its
internal system, the respective principal amount of the individual beneficial
interests represented by such global note to the accounts of persons who have
accounts with such depositary. Such accounts initially will be designated by or
on behalf of the exchange agent. Ownership of beneficial interests in a Dollar
Global Note will be limited to its participants or persons who hold interests
through its participants. Ownership of beneficial interests in the Dollar
Global Notes will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect
to interests of participants) and the records of participants (with respect to
interests of persons other than participants).
Upon the issuance of the Euro Global Note, the Common Depositary will
credit, on its internal system, the respective principal amount of the
beneficial interests represented by such global note to the accounts of
Euroclear. Euroclear will credit, on its internal systems, the respective
principal amounts of the individual beneficial interests in such global notes
to the accounts of persons who have accounts with Euroclear. Such accounts
initially will be designated by or on behalf of the Initial Purchasers.
Ownership of beneficial interests in the Euro Global Note will be limited to
participants or persons who hold interests through participants in Euroclear.
Ownership of beneficial interests in Euro Global Note will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
Euroclear or its nominees (with respect to interests of participants) and the
records of participants (with respect to interests of persons other than
participants).
As long as DTC or the Common Depositary, or its respective nominee, is the
registered holder of a global note, DTC or the Common Depositary or such
nominee, as the case may be, will be considered the sole owner and holder of
the notes represented by such global notes for all purposes under the indenture
and the notes. Unless (1) in the case of a Dollar Global Note, DTC notifies
Huntsman ICI Chemicals that it is unwilling or unable to continue as depositary
for a global note or ceases to be a "Clearing Agency" registered under the
Exchange Act,
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(2) in the case of a Euro Global Note, Euroclear notifies Huntsman ICI
Chemicals it is unwilling or unable to continue as clearing agency, (3) in the
case of a Euro Global Note, the Common Depositary notifies Huntsman ICI
Chemicals that it is unwilling or unable to continue as Common Depositary and a
successor Common Depositary is not appointed within 120 days of such notice or
(4) in the case of any note, an event of default has occurred and is continuing
with respect to such note, described below under "--Form, Denomination, Book-
Entry Procedures and Transfer--Certificated Notes", owners of beneficial
interests in a global note will not be entitled to have any portions of such
global note registered in their names, will not receive or be entitled to
receive physical delivery of notes in certificated form and will not be
considered the owners or holders of the global note (or any notes represented
thereby) under the indenture or the notes. In addition, no beneficial owner of
an interest in a global note will be able to transfer that interest except in
accordance with DTC's and/or Euroclear's and Cedelbank's applicable procedures
(in addition to those under the indenture referred to herein).
Investors may hold their interests in the Dollar Global Note through
Euroclear or Cedelbank and the Euro Global Note through Euroclear, if they are
participants in such systems, or indirectly through organizations which are
participants in such systems. Cedelbank and Euroclear will hold interests in
the Dollar Global Note on behalf of their participants through customers'
securities accounts in their respective names on the books of the Common
Depositary. Investors may hold their interests in the Dollar Global Note
directly through DTC, if they are participants in such system, or indirectly
through organizations (including Euroclear and Cedelbank) which are
participants in such system. All interests in a global note may be subject to
the procedures and requirements of DTC and/or Euroclear and Cedelbank.
Payments of the principal of and interest on Dollar Global Notes will be
made to DTC or its nominee as the registered owner thereof. Payments of the
principal of and interest on the Euro Global Note will be made to the order of
the Common Depositary or its nominee as the registered owner thereof. Neither
Huntsman ICI Chemicals, the trustee, the Common Depositary nor any of their
respective agents will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in the global notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Huntsman ICI Chemicals expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of a global note representing any
notes held by it or its nominee, will immediately credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such global note for such notes as shown on the
records of DTC or its nominee. Huntsman ICI Chemicals expects that the Common
Depositary, in its capacity as paying agent, upon receipt of any payment or
principal or interest in respect of a global note representing any notes held
by it or its nominee, will immediately credit the accounts of Euroclear which
in turn will immediately credit accounts of participants in Euroclear with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such global note for such notes as shown on the records
of Euroclear and Cedelbank. Huntsman ICI Chemicals also expects that payments
by participants to owners of beneficial interests in such global note held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers registered in "street name". Such payments will be the
responsibility of such participants.
Because DTC, Euroclear and Cedelbank can only act on behalf of their
respective participants, who in turn act on behalf of indirect participants and
certain banks, the ability of a holder of a beneficial interest in global notes
to pledge such interest to persons or entities that do not participate in the
DTC, Euroclear or Cedelbank systems, or otherwise take actions in respect of
such interest, may be limited by the lack of a definitive certificate for such
interest. The laws of some countries and
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some U.S. states require that certain persons take physical delivery of
securities in certificated form. Consequently, the ability to transfer
beneficial interests in a global note to such persons may be limited. Because
DTC, Euroclear and Cedelbank can act only on behalf of participants, which, in
turn, act on behalf of indirect participants and certain banks, the ability of
a person having a beneficial interest in a global note to pledge such interest
to persons or entities that do not participate in the DTC system or in
Euroclear and Cedelbank, as the case may be, or otherwise take actions in
respect of such interest, may be affected by the lack of a physical certificate
evidencing such interest.
Except for trades involving only Euroclear and Cedelbank participants,
interests in the Dollar Global Note will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants. Transfers of interests in
Dollar Global Notes between participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds. Transfers of
interests in Euro Global Notes and Dollar Global Notes between participants in
Euroclear and Cedelbank will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes described above, cross-market transfers of dollar notes between DTC
participants, on the one hand, and Euroclear or Cedelbank participants, on the
other hand, will be effected in DTC in accordance with DTC's rules on behalf of
Euroclear or Cedelbank, as the case may be by its respective depositary;
however, such crossmarket transactions will require delivery of instructions to
Euroclear or Cedelbank, as the case may be, by the counterparty in such system
in accordance with the rules and procedures and within the established
deadlines (Brussels time) of such system. Euroclear or Cedelbank, as the case
may be, will, if the transaction meets its settlement requirements, deliver
instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the relevant
global note in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Cedelbank participants may not deliver instructions directly
to the depositories for Euroclear or Cedelbank.
Because of time zone differences, the securities account of a Euroclear or
Cedelbank participant purchasing an interest in the Dollar Global Note from a
DTC participant will be credited, and any such crediting will be reported to
the relevant Euroclear or Cedelbank participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Cedelbank immediately following the DTC settlement date). Cash received in
Euroclear or Cedelbank as a result of sales of interests in a global note by or
through a Euroclear or Cedelbank participant to a DTC participant will be
received with value on the DTC settlement date but will be available in the
relevant Euroclear or Cedelbank cash account only as of the business day for
Euroclear or Cedelbank following the DTC settlement date.
DTC, Euroclear and Cedelbank have advised Huntsman ICI Chemicals that they
will take any action permitted to be taken by a holder of notes (including the
presentation of notes for exchange as described below) only at the direction of
one or more participants to whose account with DTC or Euroclear or Cedelbank,
as the case may be, interests in the global notes are credited and only in
respect of such portion of the aggregate principal amount of the notes as to
which such participant or participants has or have given such direction.
However, if there is an event of default under the notes, DTC, Euroclear and
Cedelbank reserve the right to exchange the global notes for legended notes in
certificated form, and to distribute such notes to their respective
participants.
DTC has advised Huntsman ICI Chemicals as follows: DTC is a limited purpose
trust company organized under the laws of the State of New York, a member of
the Federal Reserve system, a
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"clearing corporation" within the meaning of the Uniform Commercial Code and a
"Clearing Agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical transfer and delivery
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is available to other entities
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Euroclear and Cedelbank have advised Huntsman ICI Chemicals as follows:
Euroclear and Cedelbank each hold securities for their account holders and
facilitate the clearance and settlement of securities transactions by
electronic book-entry transfer between their respective account holders,
thereby eliminating the need for physical movements of certificates and any
risk from lack of simultaneous transfers of securities.
Euroclear and Cedelbank each provide various services including
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Euroclear and Cedelbank each
also deal with domestic securities markets in several countries through
established depository and custodial relationships. The respective systems of
Euroclear and Cedelbank have established an electronic bridge between their two
systems across which their respective account holders may settle trades with
each other.
Account holders in both Euroclear and Cedelbank are world-wide financial
institutions including underwriters, securities brokers and dealers, trust
companies and clearing corporations. Indirect access of both Euroclear and
Cedelbank is available to other institutions that clear through or maintain a
custodial relationship with an account holder of either system.
An account holder's overall contractual relations with either Euroclear or
Cedelbank are governed by the respective rules and operating procedures of
Euroclear or Cedelbank and any applicable laws. Both Euroclear and Cedelbank
act under such rules and operating procedures only on behalf of their
respective account holders, and have no record of or relationship with persons
holding through their respective account holders.
Although DTC, Euroclear and Cedelbank currently follow the foregoing
procedures to facilitate transfers of interests in global notes among
participants of DTC, Euroclear and Cedelbank, they are under no obligation to
do so, and such procedures may be discontinued or modified at any time. Neither
Huntsman ICI Chemicals nor the trustee will have any responsibility for the
performance by DTC, Euroclear or Cedelbank or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
Certificated Notes. If any depositary is at any time unwilling or unable to
continue as a depositary for notes for the reasons set forth above under "--
Form, Denomination, Book-Entry Procedures and Transfer--Global Notes", Huntsman
ICI Chemicals will issue certificates for such notes in definitive, fully
registered, non-global form without interest coupons in exchange for the Dollar
Global Note or the Euro Global Note, as the case may be. Certificates for notes
delivered in exchange for any global note or beneficial interests therein will
be registered in the names, and issued in any approved denominations, requested
by DTC, Euroclear, Cedelbank or the Common Depositary (in accordance with their
customary procedures).
The holder of a non-global note may transfer such note by surrendering it
at the office or agency maintained by Huntsman ICI Chemicals for such purpose
in the Borough of Manhattan, The City of New York, which initially will be the
office of the trustee or of the Transfer Agent in
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Luxembourg. Upon transfer or partial redemption of any note, new certificates
may be obtained from the Transfer Agent in Luxembourg.
Notwithstanding any statement herein, Huntsman ICI Chemicals and the
trustee reserve the right to impose such transfer, certification, exchange or
other requirements, and to require such restrictive legends on certificates
evidencing notes, as they may determine are necessary to ensure compliance with
the securities laws of the United States and the states therein and any other
applicable laws or as DTC, Euroclear or Cedelbank may require.
Same-Day Settlement and Payment
The indenture requires that payments in respect of the notes represented by
the global notes, including principal, premium, if any, interest and liquidated
damages, if any, be made by wire transfer of immediately available funds to the
accounts specified by the global note holder. With respect to notes in
certificated form, Huntsman ICI Chemicals will make all payments of principal,
premium, if any, interest and liquidated damages, if any, by wire transfer of
immediately available funds to the accounts specified by the holders thereof
or, if no such account is specified, by mailing a check to each such holder's
registered address. Certificated notes may be surrendered for payment at the
offices of the trustee or, so long as the notes are listed on the Luxembourg
Stock Exchange, the Paying Agent in Luxembourg on the maturity date of the
notes. The notes represented by the global notes are expected to be eligible to
trade in DTC's, Same-Day Firm Settlement System, and any permitted secondary
market trading activity in such notes will, therefore, be required by DTC to be
settled in immediately available funds. Huntsman ICI Chemicals expects that
secondary trading in any certificated notes will also be settled in immediately
available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedelbank participant purchasing an interest in a global note from a
participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Cedelbank participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Cedelbank) immediately following the settlement date of DTC. Cash received in
Euroclear or Cedelbank as a result of sales of interests in a global note by or
through a Euroclear or Cedelbank participant to a participant in DTC will be
received with value on the settlement date of DTC but will be available in the
relevant Euroclear or Cedelbank cash account only as of the business day for
Euroclear or Cedelbank following DTC's settlement date.
Registration Covenant; Exchange Offer
Huntsman ICI Chemicals has entered into an exchange and registration rights
agreement pursuant to which Huntsman ICI Chemicals has agreed, for the benefit
of the holders of the notes:
(1) to use its reasonable best efforts to file with the SEC a registration
statement with respect to the notes to be exchanged for the
outstanding notes, of which this prospectus forms a part; and
(2) to use its reasonable best efforts to cause the registration statement
of which this prospectus forms a part to become effective within 210
days following the Closing.
Huntsman ICI Chemicals has further agreed to commence the exchange offer
promptly after the exchange offer registration statement has become effective,
hold the offer open for at least 30 days, and exchange notes for all notes
validly tendered and not withdrawn before the expiration of the offer.
Under existing SEC interpretations, the exchange notes would in general be
freely transferable after the exchange offer without further registration under
the Securities Act, except that broker-
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dealers ("Participating Broker-Dealers") receiving exchange notes in the
exchange offer will be subject to a prospectus delivery requirement with
respect to resales of those exchange notes. The SEC has taken the position that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to the exchange notes (other than a resale of an unsold allotment
from the original sale of the notes) by delivery of the prospectus contained in
the exchange offer registration statement. Under the exchange and registration
rights agreement, Huntsman ICI Chemicals is required to allow Participating
Broker-Dealers and other persons, if any, subject to similar prospectus
delivery requirements to use the prospectus contained in the exchange offer
registration statement in connection with the resale of such exchange notes.
Each holder of notes (other than certain specified holders of notes) who wishes
to exchange such notes for exchange notes in the exchange offer will be
required to represent that any exchange notes to be received by it will be
acquired in the ordinary course of its business, that at the time of the
commencement of the exchange offer it has no arrangement with any person to
participate in the distribution (within the meaning of the Securities Act) of
the exchange notes and that it is not an Affiliate of Huntsman ICI Chemicals.
However, if:
. on or before the date of consummation of the exchange offer, the
existing SEC interpretations are changed such that the exchange notes
would not in general be freely transferable in such manner on such
date; or
. the exchange offer has not been consummated on or before March 12,
2000; or
. the exchange offer is not available by any holder of the notes,
Huntsman ICI Chemicals will, in lieu of (or, in the case of clause (3), in
addition to) effecting registration of exchange notes, use its reasonable best
efforts to cause a registration statement under the Securities Act relating to
a shelf registration of the notes for resale by holders or, in the case of
clause (3), of the notes held by the initial purchasers of the notes for resale
by the initial purchasers (the "Resale Registration") to become effective and
to remain effective until two years following the effective date of such
registration statement or such shorter period that will terminate when all the
securities covered by the shelf registration statement have been sold pursuant
to the shelf registration statement.
Huntsman ICI Chemicals will, in the event of the Resale Registration,
provide to the holder or holders of the applicable notes copies of the
prospectus that is a part of the registration statement filed in connection
with the Resale Registration, notify such holder or holders when the Resale
Registration for the applicable notes has become effective and take certain
other actions as are required to permit unrestricted resales of the applicable
notes. A holder of notes that sells such notes pursuant to the Resale
Registration generally would be required to be named as a selling security
holder in the related prospectus and to deliver a prospectus to purchasers,
will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales and will be bound by the
provisions of the exchange and registration rights agreement that are
applicable to such holder (including certain indemnification obligations).
Although Huntsman ICI Chemicals intends to file the registration statement
previously described, we cannot assure you that the registration statement will
be filed or, if filed, that it will become effective.
In the event that:
(1) the registration statement relating to the exchange offer (or, if
applicable, the Resale Registration) has not become effective on or
before January 27, 2000; or
(2) the exchange offer has not been consummated within 45 business days
after the effective date of the exchange offer registration statement;
or
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(3) any registration statement required by the exchange and registration
rights agreement is filed and declared effective but shall thereafter
cease to be effective (except as specifically permitted therein)
without being succeeded immediately by an additional registration
statement filed and declared effective (any such event referred to in
clauses (1) through (4), the "Registration Default"),
then the per annum interest rate on the applicable notes will increase, for the
period from the occurrence of the Registration Default until such time as no
Registration Default is in effect (at which time the interest rate will be
reduced to its initial rate) by 0.25% during the first 90-day period following
the occurrence of such Registration Default, which rate shall increase by an
additional 0.25% during each subsequent 90-day period, up to a maximum of 1.0%.
The summary herein of certain provisions of the exchange and registration
rights agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the exchange
and registration rights agreement, a copy of which will be available upon
request to Huntsman ICI Chemicals.
We have filed an application to list the exchange notes on the Luxembourg
Stock Exchange. Huntsman ICI Chemicals will publish, in accordance with the
procedures described under "Notices," a notice of the commencement of the
exchange offer and any increase in the rate of interest on the notes, as well
as the results of the exchange offer and the new identifying numbers of the
securities (the common codes and ISINs). All documents prepared in connection
with the exchange offer will be available for inspection at the office of the
paying and transfer agent in Luxembourg and all necessary actions and services
in respect of the exchange offer may be done at the office of the paying and
transfer agent in Luxembourg.
The notes and the exchange notes will be considered collectively to be a
single class for all purposes under the indenture, including, without
limitation, waivers, amendments, redemptions and offers to purchase.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives notes for its own account in the exchange
offer must acknowledge that it will deliver a prospectus in connection with any
resale of those notes. 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
notes received in the exchange offer where the outstanding notes were acquired
as a result of market-making activities or other trading activities. We have
agreed that, for a period of 180 days after the consummation of the exchange
offer, we will make this prospectus, as amended and supplemented, available to
any broker-dealer for use in connection with any such resale. In addition,
until , 1999, all dealers effecting transactions in the notes issued in
the exchange offer may be required to deliver a prospectus.
Neither Huntsman ICI Chemicals nor any of the Guarantors will receive any
proceeds from any sale of notes by broker-dealers. Notes received by broker-
dealers for their own account in the exchange offer 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 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 at negotiated prices. Any
such resale may be made directly to purchasers or to or though brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer or the purchasers of any such notes. Any broker-
dealer that resells notes that were received by it for its own account in the
exchange offer and any broker or dealer that participates in a distribution of
such notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and profit on any such resale of notes issued in the exchange
and any commission 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, 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 consummation of the exchange offer,
Huntsman ICI Chemicals 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. Huntsman ICI Chemicals
has agreed to pay all expenses incident to the exchange offer, including the
expenses of one counsel for the holders of the notes, other than the
commissions or concessions of any broker-dealers and will indemnify the holders
of the notes, including any broker-dealers, against certain liabilities,
including liabilities under the Securities Act. We note, however, that, in the
opinion of the SEC, indemnification against liabilities arising under federal
securities laws is against public policy and may be unenforceable.
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CERTAIN U.S. FEDERAL TAX CONSEQUENCES
The following is a general summary of material U.S. federal tax
consequences of the exchange of outstanding notes for the notes to be issued in
the exchange offer and of the ownership and disposition of those new notes to
holders who acquired the outstanding notes at the initial offering for the
original offering price and who acquire new notes in the exchange offer. This
discussion is based on U.S. federal income tax laws, regulations, ruling and
decisions, all as in effect on the date hereof, and all of which are subject to
change, possibly with retroactive effect. This discussion does not address all
aspects of U.S. federal taxation that may be relevant to a particular holder of
the notes based on such holder's particular circumstances. For example, the
following discussion does not address the U.S. federal income tax consequences
of the ownership and disposition of the notes to a holder who is a broker-
dealer, an insurance company, a tax-exempt organization, a financial
institution or who is a non-U.S. holder (as defined below) that controls 10% or
more of the capital or profits interest of Huntsman ICI Chemicals, or of any
related person to Huntsman ICI Chemicals. Further, this discussion generally
considers only holders of notes that purchased the notes upon the initial
offering and that own their notes as capital assets (generally, assets held for
investment) and does not consider the tax treatment of holders that hold the
notes through a partnership or other pass-through entity. Prospective investors
are urged to consult their tax advisors regarding the U.S. Federal tax
consequences of acquiring, holding, and disposing of the notes, as well as any
tax consequences that may arise under the laws of any foreign, state, local or
other taxing jurisdiction.
For purposes of this discussion, a U.S. holder is any person who is:
. a citizen or resident of the U.S.;
. a corporation, partnership, or other entity created or organized in the
U.S. or under the laws of the U.S. or of any political subdivision
thereof;
. an estate the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source; or
. a trust whose administration is subject to the primary supervision of a
U.S. court and which has one or more U.S. persons who have the
authority to control all substantial decisions of the trust.
The Exchange Offer
An exchange of the notes for the exchange notes pursuant to the exchange
offer will be ignored for federal income tax purposes, assuming, as expected,
that the terms of the exchange notes are substantially identical to the terms
of the notes. Consequently, a holder of the notes will not recognize taxable
gain or loss as a result of exchanging notes pursuant to the exchange offer.
The holding period of the exchange notes will be the same as the holding period
of the notes and the tax basis in the exchange notes will be the same as the
basis in the notes immediately before the exchange.
Taxation of U.S. Holders of Notes
Interest
Payments of interest on the notes will be includible in a U.S. holder's
taxable income as ordinary interest income at the time such payments are
accrued or received, in accordance with such holder's method of tax accounting.
151
<PAGE>
Payments of interest that are made to a U.S. holder in respect of notes
that are denominated in a currency other than the U.S. dollar (e.g., Euros),
will be included in gross income by the U.S. holder based on the U.S. dollar
value of such interest payments. The U.S. dollar value of the interest payments
will be translated by a U.S. holder that uses the cash method of tax accounting
based on the spot rate of exchange on the date of receipt regardless of whether
the payments in fact are converted to U.S. dollars. The U.S. dollar value of
the interest payments will be translated by a U.S. holder that uses the accrual
method of tax accounting based on the average exchange rate in effect during
the accrual period (or a portion thereof within the holder's taxable year), or
at such holder's election at the spot rate of exchange on (1) the last day of
the accrual period (or the last day of the taxable year within such accrual
period if the accrual period spans more than one taxable year); or (2) the date
of receipt, if such date is within five business days of the last day of the
accrual period. Such election must be applied consistently by the U.S. holder
to all debt instruments from year to year and can be changed only with the
consent of the Internal Revenue Service. A U.S. holder that uses the accrual
method of tax accounting will recognize exchange gain or loss if the spot rate
of exchange on the date the interest payments are received differs from the
rate applicable to the accrual of that interest in income.
Upon the disposition of the foreign currency, a U.S. holder will recognize
exchange gain or loss in amount equal to the difference between the amount
realized on such disposition and its basis in the foreign currency. The basis
of the U.S. holder in the foreign currency and the amount realized on the
disposition of the foreign currency will be determined by the spot rate of
exchange on the date of receipt or disposition, respectively. Exchange gain and
loss are treated as ordinary income or loss for U.S. federal income tax
purposes.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a note, a U.S. holder generally
will recognize capital gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (less any accrued but unpaid
interest, which will be taxed as such), and its adjusted tax basis in the note.
Such gain or loss will be long term capital gain or loss if the note was held
by the U.S. holder for more than one year on the date of the sale, exchange or
retirement.
If a U.S. holder receives a specified currency other than the U.S. dollar
on the sale, exchange or retirement of a note, the amount realized will be the
U.S. dollar value of the foreign currency received calculated at the spot rate
of exchange on the date of the sale, exchange or retirement. In the case of a
note that is traded on an established securities market, a U.S. holder that
uses the cash method of tax accounting, and a U.S. holder that uses the accrual
method of tax accounting and that makes the election discussed below, will
determine the U.S. dollar value of its basis in the note and the amount
realized on the disposition of the note by translating the foreign currency
paid for the note and the foreign currency received on the disposition of the
note at the spot rate of exchange on the settlement date of such purchase and
disposition, respectively. The election available to accrual basis U.S. holders
in respect of the purchase and sale of notes denominated in foreign currency
traded on an established securities market must be applied consistently by the
U.S. holders to all debt instrument from year to year and can be changed only
with the consent of the Internal Revenue Service.
A U.S. holder will recognize exchange gain or loss upon the disposition of
the foreign currency received on the sale, exchange or retirement of the notes
equal to the difference between the amount realized on the disposition of the
foreign currency and its basis in the foreign currency. Exchange gain and loss
are treated as ordinary income or loss for U.S. federal income tax purposes.
152
<PAGE>
Taxation of Non-U.S. Holders of the Notes
Interest
Payments of interest on the notes to any person who is not a U.S. holder,
which will be referred to as a non-U.S. holder, who satisfies the certification
requirements described below under "Certification Requirements", generally will
not be subject to United States Federal income or withholding tax, provided
that (1) the non-U.S. holder does not actually or constructively own 10% or
more of the capital or profits interest of Huntsman ICI Chemicals; (2) the non-
U.S. holder is not a controlled foreign corporation that is related to Huntsman
ICI Chemicals; or (3) such interest payments are not effectively connected with
the conduct of a United States trade or business of the non-U.S. holder.
Disposition of the Notes
A non-U.S. holder of notes generally will not be subject to U.S. federal
income tax on gain realized on the sale, exchange, or other disposition of a
note, unless (1) such holder is an individual who is present in the U.S. for
183 days or more during the taxable year and certain other requirements are
met, or (2) the gain is effectively connected with the conduct of a U.S. trade
or business of the non-U.S. holder.
Certification Requirements
Information reporting and backup withholding tax at the rate of 31% may
apply to the payments of interest on the notes, and on payment of the proceeds
of a sale or other disposition of the notes. A U.S. holder will generally be
exempt from backup withholding tax if the U.S. holder delivers a properly filed
Internal Revenue Service Form W-9 or a substantially similar substitute form
certifying as to its tax identification numbers, or otherwise establishes an
exemption from backup withholding. A non-U.S. holder generally will be exempt
from the backup withholding tax and information reporting requirements if the
holder delivers a properly filed Internal Revenue Service Form W-8 or a
substantially similar substitute form certifying as to its foreign status, or
otherwise establishes an exemption from backup withholding.
In addition, as mentioned above, a non-U.S. holder might be subject to
withholding tax on the payments of interest on the notes. In order to be exempt
from withholding tax, the non-U.S. holder must deliver a properly filed
Internal Revenue Service Form W-8 or a substantially similar substitute form
certifying as to its foreign status.
Estate Tax
If interest on the notes is exempt from withholding of U.S. federal income
tax under the rules described above, the notes will not be included in the
estate of a deceased non-U.S. holder for U.S. federal estate tax purposes.
LEGAL MATTERS
Certain legal matters as to the validity of the notes offered hereby will
be passed upon for Huntsman ICI Chemicals by Skadden, Arps, Slate, Meagher &
Flom LLP, New York, New York.
153
<PAGE>
EXPERTS
The financial statements of Huntsman Specialty Chemicals Corporation
included in this prospectus as of December 31, 1997 and 1998 and for the two
months ended February 28, 1997, the ten months ended December 31, 1997 and for
the year end December 31, 1998, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
The financial statements of Texaco Chemical Inc. included in this
prospectus to the extent and for the period indicated in their report have been
audited by Arthur Andersen LLP, independent public accountants, and are
included herein in reliance upon the authority of such firm as experts in
giving such reports.
The combined financial statements of the polyurethane chemicals, TiO\\2\\
and selected petrochemicals businesses included in this prospectus for the
years ended December 31, 1996, 1997 and 1998 have been audited by KPMG Audit
Plc, independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm as experts in accounting and
auditing.
GENERAL LISTING INFORMATION
Listing
We have applied to list the exchange notes on the Luxembourg Stock
Exchange. Our limited liability company agreement and the legal notice relating
to the issue of the exchange notes will be deposited prior to any listing with
the Registrar of the District Court in Luxembourg (Greffier en Chef du Tribunal
d'Arrondissement a Luxembourg), where such documents are available for
inspection and where copies thereof can be obtained upon request. As long as
the notes are listed on the Luxembourg Stock Exchange, an agent for making
payments on, and transfers of, notes will be maintained in Luxembourg.
The notes denominated in euros have been accepted for clearance by
Euroclear under the common code . The ISIN for the notes denominated in
euros is .
The CUSIP number for the notes denominated in dollars is .
The issuance of the notes was authorized by the Managers of Huntsman ICI
Chemicals by unanimous written consent on June 22, 1999.
Documents
For so long as the notes are listed on the Luxembourg Stock Exchange and
the rules of such exchange so require, copies of the following documents may be
inspected at the specified office of the Paying Agent and Registrar in
Luxembourg:
. Limited Liability Company Agreement of Huntsman ICI Chemicals LLC;
. the indenture relating to the notes, which includes the forms of the
note certificates; and
. the exchange and registration rights agreement.
In addition, copies of the most recent consolidated financial statements of
Huntsman ICI Chemicals for the preceding financial year, and any interim
quarterly financial statements published
154
<PAGE>
by Huntsman ICI Chemicals will be available at the specified office of the
Paying Agent in Luxembourg for so long as the notes are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require. The
Guarantors do not and will not publish separate reports.
Responsibility Statement
Having made all reasonable inquiries, we confirm that this prospectus
contains all information with respect to Huntsman ICI Chemicals and the notes
which is material in the context of the issue and offering of the notes, that
such information is true and accurate in every material respect and is not
misleading in any material respect and that this prospectus does not omit to
state any material fact necessary to make such information not misleading. The
opinions, assumptions and intentions expressed in this prospectus with regard
to Huntsman ICI Chemicals are honestly held, have been reached after
considering all relevant circumstances and are based on reasonable assumptions.
We accept responsibility for the information contained in this prospectus
accordingly. We represent that, other than as contemplated by the pro forma
financial information presented in this prospectus, there has been no material
adverse change in our financial position since March 31, 1999.
155
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Huntsman ICI Chemicals LLC
Independent Auditors' Report--Deloitte & Touche LLP ..................... F-2
Balance Sheet as of June 30, 1999 (Date of Initial Capitalization)....... F-3
Notes to Balance Sheet................................................... F-4
Huntsman Specialty Chemicals Corporation and its Predecessor:
Independent Auditors' Report--Deloitte & Touche LLP...................... F-6
Report of Independent Public Accountants--Arthur Andersen LLP............ F-7
Balance Sheets as of December 31, 1997 and 1998.......................... F-8
Statements of Operations for the year ended December 31, 1996 and
the two months ended February 28, 1997 and the ten months ended
December 31, 1997 and the year ended December 31, 1998.................. F-10
Statements of Stockholders' Equity for the year ended December 31,
1996, the two months ended February 28, 1997, the ten months ended
December 31, 1997 and the year ended December 31, 1998 ................. F-11
Statements of Cash Flows for the year ended December 31, 1996, the two
months ended February 28, 1997, the ten months ended December 31, 1997
and the year ended December 31, 1998.................................... F-12
Notes to Financial Statements............................................ F-13
Balance Sheets as of December 31, 1998 and March 31, 1999 (Unaudited) ... F-26
Statements of Income for the three months ended March 31, 1998
and 1999 (Unaudited) ................................................... F-28
Statements of Cash Flows for the three months ended March 31,
1998 and 1999 (Unaudited) .............................................. F-29
Notes to Financial Statements (Unaudited) ............................... F-30
ICI Businesses:
Independent Auditors Report--KPMG Audit Plc.............................. F-38
Combined Profit and Loss Accounts for the years ended
December 31, 1996, 1997 and 1998........................................ F-39
Combined Statements of Total Recognised Gains and Losses
for the years ended December 31, 1996, 1997 and 1998.................... F-39
Combined Balance Sheets as at December 31, 1997 and 1998................. F-40
Combined Cash Flow Statements for the years ended
December 31, 1996, 1997 and 1998........................................ F-41
Reconciliation of Movements in Combined Net Investment for the years
ended
December 31, 1996, 1997 and 1998........................................ F-41
Notes to the Combined Financial Statements............................... F-42
Unaudited Condensed Combined Profit and Loss Accounts for the three
months ended March 31, 1998 and March 31, 1999.......................... F-71
Unaudited Condensed Combined Balance Sheets as at December 31, 1998 and
March 31, 1999.......................................................... F-72
Unaudited Condensed Combined Cash Flow Statements for the three months
ended March 31, 1998 and 1999........................................... F-73
Notes to the Unaudited Condensed Combined Financial Statements........... F-74
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Huntsman ICI Chemicals LLC
We have audited the accompanying balance sheet of Huntsman ICI Chemicals
LLC (the "Company") (a wholly-owned subsidiary of Huntsman ICI Holdings LLC) as
of June 30, 1999 (date of initial capitalization). This financial statement is
the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of the Company at June 30, 1999 in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Salt Lake City, Utah
August 12, 1999
F-2
<PAGE>
HUNTSMAN ICI CHEMICALS LLC
(a wholly-owned subsidiary of Huntsman ICI Holdings LLC)
BALANCE SHEET
June 30, 1999 (Date of Initial Capitalization)
<TABLE>
<S> <C>
ASSETS
Cash..................................................................... $1,000
------
TOTAL.................................................................... $1,000
======
MEMBER'S EQUITY
Member's Equity.......................................................... $1,000
------
TOTAL.................................................................... $1,000
======
</TABLE>
See notes to balance sheet.
F-3
<PAGE>
HUNTSMAN ICI CHEMICALS LLC
(a wholly-owned subsidiary of Huntsman ICI Holdings LLC)
NOTES TO BALANCE SHEET
As of June 30, 1999 (Date of Initial Capitalization)
1. GENERAL
The accompanying balance sheet includes the accounts of Huntsman ICI
Chemicals LLC (the Company), a wholly owned subsidiary of Huntsman ICI
Holdings LLC (Holdings). The Company was incorporated on April 12, 1999
for the purpose of entering into a Contribution Agreement to acquire
certain businesses of Imperial Chemical Industries PLC (ICI) discussed in
Note 2 and the propylene oxide (PO) business of Huntsman Specialty
Chemical Company (HSCC). Holdings and HSCC are majority-owned subsidiaries
of Huntsman Corporation. The Company was initially funded on
June 30, 1999.
Use of Estimates in Preparing Financial Statements--The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. SUBSEQUENT EVENTS
Effective July 1, 1999, pursuant to a contribution agreement and ancillary
agreements between the Company, HSCC, ICI, and Holdings, the Company
acquired assets and stock representing ICI's polyurethene chemicals,
selected petrochemicals, (including ICI's 80% interest in the Wilton
Olefins facility), and TiO\\2\\ businesses and HSCC's PO business. In
addition, at the close of business on June 30, 1999, the Company also
acquired the remaining 20% ownership interest in the Wilton Olefins
facility from BP Chemicals, Limited (BP Chemicals), as well as the BP
Chemicals' interest in related infrastructure assets for approximately
$118 million.
In exchange for transferring its business to the Company, HSCC (1)
retained a 60% common equity interest in Holdings and (2) received
approximately $360 million in cash. In exchange for transferring its
business to the Company, ICI received (1) a 30% common equity interest in
Holdings, (2) approximately $2 billion in cash that was paid in a
combination of U.S. dollars and euros, and (3) discount notes of Holdings
with approximately $508 million of accreted value at issuance. The
obligations of the discount notes from Holdings are non-recourse to the
Company. BT Capital Investors, L.P., Chase Equity Associates, L.P., and
the Goldman Sachs Group acquired the remaining 10% common equity interest
in Holdings for approximately $90 million cash.
The cash sources to finance the above transactions are summarized as
follows (in millions):
<TABLE>
<S> <C>
Senior secured credit facilities...................................... $1,685
Senior subordinated notes............................................. 807
Cash equity from institutional investors.............................. 90
------
Total cash sources.................................................... $2,582
======
</TABLE>
F-4
<PAGE>
HSCC is considered the acquiror of the businesses transferred to the
Company in connection with the transaction with ICI and HSCC because the
shareholders of HSCC acquired majority control of the businesses
transferred to the Company. The transactions with ICI and BP Chemicals
will be accounted for as purchase transactions, and accordingly, the
financial statements of the Company effective July 1, 1999 will reflect
the purchase price (including transaction costs and liabilities assumed)
based upon the estimated fair values.
3. BORROWING ARRANGEMENTS
The Senior Secured Credit Facilities will allow the Company to borrow up
to an aggregate of $2,070 million comprised of as follows (in millions):
<TABLE>
<S> <C>
Revolving loan....................................................... $ 400
Term A dollar loan................................................... 240
Term A euro loan (in euro equivalent)................................ 300
Term B loan.......................................................... 565
Term C loan.......................................................... 565
------
Total................................................................ $2,070
======
</TABLE>
Both the term A dollar loan facility and the term A euro loan facility
mature on June 30, 2005 and are payable in semi-annual installments
commencing December 31, 2000 with the amortization increasing over time.
The term B loan facility matures on June 30, 2007 and the term C loan
facility matures on June 30, 2008. Both the term B and term C loan
facilities require repayments in annual installments of $5.65 million
each, commencing June 30, 2000, with the remaining unpaid balance due on
final maturity. The revolving loan facility matures on June 30, 2005 with
no scheduled commitment reductions.
Interest rates for the Senior Secured Credit Facilities are based upon, at
the Company's option, either a eurocurrency rate or a base rate plus a
spread. The applicable spreads vary based on a pricing grid, in the case
of eurocurrency based loans, from 1.25% to 3.50% per annum depending on
the loan facility and whether specified conditions have been satisfied
and, in the case of base rate loans, from 0% to 2.25% per annum.
The obligations under the Senior Secured Credit Facilities are supported
by guarantees of certain other subsidiaries (Tioxide Group Limited,
Tioxide America, Inc., and Huntsman ICI Financial LLC) and Holdings as
well as pledges of 65% of the voting stock of certain non-U.S.
subsidiaries. The Senior Secured Credit Facilities contain covenants
relating to incurrence of debt, purchase and sale of assets, limitations
on investments, affiliate transactions and maintenance of certain
financial ratios. The Senior Secured Credit Facilities limit the payment
of dividends generally to the amount required by the members to pay income
taxes.
The Company issued $600 million and (Euro)200 million 10 1/8% Senior
Subordinated Notes (the Notes). Interest on the Notes is payable semi-
annually and the Notes mature on July 1, 2009. The Notes will be
guaranteed by the Company's domestic subsidiaries and certain non-U.S.
subsidiaries. The Notes may be redeemed, in whole or in part, at any time
by the Company on or after July 1, 2004, at percentages ranging from 105%
to 100% at July 1, 2007 of their face amount, plus accrued and unpaid
interest. The Notes contain covenants relating to the incurrence of debt,
limitations on distributions, asset sales and affiliate transactions,
among other things. The Notes also contain a change in control provision
requiring the Company to offer to repurchase the Notes upon a change in
control.
F-5
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
Huntsman Specialty Chemicals Corporation
We have audited the accompanying balance sheets of Huntsman Specialty
Chemicals Corporation (the "Company"), formerly Texaco Chemical, Inc. (the
"Predecessor Company"), as of December 31, 1997 and 1998, and the related
statements of operations, stockholder's equity, and cash flows for the two
months ended February 28, 1997 (Predecessor Company operations), the period
from March 1, 1997 (commencement of operations) to December 31, 1997 and the
year ended December 31, 1998. 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, such financial statements present fairly, in all material
respects, the financial position of Huntsman Specialty Chemicals Corporation at
December 31, 1997 and 1998 and the results of the Predecessor Company
operations and its cash flows for the two months ended February 28, 1997 and
the results of the Company operations and cash flows for the period March 1,
1997 to December 31, 1997 and the year ended December 31, 1998, in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Houston, Texas
February 26, 1999 (June 2, 1999 as to Note 14)
F-6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Texaco Chemical Inc.:
We have audited the accompanying statements of operations, stockholders'
equity and cash flows of Texaco Chemical Inc. (a Delaware corporation) (the
"Predecessor Company") for the year ended December 31, 1996. These financial
statements are the responsibility of Texaco Chemical Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of the operations and cash flows of
Texaco Chemical Inc. for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 14, 1997
F-7
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
As of December
31,
------------------
1997 1998
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 2)........................ $ 10,093 $ 2,574
Accounts receivable....................................... 43,894 45,787
Related party accounts receivable (Note 8)................ 5,144 4,710
Inventories (Notes 2 and 3)............................... 23,102 19,687
Deferred tax asset (Note 7)............................... 655
Other current assets...................................... 974 862
-------- --------
Total current assets.................................... 83,862 73,620
-------- --------
PLANT AND EQUIPMENT (Notes 1 and 2):
Land and improvements..................................... 3,575 3,575
Buildings and equipment................................... 404,013 415,268
Construction-in-progress.................................. 4,600 3,753
-------- --------
Total plant and equipment............................... 412,188 422,596
Less accumulated depreciation and amortization............ (16,920) (37,505)
-------- --------
Plant and equipment, net................................ 395,268 385,091
-------- --------
OTHER ASSETS (Notes 2 and 4)................................ 114,542 118,922
-------- --------
TOTAL....................................................... $593,672 $577,633
======== ========
</TABLE>
See notes to financial statements.
F-8
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
As of December
31,
-----------------
1997 1998
-------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable (Note 2).................................. $ 15,207 $ 9,394
Related party accounts payable (Note 8).................... 8,797 16,588
Accrued liabilities (Note 5)............................... 10,236 13,835
Deferred income taxes (Note 7)............................. 3,436
Current portion of long-term debt.......................... 9,209
-------- --------
Total current liabilities................................ 43,449 43,253
-------- --------
LONG-TERM DEBT (Notes 1, 2 and 6)
Senior Credit Facilities................................... 256,100 221,987
Term Loan.................................................. 135,000 135,000
BASF note.................................................. 63,473 70,575
-------- --------
Total long-term debt..................................... 454,573 427,562
-------- --------
DEFERRED INCOME TAXES (Notes 2 and 7)........................ 2,572 4,264
MANDATORILY REDEEMABLE PREFERRED STOCK
($1 par value; 65,000 shares authorized, issued and
outstanding-stated at liquidation value of $1,000 per
share, including $2,682 and $6,909 in unpaid dividends,
respectively)............................................. 67,682 71,909
-------- --------
Total liabilities........................................ 568,276 546,988
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 8, 9, 11 and 12)
STOCKHOLDER'S EQUITY:
Common stock ($.01 par value; 2,500 shares authorized,
issued and outstanding)...................................
Additional paid-in capital................................. 25,000 25,000
Retained earnings.......................................... 396 5,645
-------- --------
Total stockholder's equity............................... 25,396 30,645
-------- --------
TOTAL........................................................ $593,672 $577,633
======== ========
</TABLE>
See notes to financial statements.
F-9
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
STATEMENTS OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
Predecessor Company
-------------------------
Two Months Ten Months
Year Ended Ended Ended Year Ended
December 31, February 28, December 31, December 31,
1996 1997 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE:
Sales (Note 13)......... $358,071 $42,800 $283,808 $253,161
Related party sales
(Note 8)............... 46,582 9,657 24,053 32,999
Tolling fees............ 8,552 40,666 52,509
Other revenue........... 10,424 -- -- --
-------- ------- -------- --------
Total revenue......... 415,077 61,009 348,527 338,669
COST OF SALES (Note 8).... 377,173 64,935 300,051 276,538
-------- ------- -------- --------
GROSS PROFIT (LOSS)....... 37,904 (3,926) 48,476 62,131
EXPENSES (Notes 8 and 9):
Sales, general &
administrative......... 15,256 1,103 5,499 4,830
Research and
development............ 3,695 694 2,578 3,030
-------- ------- -------- --------
Total expenses........ 18,951 1,797 8,077 7,860
-------- ------- -------- --------
OPERATING INCOME (LOSS)... 18,953 (5,723) 40,399 54,271
INTEREST EXPENSE (Note
6)....................... 35,985 40,925
INTEREST INCOME........... (581) (1,050)
OTHER INCOME.............. (863)
-------- ------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAXES............. 18,953 (5,723) 4,995 15,259
INCOME TAX EXPENSE
(BENEFIT) (Notes 2 and
7)....................... 6,643 (2,035) 1,917 5,783
-------- ------- -------- --------
NET INCOME (LOSS)......... $ 12,310 $(3,688) $ 3,078 $ 9,476
======== ======= ======== ========
</TABLE>
See notes to financial statements.
F-10
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
STATEMENTS OF STOCKHOLDER'S EQUITY
(In thousands)
<TABLE>
<CAPTION>
Additional Retained
Common Paid-In Earnings
Stock Capital (Deficit) Total
------ ---------- --------- -------
<S> <C> <C> <C> <C>
Predecessor Company:
BALANCE, JANUARY 1, 1996................ $ 1 $ $(7,338) $(7,337)
Net income.............................. 12,310 12,310
---- ------- ------- -------
BALANCE, DECEMBER 31, 1996.............. 1 4,972 4,973
---- ------- ------- -------
Net loss................................ (3,688) (3,688)
---- ------- ------- -------
BALANCE, FEBRUARY 28, 1997.............. $ 1 $ $ 1,284 $ 1,285
==== ======= ======= =======
Post Acquisition:
Issuance of stock at formation, March
21, 1997............................... 25,000 25,000
Dividends accrued on mandatorily
redeemable preferred stock............. (2,682) (2,682)
Net income.............................. 3,078 3,078
---- ------- ------- -------
BALANCE, DECEMBER 31, 1997.............. -- 25,000 396 25,396
---- ------- ------- -------
Dividends accrued on mandatorily
redeemable preferred stock............. (4,227) (4,227)
Net income.............................. 9,476 9,476
---- ------- ------- -------
BALANCE, DECEMBER 31, 1998.............. $-- $25,000 $ 5,645 $30,645
==== ======= ======= =======
</TABLE>
See notes to financial statements.
F-11
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Predecessor Company
-------------------------
Two Months Ten Months
Year Ended Ended Ended Year Ended
December 31, February 28, December 31, December 31,
1996 1997 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)....... $12,310 $(3,688) $ 3,078 $ 9,476
Reconciliation to net
cash provided by
(used in) operating
activities:
Depreciation and
amortization......... 465 1,092 25,733 30,482
Deferred income
taxes................ 37,575 4,102 1,917 5,783
Interest on
subordinated note.... 5,272 7,102
Changes in operating
working capital:
Accounts receivable... (3,660) 8,399 (11,766) (1,459)
Inventories........... (7,453) (1,561) 10,763 3,415
Other current assets.. (2,092) 603 (974) 112
Accounts payable...... 7,995 (12,619) (85) 1,978
Other current
liabilities.......... 2,635 1,328 4,861 3,599
Other assets............ 235 (2,709) (1,949) (14,277)
------- ------- -------- -------
Net cash provided by
(used in) operating
activities......... 48,010 (5,053) 36,850 46,211
------- ------- -------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of PO/MTBE
facility............... (508,200)
Capital expenditures.... (1,445) (1,090) (2,067) (10,408)
------- ------- -------- -------
Net cash used in
investing
activities......... (1,445) (1,090) (510,267) (10,408)
------- ------- -------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of long-term debt...... 483,200
Repayment of long-term
debt................... (24,690) (43,322)
Issuance of common
stock.................. 25,000
Intercompany investments
and advances from (to)
Texaco (net)........... (46,565) 6,143
------- ------- -------- -------
Net cash provided by
(used in) financing
activities......... (46,565) 6,143 483,510 (43,322)
------- ------- -------- -------
INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS.............. -- -- 10,093 (7,519)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD... -- -- 10,093
------- ------- -------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD......... $ -- $ -- $ 10,093 $ 2,574
======= ======= ======== =======
SUPPLEMENTAL SCHEDULE OF
NONCASH FINANCING
ACTIVITIES:
In conjunction with the
purchase of the
facilities, the Company
issued preferred stock
to Texaco.............. $ 65,000
========
</TABLE>
See notes to financial statements.
F-12
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
NOTES TO FINANCIAL STATEMENTS
1.ACQUISITIONS
General--The accompanying financial statements include the accounts of
Huntsman Specialty Chemicals Corporation (the "Company" or "Huntsman"),
which was formed on December 26, 1996. Effective March 1, 1997 (the
"Effective Date") for financial accounting purposes, the Company purchased
from Texaco, Inc. its propylene oxide ("PO") and methyl tertiary butyl
ether ("MTBE") business, known as the "PO/MTBE business" for $573.2
million, subject to a working capital adjustment (the "Acquisition"). The
Acquisition closed on March 21, 1997.
The financial statements for the year ended December 31, 1996 and the two
months ended February 28, 1997 present on a historical cost basis the
assets, liabilities, revenues and expenses related to Texaco Chemical Inc.
("TCI" or the "Predecessor Company"), a wholly-owned subsidiary of Texaco
Inc., which includes the PO/MTBE business that was included in the
Acquisition. These Predecessor Company financial statements exclude
certain assets held under the Citibank lease (see Note 12).
To finance the Acquisition, the Company entered into a $350 million Credit
Agreement with a group of financial institutions, a $135 million Term Loan
Agreement and issued a $75 million Subordinated Note to BASF. The Company
also issued preferred stock to Texaco with an aggregate liquidation
preference of $65 million at the date of issuance. Cumulative dividends of
5.5% to 6.5% of the liquidation preference (which equals redemption price)
will accrue and be payable commencing July 15, 2002. The Company may
redeem the preferred stock at any time, subject to restrictions, and is
required to redeem the stock prior to April 15, 2008. Additionally, prior
to the Acquisition, the Company received an equity contribution from its
parent company, Huntsman Specialty Chemicals Holdings Corporation, in the
amount of $25 million.
The sources and applications of funds required to consummate the
Acquisition are summarized below in thousands of dollars.
<TABLE>
<S> <C>
Sources of Funds:
Senior Credit Facilities:
Revolving Credit Facility(1)................................... $ --
Term Loan A.................................................... 150,000
Term Loan B.................................................... 70,000
Term Loan C.................................................... 70,000
Term Loan........................................................ 135,000
BASF Subordinated Note(2)........................................ 58,200
Equity contribution.............................................. 25,000
Seller Preferred Stock........................................... 65,000
--------
Total.......................................................... $573,200
========
Uses of Funds:
Payment of the Acquisition Price................................. $560,700
Transaction fees and expenses(3)................................. 12,500
--------
Total.......................................................... $573,200
========
</TABLE>
F-13
<PAGE>
--------
(1) The Revolving Credit Facility provided for maximum borrowings of up to
$60 million.
(2) The BASF Subordinated Note had an original principal amount of $75
million, for financial reporting purposes, the note was recorded at
its estimated fair value of $58.2 million.
(3) Total transaction fees and expenses totaled $15.0 million, of which
$9.6 million was paid on March 21, 1997. The remainder was paid using
the excess funds obtained by the notes, the equity contribution and
funds provided by operations.
The Acquisition has been accounted for as a purchase transaction, and,
accordingly, the financial statements subsequent to the Effective Date
reflect the purchase price, including transaction costs allocated to
tangible and intangible assets acquired and liabilities assumed based on
their estimated fair values as of the Effective Date.
The allocation of the $572.5 million purchase price (after working capital
adjustment and including fees and expenses) is summarized as follows in
thousands of dollars:
<TABLE>
<S> <C>
Current assets..................................................... $ 68,569
Plant and equipment................................................ 410,122
Other noncurrent assets............................................ 121,405
Liabilities assumed................................................ (27,547)
--------
Total............................................................ $572,549
========
</TABLE>
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business--The Company markets and sells products: (1) PO,
(2) Glycols, and (3) MTBE, which it manufactures at its facility in Port
Neches, Texas (the "Facility").
Revenue Recognition--The Company generates revenues through sales in the
open market, raw material conversion agreements and long-term supply
contracts. The Company recognizes revenues as the products are shipped.
Cash Flow Information--Highly liquid investments with an original maturity
of three months or less when purchased are considered to be cash
equivalents. The Company paid $31 million and $33 million in interest
expense for the period and the year ended December 31, 1997 and 1998,
respectively. The Company paid $10 thousand in state taxes during 1998.
Supplemental Non-cash Information--In 1996, TCI had an MTBE sales
agreement with Huntsman in which it purchased MTBE from Huntsman at a
price which may have been greater than market. Texaco Inc. absorbed any
additional costs and reimbursed TCI through intercompany investments and
advances.
Financial Instruments--The carrying amount reported in the balance sheet
for cash and cash equivalents, accounts receivable, and accounts payable
approximates fair value because of the immediate or short-term maturity of
these financial instruments. The carrying value of the Revolving Credit
Facility and the Term Loans approximate fair value since they bear
interest at a floating rate plus an applicable margin. The fair value of
the Subordinated Note, $64 million and $75 million at December 31, 1997
and 1998, respectively, was derived based on rates currently available to
the Company for debt instruments of similar terms.
The Company enters into certain derivative financial instruments as part
of its interest rate risk management. Interest rate swaps, caps, collars
and floors are classified as matched transactions. The differential to be
paid or received as interest rates change is accrued and
F-14
<PAGE>
recognized as an adjustment to interest expense. The related amount
payable to or receivable from counterparties is included in accounts
receivable or accrued liabilities. Gains and losses on terminations of
interest rate agreements are deferred and amortized over the lesser of the
remaining term of the original contract or the life of the debt. The
premiums paid for the interest rate agreements are included as other
assets and are amortized to expense over the term of the agreements.
The fair values of derivative financial instruments are the amounts at
which they could be settled, based on estimates obtained from dealers.
Such amounts as of December 31, 1997 and 1998 were as follows in
thousands:
<TABLE>
<CAPTION>
1997 1998
------------------- -------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Pay fixed swaps..................... $(840) $(2,182)
Interest rate caps purchased........ $ 736 221 $641 61
Interest rate collars purchased..... 1,139 124 927 (3,610)
</TABLE>
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Carrying Value of Long-Term Assets--The Company evaluates the carrying
value of long-term assets based upon current and anticipated undiscounted
cash flows, and recognizes an impairment when such estimated cash flows
will be less than the carrying value of the asset. Measurement of the
amount of impairment, if any, is based upon the difference between
carrying value and fair value.
Inventories--Inventories of petrochemical products are stated at cost,
determined on the weighted average method. Inventories are valued at the
lower of cost or market. Materials and supplies are stated at average
cost. Prior to March 1, 1997, MTBE was valued at market price as of the
date produced.
Plant and Equipment and Depreciation and Amortization--Depreciation of
plant and equipment is provided generally on the group plan, using the
straight-line method, with depreciation based on a 5% composite rate for
all classes of property.
Effective March 1, 1997, periodic maintenance and repairs applicable to
manufacturing facilities are accounted for on the prepaid basis by
capitalizing the cost of the turnaround and amortizing the costs over the
estimated period until the next turnaround. Normal maintenance and repairs
of all other plant and equipment are charged to expense as incurred.
Renewals, betterments and major repairs that materially extend the useful
life of the assets are capitalized, and the assets replaced, if any, are
retired.
Prior to March 1, 1997, periodic maintenance and repairs applicable to
manufacturing facilities were accounted for on an accrual basis.
When capital assets representing complete groups of property are disposed
of, the difference between the disposal proceeds and net book value is
credited or charged to income. When miscellaneous assets are disposed of,
the difference between asset cost and salvage value is charged or credited
to accumulated depreciation.
F-15
<PAGE>
Interest expense capitalized as part of plant and equipment was $77
thousand and $441 thousand for the period and the year ended December 31,
1997 and 1998, respectively
Intangible assets--Intangible assets are stated at their fair market
values at the time of the Acquisition and are amortized using the
straight-line method over their estimated useful lives of five to fifteen
years or over the life of the related agreement and are included in "Other
assets."
Preferred Stock--In conjunction with the Acquisition, the Company issued
preferred stock to Texaco with an aggregate liquidation preference of $65
million. The preferred stock has a cumulative dividend rate of 5.5%, 6.5%
or a combination thereof of the liquidation preference per year, which is
adjusted on April 15th of each year, based on the Company's cash flow in
the previous year. During 1998, $35 million of the preferred stock accrued
dividends at the rate of 6.5% and the remainder at 5.5%. Unpaid cumulative
dividends will compound at a rate of 5.5% or 6.5% and are payable
commencing July 15, 2002. The Company may redeem the preferred stock at
any time, subject to restrictions, and is required to redeem the stock
prior to April 15, 2008.
Environmental Expenditures--Environmental related restoration and
remediation costs are recorded as liabilities and expensed when site
restoration and environmental remediation and clean-up obligations are
either known or considered probable and the related costs can be
reasonably estimated. Other environmental expenditures, which are
principally maintenance or preventative in nature, are recorded when
expended and are expensed or capitalized as appropriate.
Income Taxes--The Company files a consolidated federal income tax return
with its ultimate parent. The Company has entered into a tax allocation
agreement with its ultimate parent whereby the Company is charged or
credited for an amount that would have been applicable had the Company
filed a separate consolidated federal income tax return.
Deferred income taxes are provided for temporary differences between
financial statement income and taxable income using the asset and
liability method in accordance with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes."
See Note 8--For Predecessor Company Income Tax Policy.
Research and Development Expenses--Research and development costs are
expensed as incurred.
Earnings per Share--Earnings per share have been omitted from the
statement of operations since such information is not meaningful.
Recently Issued Financial Accounting Standards--In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments
at fair value. SFAS No. 133 is effective for the Company's financial
statements for the year ending December 31, 2000. The Company is currently
evaluating the effects of SFAS No. 133 on its financial statements.
F-16
<PAGE>
3.INVENTORIES
Inventories as of December 31, 1997 and 1998 consisted of the following in
thousands of dollars:
<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Feedstocks.................................................. $ 7,471 $ 5,175
Unfinished products......................................... 224 1,032
Finished products........................................... 15,127 12,915
------- -------
22,822 19,122
Materials and supplies...................................... 280 565
------- -------
Total....................................................... $23,102 $19,687
======= =======
</TABLE>
In the normal course of operations, the Company exchanges raw materials
with other companies for the purpose of reducing transportation costs. No
gains or losses are recognized on these exchanges, and the net open
exchange positions are valued at the Company's cost. Net amounts deducted
from inventory under open exchange agreements owed by the Company at
December 31, 1997 and 1998 were $90 thousand (477,688 pounds of feedstock
and products) and $412 thousand (927,529 pounds of feedstock and products)
respectively, which represent the net amounts payable by the Company under
open exchange agreements.
4.OTHER ASSETS
Other assets at December 31, 1997 and 1998 consisted of the following in
thousands of dollars:
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Patents, licenses, and technology........................ $ 90,180 $ 90,180
Other agreements......................................... 17,823 17,823
Non-compete agreements................................... 1,520 1,520
-------- --------
Total intangibles........................................ 109,523 109,523
Accumulated amortization................................. (6,736) (14,820)
-------- --------
Net intangibles.......................................... 102,787 94,703
Capitalized turnaround expense........................... 14,009
Other noncurrent assets.................................. 11,296 9,557
Spare parts inventory.................................... 459 653
-------- --------
Total.................................................... $114,542 $118,922
======== ========
</TABLE>
5.ACCRUED LIABILITIES
Accrued liabilities at December 31, 1997 and 1998 consisted of the
following in thousands of dollars:
<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Ad valorem taxes............................................ $ 4,532 $ 6,974
Product rebate accruals..................................... 2,367 4,110
Other miscellaneous accruals................................ 3,337 2,751
------- -------
Total....................................................... $10,236 $13,835
======= =======
</TABLE>
F-17
<PAGE>
6.LONG-TERM DEBT
Long-term debt as of December 31, 1997 and 1998 consisted of the following
in thousands of dollars:
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Senior Credit Facilities:
Revolving Credit Facility
Term Loan A........................................... $126,709 $ 87,935
Term Loan B........................................... 69,300 67,026
Term Loan C........................................... 69,300 67,026
Term Loan............................................... 135,000 135,000
BASF Subordinated Note, face value $75 million,
discounted to a 9.3% effective rate.................... 59,257 60,632
Accrued Interest on BASF Subordinated Note.............. 4,216 9,943
-------- --------
Total................................................... 463,782 427,562
Less current maturities................................. (9,209)
-------- --------
Total long-term debt.................................... $454,573 $427,562
======== ========
</TABLE>
The scheduled maturities of long-term debt by year as of December 31, 1998
are as follows (in thousands):
<TABLE>
<CAPTION>
Year ended December 31:
-----------------------
<S> <C>
1999............................................................... $ --
2000............................................................... 30,435
2001............................................................... 37,500
2002............................................................... 20,000
2003............................................................... 1,400
Thereafter......................................................... 352,595
--------
Total.............................................................. 441,930
Less discount on BASF note......................................... (14,368)
--------
Total long-term debt............................................... $427,562
========
</TABLE>
Senior Credit Facilities--In March 1997, the Company entered into a Bank
Credit Agreement with Bankers Trust Company related to Senior Credit
Facilities in an aggregate principal amount of $350 million. These
facilities consisted of (i) a five-year $60 million revolving credit
facility (the "Revolving Credit Facility"), (ii) a five-year $150 million
aggregate principal amount Term Loan A, a seven-year $70 million aggregate
principal amount Term Loan B and an eight-year $70 million aggregate
principal amount Term Loan C (the "Term Loan A", the "Term Loan B" and the
"Term Loan C" are referred to collectively as the "Senior Term Loans").
The Senior Credit Facilities bear interest at a rate equal to, at the
Company's option, (i) the Reserve adjusted Eurodollar Rate plus an
applicable margin which ranges from 0.625% to 2.0% for the Revolving
Credit Facility and the Term Loan A, 2.00 to 2.50% for the Term Loan B and
2.25 to 2.75% for the Term Loan C, ("Eurodollar Loans") or (ii) the Base
Rate (defined in the Senior Credit Facilities as the higher of the prime
rates of Bankers Trust Company or the sum of the overnight rate on the
federal funds transactions plus 0.5% ) plus the applicable margin, equal
to 1.25% less than the applicable borrowing margin for Eurodollar loans,
but in no event less than 0% ("Prime Rate Loans").
The Revolving Credit Facility requires a commitment fee ranging from
0.225% to 0.5% per annum on the total unused balance. This rate is
determined based on the Company's most recent financial ratios. The rate
during 1997 and 1998 was 0.5%.
F-18
<PAGE>
The obligations of the Company under the Senior Credit Facilities are
secured by a first-priority interest in substantially all of the assets of
the Company.
Term Loan--In March 1997, the Company entered into a Term Loan Agreement
with Bankers Trust Company and various lending institutions in the
aggregate principal amount of $135 million (the "Term Loan"). The Term
Loan bears interest at a rate equal to, at the Company's option, (i) the
Eurodollar Rate plus an applicable margin of 3.5% per annum ("Eurodollar
Loans") or (ii) the Base Rate plus the applicable margin, equal to 2.25%
per annum ("Prime Rate Loans").
Interest on Prime Rate Loans is due quarterly and on the date of
conversion of any such Prime Rate Loan to a Eurodollar Loan. Interest on
Eurodollar Loans will be due at the end of the interest period applicable
thereto, and if such interest period is in excess of three months, each
three months.
BASF Subordinated Note--The Company issued to BASF a subordinated note in
the aggregate principal amount of $75 million. Until April 15, 2002,
interest is accrued on the Subordinated Note at 7% per annum and is
included in "Long-term Debt." On April 15, 2002, all accrued interest will
be added to the principal of the Subordinated Note. Such principal balance
will be payable in a single installment on April 15, 2008. Interest
accrued after April 15, 2002 will be payable quarterly, commencing July
15, 2002. For financial reporting purposes, the note was recorded at its
fair value of $58.2 million based on prevailing market rates as of the
Effective Date.
The Senior Credit Facility, the Term Loan and the Subordinated Note
contain restrictive covenants that, among other things and under certain
conditions, restrict the Company's indebtedness, liens, sales/leaseback
transactions, assets sales, capital expenditures, acquisitions,
investments and transactions with affiliates, dividends and other
restricted payments. Additionally, these covenants require that certain
financial ratios be maintained. Management believes the Company was in
compliance as of December 31, 1998.
Interest Rate Contracts--The Company enters into various types of interest
rate contracts in managing interest rate risk on its long-term debt as
indicated below as of December 31, 1998:
. Pay Fixed Swaps--$65 million notional amount, weighted average pay
rate of 6.03%, maturing in 2000.
. Interest Rate Caps--$60 million notional amount, weighted average
cap rate of 8%, maturing in 2002.
. Interest Rate Collars--$125 million notional amount, weighted
average cap rate of 6.99%, weighted average floor rate of 5.67%,
maturing in 2002.
Under interest rate swaps, the Company agrees with other parties to
exchange, at specified intervals, the difference between fixed-rate and
floating-rate interest amounts calculated by reference to an agreed
notional principal amount.
The Company purchases interest rate cap and sells interest rate floor
agreements to reduce the impact of changes in interest rates on its
floating-rate long-term debt. The cap agreements entitle the Company to
receive from counterparties (major banks) the amounts, if any, by which
the Company's interest payments on certain of its floating-rate borrowings
exceed 6.6% to 8.0%. The floor agreement requires the Company to pay to
the counterparty (a major bank) the amount, if any, by which the Company's
interest payments on certain of its floating-rate borrowings are less than
6.0% to 5.26%.
F-19
<PAGE>
The Company is exposed to credit losses in the event of nonperformance by
a counterparty to the derivative financial instruments. The Company
anticipates, however, that the counterparties will be able to fully
satisfy obligations under the contracts. Market risk arises from changes
in interest rates.
Predecessor Company--In February 1986, Texaco Inc. and various
subsidiaries entered into a Master Credit Agreement ("Credit Agreement"),
whereby Texaco Inc. and such subsidiaries may, from time to time, be
borrowers or lenders pursuant to the Credit Agreement. The Credit
Agreement was subsequently amended for minor revisions in June 1986,
January 1987 and April 1987. While TCI is not a party to the Credit
Agreement, the financial statements are prepared as if TCI had been a
party to the Credit Agreement with Texaco. As a result, interest is
calculated based on the Short-Term Applicable Federal Rate as published by
the Internal Revenue Service in its Internal Revenue Bulletin. The average
annual interest rates utilized ranged from 5.1% to 6.2% for the periods
presented. Interest accrued during the year and outstanding at year-end
was added to the principal balance of the intercompany account and itself
became interest bearing. Interest income totaled $4,182,000 for the year
ended December 31, 1996. No interest was charged or credited during the
two months ended February 28, 1997.
7.INCOME TAXES
<TABLE>
<CAPTION>
Predecessor Company
-------------------------
Two Months Ten Months
Year Ended Ended Ended Year Ended
December 31, February 28, December 31, December 31,
1996 1997 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current................. $(30,932) $(6,137) $ $
Deferred................ 37,575 4,102 1,917 5,783
-------- ------- ------ ------
Total................. $ 6,643 $(2,035) $1,917 $5,783
======== ======= ====== ======
</TABLE>
The following schedule reconciles the differences between the United
States federal income taxes at the United State statutory rate to the
Company's provision for income taxes, in thousands of dollars:
<TABLE>
<CAPTION>
Predecessor Company
-------------------------
Two Months Ten Months
Year Ended Ended Ended Year Ended
December 31, February 28, December 31, December 31,
1996 1997 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
United States federal
income taxes at
statutory rate......... $6,634 $(2,003) $1,748 $5,341
State income taxes, net
of federal benefit..... 97 82
Other................... 9 (32) 72 360
------ ------- ------ ------
Total provision
(benefit) income
taxes.................. $6,643 $(2,035) $1,917 $5,783
====== ======= ====== ======
Effective income tax
rate................... 35% 36% 38% 38%
====== ======= ====== ======
</TABLE>
F-20
<PAGE>
Components of deferred tax assets and liabilities at December 31, 1997 and
1998 are as follows in thousands of dollars:
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Plant and equipment................................... $(44,919) $(78,602)
Capitalized turnaround costs.......................... (5,323)
Interest.............................................. (5,460)
Other deferred tax liability.......................... (27) (27)
-------- --------
Total deferred tax liability............................ (44,946) (89,412)
-------- --------
Deferred tax assets:
Intangible assets..................................... 29,081 27,765
Inventories........................................... 655 1,887
Net operating loss carryforward....................... 13,293 52,060
-------- --------
Total deferred tax assets............................... 43,029 81,712
-------- --------
Net deferred tax liability.............................. $ (1,917) $ (7,700)
======== ========
</TABLE>
8.RELATED-PARTY TRANSACTIONS
The Company has no employees and relies entirely on third parties to
provide all goods and services necessary to operate the Company's
business. Certain of such goods and services are provided by Huntsman
Petrochemical Corporation ("HPC"), an affiliate of the Company.
Service Agreements--In accordance with various service agreements, the
terms of which range from 10 to 29 years, HPC provides management,
operating, maintenance and other services to the Company. In connection
with those service agreements, the Company paid $27 and $61 million of
fees and expense reimbursements to HPC during the period and year ended
December 31, 1997 and 1998, respectively. Additionally, the Company was
reimbursed $6 million in the period and year ended December 31, 1997 and
1998 by HPC for steam purchased by the Company on HPC's behalf.
Supply Agreements--Additionally, the Company relies on HPC to supply
certain raw materials and to purchase a significant portion of the
facility's output pursuant to various agreements. The Company sold $24 and
$33 million of product to HPC and purchased $43 and $38 million of raw
materials from HPC during the period and year ended December 31, 1997 and
1998, respectively.
Other Related Party Sales--During 1998, the Company purchased $5 million
of raw materials from Huntsman Polymers Corporation.
Receivables and Payables--As of December 31, 1997 and 1998, the Company
had $5 and $3 million, respectively, in trade receivables from HPC and $5
and $11 million, respectively in trade payables to HPC. In addition, the
Company had $2 million in miscellaneous receivables from HPC as of
December 31, 1998, as well as $4 and $6 million in miscellaneous payables
to HPC as of December 31, 1997 and 1998, respectively.
F-21
<PAGE>
Predecessor Company--Transactions with the Texaco entities include the
purchase and sale of raw materials and products, and activities involving
administrative support and financing. A summary of transactions between
the Predecessor Company and the Texaco entities and Star Enterprise
(Star), a joint venture partnership of Texaco follows:
<TABLE>
<CAPTION>
Year Ended Two Months Ended
December 31, February 28,
1996 1997
------------ ----------------
<S> <C> <C>
Sales and services to:
Texaco entities........................ $ 16,792 $ 2,385
Star................................... 29,790 7,272
-------- -------
Total................................ $ 46,582 $ 9,657
======== =======
Cost of goods sold from:
Texaco entities........................ $ 97,717 $16,642
Star................................... 22,571 1,800
-------- -------
Total................................ $120,288 $18,442
======== =======
</TABLE>
The management, professional, technical and administrative services billed
to the Predecessor Company by Texaco entities are summarized below in
thousands of dollars:
<TABLE>
<CAPTION>
Year Ended Two Months Ended
December 31, February 28,
1996 1997
------------ ----------------
<S> <C> <C>
Management and Professional(a)........... $ 986 $ 58
Technical(b)............................. 33 3
Administrative(c)........................ 367 62
Research and development................. 1,564 264
------ -----
Total.................................. $2,950 $ 387
====== =====
</TABLE>
--------
(a)Primarily Legal, Employee Relations, Finance, Tax and other Corporate
Management.
(b)Primarily Computer and Communications costs.
(c)Primarily Accounting Services.
Insurance coverage for the Predecessor Company was provided by Texaco's
worldwide risk management program arranged through Heddington Insurance
Limited ("Heddington"), an indirect wholly owned captive insurance
subsidiary of Texaco Inc. Texaco Inc. charges the participating companies
for their proportionate share of the premiums charged by Heddington to
Texaco Inc. based upon various risk factors and other estimates determined
by Texaco's management. Accordingly, the Company's cost for insurance
premiums is charged to expense as incurred, and is included in the above
table in cost of goods sold. Such premiums totaled $1,817,000 in 1996 and
$307,000 for the two months ended February 28, 1997.
The Predecessor Company is a member of the Texaco Inc. consolidated United
States income tax return group. The income tax return group operates under
a formal agreement whereby each member of this group is allocated its
share of the consolidated United States income tax provision or benefit
based on what the member's income tax provision or benefit would have been
had the member filed a separate return and made the same tax elections.
Excluded from such allocation, and therefore from the Company's financial
statements, are any Federal alternative minimum tax payments made by
Texaco Inc. in excess of regular tax, which are recorded by Texaco Inc.,
offset by a reduction of deferred income taxes, and are available to
reduce future regular income tax payments. In any event, as the
Predecessor Company assets and liabilities, rather than stock, were sold
to Huntsman, the Federal alternative minimum tax
F-22
<PAGE>
credits will remain with Texaco Inc. Current taxes are charged or credited
to expense and are reflected as related party payables or receivables
until settled after the applicable tax returns have been filed.
9.ENVIRONMENTAL MATTERS
The Company's operations are subject to extensive environmental laws and
regulations concerning emissions to air, discharges to surface and
subsurface waters and the generation, storage, handling, transportation,
treatment, disposal and remediation of hazardous substances and other
waste materials ("Environmental Laws"). The Company's production
facilities require operating permits that are subject to revocation,
modification and renewal. Violations of Environmental Laws or permit
requirements can result in substantial fines and civil or criminal
sanctions. The operation of any chemical manufacturing plant entails risk
of adverse environmental effects, including exposure to chemical products,
by-products and waste from the Company's operations, and there can be no
assurance that material costs or liabilities will not be incurred to
rectify any such damage. In addition, potentially significant expenditures
could be required in order to comply with Environmental Laws and permit
requirements that may be adopted or imposed in the future.
The Company believes that there is existing contamination under the
property resulting from the operation from about 1920 to 1950 of the
unlined earthen crude oil storage tanks on the property and from
contaminated groundwater emanating from adjacent property formerly owned
by Texaco and now owned by HPC. The Purchase Agreement provides that
Texaco will generally be responsible, for a period of eleven years
following the Closing Date for up to $40 million of costs incurred with
respect to all other conditions related to the property that existed on
the Closing Date related to air, land, soil surface, subsurface strata or
groundwater that were not in compliance with Environmental Laws as in
effect as of the Closing Date. The Company, however, is generally
responsible for the first $3 million of such costs as well as for the
first $50,000 of such costs incurred per claim. The Purchase Agreement
further provides that, subject to certain limitations, the Company will be
responsible for such conditions to the extent (i) that Texaco is not
responsible, or (ii) such conditions were caused or arose after the
Closing Date.
It is the Company's belief that the total cost of remediation of all
contamination existing on the property will be less than the $40 million
cap on Texaco's indemnity obligations. However, there can be no assurance
that the cost of remediation will not exceed this amount, that the cost of
remediation will not be covered by Texaco indemnity obligations which
contain certain specified limitations, that Texaco will have the financial
resources to fully perform its responsibilities under the Purchase
Agreement or that the Company will not be required to incur expenses for
liabilities under environmental laws or for environmental remediation
before such time as Texaco pays any liability for which it is ultimately
held responsible. In any such event, the Company may be required to incur
significant liabilities. In addition, no assurance can be given that
Texaco will not seek to challenge its liability under the Purchase
Agreement, that the eleven year period of limitation with respect to
certain costs incurred for the remediation of contamination will not
expire before remediation costs are incurred pursuant to an Environmental
Law in effect as of the Closing Date or that remediation will not be
required pursuant to an Environmental Law enacted after the Closing Date.
10.EMPLOYEE BENEFIT PLANS
Active employees of the Predecessor Company participated in various
Texaco-sponsored benefit plans. The costs of the savings, health care and
life insurance plans relative to employees' active services were shared by
the Predecessor Company and its employees. Texaco Inc. charges the
participating companies for their proportionate share of these costs, and
accordingly, the Predecessor Company's costs for these plans were charged
to expense as incurred.
F-23
<PAGE>
Employee Stock Ownership Plans--Texaco sponsors a Thrift Plan for the
benefit of its salaried employees. Amendments to the thrift Plan in 1988
created an Employee Stock Ownership Plan ("ESOP") feature. The ESOP
purchased 833,333 1/3 shares of Series B ESOP Convertible Preferred Stock
("Series B") from Texaco Inc. for $600 per share, or an aggregate purchase
price of $500 million, Texaco Inc. guaranteed the loan made to the ESOP,
which was used to acquire the shares of Series B.
The Thrift Plan is designed to provide a participant with a maximum
benefit of approximately 6% of base pay, which is payable in shares of
Series B. Participants may partially convert their Series B into common
stock of Texaco Inc. beginning at age 55, or may elect full conversion
upon retirement or separation from service with Texaco Inc. or a
participating company.
The Predecessor Company recorded ESOP expense of $46,000 in 1996 and
$8,000 for the two months ended February 28, 1997.
Pension Plans--The Predecessor Company employees participated in Texaco
Inc. and other subsidiary-sponsored pension plans. Generally, these plans
provided defined pension benefits based on final average pay. However, the
level of benefits and terms of vesting vary among plans. Amounts charged
to pension expense, as well as amounts funded, were generally based on
actuarial studies. Pension plan assets were administered by trustees and
are principally invested in equity and fixed income securities and
deposits with insurance companies.
The total expense for the Predecessor Company's participation in these
pension plans was $122,000 in 1996 and $19,000 for the two months ended
February 28, 1997.
Other Postretirement Benefits--The Predecessor Company employees
participated in Texaco Inc. sponsored postretirement plans that provide
health care and life insurance for retirees and eligible dependents. The
Predecessor Company's U.S. health insurance obligation is its fixed dollar
contribution. The plans were unfunded, and the costs are shared by the
Predecessor Company and its employees.
The total expense for postretirement plans other than pensions of the
Predecessor Company was $136,000 in 1996 and $20,000 for the two months
ended February 28, 1997.
Effective with the acquisition, substantially all Predecessor Company
employees became employees of HPC.
11.COMMITMENTS AND CONTINGENCIES
The Company has various purchase commitments for materials and supplies
entered into in the ordinary course of business. These agreements extend
from three to ten years and the purchase price is generally based on
market prices subject to certain minimum price provisions.
The Company is involved in litigation from time to time in the ordinary
course of its business. In management's opinion, none of such litigation
is material to the Company's financial condition or results of operations.
Contingent Liabilities
There were various legal proceedings and claims against TCI which arose in
the ordinary course of business, none of which are material to TCI. Texaco
Inc. subject to terms of the Acquisition, will remain liable for any and
all of TCI's contingent liabilities that arise prior to the date of sale.
F-24
<PAGE>
Internal Revenue Service Claims
The Internal Revenue Service ("IRS") has asserted a number of claims
against Texaco Inc. for periods prior to the effective date of the PO/MTBE
operations sale. Notwithstanding the tax sharing agreement, TCI, and each
of the members of the consolidated U.S. income tax return group, is
jointly and severally liable for any potential liability to the IRS.
However, Texaco Inc. will remain primarily liable for the Company's tax
liabilities that arise prior to the date of sale.
12.LEASE COMMITMENTS AND RENTAL EXPENSE
The Predecessor's Company's principal operating asset was a PO/MTBE plant
under lease from Citibank, N.A. and other financial institutions, dated
August 14, 1992. The lease was accounted for as an operating lease. Terms
of the lease include an option for TCI or Texaco to purchase the lease.
The purchase option was exercised prior to the acquisition. The lease
obligation is reflected in the Predecessor Company's statement of income
as rental expense, included in "Cost of Sales", and totaled $34,436,000 in
1996 and $5,523,000 for the two months ended February 28, 1997.
As of December 31, 1996, the Predecessor Company had estimated minimum
commitments of $20,725,000 for the year 1997 for payment of rentals (net
of noncancelable sublease rentals) under the above-mentioned lease which,
at inception, had a noncancelable term of more than one year. Also at
December 31, 1996, TCI had a minimum commitment under this lease of
$489,033,000 for the year 1997 as a residual value guarantee.
13.CUSTOMER INFORMATION
Sales to three non-related customers account for 17%, 18%, and 36% of
sales for the year ended December 31, 1998. Sales to three non-related
customers account for 15%, 20%, and 32% of sales for the period from March
1, 1997 to December 31, 1997. Sales to four non-related customers' account
for 13%, 13%, 18%, and 23% of sales for the period from January 1, 1997 to
February 28, 1997. Sales to four non-related customers account for 12%,
12%, 17%, and 19% of sales for the year ended December 31, 1996.
14.SUBSEQUENT EVENT
In April 1999, the Company, Imperial Chemical Industries Plc (ICI), and
Huntsman ICI Holdings LLC (Holdings) entered into a Contribution Agreement
and certain ancillary agreements under which Huntsman ICI Chemicals LLC
(Huntsman ICI), a wholly owned subsidiary of Holdings, agreed to acquire
certain assets and stock representing ICI's polyurethene chemicals,
selected petrochemicals and titanium dioxide businesses and the business
of the Company. In exchange for transferring its business to Holdings, the
Company will obtain a 60% common equity interest in Holdings and receive
$360 million in cash. The Company will use the cash and any additional
funds from Huntsman Corporation to repay the existing debt and acquire the
preferred stock. In exchange for transferring its businesses to Holdings,
ICI will receive a 30% equity interest in Holdings, an aggregate of
approximately $2,022 million in cash and approximately $508 million of
accreted value at issuance from the discount notes of Holdings. In
addition, BT Capital Investors, L.P., Chase Equity Associates, L.P. and
The Goldman Sachs Group, Inc. will acquire the remaining 10% interest in
Holdings for $90 million in cash.
The Company and ICI have agreed to indemnify each other for specific
claims and losses with respect to the transaction. Between the third and
fourth anniversary of the closing of the transaction, the Company has the
option to purchase, and ICI has the right to require the Company to
purchase, ICI's 30% interest in Holdings.
Huntsman ICI has negotiated senior credit facilities and subordinated
credit facilities totaling approximately $2.9 billion to fund the
transaction.
The transaction is expected to close June 30, 1999 and is subject to
regulatory and ICI shareholder approval.
F-25
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
BALANCE SHEETS (Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
ASSETS ------------ ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 2).................... $ 2,574 $ 9,845
Accounts receivable................................... 45,787 47,443
Related party accounts receivable..................... 4,710 4,918
Inventories (Notes 2 and 3)........................... 19,687 23,435
Other current assets.................................. 862 431
-------- --------
Total current assets................................ 73,620 86,072
-------- --------
PLANT AND EQUIPMENT (Notes 1 and 2):
Land and improvements................................. 3,575 3,575
Buildings and equipment............................... 415,268 415,268
Construction-in-progress.............................. 3,753 4,917
-------- --------
Total plant and equipment........................... 422,596 423,760
Less accumulated depreciation and amortization........ (37,505) (42,721)
-------- --------
Plant and equipment, net............................ 385,091 381,039
-------- --------
OTHER ASSETS (Notes 2 and 4)............................ 118,922 116,270
-------- --------
TOTAL................................................... $577,633 $583,381
======== ========
</TABLE>
See notes to financial statements.
F-26
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
BALANCE SHEETS (Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
LIABILITIES AND STOCKHOLDER'S EQUITY ------------ ---------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable (Note 2)............................. $ 9,394 $ 14,767
Related party accounts payable........................ 16,588 10,646
Accrued liabilities (Note 5).......................... 13,835 10,660
Deferred income taxes................................. 3,436 5,252
-------- --------
Total current liabilities........................... 43,253 41,325
-------- --------
LONG-TERM DEBT (Notes 1, 2 and 6)
Senior Credit Facilities.............................. 221,987 221,987
Term Loan............................................. 135,000 135,000
BASF note............................................. 70,575 72,327
-------- --------
Total long-term debt................................ 427,562 429,314
-------- --------
DEFERRED INCOME TAXES (Note 2).......................... 4,264 4,263
MANDATORILY REDEEMABLE PREFERRED STOCK
($1 par value; 65,000 shares authorized, issued and
outstanding-stated at liquidation value of $1,000 per
share, including $7,959 and $6,909 in unpaid
dividends, respectively)............................. 71,909 72,959
-------- --------
Total liabilities................................... 546,988 547,861
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)
STOCKHOLDER'S EQUITY:
Common stock ($.01 par value; 2,500 shares authorized,
issued and outstanding)
Additional paid-in capital............................ 25,000 25,000
Retained earnings..................................... 5,645 10,520
-------- --------
Total stockholder's equity.......................... 30,645 35,520
-------- --------
TOTAL................................................... $577,633 $583,381
======== ========
</TABLE>
See notes to financial statements.
F-27
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
STATEMENTS OF INCOME (Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months Ended
March 31,
----------------
1998 1999
------- -------
<S> <C> <C>
REVENUE:
Sales (Note 9).............................................. $64,113 $58,851
Related party sales......................................... 9,654 10,781
Tolling fees................................................ 12,182 13,730
------- -------
Total revenue............................................. 85,949 83,362
COST OF SALES................................................. 72,018 61,738
------- -------
GROSS PROFIT.................................................. 13,931 21,624
EXPENSES (Note 7):
Sales, general & administrative............................. 1,722 1,846
Research and development.................................... 765 858
------- -------
Total expenses............................................ 2,487 2,704
------- -------
OPERATING INCOME.............................................. 11,444 18,920
INTEREST EXPENSE (Note 6)..................................... 10,433 9,539
INTEREST INCOME............................................... (233) (176)
------- -------
INCOME BEFORE INCOME TAXES.................................... 1,244 9,557
INCOME TAX EXPENSE (Note 2)................................... 467 3,632
------- -------
NET INCOME.................................................... $ 777 $ 5,925
======= =======
</TABLE>
See notes to financial statements.
F-28
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
STATEMENTS OF CASH FLOWS (Unaudited)
(Thousand of Dollars)
<TABLE>
<CAPTION>
3 Months Ended
March 31,
----------------
1998 1999
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income................ $ 777 $ 5,925
Reconciliation to net cash
provided by operating ac-
tivities:
Depreciation and amorti-
zation................. 7,504 7,877
Deferred income taxes... 234 1,815
Interest on subordinated
note................... 1,711 1,752
Changes in operating work-
ing capital:
Accounts receivable..... (4,638) (1,864)
Inventories............. (4,820) (3,748)
Other current assets.... 488 431
Accounts payable........ (74) (569)
Other current liabili-
ties................... (2,389) (3,175)
Other assets.............. 1,426 (9)
------- -------
Net cash provided by op-
erating activities..... 219 8,435
------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures...... (1,697) (1,164)
------- -------
Net cash used in invest-
ing activities......... (1,697) (1,164)
------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS....... (1,478) 7,271
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD........ 10,093 2,574
------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD.............. $ 8,615 $ 9,845
======= =======
</TABLE>
See notes to financial statements.
F-29
<PAGE>
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ACQUISITIONS
General--The accompanying financial statements include the accounts of
Huntsman Specialty Chemicals Corporation (the Company), which was formed
on December 26, 1996. Effective March 1, 1997 (the "Effective Date") for
financial accounting purposes, the Company purchased from Texaco, Inc. its
propylene oxide ("PO") and methyl tertiary butyl ether ("MTBE") business,
known as the "PO/MTBE business" for $573.2 million, subject to a working
capital adjustment (the "Acquisition"). The Acquisition closed on March
21, 1997.
To finance the Acquisition, the Company entered into a $350 million Credit
Agreement with a group of financial institutions, a $135 million Term Loan
Agreement and issued a $75 million Subordinated Note to BASF. The Company
also issued preferred stock to Texaco with an aggregate liquidation
preference of $65 million. Cumulative dividends of 5.5% to 6.5% of the
liquidation preference will accrue and be payable commencing July 15,
2002. The Company may redeem the preferred stock at any time, subject to
restrictions, and is required to redeem the stock prior to April 15, 2008.
Additionally, prior to the Acquisition, the Company received an equity
contribution from its parent company, Huntsman Specialty Chemicals
Holdings Corporation, in the amount of $25 million.
The sources and applications of funds required to consummate the
Acquisition are summarized below in thousands of dollars.
<TABLE>
<S> <C>
Sources of Funds:
Senior Credit Facilities:
Revolving Credit Facility (1)................................. $ --
Term Loan A................................................... 150,000
Term Loan B................................................... 70,000
Term Loan C................................................... 70,000
Term Loan....................................................... 135,000
BASF Subordinated Note (2)...................................... 58,200
Equity contribution............................................. 25,000
Seller Preferred Stock.......................................... 65,000
--------
Total......................................................... $573,200
========
Uses of Funds:
Payment of the Acquisition Price................................ $560,700
Transaction fees and expenses (3)............................... 12,500
--------
Total......................................................... $573,200
========
</TABLE>
--------
(1) The Revolving Credit Facility provided for maximum borrowings of up to
$60 million.
(2) The BASF Subordinated Note had an original principal amount of $75
million, for financial reporting purposes, the note was recorded at its
estimated fair value of $58.2 million.
(3) Total transaction fees and expenses totaled $15.0 million, of which
$9.6 million was paid on March 21, 1997. The remainder was paid using
the excess funds obtained by the notes, the equity contribution and
funds provided by operations.
F-30
<PAGE>
The Acquisition has been accounted for as a purchase transaction, and,
accordingly, the financial statements subsequent to the Effective Date
reflect the purchase price, including transaction costs allocated to
tangible and intangible assets acquired and liabilities assumed based on
their estimated fair values as of the Effective Date.
The allocation of the $572.5 million purchase price (after working capital
adjustment and including fees and expenses) is summarized as follows in
thousands of dollars:
<TABLE>
<S> <C>
Current assets...................................................... $ 68,569
Plant and equipment................................................. 410,122
Other noncurrent assets............................................. 121,405
Liabilities assumed................................................. (27,547)
--------
Total............................................................. $572,549
========
</TABLE>
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business--The Company markets and sells products: (1) PO,
(2) Glycols, and (3) MTBE, which it manufactures at its facility in Port
Neches, Texas (the "Facility").
Revenue Recognition--The Company generates revenues through sales in the
open market, raw material conversion agreements and long-term supply
contracts. The Company recognizes revenues as the products are shipped.
Cash Flow Information--Highly liquid investments with an original maturity
of three months or less when purchased are considered to be cash
equivalents. The Company paid $8.8 million and $8.0 million in interest
expense for the quarter ended March 31, 1998 and 1999 respectively.
Financial Instruments--The carrying amount reported in the balance sheet
for cash and cash equivalents, accounts receivable, and accounts payable
approximates fair value because of the immediate or short-term maturity of
these financial instruments. The carrying value of the Revolving Credit
Facility and the Term Loans approximate fair value since they bear
interest at a floating rate plus an applicable margin. The fair value of
the Subordinate Note was derived based on rates currently available to the
Company for debt instruments of similar terms.
The Company enters into certain derivative financial instruments as part
of its interest rate risk management. Interest rate swaps, caps, collars
and floors are classified as matched transactions. The differential to be
paid or received as interest rates change is accrued and recognized as an
adjustment to interest expense. The related amount payable to or
receivable from counterparties is included in accounts receivable or
accrued liabilities. Gains and losses on terminations of interest rate
agreements are deferred and amortized over the lesser of the remaining
term of the original contract or the life of the debt. The premiums paid
for the interest rate agreements are included as other assets and are
amortized to expense over the term of the agreements.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Carrying Value of Long-Term Assets--The Company evaluates the carrying
value of long-term assets based upon current and anticipated undiscounted
cash flows, and recognizes an impairment when such estimated cash flows
will be less than the carrying value of the asset. Measurement of the
amount of impairment, if any, is based upon the difference between
carrying value and fair value.
F-31
<PAGE>
Inventories--Inventories of petrochemical products are stated at cost,
determined on the weighted average method. Inventories are valued at the
lower of cost or market. Materials and supplies are stated at average
cost.
Plant and Equipment and Depreciation and Amortization--Depreciation of
plant and equipment is provided generally on the group plan, using the
straight-line method, with depreciation based on a 5% composite rate for
all classes of property.
Periodic maintenance and repairs applicable to manufacturing facilities
are accounted for on the prepaid basis by capitalizing the cost of the
turnaround and amortizing the costs over the estimated period until the
next turnaround. Normal maintenance and repairs of all other plant and
equipment are charged to expense as incurred. Renewals, betterments and
major repairs that materially extend the useful life of the assets are
capitalized, and the assets replaced, if any, are retired.
When capital assets representing complete groups of property are disposed
of, the difference between the disposal proceeds and net book value is
credited or charged to income. When miscellaneous assets are disposed of,
the difference between asset cost and salvage value is charged or credited
to accumulated depreciation.
Interest expense capitalized as part of plant and equipment was $56
thousand and $168 thousand for the quarter ended March 31, 1998 and 1999,
respectively.
Intangible assets--Intangible assets are stated at their fair market
values at the time of the Acquisition and are amortized using the
straight-line method over their estimated useful lives of five to fifteen
years or over the life of the related agreement and are included in "Other
assets."
Preferred Stock--In conjunction with the Acquisition, the Company issued
preferred stock to Texaco with an aggregate liquidation preference of $65
million. The preferred stock has a cumulative dividend rate of 5.5%, 6.5%
or a combination thereof of the liquidation preference per year, which is
adjusted on April 15th of each year, based on the Company's cash flow in
the previous year. During 1998, $35 million of the preferred stock accrued
dividends at the rate of 6.5% and the remainder at 5.5%. Unpaid cumulative
dividends will compound at a rate of 5.5% or 6.5% and is payable
commencing July 15, 2002. The Company may redeem the preferred stock at
any time, subject to restrictions, and is required to redeem the stock
prior to April 15, 2008.
Environmental Expenditures--Environmental related restoration and
remediation costs are recorded as liabilities and expensed when site
restoration and environmental remediation and clean-up obligations are
either known or considered probable and the related costs can be
reasonably estimated. Other environmental expenditures, which are
principally maintenance or preventative in nature, are recorded when
expended and are expensed or capitalized as appropriate.
Income Taxes--The Company files a consolidated federal income tax return
with its ultimate parent. The Company has entered into a tax allocation
agreement with its ultimate parent whereby the Company is charged or
credited for an amount that would have been applicable had the Company
filed a separate consolidated federal income tax return.
Deferred income taxes are provided for temporary differences between
financial statement income and taxable income using the asset and
liability method in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes."
F-32
<PAGE>
Unaudited Interim Financial Information--The accompanying unaudited
financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, have been made which are
necessary to fairly present the financial position of the Company as of
March 31, 1999 and the results of its operations and cash flows for the
interim periods ended March 31, 1998 and 1999. The results of the interim
period should not be regarded as necessarily indicative of results that
may be expected for the entire year. The financial information presented
herein should be read in conjunction with the audited financial statements
and notes for the year ended December 31, 1998, included elsewhere in the
offering circular.
Recently Issued Financial Accounting Standards--In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities. It requires that an entity recognize all derivatives as assets
or liabilities in the balance sheet and measure those instruments at fair
value. SFAS No. 133 is effective for the Company's financial statements
for the year ending December 31, 2000. The Company is currently evaluating
the effects of SFAS No. 133 on its financial statements.
3.INVENTORIES
Inventories consisted of the following in thousands of dollars:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ ---------
<S> <C> <C>
Feedstocks............................................ $ 5,175 $ 8,278
Unfinished products................................... 1,032 2,231
Finished products..................................... 12,915 12,427
------- -------
19,122 22,936
Materials and supplies................................ 565 499
------- -------
Total............................................... $19,687 $23,435
======= =======
</TABLE>
In the normal course of operations, the Company exchanges raw materials
with other companies for the purpose of reducing transportation costs. No
gains or losses are recognized on these exchanges, and the net open
exchange positions are valued at the Company's cost. Net amounts deducted
from inventory under open exchange agreements owed by the Company at
December 31, 1998 and March 31, 1999 were $412 thousand (927,529 pounds of
feedstock and products) and $817 thousand (420,837 pounds of feedstock and
products), respectively, which represent the net amounts payable by the
Company under open exchange agreements.
F-33
<PAGE>
4.OTHER ASSETS
Other assets consisted of the following in thousands of dollars:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ ---------
<S> <C> <C>
Patents, licenses, and technology..................... $ 90,180 $ 90,180
Other agreements...................................... 17,823 17,823
Non-compete agreements................................ 1,520 1,520
-------- --------
Total intangibles................................... 109,523 109,523
Accumulated amortization.............................. (14,820) (16,841)
-------- --------
Net intangibles....................................... 94,703 92,682
Capitalized turnaround expense........................ 14,009 13,235
Other noncurrent assets............................... 9,557 9,521
Spare parts inventory................................. 653 832
-------- --------
Total............................................... $118,922 $116,270
======== ========
</TABLE>
5.ACCRUED LIABILITIES
Accrued liabilities consisted of the following in thousands of dollars:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ ---------
<S> <C> <C>
Ad valorem taxes....................................... $ 6,974 $ 2,514
Product rebate accruals................................ 4,110 3,308
Other miscellaneous accruals........................... 2,751 4,838
------- -------
Total................................................ $13,835 $10,660
======= =======
</TABLE>
6.LONG-TERM DEBT
Long-term debt consisted of the following in thousands of dollars:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ ---------
<S> <C> <C>
Senior Credit Facilities:
Revolving Credit Facility
Term Loan A......................................... $ 87,935 $ 87,935
Term Loan B......................................... 67,026 67,026
Term Loan C......................................... 67,026 67,026
Term Loan............................................. 135,000 135,000
BASF Subordinated Note, face value $75 million, dis-
counted to a 9.3% effective rate..................... 60,632 60,976
Accrued Interest on BASF Subordinated Note............ 9,943 11,351
-------- --------
Total Long-Term Debt................................ $427,562 $429,314
======== ========
</TABLE>
Senior Credit Facilities--In March 1997, the Company entered into a Bank
Credit Agreement with Bankers Trust Company related to Senior Credit
Facilities in an aggregate principal amount of $350 million. These
facilities consisted of (i) a five-year $60 million revolving credit
facility (the "Revolving Credit Facility"), (ii) a five-year $150 million
aggregate principal amount Term Loan A, a seven-year $70 million aggregate
principal amount Term Loan B and an eight-year $70 million aggregate
principal amount Term Loan C (the "Term Loan A", the "Term Loan B" and the
"Term Loan C" are referred to collectively as the "Senior Term Loans").
F-34
<PAGE>
The Senior Credit Facilities bear interest at a rate equal to, at the
Company's option, (i) the Reserve adjusted Eurodollar Rate plus an
applicable margin which ranges from 0.625% to 2.0% for the Revolving
Credit Facility and the Term Loan A, 2.00 to 2.50% for the Term Loan B and
2.25 to 2.75% for the Term Loan C, ("Eurodollar Loans") or (ii) the Base
Rate (defined in the Senior Credit Facilities as the higher of the prime
rates of Bankers Trust Company or the sum of the overnight rate on the
federal funds transactions plus 0.5%) plus the applicable margin, equal to
1.25% less than the applicable borrowing margin for Eurodollar loans, but
in no event less than 0% ("Prime Rate Loans").
The Revolving Credit Facility requires a commitment fee ranging from
0.225% to 0.5% per annum on the total unused balance. This rate is
determined based on the Company's most recent financial ratios.
The obligations of the Company under the Senior Credit Facilities are
secured by a first-priority interest in substantially all of the assets of
the Company.
Term Loan--In March 1997, the Company entered into a Term Loan Agreement
with Bankers Trust Company and various lending institutions in the
aggregate principal amount of $135 million (the "Term Loan"). The Term
Loan bears interest at a rate equal to, at the Company's option, (i) the
Eurodollar Rate plus an applicable margin of 3.5% per annum ("Eurodollar
Loans") or (ii) the Base Rate plus the applicable margin, equal to 2.25%
per annum ("Prime Rate Loans").
Interest on Prime Rate Loans is due quarterly and on the date of
conversion of any such Prime Rate Loan to a Eurodollar Loan. Interest on
Eurodollar Loans will be due at the end of the interest period applicable
thereto, and if such interest period is in excess of three months, each
three months.
BASF Subordinated Note--The Company issued to BASF a subordinated note in
the aggregate principal amount of $75 million. Until April 15, 2002,
interest is accrued on the Subordinated Note at 7% per annum and is
included in "Long-term Debt." On April 15, 2002, all accrued interest will
be added to the principal of the Subordinated Note. Such principal balance
will be payable in a single installment on April 15, 2008. Interest
accrued after April 15, 2002 will be payable quarterly, commencing July
15, 2002. For financial reporting purposes, the note was recorded at its
fair value of $58.2 million based on prevailing market rates as of the
Effective Date.
The Senior Credit Facility, the Term Loan and the Subordinated Note
contain restrictive covenants that, among other things and under certain
conditions, restrict the Company's indebtedness, liens, sales/leaseback
transactions, assets sales, capital expenditures, acquisitions,
investments and transactions with affiliates, dividends and other
restricted payments. Additionally, these covenants require that certain
financial ratios be maintained.
Interest Rate Contracts--The Company enters into various types of interest
rate contracts in managing interest rate risk on its long-term Under
interest rate swaps, the Company agrees with other parties to exchange, at
specified intervals, the difference between fixed-rate and floating-rate
interest amounts calculated by reference to an agreed notional principal
amount.
The Company purchases interest rate cap and sells interest rate floor
agreements to reduce the impact of changes in interest rates on its
floating-rate long-term debt. The cap agreements entitle the Company to
receive from counterparties (major banks) the amounts, if any, by which
the Company's interest payments on certain of its floating-rate borrowings
exceed 6.6% to 8.0%. The floor agreement requires the Company to pay to
the counterparty (a major bank) the amount, if any, by which the Company's
interest payments on certain of its floating-rate borrowings are less than
6.0% to 5.26%.
F-35
<PAGE>
The Company is exposed to credit losses in the event of nonperformance by
a counterparty to the derivative financial instruments. The Company
anticipates, however, that the counterparties will be able to fully
satisfy obligations under the contracts. Market risk arises from changes
in interest rates.
7.ENVIRONMENTAL MATTERS
The Company's operations are subject to extensive environmental laws and
regulations concerning emissions to airs, discharges to surface and
subsurface waters and the generation, storage, handling, transportation,
treatment, disposal and remediation of hazardous substances and other
waste materials ("Environmental Laws"). The Company's production
facilities require operating permits that are subject to revocation,
modification and renewal. Violations of Environmental Laws or permit
requirements can result in substantial fines and civil or criminal
sanctions. The operation of any chemical manufacturing plant entails risk
of adverse environmental effects, including exposure to chemical products,
by-products and waste from the Company's operations, and there can be no
assurance that material costs or liabilities will not be incurred to
rectify any such damage. In addition, potentially significant expenditures
could be required in order to comply with Environmental Laws and permit
requirements that may be adopted or imposed in the future.
The Company believes that there is existing contamination under the
property resulting from the operation from about 1920 to 1950 of the
unlined earthen crude oil storage tanks on the property and from
contaminated groundwater emanating from adjacent property formerly owned
by Texaco and now owned by HPC. The Purchase Agreement provides that
Texaco will generally be responsible, for a period of eleven years
following the Closing Date for up to $40 million of costs incurred with
respect to all other conditions related to the property that existed on
the Closing Date related to air, land, soil surface, subsurface strata or
groundwater that were not in compliance with Environmental Laws as in
effect as of the Closing Date. The Company, however, is generally
responsible for the first $3 million of such costs as well as for the
first $50,000 of such costs incurred per claim. The Purchase Agreement
further provides that, subject to certain limitations, the Company will be
responsible for such conditions to the extent (i) that Texaco is not
responsible, or (ii) such conditions were caused or arose after the
Closing Date.
It is the Company's belief that the total cost of remediation of all
contamination existing on the property will be less than the $40 million
cap on Texaco's indemnity obligations. However, there can be no assurance
that the cost of remediation will not exceed this amount, that the cost of
remediation will not be covered by Texaco indemnity obligations which
contain certain specified limitations, that Texaco will have the financial
resources to fully perform its responsibilities under the Purchase
Agreement or that the Company will not be required to incur expenses for
liabilities under environmental laws or for environmental remediation
before such time as Texaco pays any liability for which it is ultimately
held responsible. In any such event, the Company may be required to incur
significant liabilities. In addition, no assurance can be given that
Texaco will not seek to challenge its liability under the Purchase
Agreement, that the eleven year period of limitation with respect to
certain costs incurred for the remediation of contamination will not
expire before remediation costs are incurred pursuant to an Environmental
Law in effect as of the Closing Date or that remediation will not be
required pursuant to an Environmental Law enacted after the Closing Date.
F-36
<PAGE>
8.COMMITMENTS AND CONTINGENCIES
The Company has various purchase commitments for materials and supplies
entered into in the ordinary course of business. These agreements extend
from three to ten years and the purchase price is generally based on
market prices subject to certain minimum price provisions.
The Company is involved in litigation from time to time in the ordinary
course of its business. In management's opinion, none of such litigation
is material to the Company's financial condition or results of operations.
9.CUSTOMER INFORMATION
Sales to three non-related customers account for 31%, 20%, and 16% of
sales for the quarter ended March 31, 1998. Sales to three non-related
customers account for 23%, 17%, and 15% of sales for the quarter ended
March 31, 1999.
F-37
<PAGE>
INDEPENDENT AUDITORS REPORT
The Board of Directors
Imperial Chemical Industries PLC
We have audited the accompanying combined balance sheets representing an
aggregation of financial information from the individual companies and
operations of the businesses of Imperial Chemical Industries PLC ("ICI")
relating to polyurethane chemicals, titanium dioxide and selected
petrochemicals ("the Businesses") as at 31 December 1997 and 1998 and their
related combined profit and loss accounts, cash flow statements and statements
of total recognised gains and losses for each of the years in the three year
period ended 31 December 1998. Our responsibility is to express an opinion on
these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom and the United States. These 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 present fairly, in
all material respects, the combined financial position of the Businesses as of
31 December 1997 and 1998, and the results of their operations and their cash
flows for each of the years in the three year period ended 31 December 1998, in
conformity with generally accepted accounting principles in the United Kingdom.
Generally accepted accounting principles in the United Kingdom vary in certain
significant respects from generally accepted accounting principles in the
United States. Application of generally accepted accounting principles in the
United States would have affected results of operations for each of the years
in the three year period ended 31 December 1998 and net investment as of 31
December 1997 and 1998, to the extent summarised in Note 30 of the combined
financial statements.
KPMG Audit Plc
Chartered Accountants
London, England
2 June 1999
F-38
<PAGE>
COMBINED PROFIT AND LOSS ACCOUNTS
<TABLE>
<CAPTION>
Years ended 31 December
-------------------------
Notes 1996 1997 1998
----- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C>
Turnover.............................. 3 2,534 2,337 2,011
Operating costs....................... 5 (2,368) (2,288) (1,888)
Other operating income................ 5 6 5 8
------ ------ ------
Trading profit before operating
exceptional items.................... 3,5 172 54 131
Operating exceptional items........... 4 (11) (56) (10)
------ ------ ------ ---
Trading profit/(loss) after operating
exceptional items.................... 5 161 (2) 121
Income from fixed asset investment--
dividends............................ 2 1 1
Exceptional items--profit/(loss) on
sale or closure of operations........ 4 -- 23 (4)
------ ------ ------ ---
Profit on ordinary activities before
interest............................. 163 22 118
Net interest payable.................. 8 (78) (69) (71)
------ ------ ------ ---
Profit/(loss) on ordinary activities
before taxation...................... 85 (47) 47
Taxation on profit/(loss) on ordinary
activities........................... 9 (29) (15) 12
------ ------ ------ ---
Profit/(loss) on ordinary activities
after taxation....................... 56 (62) 59
Attributable to minorities............ (3) (1) (1)
------ ------ ------ ---
Net profit/(loss) for the financial
year................................. 53 (63) 58
====== ====== ====== ===
</TABLE>
COMBINED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Net profit/(loss) for the financial year........ 53 (63) 58
Currency translation differences on foreign
currency net
investments.................................... (88) (51) --
Other movements................................. -- (2) 7
--- ---- ---
(88) (53) 7
--- ---- ---
Total recognised gains/(losses) relating to the
year........................................... (35) (116) 65
=== ==== ===
</TABLE>
The accompanying notes form an integral part of these combined financial
statements.
F-39
<PAGE>
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
At 31 December
-------------------
Notes 1997 1998
----- --------- ---------
(Pounds)m (Pounds)m
<S> <C> <C> <C>
Fixed assets
Tangible assets...................................... 10 958 1,041
Investments--Participating and other interests....... 11 7 6
----- ------
965 1,047
Current assets
Stocks............................................... 12 236 250
Debtors.............................................. 13 340 296
Investments and short-term deposits--unlisted........ 2 2
Cash at bank......................................... 24 53 51
----- ------
631 599
----- ------
Total assets......................................... 1,596 1,646
----- ------
Creditors due within one year
Short-term borrowings................................ 14 (20) (12)
Current instalments of loans......................... 16 (9) (4)
Financing due to ICI................................. 16 -- (866)
Other creditors...................................... 15 (408) (345)
----- ------
(437) (1,227)
----- ------
Net current assets/(liabilities)..................... 194 (628)
----- ------
Total assets less current liabilities................ 1,159 419
----- ------
Creditors due after more than one year
Loans................................................ 16 (10) (8)
Financing due to ICI................................. 16 (866) --
Other creditors...................................... 15 (7) (9)
----- ------
(883) (17)
Provisions for liabilities and charges............... 17 (77) (72)
Deferred income...................................... (11) (11)
----- ------
(971) (100)
----- ------
Net assets........................................... 188 319
===== ======
Net investment (page F-37)........................... 184 316
Minority interests--equity........................... 4 3
----- ------
188 319
===== ======
</TABLE>
The accompanying notes form anintegral part of these combined financial
statements.
F-40
<PAGE>
COMBINED CASH FLOW STATEMENTS
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
Notes 1996 1997 1998
----- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Net cash inflow from operating
activities............................... 18 292 111 200
Returns on investments and servicing of
finance.................................. 19 (13) (12) (12)
Taxation.................................. (41) (22) (56)
---- ---- ----
238 77 132
Capital expenditure and financial
investment............................... 20 (187) (169) (130)
Disposals................................. 21 -- 31 --
---- ---- ----
Cashflow before financing................. 51 (61) 2
Net movement in financing................. 22 (57) 67 (4)
---- ---- ----
Increase/(decrease) in cash............... 24 (6) 6 (2)
==== ==== ====
</TABLE>
RECONCILIATION OF MOVEMENTS IN COMBINED NET INVESTMENT
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Net profit/(loss) for the financial year......... 53 (63) 58
Distributions and transfers (to)/from ICI, net of
tax............................................. (3) 10 21
--- --- ---
Profit/(loss) retained for year.................. 50 (53) 79
Other recognised gains/(losses) related to the
year--exchange differences on translation of
opening investment and other non cash
movements....................................... (42) 2 53
--- --- ---
Increase/(decrease) in net investment............ 8 (51) 132
Combined net investment at beginning of year..... 227 235 184
--- --- ---
Combined net investment at end of year........... 235 184 316
=== === ===
</TABLE>
The net assets above have been reduced as of 31 December, in each year by a
cumulative amount of goodwill written off of (Pounds)35m.
There are no significant statutory or contractual restrictions on the
distribution of current year income of subsidiary undertakings. Undistributed
profits are, in the main, employed in the businesses of these companies. The
undistributed income of the Businesses overseas may be liable to overseas taxes
and/or United Kingdom taxation (after allowing for double taxation relief) if
they were to be distributed as dividends.
The cumulative exchange gains and losses on the translation of foreign
currency financial statements into pounds sterling are taken into account in
the above reconciliation of movements in combined net investment.
The accompanying notes form anintegral part of these combined financial
statements.
F-41
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS
1 Basis of preparation
The accompanying Combined Financial Statements for the three years ended 31
December 1998 have been prepared in connection with the disposal of ICI's
Tioxide, Polyurethanes and selected petrochemicals businesses (the
"Businesses") in order to show the financial position, results of operations,
total recognised gains and losses and cash flows of the Businesses. They have
been prepared on a carve-out basis by aggregating the historical financial
information of the Businesses as if they had formed a discrete operation under
common management for the entire three year period. The Businesses are not
separate legal entities and have not been separately financed. Distributions
and transfers out of retained income made by the Businesses have been treated
as reductions in net investment (i.e. as if they were dividends).
Management overheads
Certain management overheads and other similar costs amounting to
(Pounds)13m in 1996, (Pounds)23 million in 1997 and (Pounds)15 million in 1998
have been attributed to the Businesses. Allocations were based on a combination
of the sales of the Businesses as a percentage of ICI's sales and the net
assets of the Businesses as a percentage of ICI's net assets. In all cases
management believes the method used was reasonable. The allocated costs are
included in operating costs in the Combined Profit and Loss Accounts and have
been treated as non-cash movements through net investment.
Indebtedness and interest
The Combined Financial Statements include interest on the indebtedness
between ICI and the Businesses of (Pounds)866 million as if such indebtedness
had been in place for all periods presented. This debt has been determined by
management to be an appropriate amount to include in the Combined Financial
Statements because it is the amount of long-term debt that is expected to be
outstanding on the date the transaction is completed. The charge for interest
on such indebtedness is based on the weighted average interest rates of
selected, representative long-term borrowings of ICI in each year. The interest
charge was (Pounds)73 million in 1996, (Pounds)66 million in 1997 and
(Pounds)69 million in 1998, reflecting interest rates of 8.5% in 1996, 7.6% in
1997 and 8.0% in 1998. For cash flow purposes, interest on such indebtedness
and associated tax relief to the extent that it exceeds the actual interest
paid to ICI in the relevant period has been treated as a non-cash movement
through net investment.
Taxation
The tax charge attributable to the Businesses is based on the charge
recorded by individual legal entities and an appropriate allocation of the tax
charge incurred by ICI where activities of both the Businesses and ICI were
carried out within a single legal entity. There are no material differences
between the tax charge allocated and that which would have arisen on a stand
alone basis. Only actual tax payments by individual legal entities of the
Businesses have been included in the Combined Cash Flow Statements; payments by
ICI legal entities in respect of tax attributable to activities of the
Businesses have been treated as non-cash movements through net investment.
2 Principal accounting policies
These Combined Financial Statements have been prepared under the historical
cost convention and UK accounting standards applicable for those periods
presented. Accordingly, the provisions of Financial Reporting Standard (FRS) 12
and FRS 14 and all of the disclosure requirements of FRS 13 have not been
applied. Accounting policies conform with UK Generally Accepted Accounting
Principles (UK GAAP). The principal accounting policies which have been applied
are set out below.
F-42
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Turnover
Turnover excludes intra-Business turnover and value added taxes. Revenue
is recognised at the point at which title passes.
Depreciation
The book value of each tangible fixed asset is written off to its residual
value evenly over its estimated remaining life. Reviews are made annually of
the estimated remaining lives of individual productive assets, taking account
of commercial and technological obsolescence as well as normal wear and tear.
Under this policy it becomes impracticable to calculate average asset lives
exactly; however, the total lives approximate to 28 years for buildings and 20
years for plant and equipment. Depreciation of assets qualifying for grants is
calculated on their full cost.
Pension costs
The pension costs relating to UK retirement plans are assessed in
accordance with the advice of independent qualified actuaries. The amounts so
determined include the regular cost of providing the benefits under the plans
which should be a level percentage of current and expected future earnings of
the employees covered under the plans. Variations from the regular pension
cost are spread on a systematic basis over the estimated average remaining
service lives of current employees in the plans. With minor exceptions, non-UK
subsidiaries recognise the expected cost of providing pensions on a systematic
basis over the average remaining service lives of employees in accordance with
the advice of independent qualified actuaries.
Research and development
Research and development expenditure is charged to profit in the year in
which it is incurred.
Government grants
Grants related to expenditure on tangible fixed assets are credited to
profit over a period approximating to the lives of qualifying assets. The
grants shown in the balance sheets consist of the total grants receivable to
date less the amounts so far credited to profit.
Foreign currencies
Profit and loss accounts in foreign currencies are translated into
sterling at average rates for the relevant accounting periods. Assets and
liabilities are translated at exchange rates ruling at the date of the
Businesses' balance sheet. Exchange differences on short-term foreign currency
borrowings and deposits are included with net interest payable. Exchange
differences on all other transactions, except relevant foreign currency loans,
are taken to trading profit. In the Businesses' accounts, exchange differences
arising on consolidation of the net investments in overseas subsidiary
undertakings and associated undertakings are taken to net investment in the
balance sheet. Differences on relevant foreign currency loans are taken to net
investment and offset against the differences on net investment in the balance
sheet.
Stock valuation
Finished goods are stated at the lower of cost and net realisable value,
raw materials and other stocks at the lower of cost and replacement price; the
first in, first out or an average method of valuation is used. In determining
cost for stock valuation purposes, depreciation is included but selling
expenses and certain overhead expenses are excluded.
F-43
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Environmental liabilities
The Businesses are exposed to environmental liabilities relating to past
operations, principally in respect of soil and groundwater remediation costs.
Provisions for these costs are made when expenditure on remedial work is
probable and the cost can be estimated within a reasonable range of possible
outcomes.
Associated undertakings and joint ventures
Associated undertakings and joint ventures are undertakings in which the
Businesses hold a long-term interest and over which they actually exercise
significant influence. Interests in joint arrangements that are not entitles
are included proportionately in the accounts of the investing entity.
Taxation
The charge for taxation is based on the profit for the year and takes into
account taxation deferred because of timing differences between the treatment
of certain items, including post-retirement benefits, for taxation and for
accounting purposes. However, no provision is made for taxation deferred by
reliefs unless there is reasonable evidence that such deferred taxation will be
payable in the future.
Goodwill
On the acquisition of a business, fair values are attributed to the net
assets acquired. Goodwill arises where the fair value of the consideration
given for a business exceeds such net assets. For purchased goodwill arising on
acquisitions after 31 December 1997 goodwill is capitalised and amortised
through the profit and loss acount over a period of 20 years unless it is
considered that it has a materially different useful life. For goodwill arising
on acquisitions prior to 31 December 1997 purchased goodwill was charged
directly to net investment in the year of acquisition. On subsequent disposal
or termination of a previously acquired business, the profit or loss recognised
on disposal or termination is calculated after charging the amount of any
related goodwill previously taken to net investment.
F-44
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
3 Segmental information
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Turnover
By business
Polyurethanes.................................... 907 860 816
Tioxide.......................................... 618 547 574
Petrochemicals................................... 1,047 980 659
----- ----- -----
2,572 2,387 2,049
Inter-business................................... (38) (50) (38)
----- ----- -----
2,534 2,337 2,011
===== ===== =====
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
By geographical location of operating units
United Kingdom................................... 1,511 1,214 818
Continental Europe............................... 845 781 751
USA.............................................. 481 494 509
Other Americas................................... 101 97 83
Asia Pacific..................................... 224 184 143
Other countries.................................. 42 37 42
----- ----- -----
3,204 2,807 2,346
Inter-area eliminations.......................... (670) (470) (335)
----- ----- -----
2,534 2,337 2,011
===== ===== =====
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
By geographical location of customer
United Kingdom................................... 900 760 560
Continental Europe............................... 772 755 638
USA.............................................. 377 386 408
Other Americas................................... 118 117 118
Asia Pacific..................................... 266 236 204
Other countries.................................. 101 83 83
----- ----- -----
2,534 2,337 2,011
===== ===== =====
</TABLE>
F-45
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
3. Segmental information (continued)
<TABLE>
<CAPTION>
Profit/(loss) before interest
Trading profit/(loss) and taxation after
before exceptional items exceptional items
----------------------------- -----------------------------
Years ended 31 December Years ended 31 December
----------------------------- -----------------------------
1996 1997 1998 1996 1997 1998
--------- --------- --------- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C>
By business
Polyurethanes........... 113 77 90 115 101 87
Tioxide................. -- (23) 68 (11) (54) 58
Petrochemicals.......... 59 -- (27) 59 (25) (27)
--- --- --- --- --- ---
172 54 131 163 22 118
=== === === === === ===
<CAPTION>
Profit/(loss) before interest
Trading profit/(loss) and taxation after
before exceptional items exceptional items
----------------------------- -----------------------------
Years ended 31 December Years ended 31 December
----------------------------- -----------------------------
1996 1997 1998 1996 1997 1998
--------- --------- --------- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C>
By geographical location
of operating units
United Kingdom.......... 85 36 13 80 13 11
Continental Europe...... 31 (19) 56 30 (22) 48
USA..................... 49 30 44 47 30 44
Other Americas.......... 9 5 6 7 4 5
Asia Pacific............ (8) (1) 7 (8) (6) 5
Other countries......... 6 3 5 7 3 5
--- --- --- --- --- ---
172 54 131 163 22 118
=== === === === === ===
</TABLE>
<TABLE>
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Total assets less current liabilities
By business
Net operating assets
Polyurethanes.............................................. 480 523
Tioxide.................................................... 629 661
Petrochemicals............................................. 100 102
----- -----
1,209 1,286
Net non-operating liabilities............................... (50) (867)
----- -----
1,159 419
===== =====
</TABLE>
F-46
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
3. Segmental information (continued)
<TABLE>
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
By geographical location of operating units
Net operating assets
United Kingdom............................................. 438 420
Continental Europe......................................... 371 439
USA........................................................ 263 290
Other Americas............................................. 15 19
Asia Pacific............................................... 105 100
Other...................................................... 17 18
----- -----
1,209 1,286
Net non-operating liabilities............................... (50) (867)
----- -----
1,159 419
===== =====
</TABLE>
Net operating assets comprise tangible fixed assets, stocks and total
operating debtors(note 13) less current operating creditors (note 15).
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Employees--average number of people employed
By business
Polyurethanes........................................... 2,139 2,225 2,172
Tioxide................................................. 3,611 3,383 3,243
Petrochemicals.......................................... 946 947 952
------- ------- -------
6,696 6,555 6,367
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
By geographical location of operating units
United Kingdom.......................................... 2,517 2,421 2,261
Continental Europe...................................... 2,515 2,595 2,614
USA..................................................... 545 436 444
Other Americas.......................................... 76 153 161
Asia Pacific............................................ 712 628 558
Other countries......................................... 331 322 329
------- ------- -------
6,696 6,555 6,367
======= ======= =======
</TABLE>
F-47
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
4 Exceptional items before taxation
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Operating exceptional items
Tioxide:
Rationalisation of operations, including
severance (1996 (Pounds)4m; 1997 (Pounds)10m;
1998 (Pounds)7m).............................. (11) (14) (10)
Settlement of dispute with supplier............ -- (17) --
Petrochemicals:
Asset impairment............................... -- (25) --
--- --- ---
(11) (56) (10)
--- --- ---
Credited/(charged) after trading profit
Profit/(loss) on sale or closure of operations:
Disposal of Polyurethanes business in Australia.. -- 25 --
Other disposals.................................. -- (2) (4)
--- --- ---
-- 23 (4)
--- --- ---
Exceptional items within profit on ordinary
activities before taxation...................... (11) (33) (14)
=== === ===
</TABLE>
F-48
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
5 Trading profit
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Trading profit before exceptional items
Turnover......................................... 2,534 2,337 2,011
------ ------ ------
Operating costs
Cost of sales.................................. (1,989) (1,911) (1,535)
Distribution costs............................. (100) (128) (143)
Research and development....................... (51) (49) (39)
Administration and other expenses.............. (228) (200) (171)
------ ------ ------
(2,368) (2,288) (1,888)
Other operating income
Government grants.............................. 1 2 2
Royalty income................................. 1 -- 3
Other income................................... 4 3 3
------ ------ ------
6 5 8
------ ------ ------
Trading profit................................... 172 54 131
====== ====== ======
Operating costs include:
Depreciation................................... 93 88 76
------ ------ ------
Gross profit, as defined by UK Companies Act
1985.......................................... 545 426 476
------ ------ ------
Trading profit after exceptional items
Turnover......................................... 2,534 2,337 2,011
------ ------ ------
Operating costs
Cost of sales.................................. (1,996) (1,965) (1,544)
Distribution costs............................. (102) (128) (143)
Research and development....................... (51) (49) (39)
Administration and other expenses.............. (230) (202) (172)
------ ------ ------
(2,379) (2,344) (1,898)
Other operating income
Government grants.............................. 1 2 2
Royalty income................................. 1 -- 3
Other income................................... 4 3 3
------ ------ ------
6 5 8
------ ------ ------
Trading profit/(loss)............................ 161 (2) 121
====== ====== ======
Operating costs include:
Depreciation................................... 93 113 76
------ ------ ------
Gross profit, as defined by UK Companies Act
1985.......................................... 538 372 467
------ ------ ------
</TABLE>
6 Note of historical cost profits and losses
There were no material differences between reported profits and losses on
ordinary activities before tax in 1996, 1997 and 1998.
F-49
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
7 Staff costs
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Staff costs:
Salaries...................................... 181 166 163
Social security costs......................... 28 24 27
Pension costs................................. 13 15 15
Other employment costs........................ 3 3 2
--- --- ---
225 208 207
Less amounts allocated to capital and to
provisions set up in previous years............ (2) (3) --
Severance costs charged in arriving at profit
before tax..................................... 5 10 8
--- --- ---
Employee costs charged in arriving at profit
before tax..................................... 228 215 215
=== === ===
</TABLE>
8 Net interest payable
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Interest payable and similar charges
Interest on loans
External........................................ 3 3 1
Other ICI businesses............................ 73 66 69
--- --- ---
76 69 70
Interest on short-term borrowings................. 3 2 2
--- --- ---
79 71 72
Interest receivable and similar income
External........................................ (1) (2) (1)
--- --- ---
78 69 71
=== === ===
</TABLE>
9 Taxation on profit on ordinary activities
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------------------------------------------------------------------------------
1996 1997 1998
--------------------------------- --------------------------------- ---------------------------------
Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptional
items items Total items items Total items items Total
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United Kingdom
taxation
Corporation
tax............ (11) (3) (14) 17 -- 17 (30) -- (30)
Deferred
taxation....... 4 -- 4 -- -- -- 2 -- 2
--- --- --- --- --- --- --- --- ---
(7) (3) (10) 17 -- 17 (28) -- (28)
--- --- --- --- --- --- --- --- ---
Overseas taxation
Overseas taxes.. 33 -- 33 31 (10) 21 24 (4) 20
Deferred
taxation....... 6 -- 6 (23) -- (23) (4) -- (4)
--- --- --- --- --- --- --- --- ---
39 -- 39 8 (10) (2) 20 (4) 16
--- --- --- --- --- --- --- --- ---
32 (3) 29 25 (10) 15 (8) (4) (12)
=== === === === === === === === ===
</TABLE>
UK and overseas taxation has been provided on the profit/(loss) earned for
the periods covered by the accounts, UK corporation tax has been provided at
the rate of 31% (1997 31.5%; 1996 33%).
F-50
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Deferred taxation
The amounts of deferred taxation accounted for as the balance sheet data
and the potential amounts of deferred taxation are disclosed below.
<TABLE>
<CAPTION>
Year ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Accounted for at balance sheet date
Timing differences on UK capital allowances and
depreciation................................... 70 63 83
Miscellaneous timing differences................ (3) (22) (43)
--- --- ---
67 41 40
--- --- ---
Not accounted for at balance sheet data
Timing differences on UK capital allowances and
depreciation................................... 64 82 81
Miscellaneous timing differences................ (11) (49) (36)
--- --- ---
53 33 45
--- --- ---
Full potential deferred taxation................ 120 74 85
=== === ===
</TABLE>
F-51
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
10Tangible fixed assets
<TABLE>
<CAPTION>
Payments
to account
and assets
Land and Plant and in course of
buildings equipment construction Total
--------- --------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Cost
At 1 January 1997 ...... 191 1,396 188 1,775
Capital expenditure..... -- -- 171 171
Transfer of assets into
use.................... 2 77 (79)
Exchange adjustments.... (20) (80) (14) (114)
Disposals and other
movements.............. (2) (28) (1) (31)
--- ----- ---- -----
At 31 December 1997..... 171 1,365 265 1,801
Capital expenditure..... -- -- 135 135
Transfer of assets into
use.................... 4 261 (265)
Exchange adjustments.... 4 27 2 33
Disposals and other
movements.............. (1) (36) -- (37)
--- ----- ---- -----
At 31 December 1998 178 1,617 137 1,932
--- ----- ---- -----
Depreciation
At 1 January 1997 ...... 59 726 785
Charge for year......... 7 106 113
Exchange adjustments.... (5) (28) (33)
Disposals and other
movements.............. (1) (21) (22)
--- ----- -----
At 31 December 1997..... 60 783 843
Charge for year......... 5 71 76
Exchange adjustments.... 2 9 11
Disposals and other
movements.............. (1) (38) (39)
--- ----- -----
At 31 December 1998..... 66 825 891
=== ===== =====
Net book value at 31
December 1997.......... 111 582 265 958
=== ===== ==== =====
Net book value at 31
December 1998.......... 112 792 137 1,041
=== ===== ==== =====
</TABLE>
The depreciation charge of (Pounds)113m in 1997, shown above, includes
(Pounds)25m charged to exceptional items relating to provisions for impairment.
Included in land and buildings is (Pounds)22m (1997 (Pounds)22m) in respect
of the cost of land which is not subject to depreciation.
F-52
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
The net book value of land and buildings comprises:
Freeholds................................................. 84 86
Long leases (over 50 years unexpired)..................... 27 26
--- ---
111 112
=== ===
11 Investments in participating and other interests
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Associated undertakings--non equity accounted shares
Cost
At beginning of year........................................ 7 7
Exchange adjustments........................................ -- (1)
--- ---
At 31 December.............................................. 7 6
=== ===
12 Stocks
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Raw materials and consumables............................... 91 106
Stocks in process........................................... 9 11
Finished goods and good for resale.......................... 136 133
--- ---
236 250
=== ===
13 Debtors
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Amounts due within one year
Trade debtors--external..................................... 122 97
Trade debtors--other ICI businesses......................... 182 158
Taxation recoverable........................................ 6 10
Other prepayments and accrued income........................ 6 10
Other debtors--external..................................... 20 19
--- ---
336 294
=== ===
Amounts due after one year
Other debtors--external..................................... 4 2
--- ---
340 296
=== ===
</TABLE>
F-53
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
Non operating debtors included in the above
<TABLE>
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Amounts due within one year
Taxation recoverable........................................ 3 3
Other debtors............................................... 2 --
--- ---
5 3
Amounts due after one year
Taxation recoverable........................................ 3 7
--- ---
8 10
=== ===
14 Short-term borrowings
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Bank borrowings--Unsecured.................................. 20 12
=== ===
15 Other creditors
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
Amounts due within one year
<S> <C> <C>
Trade creditors--external................................... 158 184
Trade creditors--other ICI businesses....................... 60 26
Corporate taxation.......................................... 91 53
Value added and payroll taxes and social security........... 17 8
Accruals.................................................... 43 42
Other creditors............................................. 39 32
--- ---
408 345
=== ===
Amounts due after one year
Pension liabilities......................................... 2 3
Other creditors............................................. 5 6
--- ---
7 9
=== ===
Non-operating creditors included in the above
Amounts due within one year
Corporate taxation.......................................... 91 53
Other creditors............................................. -- 1
--- ---
91 54
=== ===
Amounts due after one year
Pension liabilities......................................... 2 3
Other creditors............................................. 3 --
--- ---
5 3
=== ===
</TABLE>
F-54
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
16 Loans
<TABLE>
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Creditors due within one year
Current instalment of loans................................. 9 4
Financing due to ICI........................................ -- 866
--- ---
9 870
=== ===
Creditors due after more than one year
Loans....................................................... 10 8
Financing due to ICI........................................ 866 --
--- ---
876 8
--- ---
885 878
=== ===
Secured loans
US dollars.................................................. 4 --
Other currencies............................................ 1 --
--- ---
Total secured............................................... 5 --
--- ---
Secured by fixed charge................................... 4 --
Secured by floating charge................................ 1 --
--- ---
Unsecured loans
US dollars.................................................. -- --
Other foreign currencies.................................... 14 12
--- ---
14 12
Financing due to ICI (see note below)....................... 866 866
--- ---
Total unsecured............................................. 880 878
--- ---
Total loans................................................. 885 878
=== ===
Loan maturities
Bank loans
Loans or instalments thereof are repayable:
From 2 to 5 years from balance sheet date................. 7 5
From 1 to 2 years......................................... 3 3
--- ---
Total due after more than one year.......................... 10 8
Total due within one year................................... 9 4
--- ---
19 12
=== ===
Other loans
Loans or instalments thereof are repayable:
From 1 to 2 years from balance sheet date................. 866 --
=== ===
Within one year........................................... -- 866
=== ===
</TABLE>
Financing due to ICI includes the indebtedness assumed by the Businesses on
1 January 1999 as if it had been in place throughout the period.
F-55
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Total loans
Loans or instalments thereof are repayable:
From 2 to 5 years from balance sheet date................. 7 5
From 1 to 2 years......................................... 869 3
--- ---
Total due after more than one year.......................... 876 8
Total due within one year................................... 9 870
--- ---
Total loans................................................. 885 878
=== ===
</TABLE>
17 Provisions for liabilities and charges
<TABLE>
<CAPTION>
Deferred Unfunded Employee Other
taxation pensions benefits provisions Total
--------- --------- --------- ---------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C>
At 1 January 1997.......... 67 13 17 14 111
Profit and loss account.... (23) -- 1 1 (21)
Net amounts paid or
becoming current.......... -- (2) (1) (8) (11)
Exchange and other
movements................. (3) -- -- 1 (2)
--- --- --- --- ---
At 31 December 1997........ 41 11 17 8 77
Profit and loss account.... (2) (5) 2 3 (2)
Net amounts paid or
becoming current.......... -- (1) (1) (2) (4)
Exchange and other
movements................. 1 -- -- -- 1
--- --- --- --- ---
At 31 December 1998........ 40 5 18 9 72
=== === === === ===
</TABLE>
18 Net cash inflow from operating activities
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Trading profit/(loss)............................. 161 (2) 121
Exceptional items within trading profit........... 11 56 10
--- --- ---
Trading profit before exceptional items .......... 172 54 131
Depreciation...................................... 93 88 76
Stocks decrease/(increase) ....................... (18) 56 (11)
Debtors decrease.................................. 28 9 52
Creditors increase/(decrease)..................... 45 (62) (36)
Other movements, including exchange............... (4) (2) (1)
--- --- ---
316 143 211
Outflow relating to exceptional items............. (24) (32) (11)
--- --- ---
292 111 200
=== === ===
</TABLE>
Outflow related to exceptional items includes expenditure charged to
exceptional provisions relating to business rationalisation, settlement of a
dispute with a supplier and for sale or closure of operations, including
severance and other employee costs.
F-56
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
19 Returns on investments and servicing of finance
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Dividends received from associated
undertakings................................... 1 -- --
Interest received............................... 32 8 10
Interest paid................................... (45) (19) (21)
Dividends paid by subsidiary undertakings to
minority shareholders.......................... (1) (1) (1)
--- --- ---
(13) (12) (12)
=== === ===
</TABLE>
20 Capital expenditure and financial investment
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Purchase of tangible fixed assets............... (188) (173) (130)
Purchase of fixed asset investments other than
associated undertakings or joint ventures ..... (1) -- --
Sale of tangible fixed assets................... 2 4 --
---- ---- ----
(187) (169) (130)
==== ==== ====
</TABLE>
21 Disposals
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Cash inflow from disposal of Polyurethanes
business in Australia.......................... -- 31 --
=== === ===
</TABLE>
The Polyurethanes business in Australia contributed (Pounds)3m and
(Pounds)2m to the trading profit of the Businesses in 1996 and 1997,
respectively.
F-57
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
22 Financing
<TABLE>
<CAPTION>
Short-term
Distributions Financing borrowings
and transfers due to other than
to ICI * ICI Sub Total Loans overdrafts Sub Total Total
------------- --------- --------- --------- ---------- --------- ---------
Notes 16 16 24
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C> <C>
At 1 January 1997....... (1,101) 866 (235) (27) - (27) (262)
Exchange adjustments.... 53 - 53 - - - 53
Financing
------ --- ---- --- --- --- ----
New finance........... (69) - (69) - (7) (7) (76)
Finance repaid........ 1 - 1 8 8 9
------ --- ---- --- --- --- ----
Cash flow............... (68) - (68) 8 (7) 1 (67)
Acquisitions and
disposals.............. 3 - 3 - - - 3
Other non-cash changes.. 63 - 63 - - - 63
------ --- ---- --- --- --- ----
At 31 December 1997..... (1,050) 866 (184) (19) (7) (26) (210)
Exchange adjustments.... (7) - (7) - - - (7)
Financing
------ --- ---- --- --- --- ----
New finance........... (23) - (23) - - (23)
Finance repaid........ 14 - 14 7 6 13 27
------ --- ---- --- --- --- ----
Cash flow............... (9) - (9) 7 6 13 4
Other non-cash changes.. (116) - (116) - - - (116)
------ --- ---- --- --- --- ----
At 31 December 1998..... (1,182) 866 (316) (12) (1) (13) (329)
====== === ==== === === === ====
</TABLE>
- --------
* The distributions and transfers to ICI and related interest paid are not
indicative of the dividends and interest that the Businesses will pay as an
independent managed and financed entity.
The Businesses have not been charged with any financing costs in respect of
amounts included within Net investment during the period covered by the
Combined Financial Statements.
23 Analysis of net debt
<TABLE>
<CAPTION>
Current
asset
Cash Financing -- debt investments Net debt
--------- ----------------------------------------- ----------- ---------
Short-term
borrowings
Financing other than
due to ICI Loans overdrafts Total
---------- --------- ---------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C> <C>
At 1 January 1997....... 39 (866) (27) - (893) 3 (851)
Exchange adjustments.... (5) - - - - (1) (6)
Cash flow............... 6 - 8 (7) 1 - 7
--- ---- --- --- ---- --- ----
At 31 December 1997..... 40 (866) (19) (7) (892) 2 (850)
Exchange adjustments.... 2 - - - - - 2
Cash flow............... (2) - 7 6 13 - 11
--- ---- --- --- ---- --- ----
At 31 December 1998..... 40 (866) (12) (1) (879) 2 (837)
=== ==== === === ==== === ====
</TABLE>
F-58
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
24 Cash and short-term borrowings
<TABLE>
<CAPTION>
Short-term borrowings Cash
Cash at ------------------------------ (at bank and
bank Overdrafts Other Total Net total overdraft)
--------- ---------- --------- --------- --------- ------------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C>
At 1 January 1997....... 50 (11) -- (11) 39 39
Exchange adjustments.... (6) 1 -- 1 (5) (5)
Cash flow............... 9 (3) (7) (10) (1) 6
--- --- --- --- --- ---
At 31 December 1997..... 53 (13) (7) (20) 33 40
Exchange adjustments.... -- 2 -- 2 2 2
Cash flow............... (2) -- 6 6 4 (2)
--- --- --- --- --- ---
At 31 December 1998..... 51 (11) (1) (12) 39 40
=== === === === === ===
</TABLE>
25 Leases
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Rentals under operating leases, charged as an
expense in the profit and loss account
Hire of plant and machinery................... 7 4 3
Other......................................... 3 1 1
--- --- ---
10 5 4
=== === ===
</TABLE>
<TABLE>
<CAPTION>
Land and buildings Other assets
Years ended 31 December Years ended 31 December
----------------------------- -----------------------------
1996 1997 1998 1996 1997 1998
--------- --------- --------- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C> <C> <C>
Commitments under
operating leases to pay
rentals during the year
following the year of
these accounts,
analysed according to
the period in which
each lease expires
Expiring within 1
year................. 1 1 1 -- -- 1
Expiring in years 2 to
5.................... 1 -- -- 2 2 1
Expiring thereafter... 1 1 1 -- -- --
--- --- --- --- --- ---
3 2 2 2 2 2
=== === === === === ===
</TABLE>
<TABLE>
<CAPTION>
Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Obligations under operating leases comprise
Rentals due within 1 year...................... 5 4 4
--- --- ---
Rentals due after more than 1 year
From 1 to 2 years.............................. 4 4 3
From 2 to 3 years.............................. 3 3 3
From 3 to 4 years.............................. 3 2 2
From 4 to 5 years.............................. 2 2 2
After 5 years from balance sheet date.......... 14 11 8
--- --- ---
26 22 18
--- --- ---
31 26 22
=== === ===
</TABLE>
F-59
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
26 Pensions and other post retirement benefits
Pensions
The majority of the Businesses' employees are covered by retirement plans.
These plans are generally of the defined benefit type under which benefits are
based on employees' years of service and average final remuneration and are
funded through separate trustee-administered funds. Formal independent
actuarial valuations of ICI's main plans are undertaken regularly, normally at
least triennially and adopting the projected unit method.
The actuarial assumptions used to calculate the projected benefit
obligation of ICI's pension plans vary according to the economic conditions of
the country in which they are situated. It is usually assumed that, over the
long term, the annual rate of return on scheme investments will be higher than
the annual rate of increase in pensionable remuneration and in present and
future pension in payments.
The weighted average discount rate used in determining the actuarial
present values of the benefit obligations was 7.3% (1997 7.8%). The weighted
average expected long-term rate of return on investments was 7.9% (1997 8.0%).
The weighted average rate of increase of future earnings was 4.9% (1997 5.0%).
The actuarial value of the fund assets of these plans at the date of the
latest actuarial valuations was sufficient to cover 104% (1997 107%) of the
benefits that had accrued to members after allowing for expected future
increases in earnings; their market value was (Pounds)462m (1997 (Pounds)427m).
The total pension cost for the Businesses for 1998 was (Pounds)15m (1997
(Pounds)15m; 1996 (Pounds)13m). Accrued pension costs amounted to (Pounds)3m
(1997 (Pounds)2m) and are included in other creditors (note 15); provisions for
the benefit obligation of a small number of unfunded plans amounted to
(Pounds)5m (1997 (Pounds)11m) and are included in provisions for liabilities
and charges - unfunded pensions (note 17).
27 Related party transactions
The following information is provided in accordance with FRS No 8 - Related
Party Transactions, as being material transactions with related parties
during 1998.
Related party: Imperial Chemical Industries PLC and subsidiary
undertakings
Transactions: a) Sales of product (Pounds)124m
b) Sales of services (Pounds)3m
c) Purchases of product (Pounds)13m
d) Purchases of services (Pounds)35m
Related party: Phillips-Imperial Petroleum Ltd (PIP), disclosed as a
principal associated undertaking of Imperial Chemical
Industries PLC.
Transactions: a) Sales of refined products to PIP amounted to
(Pounds)98m.
b) Purchase of refined oil and refining costs from PIP
amounted to (Pounds)29m.
c) Site services and other charges to PIP amounted to
(Pounds)23m.
d) Amount owed to the Group related to the above
transactions amounted to (Pounds)5m.
Related party: ICHEM Insurance Company Limited, a subsidiary undertaking
of Imperial Chemical Industries PLC.
Transactions: Insurance premium paid by the Businesses (Pounds)11.7m.
Insurance claims settled by ICHEM Insurance Company
Limited (Pounds)22.4m.
F-60
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
28 Contingent liabilities and commitments
<TABLE>
<CAPTION>
At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
<S> <C> <C>
Commitments for capital expenditure not provided in these
accounts
Contracts placed for future expenditure................. 24 107
Expenditure authorized but not yet contracted........... 1 1
--- ---
25 108
=== ===
</TABLE>
The Businesses are involved in various legal proceedings arising out of the
normal course of business. It is not believed that the outcome of these
proceedings will have a material effect on the Businesses' financial position.
The Businesses are also subject to contingencies pursuant to environmental
laws and regulations that in the future may require it to take action to
correct the effects on the environment of prior disposal or release of chemical
substances by the Businesses or other parties. The ultimate requirement for
such actions, and their cost is inherently difficult to estimate, however
provisions have been established at 31 December 1998 in accordance with the
accounting policy in note 2.
Guarantees and contingencies arising in the ordinary course of business,
for which no security has been given, are not expected to result in any
material financial loss.
The Businesses have entered into a number of take-or-pay contracts in
respect of purchases of raw materials and services for varying periods up to
2013. The aggregate present value of significant commitments at 31 December
1998 was approximately (Pounds)420m.
29 Subsequent event
In April 1999 ICI, Huntsman Specialty Chemicals Corporation and Huntsman
ICI Holdings LLC (Holdings) entered into a Contribution Agreement under which
Holdings acquired the businesses of ICI relating to polyurethane chemicals,
titanium dioxide and selected petrochemicals (the "Businesses"). In exchange
for transferring the Businesses, ICI will receive a 30% equity interest in
Holdings and an aggregate of approximately $2,022 million in cash and
approximately $508 million in proceeds from discount notes of Holdings. The
transaction is expected to close on 30 June 1999.
F-61
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
30 Differences between UK and US accounting principles
The Combined Financial Statements are prepared in accordance with United
Kingdom Generally Accepted Accounting Principles (UK GAAP). The significant
differences between UK GAAP and US Generally Accepted Accounting Principles (US
GAAP) which affect net income and net assets are set out below:
(a)Accounting for pension costs
There are four significant differences between UK GAAP and US GAAP in
accounting for pension costs:
(i) SFAS No. 87, "Employers' Accounting for Pensions", requires that
pension plan assets are valued by reference to their fair or
market related values, whereas UK GAAP permits an alternative
measurement of assets, which, in the case of the main UK
retirement plans, is on the basis of the discounted present value
of expected future income streams from the pension plan assets.
(ii)SFAS No. 87, requires measurements of plan assets and obligations
to be made as at the date of financial statements or a date not
more than three months prior to that date. Under UK GAAP,
calculations may be based on the results of the latest actuarial
valuation.
(iii)SFAS No. 87, mandates a particular actuarial method--the
projected unit credit method--and requires that each significant
assumption necessary to determine annual pension cost reflects
best estimates solely with regard to that individual assumption.
UK GAAP does not mandate a particular method, but requires that
the method and assumptions, taken as a whole, should be compatible
and lead to the actuary's best estimate of the cost of providing
the benefits promised.
(iv)Under SFAS No. 87, a negative pension cost may arise where a
significant unrecognised net asset or gain exists at the time of
implementation. This is required to be amortised on a straight-
line basis over the average remaining service period of employees.
Under UK GAAP, the policy is not to recognise pension credits in
its financial statements unless a refund of, or reduction in,
contributions is likely.
(b) Purchase accounting adjustments, including the amortisation and
impairment of goodwill and intangibles
In the Combined Financial Statements, prepared in accordance with UK
GAAP, goodwill arising on acquisitions accounted for under the purchase
method after 1 January 1998, is capitalised and amortised, as it would
be in accordance with US GAAP. Prior to that date such goodwill arising
on acquisitions was and remains eliminated against net investment.
Values were not placed on intangible assets. Additionally, UK GAAP
requires that on subsequent disposal or closure of a previously
acquired asset, any goodwill previously taken directly to net
investment is then charged in the income statement against the income
or loss on disposal or closure. Under US GAAP all goodwill would be
capitalised in the combined balance sheet and amortised through the
profit and loss account over its estimated life not exceeding 40 years.
Also, under US GAAP, it is normal practice to ascribe fair values to
identifiable intangibles. For the purpose of the adjustments to US
GAAP, included below, identifiable intangible assets are amortised to
income over the lower of their estimated lives or 40 years. Provision
is made where there is a permanent impairment to the carrying value of
capitalised goodwill and intangible assets based on a projection of
future undiscounted cash flows.
F-62
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
(c) Capitalisation of interest
There is no accounting standard in the UK regarding the capitalisation
of interest and the Businesses do not capitalise interest in the
Combined Financial Statements. Under US GAAP, SFAS No. 34
"Capitalization of Interest Cost", requires interest incurred as part
of the cost of constructing fixed assets to be capitalised and
amortised over the life of the asset.
(d) Restructuring costs
US GAAP requires a number of specific criteria to be met before
restructuring costs can be recognised as an expense. Among these
criteria is the requirement that all the significant actions arising
from the restructuring plan and their completion dates must be
identified by the balance sheet date. Under UK GAAP, prior to the
publication of FRS12, when a decision was taken to restructure, the
necessary provisions were made for severance and other costs.
Accordingly, timing differences, between UK GAAP and US GAAP, arise on
the recognition of such costs.
(e) Deferred taxation
Deferred taxation is provided on a full provision basis under US GAAP.
Under UK GAAP no provision is made for taxation deferred by reliefs
unless there is reasonable evidence that such deferred taxation will be
payable in the foreseeable future.
The following is a summary of the material adjustments to net income and
net equity which would be required if US GAAP had been applied instead of UK
GAAP:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C>
Net income after exceptional items--UK GAAP...... 53 (63) 58
Adjustments to conform with US GAAP
Pension expense................................ - (1) (1)
Purchase accounting adjustments
Amortisation of goodwill and intangibles..... (1) (1) (1)
Capitalisation of interest less amortisation
and disposals................................. (1) (3) -
Restructuring costs............................ - - 5
Deferred taxation
Arising on UK GAAP results................... (10) 16 (12)
Arising on other US GAAP adjustments......... -- 2 (1)
--- --- ---
Total US GAAP adjustments...................... (12) 13 (10)
--- --- ---
Net income--US GAAP.............................. 41 (50) 48
=== === ===
Net assets--UK GAAP.............................. 188 319
Adjustments to conform with US GAAP
Purchase accounting adjustments including
goodwill and intangibles...................... 31 30
Capitalisation of interest less amortisation
and disposals................................. 71 71
Restructuring provision........................ - 5
Pension expense................................ (26) (27)
Deferred taxation.............................. (51) (64)
--- ---
Total US GAAP adjustments...................... 25 15
--- ---
Net assets--US GAAP.............................. 213 334
=== ===
</TABLE>
F-63
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)
31 Principal companies and operations
a) Principal ICI subsidiary companies included in the Businesses.
<TABLE>
<S> <C> <C>
% owned Country Unit name
100 England Tioxide Group Ltd
100 England Tioxide Europe Ltd
100 England Tioxide Group Service Ltd
100 USA Tioxide Americas Inc
100 Canada Tioxide Canada Inc
100 Italy Tioxide Europe Srl
100 Spain Tioxide Europe S.A.
100 France Tioxide Europe SA
100 Malaysia Tioxide (Malaysia) SDN BHD
60 South Africa Tioxide Southern Africa (Pty) Ltd
b) Principal associated companies included in the Businesses.
% owned Country Unit name
50 USA Louisiana Pigment Company, LP
Louisiana Pigment Company, LP is accounted for as a joint arrangement that
is not an entity in these special purpose accounts.
c) Principal operations included in the Businesses.
% owned Country Unit name
100 England ICI Chemicals & Polymers Ltd--Petrochemicals
100 England Imperial Chemical Industries PLC--Polyurethanes
100 USA ICI Americas Inc--Polyurethanes
100 Netherlands ICI Holland BV--Polyurethanes
</TABLE>
F-64
<PAGE>
32 Supplemental Condensed Combined Financial Information
The payment obligations under the Senior Subordinated Notes (see elsewhere
in the Offering Circular) are guaranteed by certain of the Businesses which are
wholly owned subsidiaries of ICI and will be wholly owned subsidiaries of
Holdings following the transaction described in note 29 (the "Guarantors"). The
guarantees are full, unconditional and joint and several. The Supplemental
Condensed Combined Financial Information sets forth profit and loss account,
balance sheet and cash flow information for the Guarantors and for the other
individual companies and operations of the Businesses (the "Non-Guarantors").
The information reflects the investments of the Guarantors in certain of the
Non-Guarantors using the equity method of accounting. For the purposes of this
Supplemental Condensed Combined Financial Information, the indebtedness between
ICI and the Businesses of (Pounds)866 million and the interest on such
indebtedness and associated tax relief has been reflected within the Non-
Guarantors information.
Supplemental Combined Profit and Loss Account
For the year ended 31 December 1996
<TABLE>
<CAPTION>
Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Turnover......................... 131 2,454 (51) 2,534
Operating costs.................. (130) (2,289) 51 (2,368)
Other operating income........... - 6 - 6
---- ------ --- ------
Trading profit before operating
exceptional items............... 1 171 - 172
Operating exceptional items...... - (11) - (11)
---- ------ --- ------
Trading profit after operating
exceptional items............... 1 160 - 161
Income from fixed asset
investment--dividends........... - 2 - 2
Share of loss of consolidated
subsidiaries before interest.... (13) - 13 -
---- ------ --- ------
Profit/(loss) on ordinary
activities before interest...... (12) 162 13 163
Net interest
receivable/(payable)............ 10 (88) - (78)
Share of interest payable of
consolidated subsidiaries....... (17) - 17 -
---- ------ --- ------
Profit/(loss) on ordinary
activities before taxation...... (19) 74 30 85
Taxation on profit/(loss) on
ordinary activities............. (1) (28) - (29)
---- ------ --- ------
Profit/(loss) on ordinary
activities after taxation (20) 46 30 56
Attributable to minorities....... - (3) - (3)
---- ------ --- ------
Net profit/(loss) for the
financial year.................. (20) 43 30 53
==== ====== === ======
</TABLE>
F-65
<PAGE>
Supplemental Combined Profit and Loss Account
For the year ended 31 December 1997
<TABLE>
<CAPTION>
Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Turnover......................... 131 2,267 (61) 2,337
Operating costs.................. (134) (2,215) 61 (2,288)
Other operating income........... - 5 - 5
---- ------ --- ------
Trading profit/(loss) before
operating exceptional items..... (3) 57 - 54
Operating exceptional items...... - (56) - (56)
---- ------ --- ------
Trading profit/(loss) after
operating exceptional items..... (3) 1 - (2)
Income from fixed asset
investment--dividends........... - 1 - 1
Exceptional items--profit on sale
or closure of operations........ - 23 - 23
Share of loss of consolidated
subsidiaries before interest.... (50) -- 50 --
---- ------ --- ------
Profit/(loss) on ordinary
activities before interest...... (53) 25 50 22
Net interest
receivable/(payable)............ 17 (86) - (69)
Share of interest payable of
consolidated subsidiaries....... (21) -- 21 --
---- ------ --- ------
Loss on ordinary activities
before taxation................. (57) (61) 71 (47)
Taxation on loss on ordinary
activities...................... (3) (12) - (15)
Share of taxation of consolidated
subsidiaries.................... 16 -- (16) --
---- ------ --- ------
Loss on ordinary activities after
taxation (44) (73) 55 (62)
Attributable to minorities....... - (1) - (1)
---- ------ --- ------
Loss for the financial year...... (44) (74) 55 (63)
==== ====== === ======
</TABLE>
F-66
<PAGE>
Supplemental Combined Profit and Loss Account
For the year ended 31 December 1998
<TABLE>
<CAPTION>
Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Turnover......................... 137 1,925 (51) 2,011
Operating costs.................. (125) (1,814) 51 (1,888)
Other operating income........... - 8 - 8
---- ------ --- ------
Trading profit before operating
exceptional items............... 12 119 - 131
Operating exceptional items...... - (10) - (10)
---- ------ --- ------
Trading profit after operating
exceptional items............... 12 109 - 121
Income from fixed asset
investment--dividends........... - 1 - 1
Exceptional items--losses on sale
or closure of operations........ - (4) - (4)
Share of profit of consolidated
subsidiaries before interest.... 32 - (32) -
---- ------ --- ------
Profit on ordinary activities
before interest................. 44 106 (32) 118
Net interest
receivable/(payable)............ 11 (82) - (71)
Share of interest payable of
consolidated subsidiaries....... (16) - 16 -
---- ------ --- ------
Profit on ordinary activities
before taxation................. 39 24 (16) 47
Taxation on profit on ordinary
activities...................... (9) 21 - 12
Share of taxation of consolidated
subsidiaries.................... 7 - (7) -
---- ------ --- ------
Profit on ordinary activities
after taxation 37 45 (23) 59
Attributable to minorities....... - (1) - (1)
---- ------ --- ------
Net profit for the financial
year............................ 37 44 (23) 58
==== ====== === ======
</TABLE>
F-67
<PAGE>
Supplemental Combined Balance Sheet
As at 31 December 1997
<TABLE>
<CAPTION>
Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Fixed assets
Tangible assets.................. - 958 - 958
Investments--Participating and
other interests................. 141 7 (141) 7
--- ----- ---- -----
141 965 (141) 965
Current assets
Stocks........................... 12 224 - 236
Debtors.......................... 189 366 (215) 340
Investments and short-term
deposits--unlisted.............. - 2 - 2
Cash at bank..................... - 53 - 53
--- ----- ---- -----
201 645 (215) 631
--- ----- ---- -----
Total assets..................... 342 1,610 (356) 1,596
--- ----- ---- -----
Creditors due within one year
Short-term borrowings............ - (20) - (20)
Current instalments of loans..... - (9) - (9)
Other creditors.................. (51) (572) 215 (408)
--- ----- ---- -----
(51) (601) 215 (437)
--- ----- ---- -----
Net current assets............... 150 44 - 194
--- ----- ---- -----
Total assets less current
liabilities..................... 291 1,009 (141) 1,159
--- ----- ---- -----
Creditors due after more than one
year
Loans............................ - (10) - (10)
Financing due to ICI............. - (866) - (866)
Other creditors.................. - (7) - (7)
--- ----- ---- -----
- (883) - (883)
Provisions for liabilities and
charges......................... - (77) - (77)
Deferred income.................. - (11) - (11)
--- ----- ---- -----
- (971) - (971)
--- ----- ---- -----
Net assets....................... 291 38 (141) 188
=== ===== ==== =====
Net Investment................... 291 34 (141) 184
Minority Interests--equity....... - 4 - 4
--- ----- ---- -----
291 38 (141) 188
=== ===== ==== =====
</TABLE>
F-68
<PAGE>
Supplemental Combined Balance Sheet
As at 31 December 1998
<TABLE>
<CAPTION>
Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Fixed assets
Tangible assets.................. - 1,041 - 1,041
Investments--Participating and
other interests................. 239 6 (239) 6
--- ------ ---- ------
239 1,047 (239) 1,047
Current assets
Stocks........................... 13 237 - 250
Debtors.......................... 141 328 (173) 296
Investments and short-term
deposits--unlisted.............. - 2 - 2
Cash at bank..................... - 51 - 51
--- ------ ---- ------
154 618 (173) 599
--- ------ ---- ------
Total assets..................... 393 1,665 (412) 1,646
--- ------ ---- ------
Creditors due within one year
Short-term borrowings............ - (12) - (12)
Current instalments of loans..... - (4) - (4)
Financing due to ICI ............ - (866) - (866)
Other creditors.................. (60) (458) 173 (345)
--- ------ ---- ------
(60) (1,340) 173 (1,227)
--- ------ ---- ------
Net current
assets/(liabilities)............ 94 (722) - (628)
--- ------ ---- ------
Total assets less current
liabilities..................... 333 325 (239) 419
--- ------ ---- ------
Creditors due after more than one
year
Loans............................ - (8) - (8)
Other creditors.................. - (9) - (9)
--- ------ ---- ------
- (17) - (17)
Provisions for liabilities and
charges......................... - (72) - (72)
Deferred income.................. - (11) - (11)
--- ------ ---- ------
- (100) - (100)
--- ------ ---- ------
Net assets....................... 333 225 (239) 319
=== ====== ==== ======
Net investment................... 333 222 (239) 316
Minority interests--equity ...... - 3 - 3
--- ------ ---- ------
333 225 (239) 319
=== ====== ==== ======
</TABLE>
F-69
<PAGE>
Supplemental Combined Cash Flow Statements
For the year ended 31 December 1996
<TABLE>
<CAPTION>
Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Net cash inflow from operating
activities...................... 6 286 - 292
Equity income of wholly owned
subsidiaries.................... 45 - (45) -
Returns on investments and
servicing of finance............ 12 (25) - (13)
Taxation......................... 8 (49) - (41)
--- ---- --- ----
71 212 (45) 238
Capital expenditure and financial
investment...................... - (187) - (187)
Disposals........................ (13) - 13 -
--- ---- --- ----
Cashflow before financing........ 58 25 (32) 51
Net movement in financing........ (56) (33) 32 (57)
--- ---- --- ----
Increase/(decrease) in cash...... 2 (8) - (6)
=== ==== === ====
For the year ended 31 December 1997
<CAPTION>
Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Net cash inflow from operating
activities...................... (6) 117 - 111
Equity income of wholly owned
subsidiaries.................... 4 - (4) -
Returns on investments and
servicing of finance............ 16 (28) - (12)
Taxation......................... (9) (13) - (22)
--- ---- --- ----
5 76 (4) 77
Capital expenditure and financial
investment...................... - (169) - (169)
Acquisitions/(Disposals)......... (13) 31 13 31
--- ---- --- ----
Cashflow before financing........ (8) (62) 9 (61)
Net movement in financing........ 6 70 (9) 67
--- ---- --- ----
Increase/(decrease) in cash...... (2) 8 - 6
=== ==== === ====
For the year ended 31 December 1998
<CAPTION>
Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
<S> <C> <C> <C> <C>
Net cash inflow from operating
activities...................... 9 191 - 200
Equity income of wholly owned
subsidiaries.................... 1 - (1) -
Returns on investments and
servicing of finance............ 9 (21) - (12)
Taxation......................... (10) (46) - (56)
--- ---- --- ----
9 124 (1) 132
Capital expenditure and financial
investment...................... - (130) - (130)
Disposals........................ (70) - 70 -
--- ---- --- ----
Cashflow before financing........ (61) (6) 69 2
Net movement in financing........ 61 4 (69) (4)
--- ---- --- ----
Decrease in cash................. - (2) - (2)
=== ==== === ====
</TABLE>
F-70
<PAGE>
UNAUDITED CONDENSED COMBINED PROFIT AND LOSS ACCOUNTS
<TABLE>
<CAPTION>
3 months ended
31 March
-------------------
1998 1999
--------- ---------
(Unaudited)
(Pounds)m (Pounds)m
<S> <C> <C>
Turnover.............................................. 532 482
Operating costs....................................... (494) (455)
---- ----
Trading profit........................................ 38 27
Exceptional items - loss on sale or closure of
operations........................................... (4) --
---- ----
Profit on ordinary activities before interest......... 34 27
Net interest payable.................................. (20) (16)
---- ----
Profit on ordinary activities before taxation......... 14 11
Taxation on profit on ordinary activities............. -- (4)
---- ----
Profit on ordinary activities after taxation ......... 14 7
Attributable to minorities............................ -- --
---- ----
Net profit for the financial year..................... 14 7
---- ----
</TABLE>
The accompanying notes form an integral part of these condensed combined
financial statements.
F-71
<PAGE>
UNAUDITED CONDENSED COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
At
31 December At
1998 31 March 1999
----------- -------------
(Unaudited)
(Pounds)m (Pounds)m
<S> <C> <C>
Fixed assets
Tangible assets.................................... 1,041 1,051
Investments--Participating and other interests .... 6 6
------ ------
1,047 1,057
------ ------
Current assets
Stocks............................................. 250 256
Debtors............................................ 296 308
Investments and short-term deposits--unlisted...... 2 3
Cash at bank....................................... 51 32
------ ------
599 599
------ ------
Total assets....................................... 1,646 1,656
------ ------
Creditors due within one year
Short-term borrowings.............................. (12) (8)
Current instalments of loans....................... (4) (5)
Financing due to ICI............................... (866) (866)
Other creditors.................................... (345) (326)
------ ------
(1,227) (1,205)
------ ------
Net current liabilities ........................... (628) (606)
------ ------
Total assets less current liabilities.............. 419 451
------ ------
Creditors due after more than one year
Loans.............................................. (8) (7)
Other creditors.................................... (9) (9)
------ ------
(17) (16)
Provisions for liabilities and charges............. (72) (75)
Deferred income.................................... (11) (10)
------ ------
(100) (101)
------ ------
------ ------
Net assets......................................... 319 350
====== ======
Net investment..................................... 316 347
Minority interest - equity ........................ 3 3
------ ------
319 350
====== ======
</TABLE>
The accompanying notes form an integral part of these condensed combined
financial statements.
F-72
<PAGE>
UNAUDITED CONDENSED COMBINED CASH FLOW STATEMENTS
<TABLE>
<CAPTION>
3 months ended 31
March
-------------------
1998 1999
--------- ---------
(Unaudited)
(Pounds)m (Pounds)m
<S> <C> <C>
Net cash inflow/(outflow) from operating activities......... (12) 1
Returns on investments and servicing of finance............. (4) (3)
Taxation.................................................... (9) (2)
--- ---
(25) (4)
Capital expenditures and financial investment............... (22) (35)
--- ---
Cash flow before financing.................................. (47) (39)
Net movement in financing................................... 38 26
--- ---
Decrease in cash............................................ (9) (13)
=== ===
</TABLE>
The accompanying notes form an integral part of these condensed combined
financial statements.
F-73
<PAGE>
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
1 Basis of Preparation
These Unaudited Condensed Combined Financial Statements have been prepared
applying the basis of preparation and accounting policies disclosed in
Notes 1 and 2 to the Combined Financial Statements and should be read in
conjunction with those Combined Financial Statements included at pages F-
35 to F-66. In the opinion of management of ICI, the Unaudited Condensed
Combined Financial Statements includes all adjustments, consisting only of
normal recurring adjustments other than those separately disclosed,
necessary for a fair statement of the results for the interim periods.
Financial information for interim periods is not necessarily indicative of
the results for the full year.
2 Inventories
<TABLE>
<CAPTION>
31 December, 31 March,
1998 1999
------------ -----------
(Unaudited)
(Pounds)m (Pounds)m
<S> <C> <C>
Raw materials and consumables........................ 106 100
Stocks in process.................................... 11 10
Finished goods and goods for resale.................. 133 146
--- ---
250 256
=== ===
</TABLE>
F-74
<PAGE>
3 Differences between UK and US accounting principles
These Unaudited Condensed Combined Financial Statements have been prepared
in accordance with United Kingdom Generally Accepted Accounting Principles (UK
GAAP) which differs in certain significant respects from US GAAP. A description
of the relevant accounting principles which differ materially is given in Note
30 to the Combined Financial Statements.
The following is a summary of the material adjustments to net income and
net assets which would be required if US GAAP had been applied instead of UK
GAAP:
<TABLE>
<CAPTION>
3 months ended
31 March
-------------------
1998 1999
--------- ---------
(Unaudited)
(Pounds)m (Pounds)m
<S> <C> <C>
Net income - UK GAAP....................................... 14 7
Adjustments to conform with US GAAP:
Pension expense.......................................... - (1)
Purchase accounting adjustments:
Amortisation of goodwill and intangibles............... - -
Capitalisation of interest less amortisation and
disposals............................................... (1) (2)
Restructuring costs...................................... - -
Deferred taxation........................................
Arising on UK GAAP results............................. 2 1
Arising on other US GAAP adjustments................... - 1
--- ---
Total US GAAP adjustments................................ 1 (1)
--- ---
Net income - US GAAP....................................... 15 6
=== ===
</TABLE>
<TABLE>
<CAPTION>
At 31 March
1999
-----------
(Unaudited)
(Pounds)m
<S> <C>
Net assets - UK GAAP............................................... 350
Adjustments to conform with US GAAP:
Purchase accounting adjustments including goodwill and
intangibles..................................................... 30
Capitalisation of interest less amortisation and disposals....... 69
Restructuring provisions......................................... 5
Pension expense.................................................. (28)
Deferred taxation................................................ (68)
---
Total US GAAP adjustments........................................ 8
---
Net assets - US GAAP............................................... 358
===
</TABLE>
F-75
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus
does not offer to sell or ask for offers to buy any securities other than those
to which this prospectus relates and it does not constitute an offer to sell or
ask for offers to buy any of the securities in any jurisdiction where it is
unlawful, where the person making the offer is not qualified to do so, or to
any person who cannot legally be offered the securities. The information
contained in this prospectus is current only as of its date.
Until , 1999, all dealers that effect transactions in these
securities, whether or not participating in this exchange offer, may be
required to deliver a prospectus.
---------------
PROSPECTUS
---------------
Huntsman ICI Chemicals LLC
Exchange Offer for
$600,000,000 10 1/8% Senior Subordinated Notes due 2009
(Euro)200,000,000 10 1/8% Senior Subordinated Notes due 2009
---------------
[LOGO OF HUNTSMAN APPEARS HERE]
[LOGO OF ICI APPEARS HERE]
---------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
Item 20. Indemnification of Officers and Directors
Huntsman ICI Chemicals LLC is empowered by Section 18-108 of the Delaware
Limited Liability Company Act, subject to the procedures and limitations
therein, to indemnify and hold harmless any member or manager or other person
from and against any and all claims and demands whatsoever, subject to such
standards and restrictions, if any, as are set forth in its limited liability
company agreement. Huntsman ICI Chemicals LLC's amended and restated limited
liability company agreement contains no indemnification provisions.
Huntsman ICI Financial LLC is empowered by Section 18-108 of the Delaware
Limited Liability Company Act, subject to the procedures and limitations
therein, to indemnify and hold harmless any member or manager or other person
from and against any and all claims and demands whatsoever, subject to such
standards and restrictions, if any, as are set forth in its limited liability
company agreement. Huntsman ICI Financial LLC's limited liability company
agreement contains no indemnification provisions.
Tioxide Group is an unlimited company having share capital registered in
England and Wales. Section 310 of the U.K. Companies Act of 1985 (as amended)
nullifies any provision contained in a company's articles of association or in
any other contract with the company for exempting any director, officer or
auditor of the company, or indemnifying such person against, any liability that
would attach to him by rule of law in respect of any negligence, default,
breach of duty or breach of trust for which such person may be guilty with
respect to such company. However, Section 310 permits a company to purchase or
maintain insurance for its directors, officers and auditors against liabilities
of this nature and permits a company to indemnify any director, officer or
auditor against any liability incurred by such person that results from
defending any proceedings (civil or criminal) in which a judgment is given in
such person's favor or such person is acquitted or application is made under
Section 144(3) or (4) of the Companies Act (acquisition of shares by innocent
nominee) or Section 727 of the Companies Act (general power to grant relief in
the case of honest and reasonable conduct) where relief is granted to such
director, officer or auditor by the court.
Article 22(a) of the Articles of Association of Tioxide Group indemnifies
every director, officer and auditor of Tioxide Group out of the assets of
Tioxide Group against all losses and liabilities that such person may sustain
in the performance of the duties of his office to the extent permitted by
Section 310 of the Companies Act. Furthermore, Article 22(b) empowers the
directors of Tioxide Group to purchase insurance for any director, officer or
auditor of Tioxide Group as permitted by the Companies Act.
Tioxide Americas Inc. is incorporated in the Cayman Islands. Cayman Islands
law does not specifically limit the extent to which a company's articles of
association may provide for the indemnification of officers and directors,
except to the extent that such provision may be held by the Cayman Islands
courts to be contrary to public policy (e.g., for purporting to provide
indemnification against the consequences of committing a crime). In addition,
an officer or director may not be able to enforce indemnification for his own
dishonesty or wilful neglect or default.
Article 123 of the Articles of Association of Tioxide Americas Inc., which
is filed as an exhibit to this registration statement, contain provisions
providing for the indemnification by Tioxide Americas of an officer, director
or trustee of Tioxide Americas for all actions, proceedings, claims, costs,
charges,
II-1
<PAGE>
losses, damages and expenses which they incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own respective wilful neglect or default.
Item 21. Exhibits and Financial Statement Schedules
<TABLE>
<C> <S>
3.1 Certificate of Formation of Huntsman ICI Chemicals LLC
3.2 Amended and Restated Limited Liability Company Agreement of Huntsman
ICI Chemicals LLC dated June 30, 1999
3.3 Certificate of Formation of Huntsman ICI Financial LLC
3.4 Limited Liability Company Agreement of Huntsman ICI Financial LLC dated
June 18, 1999, as amended by the First Amendment dated June 19, 1999
3.5 Memorandum of Association of Tioxide Group*
3.6 Articles of Association of Tioxide Group*
3.7 Memorandum of Association of Tioxide Americas Inc.
3.8 Articles of Association of Tioxide Americas Inc.
4.1 Indenture, dated as of June 30, 1999, among Huntsman ICI Chemicals LLC,
the Guarantors party thereto and Bank One, N.A., as Trustee, relating
to the 10 1/8% Senior Subordinated Notes due 2009
4.2 Form of certificate of 10 1/8% Senior Subordinated Note due 2009
denominated in dollars (included as Exhibit A-3 to Exhibit 4.1)
4.3 Form of certificate of 10 1/8% Senior Subordinated Note due 2009
denominated in euros (included as Exhibit A-4 to Exhibit 4.1)
4.4 Exchange and Registration Rights Agreement dated June 30, 1999, by and
among Huntsman ICI Chemicals LLC, the Guarantors party thereto,
Goldman, Sachs & Co., Deutsche Bank Securities Inc., Chase Securities
Inc. and Warburg Dillon Read LLC
4.5 Form of Guarantee (included as Exhibit E to Exhibit 4.1)
5.1 Form of opinion and consent of Skadden, Arps, Slate, Meagher & Flom as
to the legality of the notes to be issued by Huntsman ICI Chemicals
LLC, and the guarantees to be issued by Huntsman ICI Financial LLC, in
the exchange offer*
5.2 Form of opinion and consent of Counsel to Tioxide Group as to the
legality of the guarantees to be issued by Tioxide Group in the
exchange offer*
5.3 Form of opinion and consent of W.S. Walker & Company as to the legality
of the guarantees to be issued by Tioxide Americas Inc. in the exchange
offer*
8.1 Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP as to
the tax consequences of the notes to be issued by Huntsman ICI Chemical
LLC*
10.1 Contribution Agreement, dated as of April 15, 1999, by and among
Imperial Chemical Industries PLC, Huntsman Specialty Chemicals
Corporation, Huntsman ICI Holdings LLC and Huntsman ICI Chemicals LLC
as amended by the first Amending Agreement, dated June 4, 1999, the
second Amending Agreement, dated June 30, 1999, and the third Amending
Agreement, dated June 30, 1999
10.2 Purchase and Sale Agreement (PO/MTBE Business), dated March 21, 1997,
among Texaco, Texaco Chemical Inc. and Huntsman Specialty Chemicals
Corporation
10.3 Operating and Maintenance Agreement, dated as of March 21, 1997, by and
between Huntsman Specialty Chemicals Corporation and Huntsman
Petrochemical Corporation
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.4 Credit Agreement, dated as of June 30, 1999, by and among Huntsman ICI
Chemicals LLC, Huntsman ICI Holdings LLC, Bankers Trust Company,
Goldman Sachs Credit Partners LP, The Chase Manhattan Bank, and Warburg
Dillon Read and various lending institutions party thereto
10.5 Asset Sale Agreement, dated June 30, 1999, by and between BP Chemicals
Limited and Huntsman ICI Chemicals LLC+
10.6 Joint Venture Agreement, dated as of October 18, 1993 between Tioxide
Americas Inc. and Kronos Louisiana, Inc.
10.7 Shareholders Agreement, dated as of January 11, 1982, by and among
Imperial Chemical Industries PLC, ICI American Holdings, Inc. and
Uniroyal, Inc.
10.8 Operating Agreement, dated December 28, 1981, between Uniroyal, Inc.,
Rubicon Chemicals, Inc. and Rubicon, Inc.
10.9 Liability and Indemnity Agreement, dated December 28, 1981, by and
among Rubicon Inc., Rubicon Chemicals Inc., Imperial Chemical
Industries PLC, ICI American Holdings Inc., ICI Americas Inc. and
Uniroyal Inc.*
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of Huntsman ICI Chemicals LLC
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of KPMG Audit Plc
23.4 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1)*
24.1 Powers of Attorney (included as part of signature page)
25.1 Form T-1 Statement of Eligibility of Bank One, N.A. to act as Trustee
under the indenture
27.1 Financial Data Schedule (for SEC use only)
99.1 Form of Letter of Transmittal for dollar denominated notes
99.2 Form of Notice of Guaranteed Delivery for dollar denominated notes
99.3 Form of Letter of Transmittal for euro denominated notes
99.4 Form of Notice of Guaranteed Delivery for euro denominated notes
99.5 Letter to Brokers
99.6 Letter to Clients
</TABLE>
- --------
* To be filed by amendment.
+ Confidential treatment requested. Exhibit omitted and filed separately with
the SEC.
II-3
<PAGE>
Item 22. Undertakings
The Undersigned registrants hereby undertake:
(1) To file during any period in which offers to sale are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities would
not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) to include any material information with respect to the plan of
distribution previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liabilities under the
Securities Act of 1933, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from the registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of the 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.
The undersigned registrant hereby undertakes to supply by means of 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.
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 provisions described in Item 20 above, 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 counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, Huntsman ICI Chemicals
LLC has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of Salt Lake City,
State of Utah, on the 13th day of August, 1999.
Huntsman ICI Chemicals LLC
/s/ Jon M. Huntsman
By: _________________________________
Jon M. Huntsman
Chief Executive Officer, Chairman
of the
Board of Managers & Manager
POWER OF ATTORNEY
We the undersigned managers and officers of Huntsman ICI Chemicals LLC do
hereby constitute and appoint Jon M. Huntsman, Jon M. Huntsman, Jr., J. Kimo
Esplin, Robert B. Lence and Martin F. Petersen and each of them, our true and
lawful attorneys-in-fact and agents, to do any and all acts and things in our
names and on our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said company to comply with the Securities Act
of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this registration
statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
including specifically, but without limitation, the power and authority to sign
for us or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities on the 13th day of August, 1999:
<TABLE>
<CAPTION>
Name Capacities
---- ----------
<S> <C>
/s/ Jon M. Huntsman Chief Executive Officer, Chairman of the
______________________________________ Board of Managers & Manager
Jon M. Huntsman
/s/ Jon M. Huntsman, Jr. Vice Chairman of the Board of Managers and
______________________________________ Manager
Jon M. Huntsman, Jr.
/s/ Peter R. Huntsman President, Chief Operating Officer and
______________________________________ Manager
Peter R. Huntsman
/s/ J. Kimo Esplin Chief Financial Officer
______________________________________
J. Kimo Esplin
</TABLE>
II-5
<PAGE>
HUNTSMAN ICI FINANCIAL LLC
Pursuant to the requirements of the Securities Act, Huntsman ICI Financial
LLC has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of Salt Lake City,
State of Utah, on the 13th day of August, 1999.
Huntsman ICI Financial LLC
/s/ Jon M. Huntsman
By: _________________________________
Jon M. Huntsman
Chief Executive Officer, Chairman
of the
Board of Managers & Manager
POWER OF ATTORNEY
We the undersigned managers and officers of Huntsman ICI Financial LLC do
hereby constitute and appoint Jon M. Huntsman, Jon M. Huntsman, Jr., J. Kimo
Esplin, Robert B. Lence and Martin F. Petersen and each of them, our true and
lawful attorneys-in-fact and agents, to do any and all acts and things in our
names and on our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said company to comply with the Securities Act
of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this registration
statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
including specifically, but without limitation, the power and authority to sign
for us or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities on the 13th day of August, 1999:
<TABLE>
<CAPTION>
Name Capacities
---- ----------
<S> <C>
/s/ Jon M. Huntsman Chief Executive Officer, Chairman of the
______________________________________ Board of Managers & Manager
Jon M. Huntsman
/s/ Jon M. Huntsman, Jr. Vice Chairman of the Board of Managers and
______________________________________ Manager
Jon M. Huntsman, Jr.
/s/ Peter R. Huntsman President, Chief Operating Officer and
______________________________________ Manager
Peter R. Huntsman
/s/ J. Kimo Esplin Chief Financial Officer
______________________________________
J. Kimo Esplin
</TABLE>
II-6
<PAGE>
TIOXIDE GROUP
Pursuant to the requirements of the Securities Act, Tioxide Group has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Salt Lake City, State of
Utah, on the 13th day of August, 1999.
Tioxide Group
/s/ Peter R. Huntsman
By: _________________________________
Peter R. Huntsman
Chairman of the Board of
Directors
POWER OF ATTORNEY
We the undersigned directors and officers of Tioxide Group do hereby
constitute and appoint Jon M. Huntsman, Jon M. Huntsman, Jr., J. Kimo Esplin,
Robert B. Lence and Martin F. Petersen and each of them, our true and lawful
attorneys-in-fact and agents, to do any and all acts and things in our names
and on our behalf in our capacities as directors and officers and to execute
any and all instruments for us and in our name in the capacities indicated
below, which said attorneys and agents, or either of them, may deem necessary
or advisable to enable said company to comply with the Securities Act of 1933,
as amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this registration statement, or any
registration statement for this offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, including
specifically, but without limitation, the power and authority to sign for us or
any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of Securities Act of 1933, this registration
statement has been signed by the following persons on the 13th day of August,
1999:
<TABLE>
<CAPTION>
Name Capacities
---- ----------
<S> <C>
/s/ Peter R. Huntsman Chairman of the Board of Directors
______________________________________
Peter R. Huntsman
/s/ J. Kimo Esplin Director
______________________________________
J. Kimo Esplin
/s/ L. Russell Healy Director
______________________________________
L. Russell Healy
</TABLE>
II-7
<PAGE>
TIOXIDE AMERICAS INC.
Pursuant to the requirements of the Securities Act, Tioxide Americas Inc.
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Salt Lake City, State of
Utah, on the 13th day of August, 1999.
Tioxide Americas Inc.
/s/ Peter R. Huntsman
By: _________________________________
Peter R. Huntsman
Chairman of the Board of
Directors
POWER OF ATTORNEY
We the undersigned directors and officers of Tioxide Americas Inc. do
hereby constitute and appoint Jon M. Huntsman, Jon M. Huntsman, Jr., J. Kimo
Esplin, Robert B. Lence and Martin F. Petersen and each of them, our true and
lawful attorneys-in-fact and agents, to do any and all acts and things in our
names and on our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said company to comply with the Securities Act
of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this registration
statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
including specifically, but without limitation, the power and authority to sign
for us or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
Pursuant to the requirements of Securities Act of 1933, this registration
statement has been signed by the following persons on the 13th day of August,
1999:
<TABLE>
<CAPTION>
Name Capacities
---- ----------
<S> <C>
/s/ Peter R. Huntsman Chairman of the Board of Directors
______________________________________
Peter R. Huntsman
/s/ J. Kimo Esplin Director
______________________________________
J. Kimo Esplin
/s/ L. Russell Healy Director and Treasurer
______________________________________
L. Russell Healy
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description of Exhibits
------ -----------------------
<C> <S>
3.1 Certificate of Formation of Huntsman ICI Chemicals LLC
3.2 Amended and Restated Limited Liability Company Agreement of Huntsman
ICI Chemicals LLC dated June 30, 1999
3.3 Certificate of Formation of Huntsman ICI Financial LLC
3.4 Limited Liability Company Agreement of Huntsman ICI Financial LLC dated
June 18, 1999, as amended by the First Amendment dated June 19, 1999
3.5 Memorandum of Association of Tioxide Group*
3.6 Articles of Association of Tioxide Group*
3.7 Memorandum of Association of Tioxide Americas Inc.
3.8 Articles of Association of Tioxide Americas Inc.
4.1 Indenture, dated as of June 30, 1999, among Huntsman ICI Chemicals LLC,
the Guarantors party thereto and Bank One, N.A., as Trustee, relating
to the 10 1/8% Senior Subordinated Notes due 2009
4.2 Form of certificate of 10 1/8% Senior Subordinated Note due 2009
denominated in dollars (included as Exhibit A-3 to Exhibit 4.1)
4.3 Form of certificate of 10 1/8% Senior Subordinated Note due 2009
denominated in euros (included as Exhibit A-4 to Exhibit 4.1)
4.4 Exchange and Registration Rights Agreement dated June 30, 1999, by and
among Huntsman ICI Chemicals LLC, the Guarantors party thereto,
Goldman, Sachs & Co., Deutsche Bank Securities Inc., Chase Securities
Inc. and Warburg Dillon Read LLC
4.5 Form of Guarantee (included as Exhibit E of Exhibit 4.1)
5.1 Form of opinion and consent of Skadden, Arps, Slate, Meagher & Flom as
to the legality of the notes to be issued by Huntsman ICI Chemicals
LLC, and the guarantees to be issued by Huntsman ICI Financial LLC, in
the exchange offer*
5.2 Form of opinion and consent of Counsel to Tioxide Group as to the
legality of the guarantees to be issued by Tioxide Group in the
exchange offer*
5.3 Form of opinion and consent of W.S. Walker & Company as to the legality
of the guarantees to be issued by Tioxide Americas Inc. in the exchange
offer*
8.1 Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP as to
the tax consequences of the notes to be issued by Huntsman ICI Chemical
LLC*
10.1 Contribution Agreement, dated as of April 15, 1999, by and among
Imperial Chemical Industries PLC, Huntsman Specialty Chemicals
Corporation, Huntsman ICI Holdings LLC and Huntsman ICI Chemicals LLC
as amended by the first Amending Agreement, dated June 4, 1999, the
second Amending Agreement, dated June 30, 1999, and the third Amending
Agreement, dated June 30, 1999
10.2 Purchase and Sale Agreement (PO/MTBE Business), dated March 21, 1997,
among Texaco, Texaco Chemical Inc. and Huntsman Specialty Chemicals
Corporation
10.3 Operating and Maintenance Agreement, dated as of March 21, 1997, by and
between Huntsman Specialty Chemicals Corporation and Huntsman
Petrochemical Corporation
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.4 Credit Agreement, dated as of June 30, 1999, by and among Huntsman ICI
Chemicals LLC, Huntsman ICI Holdings LLC, Bankers Trust Company,
Goldman Sachs Credit Partners LP, The Chase Manhattan Bank, and Warburg
Dillon Read and various lending institutions party thereto
10.5 Asset Sale Agreement, dated June 30, 1999, by and between BP Chemicals
Limited and Huntsman ICI Chemicals LLC+
10.6 Joint Venture Agreement, dated as of October 18, 1993 between Tioxide
Americas Inc. and Kronos Louisiana, Inc.
10.7 Shareholders Agreement, dated as of January 11, 1982, by and among
Imperial Chemical Industries PLC, ICI American Holdings, Inc. and
Uniroyal, Inc.
10.8 Operating Agreement, dated December 28, 1981, between Uniroyal, Inc.,
Rubicon Chemicals, Inc. and Rubicon, Inc.
10.9 Liability and Indemnity Agreement, dated December 28, 1981, by and
among Rubicon Inc., Rubicon Chemicals Inc., Imperial Chemical
Industries PLC, ICI American Holdings Inc., ICI Americas Inc. and
Uniroyal Inc.*
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of Huntsman ICI Chemicals LLC
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of KPMG Audit Plc
23.4 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1)*
24.1 Powers of Attorney (included as part of signature page)
25.1 Form T-1 Statement of Eligibility of Bank One, N.A. to act as Trustee
under the indenture
27.1 Financial Data Schedule (for SEC use only)
99.1 Form of Letter of Transmittal for dollar denominated notes
99.2 Form of Notice of Guaranteed Delivery for dollar denominated notes
99.3 Form of Letter of Transmittal for euro denominated notes
99.4 Form of Notice of Guaranteed Delivery for euro denominated notes
99.5 Letter to Brokers
99.6 Letter to Clients
</TABLE>
- --------
* To be filed by amendment.
+ Confidential treatment requested. Exhibit omitted and filed separately with
the SEC.
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF FORMATION
OF
HUNTSMAN IMPERIAL CHEMICALS LLC
1. The name of the limited liability company is Huntsman Imperial
Chemicals LLC.
2. The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation of Huntsman Imperial Chemicals LLC on this 23rd day of March, 1999.
By /s/ Mary E. Keogh
Name: Mary E. Keogh
Title: Authorized Person
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
HUNTSMAN ICI CHEMICALS LLC
(A Delaware Limited Liability Company)
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of
June 30, 1999 (this "Agreement"), of Huntsman ICI Chemicals LLC (the "Company")
--------- -------
by and between Huntsman ICI Holdings LLC, a Delaware limited liability company
("Holdings") and each Person (as defined in the Delaware Limited Liability
--------
Company Act, as amended from time to time (the "Act")) subsequently admitted as
---
a member of the Company (individually, a "Member" and collectively, the
------
"Members").
-------
RECITAL
WHEREAS, Holdings has caused the Company to be formed under the Act,
and Holdings desires pursuant to the Act to set forth information regarding
certain affairs of the Company and certain conduct of its business.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
FORMATION
----------
The Company has been formed as a limited liability company pursuant to the
Act. A Certificate of Formation described in Section 18-201 of the Act (the
"Certificate of Formation") has been filed by Mary E. Keogh, who was authorized
------------------------
to sign and file the Certificate of Formation, with the Secretary of State of
the State of Delaware in conformity with the Act. The name of the Company is
"HUNTSMAN ICI CHEMICALS LLC" or such other name or names as may be selected by
the Members from time to time.
<PAGE>
ARTICLE II
TERM
----
The existence of the Company shall commence on the date of the filing of
the Certificate of Formation in the office of the Secretary of State of the
State of Delaware in accordance with the Act, and the Company shall have a
perpetual life.
ARTICLE III
MEMBERS
-------
Section 3.1 Members. The initial Member of the Company is Holdings,
-------
which holds 100% of the membership interests of the Company. Holdings'
principal address is 500 Huntsman Way, Salt Lake City, Utah 84108.
Section 3.2 Admission of New Members. No Person shall be admitted as
------------------------
a Member of the Company without the approval of Holdings.
Section 3.3 Certificates of Membership. The membership interest of a
--------------------------
Member in the Company owned by each Member (denominated in units) shall be
evidenced by one or more certificates (in substantially the form attached hereto
as Exhibit A, "Certificates"). Each Certificate shall be executed by the Chief
--------- ------------
Executive Officer or any Vice President and the Secretary or any Assistant
Secretary of the Company (or other persons designated by the Board).
Section 3.4 Interest as a Security. A membership interest of a
----------------------
Member in the Company evidenced by a Certificate shall constitute a security for
all purposes of Article 8 of the Uniform Commercial Code promulgated by the
National Conference of Commissioners on Uniform State Laws, as in effect in
Delaware or any other applicable jurisdiction. Delaware law shall constitute
the local law of the Company's jurisdiction in its capacity as the issuer of
membership interests of a Member in the Company.
2
<PAGE>
ARTICLE IV
MANAGEMENT
----------
Section 4.1 Board of Managers. The business and affairs of the
-----------------
Company shall be managed by a Board of Managers (the "Board"), which shall be
-----
responsible for policy setting and approval of the overall direction of the
Company. The Board shall consist of up to four individuals (the "Managers").
--------
The names of the Managers are Jon M. Huntsman, Jon M. Huntsman, Jr., Peter R.
Huntsman and Michael C. Dixon. A Manager may be removed at any time from such
position by Holdings. Upon the removal or resignation of a Manager, a new
Manager may be designated and appointed by Holdings.
All decisions affecting or to be made by, and all actions to be taken
and obligations to be incurred on behalf of, the Company shall be made, taken or
incurred by the Board or any other person designated by the Board. Any decision
or act of the Board within the scope of its power and authority granted
hereunder shall control and shall bind the Company.
Section 4.2 Quorum. At all meetings of the Board (in person or via a
------
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other), a majority of the
entire Board shall constitute a quorum for the transaction of business and the
act of a majority of the Managers present at any meeting at which there is a
quorum shall be an act of the Board.
Section 4.3 Actions by Written Consent. Any action required or
--------------------------
permitted to be taken at any meeting of the Board may be taken without a
meeting, if a majority of the Managers consents thereto in writing, and the
writings are filed with the records of the Company.
Section 4.4 Reliance by Third Parties. Persons dealing with the
-------------------------
Company are entitled to rely conclusively upon the power and authority of the
Board herein set forth.
Section 4.5 Limitations on Duties and Liabilities. To the fullest
-------------------------------------
extent permitted under Section 18-1101 of the Delaware Act, (a) with respect to
those matters addressed in clauses 4.7 and 4.12 of the Holdings Agreement (as
defined below), no duty (including any fiduciary duty), whether at law or in
equity, that any Manager or Member has to the Company or any other Manager or
Member shall require such Manager or Member to take any action that is not
authorized as contemplated by the Holdings
3
<PAGE>
Agreement, and (b) no Manager or Member shall (i) be deemed to breach any duty
(including any fiduciary duty), whether at law or in equity, that it has to the
Company or any other Manager or Member or (ii) have any liability to the Company
or any other Manager or Member with respect to any act or omission, in each
case, if and to the extent that such Manager or Member acts in accordance with
any instruction or direction of the Board of Managers of Holdings. The Foregoing
is not intended to expand in any manner the duties (including any fiduciary
duties), whether at law or in equity, of any Manager or Member.
ARTICLE V
DISTRIBUTIONS AND CAPITAL CONTRIBUTIONS
---------------------------------------
Section 5.1 As soon as reasonably practicable after the end of each
calendar quarter, the Company shall determine the Tax Allowance Amount in
respect of such quarter. Upon such determination, the Company shall cause the
Tax Allowance Amount to be distributed in cash to Holdings to the extent of
Available Net Cash Flow, provided that such a distribution is permitted by all
--------
lending agreements to which the Company is then a party.
For purposes of this Article:
"Available Net Cash Flow" means, for any period, the consolidated gross
-----------------------
cash receipts (net of borrowings) of the U.S. Associate Group less (i) all
expenses of the U.S. Associate Group which require a cash expenditure, (ii) all
payments of principal of, interest on and any other amounts with respect to
indebtedness, leases or other commitments or obligations of the U.S. Associate
Group (including loans by Members to the U.S. Associate Group), (iii) any sum
expended by the U.S. Associate Group for capital expenditures or asset
acquisitions, and (iv) reserves for anticipated working capital and other
purposes, the amounts of which shall be reasonably determined from time to time
by the Board, provided that in the case of each of (i), (ii) and (iii) above,
expenses, payments and other amounts shall be taken into account to the extent
that they are due and payable during the period for which Available Net Cash
Flow is being generated.
"BTCP Member" has the meaning set forth in the Holdings Agreement.
-----------
"CEA Member" has the meaning set forth in the Holdings Agreement.
----------
4
<PAGE>
"GSG Member" has the meaning set forth in the Holdings Agreement.
----------
"H Member" has the meaning set forth in the Holdings Agreement.
--------
"Holdings Agreement" means the Amended and Restated Limited Liability
------------------
Company Agreement, dated _______, 1999, by and among Huntsman Specialty
Chemicals Corporation, ICI Americas Inc., ICI Alta Inc., BT Capital Investors,
L.P., Chase Equity Associates, L.P. and The Goldman Sachs Group, Inc., as
amended from time to time.
"ICI Member" has the meaning set forth in the Holdings Agreement.
----------
"Tax Allowance Amount" means, for any calendar quarter, an amount of cash
--------------------
equal to the sum of (i) the product of (q) the amount of net taxable income
allocable by Holdings to the ICI Member and (r) 38%, (ii) the product of (s) the
amount of net taxable income allocable by Holdings to the H Member and (t) 38%,
(iii) the product of (u) the amount of net taxable income allocable by Holdings
to the BTCP Member and (v) 38%, (iv) the product of (w) the amount of net
taxable income allocable by Holdings to the CEA Member and (x) 38%, and (v) the
product of (y) the amount of net taxable income allocable by Holdings to the GSG
Member and (z) 38%, provided, however, that, had each of the amounts determined
-------- -------
pursuant to clauses (i), (ii), (iii), (iv) and (v) been distributed directly to
the relevant members of Holdings, if the H Member would have received more than
60% of the aggregate tax allowance amounts so computed, the ICI Member would
have received more than 30% of the aggregate tax allowance amounts so computed,
either the BTCP Member and/or the CEA Member would have received more than 4
4/9% of the aggregate tax allowance amounts so computed and/or the GSG Member
would have received more than 1 1/9% of the aggregate tax allowance amounts so
computed, then the tax allowance amount determined with respect to the other
members of Holdings shall be increased for purposes of computing the Tax
Allowance Amount so that the Tax Allowance Amount is an aggregate amount that,
if distributed directly to the relevant members of Holdings, would be
distributed 60% to the H Member, 30% to the ICI Member, 4 4/9% to the BTCP
Member, 4 4/9% to the CEA Member and 1 1/9% to the GSG Member; provided, that as
--------
a result of the immediately preceding proviso, the Tax Allowance Amount shall
not exceed the product of (a) the net taxable income of Holdings determined on a
hypothetical basis as if Holdings were treated as a corporation for U.S. income
tax purposes and (b) 40%. In calculating the Tax Allowance Amounts, the amounts
of net taxable income allocable by Holdings to each Member shall be increased or
decreased, as necessary, to reflect the extent to which estimated amounts of net
5
<PAGE>
taxable income used to calculate Tax Allowance Amounts for previous quarters
were greater or lesser than the actual amounts of net taxable income reported on
Holdings' U.S. federal income tax return.
"U.S. Associate Group" has the meaning set forth in the Holdings Agreement.
--------------------
Section 5.2 To the extent that any member of Holdings makes a mandatory
capital contribution to Holdings pursuant to section 3.1(b) of the Holdings
Agreement, then Holdings shall contribute such capital contribution to the
capital of the Company.
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.1 Amendment to the Agreement. This Agreement may be amended
--------------------------
by, and only by, a written instrument executed by Holdings.
Section 6.2 Governing Law and Severability. This Agreement shall be
------------------------------
governed by and construed in accordance with the laws of the State of Delaware
without giving effect to the principles of conflicts of law. In particular,
this Agreement shall be construed to the maximum extent possible to comply with
all the terms and conditions of the Act. If it shall be determined by a court
of competent jurisdiction that any provisions or wording of this Agreement shall
be invalid or unenforceable under the Act or other applicable law, such
invalidity or unenforceability shall not invalidate the entire Agreement. In
that case, this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of
applicable law, and, in the event such term or provisions cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable terms or
provisions.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date first above written.
HUNTSMAN ICI HOLDINGS LLC
By: /s/ Peter R. Huntsman
Name: Peter R. Huntsman
Title: Manager
7
<PAGE>
EXHIBIT A
CERTIFICATE FOR INTERESTS IN
HUNTSMAN ICI CHEMICALS LLC
A Delaware Limited Liability Company
Certificate No. _____ No. of Units _____
Huntsman ICI Chemicals LLC,
a Delaware limited liability company (the "Company"), hereby certifies that
-------
[NAME OF MEMBER]
(The "Holder") is the registered owner of _____ Units of limited liability
------
company Interest in the Company ("Interests"). The Holder, by accepting this
---------
Certificate, is deemed to have agreed to become a Member of the Company, if
admitted as such in accordance with the terms of the Company Agreement, and to
have agreed to comply with and be bound by, the Company Agreement.
No Interest(s) may be transferred unless and until this Certificate, or a
written instrument of transfer satisfactory to the Company, is duly endorsed or
executed for transfer by the Holder of the Holder's duly authorized attorney,
and this Certificate (together with any separate written instrument of transfer)
is delivered to the Company for registration of transfer.
THE INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND
MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
UNTIL THE HOLDER PROVIDES EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY
(WHICH, IN THE DISCRETION OF THE COMPANY, MAY INCLUDE AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER
OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE SECURITIES
LAWS.
ATTEST: HUNTSMAN ICI CHEMICALS LLC
__________________________________ By__________________________________
Secretary or Assistant Secretary Chief Executive Officer or Vice
President
Dated: ___________________
8
<PAGE>
ASSIGNMENT OF INTEREST
FOR VALUE RECEIVED, the undersigned (the "Assignor"), hereby assigns,
--------
conveys, sells and transfers unto:
______________________________________________________________________________
Please print or typewrite Name and Address of Assignee
________________________________ Please insert Social Security or other Taxpayer
Identification Number of Assignee
___________ Units of Interest evidenced by this Certificate. Assignor
irrevocably constitutes and appoints the Company as its attorney-in-fact with
full power of substitution to transfer the Interest represented by this
Certificate, or any lesser designated number of Interest as referenced herein,
on the books of the Company.
Date:_____________________________ _____________________________________
Signature
9
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF FORMATION
OF
HUNTSMAN ICI FINANCIAL LLC
1. The name of the limited liability company is Huntsman ICI
Financial LLC.
2. The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation of Huntsman ICI Financial LLC on this 19th day of May, 1999.
By: /s/ Mary E. Keogh
Name: Mary E. Keogh
Title: Authorized Person
<PAGE>
EXHIBIT 3.4
LIMITED LIABILITY COMPANY AGREEMENT
OF
HUNTSMAN ICI FINANCIAL LLC
(A Delaware Limited Liability Company)
LIMITED LIABILITY COMPANY AGREEMENT, dated as of June 18, 1999 (this
"Agreement"), of Huntsman ICI Financial LLC (the "Company") by and between
- ---------- -------
Huntsman ICI Chemicals LLC, a Delaware limited liability company ("Huntsman")
--------
and each Person (as defined in the Delaware Limited Liability Company Act, as
amended from time to time (the "Act")) subsequently admitted as a member of the
---
Company (individually, a "Member" and collectively, the "Members").
------ -------
RECITAL
WHEREAS, Huntsman has caused the Company to be formed under the Act,
and Huntsman desires pursuant to the Act to set forth information regarding
certain affairs of the Company and certain conduct of its business.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
FORMATION
---------
The Company has been formed as a limited liability company pursuant to the
Act. A Certificate of Formation described in Section 18-201 of the Act (the
"Certificate of Formation") has been filed by Mary E. Keogh, who was authorized
- -------------------------
to sign and file the Certificate of Formation, with the Secretary of State of
the State of Delaware in conformity with the Act. The name of the Company is
"HUNTSMAN ICI FINANCIAL LLC" or such other name or names as may be selected by
the Members from time to time.
ARTICLE II
TERM
----
<PAGE>
The existence of the Company shall commence on the date of the filing of
the Certificate of Formation in the office of the Secretary of State of the
State of Delaware in accordance with the Act, and the Company shall have a
perpetual life.
ARTICLE III
MEMBERS
-------
Section 3.1 Members. The initial Member of the Company is Huntsman,
-------
which holds 100% of the membership interests of the Company. Huntsman's
principal address is 500 Huntsman Way, Salt Lake City, Utah 84108.
Section 3.2 Admission of New Members. No Person shall be admitted as
------------------------
a Member of the Company without the approval of Huntsman.
Section 3.3 Certificates. The membership interest of a Member in the
------------
Company owned by each Member (denominated in units) shall be evidenced by one or
more certificates (in substantially the form attached hereto as Exhibit A, the
---------
"Certificates"). Each Certificate shall be executed by the Chief Executive
- -------------
Officer or any Vice President and the Secretary or any Assistant Secretary of
the Company (or other persons designated by the Board).
ARTICLE IV
MANAGEMENT
----------
Section 4.1 Designation of Managers. The Company shall have up to
-----------------------
five managers, each of whom shall be designated and appointed by Huntsman (each,
a "Manager"). The names of the initial Managers are Jon M. Huntsman, Peter R.
-------
Huntsman, Jon M. Huntsman, Jr., Michael C. Dixon, and Samuel D. Scruggs. A
Manager may be removed at any time from such position by Huntsman. Upon the
removal or resignation of a Manager, a new Manager may be designated and
appointed by Huntsman.
Section 4.2 General Powers of the Manager. Each Manager shall have
-----------------------------
the responsibility and authority to manage, direct, control and conduct the
business and affairs the Company, subject to the direction and oversight of the
Members.
Without limiting the generality of the foregoing, each Manager is
authorized:
2
<PAGE>
(a) to negotiate, execute and deliver in the name and on behalf of
the Company the Intercompany Notes (each such note substantially in the
form attached hereto as Exhibit A) (the "Intercompany Notes") on such terms
--------- ------------------
and with such conditions as such Manager shall deem necessary, proper and
advisable to consummate the transactions contemplated by that certain
Contribution Agreement, dated April 15, 1999 (the "Contribution
------------
Agreement"), by and between Imperial Chemical Industries PLC, Huntsman
Specialty Chemicals Corporation and Huntsman ICI Holdings LLC (as amended,
modified or supplemented) (the "Transaction"), the execution of which shall
-----------
be conclusive evidence that the same was necessary, proper and advisable;
and
(b) to execute, deliver and amend, or authorize and approve the
execution, delivery and amendment of, all agreements, instruments and
documents, and to take, or authorize the taking of, all actions, as any
Manager may deem necessary and desirable to consummate the Transaction, and
the actions of any of the Managers in negotiating the Intercompany Notes
and such other agreements, documents and instruments (collectively, the
"Supplemental Instruments") as such Manager deems necessary, proper and
-------------------------
advisable to establish the relationships and to consummate the Transaction
by the Company, the execution of the Intercompany Notes and any of the
Supplemental Instruments conclusively establishing each Managers authority
therefor from the Company; and
(c) to take all such future actions and to do all such things as any
of the Managers may deem to be necessary, proper or advisable, to document
and/or consummate the Transaction by the Company, including, without
limitation, negotiating, executing and delivering future modifications,
amendments, supplements or changes to the Intercompany Notes and/or the
Supplemental Instruments, and negotiating, executing and delivering such
additional agreements, instruments, documents and certificates, in the name
and on behalf of the Company, which shall in such Manager's judgement be
necessary, proper or advisable in order to modify, amend, supplement or
change the Intercompany Notes and/or Supplemental Instruments any time in
the future, the execution or any such future modification, amendment,
supplement, or other document evidencing a change, or the execution of such
additional agreement, instrument, document or certificate to be conclusive
evidence of the same as necessary, proper or advisable.
3
<PAGE>
All decisions affecting or to be made by, and all actions to be taken
and obligations to be incurred on behalf of, the Company shall be made, taken or
incurred by any of the Managers. Any decision or act of a Manager within the
scope of his power and authority granted hereunder shall control and shall bind
the Company.
Section 4.3 Reliance by Third Parties. Persons dealing with the
-------------------------
Company are entitled to rely conclusively upon the power and authority of any of
the Managers herein set forth.
ARTICLE V
Miscellaneous
-------------
Section 5.1 Amendment to the Agreement. This Agreement may be amended
--------------------------
by, and only by, a written instrument executed by Huntsman.
Section 5.2 Governing Law and Severability. This Agreement shall be
------------------------------
governed by and construed in accordance with the laws of the State of Delaware
without giving effect to the principles of conflicts of law. In particular,
this Agreement shall be construed to the maximum extent possible to comply with
all the terms and conditions of the Act. If it shall be determined by a court
of competent jurisdiction that any provisions or wording of this Agreement shall
be invalid or unenforceable under the Act or other applicable law, such
invalidity or unenforceability shall not invalidate the entire Agreement. In
that case, this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of
applicable law, and, in the event such term or provisions cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable terms or
provisions.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date first above written.
HUNTSMAN ICI CHEMICALS LLC
By: /s/ Jon M. Huntsman, Jr.
Name: Jon M. Huntsman Jr.
Title: Manager
4
<PAGE>
EXHIBIT A
CERTIFICATE FOR INTERESTS IN
HUNTSMAN ICI FINANCIAL LLC
A Delaware Limited Liability Company
Certificate No. _____ No. of Units _____
Huntsman ICI Financial LLC,
a Delaware limited liability company (the "Company"), hereby certifies that
-------
[NAME OF MEMBER]
(The "Holder") is the registered owner of _____ Units of limited liability
------
company Interest in the Company ("Interests"). The Holder, by accepting this
---------
Certificate, is deemed to have agreed to become a Member of the Company, if
admitted as such in accordance with the terms of the Company Agreement, and to
have agreed to comply with and be bound by, the Company Agreement.
No Interest(s) may be transferred unless and until this Certificate, or a
written instrument of transfer satisfactory to the Company, is duly endorsed or
executed for transfer by the Holder of the Holder's duly authorized attorney,
and this Certificate (together with any separate written instrument of transfer)
is delivered to the Company for registration of transfer.
THE INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE
HOLDER PROVIDES EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY (WHICH, IN THE
DISCRETION OF THE COMPANY, MAY INCLUDE AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER OR OTHER
DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
ATTEST: HUNTSMAN ICI FINANCIAL LLC
________________________________ By _________________________________________
Secretary or Assistant Secretary Chief Executive Officer or Vice President
Dated: ___________________
5
<PAGE>
ASSIGNMENT OF INTEREST
FOR VALUE RECEIVED, the undersigned (the "Assignor"), hereby assigns,
--------
conveys, sells and transfers unto:
______________________________________________________________________________
Please print or typewrite Name and Address of Assignee
________________________________ Please insert Social Security or other
Taxpayer Identification Number of Assignee
___________ Units of Interest evidenced by this Certificate. Assignor
irrevocably constitutes and appoints the Company as its attorney-in-fact with
full power of substitution to transfer the Interest represented by this
Certificate, or any lesser designated number of Interest as referenced herein,
on the books of the Company.
Date:_____________________________ _____________________________________
Signature
<PAGE>
AMENDMENT NO. 1
TO
LIMITED LIABILITY COMPANY
AGREEMENT
This Amendment No. 1 (this "Amendment") to the Limited Liability Company
---------
Agreement (the "LLC Agreement") of Huntsman ICI Financial LLC, a limited
-------------
liability company organized and existing under the laws of the State of Delaware
(the "Company"), is made this 19th day of June, 1999, by Huntsman ICI Chemicals
-------
LLC, as the sole member of the Company ("Huntsman").
--------
WHEREAS, Huntsman had previously entered into the LLC Agreement dated
as of June 18, 1999; and
WHEREAS, Huntsman desires to amend the LLC Agreement to provide
clarification as to the type of interest held by members of the Company.
NOW, THEREFORE, pursuant to Section 5.1 of the LLC Agreement, Huntsman
hereby agrees as follows:
1. Article III of the LLC Agreement shall be amended to include the
following Section 3.4:
Section 3.4 Interest as a Security. A membership interest of a
----------------------
Member in the Company evidenced by a Certificate shall constitute a
security for all purposes of Article 8 of the Uniform Commercial Code
promulgated by the National Conference of Commissioners on Uniform
State Laws, as in effect in Delaware or any other applicable
jurisdiction. Delaware law shall constitute the local law of the
Company's jurisdiction in its capacity as the issuer of membership
interests of a Member in the Company.
2. Upon the execution and delivery of this Amendment, the LLC Agreement
shall be amended in accordance herewith and this Amendment shall form a part of
the LLC Agreement for all purposes, and Huntsman and every Member (as defined in
the LLC Agreement) shall be bound by the LLC Agreement, as so amended.
IN WITNESS WHEREOF, the undersigned has duly executed this Amendment as of
the date first above written.
HUNTSMAN ICI CHEMICALS LLC
By: /s/ Samuel D. Scruggs
Name: Samuel D. Scruggs
Title: Manager
<PAGE>
EXHIBIT 3.7
THE COMPANIES LAW (1998 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
TIOXIDE AMERICAS INC.
(Adopted by Special Resolution on 25th June, 1999)
1. The name of the Company is Tioxide Americas Inc..
2. The Registered Office of the Company shall be at the offices of Maples
and Calder, Attorneys-at-Law, Ugland House, South Church Street, P.O. Box 309,
George Town, Grand Cayman, Cayman Islands, British West Indies or at such other
place as the Directors may from time to time decide.
3. The objects for which the Company is established are unrestricted and
shall include, but without limitation, the following:
(i) (a) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and execute all kinds of investment,
financial, commercial, mercantile, trading and other operations.
(b) To carry on whether as principals, agents or otherwise howsoever the
business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of
all types of property including services.
<PAGE>
-2-
(ii) To exercise and enforce all rights and powers conferred by or incidental
to the ownership of any shares, stock, obligations or other securities
including without prejudice to the generality of the foregoing all such
powers of veto or control as may be conferred by virtue of the holding by
the Company of some special proportion of the issued or nominal amount
thereof, to provide managerial and other executive, supervisory and
consultant services for or in relation to any company in which the Company
is interested upon such terms as may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of and deal with real
and personal property and rights of all kinds and, in particular,
mortgages, debentures, produce, concessions, options, contracts, patents,
annuities, licences, stocks, shares, bonds, policies, book debts, business
concerns, undertakings, claims, privileges and choses in action of all
kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite, issue
on commission or otherwise, take, hold, deal in and convert stocks, shares
and securities of all kinds and to enter into partnership or into any
arrangement for sharing profits, reciprocal concessions or cooperation
with any person or company and to promote and aid in promoting, to
constitute, form or organise any company, syndicate or partnership of any
kind, for the purpose of acquiring and undertaking any property and
liabilities of the Company or of advancing, directly or indirectly, the
objects of the Company or for any other purpose which the Company may
think expedient.
<PAGE>
-3-
(v) To stand surety for or to guarantee, support or secure the performance of
all or any of the obligations of any person, firm or company whether or
not related or affiliated to the Company in any manner and whether by
personal covenant or by mortgage, charge or lien upon the whole or any
part of the undertaking, property and assets of the Company, both present
and future, including its uncalled capital or by any such method and
whether or not the Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of
being conveniently carried on in conjunction with any of the
aforementioned businesses or activities or which may appear to the
Directors of the Company likely to be profitable to the Company.
In the interpretation of this Memorandum of Association in general and of this
Clause 3 in particular no object, business or power specified or mentioned shall
be limited or restricted by reference to or inference from any other object,
business or power, or the name of the Company, or by the juxtaposition of two or
more objects, businesses or powers and that, in the event of any ambiguity in
this clause or elsewhere in this Memorandum of Association, the same shall be
resolved by such interpretation and construction as will widen and enlarge and
not restrict the objects, businesses and powers of and exercisable by the
Company.
4. Except as prohibited or limited by the Companies Law (1998 Revision),
the Company shall have full power and authority to carry out any object and
shall have and be capable of from time to time and at all times exercising any
and all of the powers at any time or from time to time exercisable by a natural
person or body corporate in doing in any part of the
<PAGE>
-4-
world whether as principal, agent, contractor or otherwise whatever may be
considered by it necessary for the attainment of its objects and whatever else
may be considered by it as incidental or conducive thereto or consequential
thereon, including, but without in any way restricting the generality of the
foregoing, the power to make any alterations or amendments to this Memorandum of
Association and the Articles of Association of the Company considered necessary
or convenient in the manner set out in the Articles of Association of the
Company, and the power to do any of the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to Members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or provide other benefits in cash or kind to Directors, officers,
employees, past or present and their families; to purchase Directors and
officers liability insurance and to carry on any trade or business and generally
to do all acts and things which, in the opinion of the Company or the Directors,
may be conveniently or profitably or usefully acquired and dealt with, carried
on, executed or done by the Company in connection with the business aforesaid
PROVIDED
<PAGE>
-5-
THAT the Company shall only carry on the businesses for which a licence is
required under the laws of the Cayman Islands when so licensed under the terms
of such laws.
5. The liability of each Member is limited to the amount from time to time
unpaid on such Member's shares.
6. The share capital of the Company is US$11,000.00 divided into 11,000
shares of a nominal or par value of US$1.00 each with power for the Company
insofar as is permitted by law, to redeem or purchase any of its shares and to
increase or reduce the said capital subject to the provisions of the Companies
Law (1998 Revision) and the Articles of Association and to issue any part of its
capital, whether original, redeemed or increased with or without any preference,
priority or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be
carried on subject to the provisions of Section 193 of the Companies Law (1998
Revision) and, subject to the provisions of the Companies Law (1998 Revision)
and the Articles of Association, it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we
<PAGE>
-6-
respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
<PAGE>
EXHIBIT 3.8
THE COMPANIES LAW (1998 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
ARTICLES OF ASSOCIATION
OF
TIOXIDE AMERICAS INC.
(Adopted by Special Resolution on 25th June, 1999)
1. In these Articles Table A in the Schedule to the Statute does not
apply and, unless there be something in the subject or context inconsistent
therewith,
"Articles" means these Articles as originally framed or as
from time to time altered by Special Resolution.
"Auditors" means the persons for the time being performing the
duties of auditors of the Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds and any
other such securities of the Company whether
constituting a charge on the assets of the Company
or not.
"Directors" means the directors for the time being of the
Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in the
Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
<PAGE>
-2-
"registered office" means the registered office for the time being of
the Company.
"Seal" means the common seal of the Company and includes
every duplicate seal.
"Secretary" includes an Assistant Secretary and any person
appointed to perform the duties of Secretary of the
Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and includes
a resolution approved in writing as described
therein.
"Statute" means the Companies Law (1998 Revision) of the
Cayman Islands as amended and every statutory
modification or re-enactment thereof for the time
being in force.
"written" and "in
writing" include all modes of representing or reproducing
words in visible form.
Words importing the singular number only include the plural number and vice-
versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after
incorporation as the Directors shall see fit, notwithstanding that part only of
the shares may have been allotted.
3. The Directors may pay, out of the capital or any other monies of the
Company, all expenses incurred in or about the formation and establishment of
the Company including the expenses of registration.
<PAGE>
-3-
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form
as shall be determined by the Directors. Such certificates may be under Seal.
All certificates for shares shall be consecutively numbered or otherwise
identified and shall specify the shares to which they relate. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered in the register of
Members of the Company. All certificates surrendered to the Company for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled. The Directors may authorise certificates to be issued with the seal
and authorised signature(s) affixed by some method or system of mechanical
process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$1.00) or such lesser sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper. The
Company shall not issue shares in bearer form.
7. The Company shall maintain a register of its Members and every person
whose name is entered as a Member in the register of Members shall be entitled
without payment to receive within two months after allotment or lodgement of
transfer (or within such other period as the conditions of issue shall provide)
one certificate for all his shares or several certificates each for one or more
of his shares upon payment of fifty cents (US$0.50) for every certificate after
the first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
<PAGE>
-4-
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall
be executed by or on behalf of the transferor and the transferor shall be deemed
to remain the holder of a share until the name of the transferee is entered in
the register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
10. The registration of transfers may be suspended at such time and for
such periods as the Directors may from time to time determine, provided always
that such registration shall not be suspended for more than forty-five days in
any year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
-----------------------------
12. If at any time the share capital of the Company is divided into
different classes of shares, the rights attached to any class (unless otherwise
provided by the terms of issue of the shares of that class) may, whether or not
the Company is being wound-up, be varied with the consent in writing of the
holders of three-fourths of the issued shares of that class, or with the
sanction of a Special Resolution passed at a general meeting of the holders of
the shares of that class.
<PAGE>
-5-
The provisions of these Articles relating to general meetings shall
apply to every such general meeting of the holders of one class of shares except
that the necessary quorum shall be one person holding or representing by proxy
at least one-third of the issued shares of the class and that any holder of
shares of the class present in person or by proxy may demand a poll.
13. The rights conferred upon the holders of the shares of any class issued
with preferred or other rights shall not, unless otherwise expressly provided by
the terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay
a commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the other.
The Company may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon
any trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all
shares (whether fully paid-up or not) registered in the name of a Member
(whether solely or jointly with others) for all debts, liabilities or
engagements to or with the Company (whether presently payable or not) by such
Member or his estate, either alone or jointly with any other person, whether a
Member or not, but the Directors may at any time declare any share to be wholly
or in part exempt from the provisions of this Article. The registration of a
transfer of any such share shall operate as a waiver of the Company's lien (if
any) thereon. The Company's lien (if any) on a share shall extend to all
dividends or other monies payable in respect thereof.
<PAGE>
-6-
17. The Company may sell, in such manner as the Directors think fit, any
shares on which the Company has a lien, but no sale shall be made unless a sum
in respect of which the lien exists is presently payable, nor until the
expiration of fourteen days after a notice in writing stating and demanding
payment of such part of the amount in respect of which the lien exists as is
presently payable, has been given to the registered holder or holders for the
time being of the share, or the person, of which the Company has notice,
entitled thereto by reason of his death or bankruptcy.
18. To give effect to any such sale the Directors may authorise some person
to transfer the shares sold to the purchaser thereof. The purchaser shall be
registered as the holder of the shares comprised in any such transfer, and he
shall not be bound to see to the application of the purchase money, nor shall
his title to the shares be affected by any irregularity or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied
in payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums not presently payable as existed upon the shares before the sale) be paid
to the person entitled to the shares at the date of the sale.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the resolution
of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable to
pay all calls in respect thereof.
<PAGE>
-7-
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on
allotment or at any fixed date, whether on account of the nominal value of the
share or by way of premium or otherwise, shall for the purposes of these
Articles be deemed to be a call duly made, notified and payable on the date on
which by the terms of issue the same becomes payable, and in the case of non-
payment all the relevant provisions of these Articles as to payment of interest
forfeiture or otherwise shall apply as if such sum had become payable by virtue
of a call duly made and notified.
23. The Directors may, on the issue of shares, differentiate between the
holders as to the amount of calls or interest to be paid and the times of
payment.
24. (a) The Directors may, if they think fit, receive from any Member willing
to advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member paying
such sum to any portion of a dividend declared in respect of any period prior to
the date upon which such sum would, but for such payment, become presently
payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make
any payment required by the terms of issue on the day appointed for payment
thereof, the Directors may, at any time thereafter during such time as any part
of the call, instalment or payment remains unpaid, give notice requiring payment
of so much of the call, instalment or payment as is unpaid, together with any
interest which may have accrued and all expenses that have been incurred by the
Company by reason of such non-payment. Such notice shall name a day (not earlier
than the expiration of fourteen days from the date of giving of the notice) on
or before which the payment required by the notice is to be made, and shall
state that, in the event of non-payment at or before the time appointed the
shares in respect of which such notice was given will be liable to be forfeited.
<PAGE>
-8-
(b) If the requirements of any such notice as aforesaid are not complied
with, any share in respect of which the notice has been given may at any time
thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture
shall include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on such terms and
in such manner as the Directors think fit and at any time before a sale or
disposition the forfeiture may be cancelled on such terms as the Directors think
fit.
26. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the
Secretary of the Company that a share in the Company has been duly forfeited on
a date stated in the declaration shall be conclusive evidence of the fact
therein stated as against all persons claiming to be entitled to the share. The
Company may receive the consideration given for the share on any sale or
disposition thereof and may execute a transfer of the share in favour of the
person to whom the share is sold or disposed of and he shall thereupon be
registered as the holder of the share and shall not be bound to see to the
application of the purchase money, if any, nor shall his title to the share be
affected by any irregularity or invalidity in the proceedings in reference to
the forfeiture, sale or disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the
case of non-payment of any sum which, by the terms of issue of a share, becomes
payable at a fixed time, whether on account of the nominal value of the share or
by way of premium as if the same had been payable by virtue of a call duly made
and notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$1.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
<PAGE>
-9-
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered himself
as holder he shall deliver or send to the Company a notice in writing signed by
him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or
bankruptcy or liquidation or dissolution of the holder (or in any other case
than by transfer) shall be entitled to the same dividends and other advantages
to which he would be entitled if he were the registered holder of the share,
except that he shall not, before being registered as a Member in respect of the
share, be entitled in respect of it to exercise any right conferred by
membership in relation to meetings of the Company PROVIDED HOWEVER that the
Directors may at any time give notice requiring any such person to elect either
to be registered himself or to transfer the share and if the notice is not
complied with within ninety days the Directors may thereafter withhold payment
of all dividends, bonuses or other monies payable in respect of the share until
the requirements of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the Statute,
the Company may from time to time by Special Resolution alter or amend its
Memorandum of Association with respect to any objects, powers or other matters
specified therein provided always that the Company may by ordinary resolution:
<PAGE>
-10-
(i) increase the share capital by such sum to be divided into shares
of such amount or without nominal or par value as the resolution
shall prescribe and with such rights, priorities and privileges
annexed thereto, as the Company in general meeting may determine;
(ii) consolidate and divide all or any of its share capital into shares
of larger amount than its existing shares;
(iii) by subdivision of its existing shares or any of them divide the
whole or any part of its share capital into shares of smaller
amount than is fixed by the Memorandum of Association or into
shares without nominal or par value;
(iv) cancel any shares which at the date of the passing of the
resolution have not been taken or agreed to be taken by any
person.
(b) All new shares created hereunder shall be subject to the same provisions
with reference to the payment of calls, liens, transfer, transmission,
forfeiture and otherwise as the shares in the original share capital.
(c) Without prejudice to Article 11 hereof and subject to the provisions of
the Statute, the Company may by Special Resolution reduce its share capital and
any capital redemption reserve fund.
(d) Subject to the provisions of the Statute, the Company may by resolution
of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or to vote
at any meeting of Members or any adjournment thereof, or Members entitled to
receive payment of any dividend, or in order to make a determination of Members
for any other proper purpose, the Directors of the Company may provide that the
register of Members shall be closed for transfers for a stated period but not to
exceed in any case forty days. If the register of Members shall be so closed
for the purpose of determining Members entitled to notice of or to vote at a
meeting of Members such register shall be so closed for at least ten days
immediately preceding such meeting and the record date for such determination
shall be the date of the closure of the register of Members.
<PAGE>
-11-
35. In lieu of or apart from closing the register of Members, the Directors
may fix in advance a date as the record date for any such determination of
Members entitled to notice of or to vote at a meeting of the Members and for the
purpose of determining the Members entitled to receive payment of any dividend
the Directors may, at or within 90 days prior to the date of declaration of such
dividend fix a subsequent date as the record date for such determination.
36. If the register of Members is not so closed and no record date is fixed
for the determination of Members entitled to notice of or to vote at a meeting
of Members or Members entitled to receive payment of a dividend, the date on
which notice of the meeting is mailed or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
section, such determination shall apply to any adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but shall
not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the Company.
(b) The requisition must state the objects of the meeting and must be signed
by the requisitionists and deposited at the registered office of the Company and
may consist of several documents in like form each signed by one or more
requisitionists.
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them
<PAGE>
-12-
representing more than one-half of the total voting rights of all of them, may
themselves convene a general meeting, but any meeting so convened shall not be
held after the expiration of three months after the expiration of the said
twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting
or any other general meeting. Every notice shall be exclusive of the day on
which it is given or deemed to be given and of the day for which it is given and
shall specify the place, the day and the hour of the meeting and the general
nature of the business and shall be given in manner hereinafter mentioned or in
such other manner if any as may be prescribed by the Company PROVIDED that a
general meeting of the Company shall, whether or not the notice specified in
this regulation has been given and whether or not the provisions of Article 38
have been complied with, be deemed to have been duly convened if it is so
agreed:
(a) in the case of a general meeting called as an annual general meeting by
all the Members entitled to attend and vote thereat or their proxies;
and
(b) in the case of any other general meeting by a majority in number of the
Members having a right to attend and vote at the meeting, being a
majority together holding not less than seventy-five per cent in
nominal value or in the case of shares without nominal or par value
seventy-five per cent of the shares in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum
of Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
<PAGE>
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42. A resolution (including a Special Resolution) in writing (in one or
more counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a quorum
is not present, the meeting, if convened upon the requisition of Members, shall
be dissolved and in any other case it shall stand adjourned to the same day in
the next week at the same time and place or to such other time or such other
place as the Directors may determine and if at the adjourned meeting a quorum is
not present within half an hour from the time appointed for the meeting the
Members present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as
Chairman at every general meeting of the Company, or if there is no such
Chairman, or if he shall not be present within fifteen minutes after the time
appointed for the holding of the meeting, or is unwilling to act, the Directors
present shall elect one of their number to be Chairman of the meeting.
45. If at any general meeting no Director is willing to act as Chairman or
if no Director is present within fifteen minutes after the time appointed for
holding the meeting, the Members present shall choose one of their number to be
Chairman of the meeting.
46. The Chairman may, with the consent of any general meeting duly
constituted hereunder, and shall if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a general meeting is
adjourned for thirty days or more, notice of the adjourned meeting shall be
given as in the case of an original meeting; save as aforesaid it shall not be
necessary to give any notice of an adjournment or of the business to be
transacted at an adjourned general meeting.
47. At any general meeting a resolution put to the vote of the meeting
shall be decided on a show of hands unless a poll is, before or on the
declaration of the result of the show of hands, demanded by the Chairman or any
other Member present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a
resolution has on a show of hands been carried, or carried unanimously, or by a
particular majority, or lost, and an entry to that effect in the Company's
Minute Book containing the Minutes of the proceedings of the meeting shall be
conclusive evidence of that fact without proof of the number or proportion of
the votes recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
<PAGE>
-14-
50. Except as provided in Article 52, if a poll is duly demanded it shall
be taken in such manner as the Chairman directs and the result of the poll shall
be deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. A poll demanded on the election of a Chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other question
shall be taken at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTES OF MEMBERS
----------------
53. Subject to any rights or restrictions for the time being attached to
any class or classes of shares, on a show of hands every Member of record
present in person or by proxy at a general meeting shall have one vote and on a
poll every Member of record present in person or by proxy shall have one vote
for each share registered in his name in the register of Members.
54. In the case of joint holders of record the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders, and for this purpose
seniority shall be determined by the order in which the names stand in the
register of Members.
55. A Member of unsound mind, or in respect of whom an order has been made
by any court, having jurisdiction in lunacy, may vote, whether on a show of
hands or on a poll, by his committee, receiver, curator bonis, or other person
in the nature of a committee, receiver or curator bonis appointed by that court,
and any such committee, receiver, curator bonis or other persons may vote by
proxy.
56. No Member shall be entitled to vote at any general meeting unless he is
registered as a shareholder of the Company on the record date for such meeting
nor unless all calls or other sums presently payable by him in respect of shares
in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except
at the general meeting or adjourned general meeting at which the vote objected
to is given or tendered and every vote not disallowed at such general meeting
shall be valid for all purposes. Any such
<PAGE>
-15-
objection made in due time shall be referred to the Chairman of the general
meeting whose decision shall be final and conclusive.
58. On a poll or on a show of hands votes may be given either personally or
by proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be
executed under the hand of the appointor or of his attorney duly authorised in
writing, or, if the appointor is a corporation under the hand of an officer or
attorney duly authorised in that behalf. A proxy need not be a Member of the
Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy duly signed is in the course of
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form
and may be expressed to be for a particular meeting or any adjournment thereof
or generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the principal
or revocation of the proxy or of the authority under which the proxy was
executed, or the transfer of the share in respect of which the proxy is given
provided that no intimation in writing of such death, insanity, revocation or
transfer as aforesaid shall have been received by the Company at the registered
office before the commencement of the general meeting, or adjourned meeting at
which it is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in
accordance with its Articles or in the absence of such provision by resolution
of its Directors or other governing body authorise such person as it thinks fit
to act as its representative at any meeting of the Company or of any class of
Members of the Company, and the person so authorised shall be entitled to
exercise the same powers on behalf of the corporation which he represents as the
corporation could exercise if it were an individual Member of record of the
Company.
<PAGE>
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64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not more than ten
persons (exclusive of alternate Directors) PROVIDED HOWEVER that the Company may
from time to time by ordinary resolution increase or reduce the limit in the
number of Directors. The first Directors of the Company shall be determined in
writing by, or appointed by a resolution of, the subscribers of the Memorandum
of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such remuneration
as the Directors shall determine. Such remuneration shall be deemed to accrue
from day to day. The Directors shall also be entitled to be paid their
travelling, hotel and other expenses properly incurred by them in going to,
attending and returning from meetings of the Directors, or any committee of the
Directors, or general meetings of the Company, or otherwise in connection with
the business of the Company, or to receive a fixed allowance in respect thereof
as may be determined by the Directors from time to time, or a combination partly
of one such method and partly the other.
67. The Directors may by resolution award special remuneration to any
Director of the Company undertaking any special work or services for, or
undertaking any special mission on behalf of, the Company other than his
ordinary routine work as a Director. Any fees paid to a Director who is also
counsel or solicitor to the Company, or otherwise serves it in a professional
capacity shall be in addition to his remuneration as a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company
in general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a
director or other officer of or otherwise interested in any company promoted by
the Company or in which
<PAGE>
-17-
the Company may be interested as shareholder or otherwise and no such Director
or alternate Director shall be accountable to the Company for any remuneration
or other benefits received by him as a director or officer of, or from his
interest in, such other company.
72. No person shall be disqualified from the office of Director or
alternate Director or prevented by such office from contracting with the
Company, either as vendor, purchaser or otherwise, nor shall any such contract
or any contract or transaction entered into by or on behalf of the Company in
which any Director or alternate Director shall be in any way interested be or be
liable to be avoided, nor shall any Director or alternate Director so
contracting or being so interested be liable to account to the Company for any
profit realised by any such contract or transaction by reason of such Director
holding office or of the fiduciary relation thereby established. A Director (or
his alternate Director in his absence) shall be at liberty to vote in respect of
any contract or transaction in which he is so interested as aforesaid PROVIDED
HOWEVER that the nature of the interest of any Director or alternate Director in
any such contract or transaction shall be disclosed by him or the alternate
Director appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a shareholder
of any specified firm or company and is to be regarded as interested in any
transaction with such firm or company shall be sufficient disclosure under
Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who
expects to be unable to attend Directors' Meetings because of absence, illness
or otherwise may appoint any person to be an alternate Director to act in his
stead and such appointee whilst he holds office as an alternate Director shall,
in the event of absence therefrom of his appointor, be entitled to attend
meetings of the Directors and to vote thereat and to do, in the place and stead
of his appointor, any other act or thing which his appointor is permitted or
required to do by virtue of his being a Director as if the alternate Director
were the appointor, other than appointment of an alternate to himself, and he
shall ipso facto vacate office if and when his appointor ceases to be a Director
or removes the appointee from office. Any appointment or removal under this
Article shall be effected by notice in writing under the hand of the Director
making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a
sole Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not
<PAGE>
-18-
inconsistent with the aforesaid, as may be prescribed by the Company in general
meeting required to be exercised by the Company in general meeting PROVIDED
HOWEVER that no regulations made by the Company in general meeting shall
invalidate any prior act of the Directors which would have been valid if that
regulation had not been made.
76. The Directors may from time to time and at any time by powers of
attorney appoint any company, firm, person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or attorneys of the
Company for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented thereat by
an alternate or by proxy) present at each meeting of the Directors and
of any committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company and
of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension or
allowance on retirement to any Director who has held any other salaried office
or place of profit with the Company or to his widow or dependants and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow
money and to mortgage or charge its undertaking, property and uncalled capital
or any part thereof and to issue debentures, debenture stock and other
securities whether outright or as security for any debt, liability or obligation
of the Company or of any third party.
<PAGE>
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MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) The Directors from time to time and at any time may delegate to any such
committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person so appointed and may annul or vary any such delegation, but no
person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors to
subdelegate all or any of the powers, authorities, and discretions for the time
being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their body
(but not an alternate Director) to the office of Managing Director for such term
and at such remuneration (whether by way of salary, or commission, or
participation in profits, or partly in one way and partly in another) as they
may think fit but his appointment shall be subject to determination ipso facto
if he ceases from any cause to be a Director and no alternate Director appointed
by him can act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any of
the powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
<PAGE>
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PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall
meet together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the
requisition of a Director or alternate Director shall, at any time summon a
meeting of the Directors by at least two days' notice in writing to every
Director and alternate Director which notice shall set forth the general nature
of the business to be considered unless notice is waived by all the Directors
(or their alternates) either at, before or after the meeting is held and
PROVIDED FURTHER if notice is given in person, by cable, telex or telecopy the
same shall be deemed to have been given on the day it is delivered to the
Directors or transmitting organisation as the case may be. The provisions of
Article 40 shall apply mutatis mutandis with respect to notices of meetings of
Directors.
86. The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors and unless so fixed shall be two, a
Director and his appointed alternate Director being considered only one person
for this purpose, PROVIDED ALWAYS that if there shall at any time be only a sole
Director the quorum shall be one. For the purposes of this Article an alternate
Director or proxy appointed by a Director shall be counted in a quorum at a
meeting at which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their
body, but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the
period for which he is to hold office; but if no such Chairman is elected, or if
at any meeting the Chairman is not present within five minutes after the time
appointed for holding the same, the Directors present may choose one of their
number to be Chairman of the meeting.
<PAGE>
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89. The Directors may delegate any of their powers to committees consisting
of such member or members of the Board of Directors (including Alternate
Directors in the absence of their appointors) as they think fit; any committee
so formed shall in the exercise of the powers so delegated conform to any
regulations that may be imposed on it by the Directors.
90. A committee may meet and adjourn as it thinks proper. Questions
arising at any meeting shall be determined by a majority of votes of the members
present, and in the case of an equality of votes the Chairman shall have a
second or casting vote.
91. All acts done by any meeting of the Directors or of a committee of
Directors (including any person acting as an alternate Director) shall,
notwithstanding that it be afterwards discovered that there was some defect in
the appointment of any Director or alternate Director, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and qualified to be a Director or alternate Director as the case may
be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of Directors
by a proxy appointed by him in which event the presence or vote of the proxy
shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to the
appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns the office
of Director;
<PAGE>
-22-
(b) if he absents himself (without being represented by proxy or an
alternate Director appointed by him) from three consecutive meetings of
the Board of Directors without special leave of absence from the
Directors, and they pass a resolution that he has by reason of such
absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or composition
with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a
Director and may in like manner remove any Director and may in like manner
appoint another person in his stead.
96. The Directors shall have power at any time and from time to time to
appoint any person to be a Director, either to fill a casual vacancy or as an
addition to the existing Directors but so that the total amount of Directors
(exclusive of alternate Directors) shall not at any time exceed the number fixed
in accordance with these Articles.
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which
shall, subject to paragraph (c) hereof, only be used by the authority of the
Directors or of a committee of the Directors authorised by the Directors in that
behalf and every instrument to which the Seal has been affixed shall be signed
by one person who shall be either a Director or the Secretary or Secretary-
Treasurer or some person appointed by the Directors for the purpose.
<PAGE>
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(b) The Company may have a duplicate Seal or Seals each of which shall be a
facsimile of the Common Seal of the Company and, if the Directors so determine,
with the addition on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or attorney may
without further authority of the Directors affix the Seal of the Company over
his signature alone to any document of the Company required to be authenticated
by him under Seal or to be filed with the Registrar of Companies in the Cayman
Islands or elsewhere wheresoever.
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions, set
aside such sums as they think proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits
of the Company, realised or unrealised, or out of the share premium account or
as otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with
special rights as to dividends or distributions, if dividends or distributions
are to be declared on a class of shares they shall be declared and paid
according to the amounts paid or credited as paid on the shares of such class
outstanding on the record date for such dividend or distribution as determined
in accordance with these Articles but no amount paid or credited as paid on a
share in advance of calls shall be treated for the purpose of this Article as
paid on the share.
<PAGE>
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104. The Directors may deduct from any dividend or distribution payable to
any Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid
wholly or partly by the distribution of specific assets and in particular of
paid up shares, debentures, or debenture stock of any other company or in any
one or more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash in
respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
<PAGE>
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BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with
respect to:
(a) all sums of money received and expended by the Company and the matters
in respect of which the receipt or expenditure takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what
extent and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be laid
before the Company in general meeting profit and loss accounts, balance sheets,
group accounts (if any) and such other reports and accounts as may be required
by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor
but while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
<PAGE>
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114. Every Auditor of the Company shall have a right of access at all times
to the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any
Member either personally or by sending it by post, cable, telex or telecopy to
him or to his address as shown in the register of Members, such notice, if
mailed, to be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of
a share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which the
Company has been advised are entitled to a share or shares in consequence of the
death or bankruptcy of a Member by sending it through the post as aforesaid in a
pre-paid letter addressed to them by name, or by the title of representatives of
the deceased, or trustee of the bankrupt, or by any like description at the
address supplied for that purpose by the persons claiming to be so entitled, or
at the option of the Company by giving the notice in any manner in which the
same might have been given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner
hereinbefore authorised to:
<PAGE>
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(a) every person shown as a Member in the register of Members as of the
record date for such meeting except that in the case of joint holders
the notice shall be sufficient if given to the joint holder first named
in the register of Members; and
(b) every person upon whom the ownership of a share devolves by reason of
his being a legal personal representative or a trustee in bankruptcy of
a Member of record where the Member of record but for his death or
bankruptcy would be entitled to receive notice of the meeting.
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the sanction
of a Special Resolution of the Company and any other sanction required by the
Statute, divide amongst the Members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purpose set such value as he deems fair upon any
property to be divided as aforesaid and may determine how such division shall be
carried out as between the Members or different classes of Members. The
liquidator may with the like sanction, vest the whole or any part of such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for
distribution amongst the Members as such shall be insufficient to repay the
whole of the paid-up capital, such assets shall be distributed so that, as
nearly as may be, the losses shall be borne by the Members in proportion to the
capital paid up, or which ought to have been paid up, at the commencement of the
winding up on the shares held by them respectively. And if in a winding up the
assets available for distribution amongst the Members shall be more than
sufficient to repay the whole of the capital paid up at the commencement of the
winding up, the excess shall be distributed amongst the Members in proportion to
the capital paid up at the commencement of the winding up on the shares held by
them respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and any
trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and
<PAGE>
-28-
expenses which they or any of them shall or may incur or sustain by reason of
any act done or omitted in or about the execution of their duty in their
respective offices or trusts, except such (if any) as they shall incur or
sustain by or through their own wilful neglect or default respectively and no
such Director, officer or trustee shall be answerable for the acts, receipts,
neglects or defaults of any other Director, officer or trustee or for joining in
any receipt for the sake of conformity or for the solvency or honesty of any
banker or other persons with whom any monies or effects belonging to the Company
may be lodged or deposited for safe custody or for any insufficiency of any
security upon which any monies of the Company may be invested or for any other
loss or damage due to any such cause as aforesaid or which may happen in or
about the execution of his office or trust unless the same shall happen through
the wilful neglect or default of such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the
Company shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to
time by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject
to the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
<PAGE>
EXHIBIT 4.1
================================================================================
INDENTURE
Dated as of June 30, 1999
Among
HUNTSMAN ICI CHEMICALS LLC, as Issuer,
each of the Guarantors named herein
and
Bank One, N.A., as Trustee
__________________
$600,000,000
10 1/8% Senior Subordinated Notes due 2009
EU200,000,000
10 1/8% Senior Subordinated Notes due 2009
================================================================================
<PAGE>
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
SECTION 1.01. Definitions.................................................1
SECTION 1.02. Incorporation by Reference of TIA..........................34
SECTION 1.03. Rules of Construction......................................35
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating............................................36
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount...38
SECTION 2.03. Registrar and Paying Agent.................................39
SECTION 2.04. Paying Agent To Hold Assets in Trust.......................40
SECTION 2.05. Holder Lists...............................................40
SECTION 2.06. Transfer and Exchange......................................40
SECTION 2.07. Replacement Notes..........................................41
SECTION 2.08. Outstanding Notes..........................................41
SECTION 2.09. Treasury Notes.............................................42
SECTION 2.10. [intentionally omitted]....................................43
SECTION 2.11. Cancellation...............................................43
SECTION 2.12. Defaulted Interest.........................................43
SECTION 2.13. CUSIP Numbers..............................................44
SECTION 2.14. Deposit of Moneys..........................................44
SECTION 2.15. Book-Entry Provisions for Global Securities................44
SECTION 2.16. Transfer and Exchange of Securities........................46
SECTION 2.17. Special Transfer Provisions................................54
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.........................................55
SECTION 3.02. Selection of Notes To Be Redeemed..........................55
SECTION 3.03. Notice of Redemption.......................................56
SECTION 3.04. Effect of Notice of Redemption.............................57
SECTION 3.05. Deposit of Redemption Price................................57
SECTION 3.06. Notes Redeemed in Part.....................................58
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ARTICLE FOUR
COVENANTS
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SECTION 4.01. Payment of Notes...........................................58
SECTION 4.02. Maintenance of Office or Agency............................58
SECTION 4.03. Limitation on Restricted Payments..........................58
SECTION 4.04. Corporate Existence........................................61
SECTION 4.05. Payment of Taxes and Other Claims..........................61
SECTION 4.06. Maintenance of Properties and Insurance....................61
SECTION 4.07. Compliance Certificate; Notice of Default..................62
SECTION 4.08. Compliance with Laws.......................................63
SECTION 4.09. Reports to Holders.........................................63
SECTION 4.10. Waiver of Stay, Extension or Usury Laws....................64
SECTION 4.11. Limitations on Transactions with Affiliates................64
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness........66
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries...................................66
SECTION 4.14. Change of Control..........................................67
SECTION 4.15. Limitation on Asset Sales..................................70
SECTION 4.16. Prohibition on Incurrence of Senior Subordinated Debt......75
SECTION 4.17. Limitation on Preferred Stock of Restricted Subsidiaries...75
SECTION 4.18. Limitation on Liens........................................75
SECTION 4.19. Limitation of Guarantees by Restricted Subsidiaries........76
SECTION 4.20. Conduct of Business........................................77
SECTION 4.21. Capital Stock of Certain Subsidiaries......................77
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets...................78
SECTION 5.02. Successor Corporation Substituted..........................80
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ARTICLE SIX
DEFAULT AND REMEDIES
<S> <C>
SECTION 6.01. Events of Default..........................................81
SECTION 6.02. Acceleration...............................................83
SECTION 6.03. Other Remedies.............................................84
SECTION 6.04. Waiver of Past Defaults....................................84
SECTION 6.05. Control by Majority........................................84
SECTION 6.06. Limitation on Suits........................................85
SECTION 6.07. Rights of Holders To Receive Payment.......................85
SECTION 6.08. Collection Suit by Trustee.................................85
SECTION 6.09. Trustee May File Proofs of Claim...........................86
SECTION 6.10. Priorities.................................................86
SECTION 6.11. Undertaking for Costs......................................87
SECTION 6.12. Expenses and Services After an Event of Default............87
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee..........................................88
SECTION 7.02. Rights of Trustee..........................................89
SECTION 7.03. Individual Rights of Trustee...............................91
SECTION 7.04. Trustee's Disclaimer.......................................91
SECTION 7.05. Notice of Default..........................................91
SECTION 7.06. Reports by Trustee to Holders..............................92
SECTION 7.07. Compensation and Indemnity.................................92
SECTION 7.08. Replacement of Trustee.....................................93
SECTION 7.09. Successor Trustee by Merger, Etc...........................94
SECTION 7.10. Eligibility; Disqualification..............................95
SECTION 7.11. Preferential Collection of Claims Against the Company......95
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations...................95
SECTION 8.02. Acknowledgment of Discharge by Trustee.....................98
SECTION 8.03. Application of Trust Money.................................99
SECTION 8.04. Repayment to the Company...................................99
SECTION 8.05. Reinstatement..............................................99
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
<S> <C>
SECTION 9.01. Without Consent of Holders................................100
SECTION 9.02. With Consent of Holders...................................100
SECTION 9.03. Compliance with TIA.......................................102
SECTION 9.04. Revocation and Effect of Consents.........................102
SECTION 9.05. Notation on or Exchange of Notes..........................103
SECTION 9.06. Trustee To Sign Amendments, Etc...........................103
ARTICLE TEN
SUBORDINATION OF NOTES
SECTION 10.01. Notes Subordinated to Senior Debt.........................104
SECTION 10.02. Suspension of Payment When Senior Debt Is in Default......104
SECTION 10.03. Notes Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation or Reorganization of Company...106
SECTION 10.04. Holders To Be Subrogated to Rights of Holders of Senior
Debt....................................................108
SECTION 10.05. Obligations of the Company Unconditional..................109
SECTION 10.06. Trustee Entitled To Assume Payments Not Prohibited in
Absence of Notice.......................................110
SECTION 10.07. Application by Trustee of Assets Deposited with It........111
SECTION 10.08. No Waiver of Subordination Provisions.....................111
SECTION 10.09. Holders Authorize Trustee To Effectuate Subordination of
Notes...................................................112
SECTION 10.10. Right of Trustee To Hold Senior Debt......................112
SECTION 10.11. No Suspension of Remedies.................................113
SECTION 10.12. No Fiduciary Duty of Trustee to Holders of Senior Debt....113
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. Unconditional Guarantee..................................113
SECTION 11.02. Limitations on Guarantees................................115
SECTION 11.03. Execution and Delivery of Guarantee......................115
SECTION 11.04. Release of a Guarantor...................................116
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SECTION 11.05. Waiver of Subrogation....................................117
SECTION 11.06. Immediate Payment........................................118
SECTION 11.07. No Set-Off...............................................118
SECTION 11.08. Obligations Absolute.....................................118
SECTION 11.09. Obligations Continuing...................................118
SECTION 11.10. Obligations Not Reduced..................................119
SECTION 11.11. Obligations Reinstated...................................119
SECTION 11.12. Obligations Not Affected.................................119
SECTION 11.13. Waiver...................................................121
SECTION 11.14. No Obligation To Take Action Against the Company.........121
SECTION 11.15. Dealing with the Company and Others......................121
SECTION 11.16. Default and Enforcement..................................122
SECTION 11.17. Amendment, Etc...........................................122
SECTION 11.18. Acknowledgment...........................................122
SECTION 11.19. Costs and Expenses.......................................122
SECTION 11.20. No Merger or Waiver; Cumulative Remedies.................123
SECTION 11.21. Survival of Obligations..................................123
SECTION 11.22. Guarantee in Addition to Other Obligations...............123
SECTION 11.23. Severability.............................................123
SECTION 11.24. Successors and Assigns...................................124
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated to Guarantor Senior
Debt...................................................124
SECTION 12.02. Suspension of Guarantee Obligations When Guarantor
Senior Debt Is in Default..............................124
SECTION 12.03. Guarantee Obligations Subordinated to Prior Payment of
All Guarantor Senior Debt on Dissolution, Liquidation
or Reorganization of Such Subsidiary Guarantor.........127
SECTION 12.04. Holders of Guarantee Obligations To Be Subrogated to
Rights of Holders of Guarantor Senior Debt.............128
SECTION 12.05. Obligations of the Guarantors Unconditional..............129
SECTION 12.06. Trustee Entitled To Assume Payments Not Prohibited in
Absence of Notice......................................131
SECTION 12.07. Application by Trustee of Assets Deposited with It.......131
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SECTION 12.08. No Waiver of Subordination Provisions....................131
SECTION 12.09. Holders Authorize Trustee To Effectuate Subordination of
Guarantee Obligations..................................132
SECTION 12.10. Right of Trustee To Hold Guarantor Senior Indebtedness...133
SECTION 12.11. No Suspension of Remedies................................133
SECTION 12.12. No Fiduciary Duty of Trustee to Holders of Guarantor
Senior Debt............................................133
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.............................................134
SECTION 13.02. Notices..................................................134
SECTION 13.03. Communications by Holders with Other Holders.............135
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.......136
SECTION 13.05. Statements Required in Certificate or Opinion............136
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar................137
SECTION 13.07. Legal Holidays...........................................137
SECTION 13.08. Governing Law............................................137
SECTION 13.09. No Adverse Interpretation of Other Agreements............137
SECTION 13.10. No Recourse Against Others...............................137
SECTION 13.11. Successors...............................................138
SECTION 13.12. Duplicate Originals......................................138
SECTION 13.13. Severability.............................................138
SECTION 13.14. Independence of Covenants................................138
SIGNATURES.....................................................................1
Exhibit A-1- Form of Restricted Dollar Note
Exhibit A-2- Form of Restricted Euro Note
Exhibit A-3- Form of Dollar Note
Exhibit A-4- Form of Euro Note
Exhibit B - Form of Legend for Global Notes
Exhibit C - Form of Transfer Certificates
Exhibit D - Form of IAI Transfer Certificate
Exhibit E - Form of Guarantee
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Note: This Table of Contents shall not, for any purpose, be
deemed to be part of this Indenture.
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<PAGE>
INDENTURE, dated as of June 30, 1999, among HUNTSMAN ICI CHEMICALS
LLC, a Delaware limited liability company (the "Company"), each of the
Guarantors named herein, as guarantors, and Bank One, N.A., a national banking
association, as trustee (the "Trustee").
The Company has duly authorized the creation of an issue of dollar
denominated 10 1/8% Senior Subordinated Notes due 2009 (the "Dollar Notes") and
euro denominated 10 1/8% Senior Subordinated Notes due 2009 (the "Euro Notes"
and, together with the Dollar Notes, the "Notes"). All things necessary to make
the Notes, when duly issued and executed by the Company and authenticated and
delivered hereunder, the valid and binding obligations of the Company and to
make this Indenture a valid and binding agreement of the Company have been done.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
Notes:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"Acceleration Notice" has the meaning provided in Section 6.02.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with the Company or any of
its Restricted Subsidiaries or assumed in connection with the acquisition of
assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such acquisition, merger or
consolidation, except for Indebtedness of a Person or any of its Subsidiaries
that is repaid at the time such Person becomes a Restricted Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Restricted Subsidiaries.
"Affiliate" means, with respect to any specified Person, any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under
<PAGE>
-2-
common control with, such specified Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative of the foregoing;
provided, however, that none of the Initial Purchasers or their respective
Affiliates shall be deemed to be an Affiliate of the Company.
"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or Co-Registrar.
"Agent Member" means, with respect to any Depository, any member of,
or participant in, such Depository.
"Applicable Procedures" has the meaning provided in Section
2.16(a)(ii).
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or of any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or of any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprises any division or line of business
of such Person or any other properties or assets of such Person other than in
the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Restricted Subsidiary of the Company of
(a) any Capital Stock of any Restricted Subsidiary of the Company; or (b) any
other property or assets of the Company or any Restricted Subsidiary of the
Company other than in the ordinary course of business; provided, however, that
-------- -------
Asset Sales shall not include (i) a transaction or series of related
transactions for which the Company
<PAGE>
-3-
or its Restricted Subsidiaries receive aggregate consideration of less than $5
million, (ii) sales of accounts receivable and related assets (including
contract rights) of the type specified in the definition of "Qualified
Securitization Transaction" to a Securitization Entity for the fair market value
thereof, (iii) sales or grants of licenses to use the Company's or any
Restricted Subsidiary's patents, trade secrets, know-how and other intellectual
property of the Company or any of its Restricted Subsidiaries to the extent that
such license does not prohibit the Company or any of its Restricted Subsidiaries
from using the technology licensed or require the Company or any of its
Restricted Subsidiaries to pay any fees for any such use, (iv) the sale, lease,
conveyance, disposition or other transfer (A) of all or substantially all of the
assets of the Company as permitted under Section 5.01, (B) of any Capital Stock
or other ownership interest in or assets or property of an Unrestricted
Subsidiary or a Person which is not a Subsidiary, (C) pursuant to any
foreclosure of assets or other remedy provided by applicable law to a creditor
of the Company or any Subsidiary of the Company with a Lien on such assets,
which Lien is permitted under the Indenture; provided that such foreclosure or
other remedy is conducted in a commercially reasonable manner or in accordance
with any bankruptcy law, (D) involving only Cash Equivalents, Foreign Cash
Equivalents or inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with past practices of
the Company or (E) including only the lease or sublease of any real or personal
property in the ordinary course of business, (v) the consummation of any
transaction in accordance with the terms of Section 4.03, (vi) Permitted
Investments and (vii) any merger or other consolidation permitted by Article V.
"Bankruptcy Law" means Title 11, United States Code or any similar
federal, state or foreign law for the relief of debtors.
"Board of Directors" means, as to any Person, the Board of Directors,
the board of managers or other similar body of such Person or any duly
authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
<PAGE>
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"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) a marketable obligation, maturing within
two years after issuance thereof, issued or guaranteed by the United States of
America or an instrumentality or agency thereof, (ii) a certificate of deposit
or banker's acceptance, maturing within one year after issuance thereof, issued
by any lender under the Credit Facilities, or a national or state bank or trust
company or a European, Canadian or Japanese bank, in each case having capital,
surplus and undivided profits of at least $100,000,000 and whose long-term
unsecured debt has a rating of "A" or better by S&P or A2 or better by Moody's
or the equivalent rating by any other nationally recognized rating agency
(provided that the aggregate face amount of all Investments in certificates of
deposit or bankers' acceptances issued by the principal offices of or branches
of such European or Japanese banks located outside the United States shall not
at any time exceed 33 1/3% of all Investments described in this definition),
(iii) open market commercial paper, maturing within 270 days after issuance
thereof, which has a rating of A1 or better by S&P or P1 or better by Moody's or
the equivalent rating by any other nationally recognized rating agency, (iv)
repurchase agreements and reverse repurchase agreements with a term not in
excess of one year with any financial institution which has been elected primary
government securities dealers by the Federal Reserve Board or whose securities
are rated AA- or better by S&P or Aa3 or better by Moody's or the equivalent
rating by any other nationally recognized rating agency relating to marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency or instrumentality thereof and backed by
<PAGE>
-5-
the full faith and credit of the United States of America, (v) "Money Market"
preferred stock maturing within six months after issuance thereof or municipal
bonds issued by a corporation organized under the laws of any state of the
United States, which has a rating of "A" or better by S&P or Moody's or the
equivalent rating by any other nationally recognized rating agency, (vi) tax
exempt floating rate option tender bonds backed by letters of credit issued by a
national or state bank whose long-term unsecured debt has a rating of AA or
better by S&P or Aa2 or better by Moody's or the equivalent rating by any other
nationally recognized rating agency, and (vii) shares of any money market mutual
fund rated at least AAA or the equivalent thereof by S&P or at least Aaa or the
equivalent thereof by Moody's or any other mutual fund holding assets consisting
(except for de minimis amounts) of the type specified in clauses (i) through
(vi) above.
"Change of Control" means (i) prior to the initial public equity
offering of the Company, the failure by Mr. Jon M. Huntsman, his spouse, direct
descendants or an entity controlled by any of the foregoing and/or by a trust of
the type described hereafter, and/or by a trust for the benefit of any of the
foregoing (the "Huntsman Group"), collectively, to have the power, directly or
indirectly, to vote or direct the voting of securities having at least a
majority of the ordinary voting power for the election of directors (or the
equivalent) of the Company or (ii) after the initial public equity offering, the
occurrence of the following: (x) any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act), other than one or more members
of the Huntsman Group, is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 35% or more of the then outstanding voting
capital stock of the Company other than in a transaction having the approval of
the Board of Directors of the Company at least a majority of which members are
Continuing Directors; or (y) Continuing Directors shall cease to constitute at
least a majority of the Board of Directors of the Company.
"Change of Control Date" has the meaning provided in Section 4.14.
"Change of Control Offer" has the meaning provided in Section 4.14.
<PAGE>
-6-
"Change of Control Payment Date" has the meaning provided in Section
4.14.
"Class A Shares" means the Class A Shares of TG which have voting
rights but no rights to dividends and a nominal liquidation preference.
"Class B Shares" means the Class B Shares of Holdings U.K., which have
voting rights, a right to nominal dividends and a nominal liquidation
preference.
"Commission" or "SEC" means the Securities and Exchange Commission.
"Commodity Agreements" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any of its Restricted Subsidiaries designed to protect the Company or any of its
Restricted Subsidiaries against fluctuations in the price of commodities
actually at that time used in the ordinary course of business of the Company or
its Restricted Subsidiaries.
"Common Depositary" means The First National Bank of Chicago, London
Branch, as common depositary for Euroclear and depositary for the Euro
Denominated Securities, together with its successors in such capacity.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor and also includes for the purposes of any provision contained herein
and required by the TIA any other obligor on the Notes.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside
<PAGE>
-7-
the ordinary course of business) and Permitted Tax Distributions paid during
such period, (B) Consolidated Interest Expense and (C) Consolidated Non-cash
Charges less any non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters for which financial statements are available under Section 4.09
(the "Four Quarter Period") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for
the Four Quarter Period. In addition to and without limitation of the
foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and prior to the Transaction Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or
Asset Acquisitions (including, without limitation, any Asset Acquisition giving
rise to the need to make such calculation as a result of such Person or one of
its Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition)incurring, assuming or otherwise
being liable for Acquired Indebtedness and also including any Consolidated
EBITDA (provided that such Consolidated EBITDA shall be included only to the
extent includible pursuant to the definition of "Consolidated Net Income")
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter Period. If
<PAGE>
-8-
such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a Person other than the Company or a Restricted
Subsidiary, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such
Person had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (2) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; and (3) notwithstanding clause
(1) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense, plus
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person and its Restricted Subsidiaries (other than
dividends paid in Qualified Capital Stock and other than dividends paid to such
Person or to a Restricted Subsidiary of such Person) paid, accrued or scheduled
to be paid or accrued during such period times (y) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount and amortization or write-off
of deferred financing costs, (b) the net costs under Interest Swap Obligations,
(c) all capitalized interest and (d) the interest portion of any deferred
payment ob-
<PAGE>
-9-
ligation; and (ii) the interest component of Capitalized Lease Obligations paid,
accrued and/or scheduled to be paid or accrued by such Person and its Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP plus (y) cash dividends or distributions paid to such Person by any
other Person (the "Payor") other than a Restricted Subsidiary of the referent
Person, to the extent not otherwise included in Consolidated Net Income, which
have been derived from operating cash flow of the Payor; provided that there
--------
shall be excluded therefrom (a) after-tax gains from Asset Sales or abandonments
or reserves relating thereto, (b) after-tax items classified as extraordinary or
nonrecurring gains, (c) the net income of any Person acquired in a "pooling of
interests" transaction accrued prior to the date it becomes a Restricted
Subsidiary of the referent Person or is merged or consolidated with the referent
Person or any Restricted Subsidiary of the referent Person, (d) the net income
(but not loss) of any Restricted Subsidiary of the referent Person to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is restricted; provided, however, that the net income
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of Foreign Subsidiaries shall not be excluded in any calculation of Consolidated
Net Income of the Company as a result of application of this clause (d) if the
restriction on dividends or similar distribution results from consensual
restrictions, (e) the net income or loss of any Person, other than a Restricted
Subsidiary of the referent Person, except to the extent of cash dividends or
distributions paid to the referent Person or to a Wholly Owned Restricted
Subsidiary of the referent Person by such Person, (f) any restoration to income
of any contingency reserve, except to the extent that provision for such reserve
was made out of Consolidated Net Income accrued at any time following the Issue
Date, (g) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued), (h) in the case of a successor
to the referent Person by consolidation or merger or as a transferee of the
referent Person's assets, any earnings of the successor corporation prior to
such consolidation, merger or transfer of assets, (i) all gains or losses from
the cumulative effect of any change in accounting principles and (j) the net
amount of all Permitted Tax Distributions made during such period.
<PAGE>
-10-
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity (or equivalent) of such Person, determined on a
consolidated basis in accordance with GAAP, less (without duplication) amounts
attributable to Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for
any period, the aggregate depreciation, amortization and other non-cash charges
of such Person and its Restricted Subsidiaries reducing Consolidated Net Income
of such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).
"Continuing Directors" means, as of any date, the collective reference
to (i) all members of the Board of Directors of the Company who have held office
continuously since a date no later than the later of (x) twelve months prior to
the Company's initial public equity offering and (y) the Issue Date, and (ii)
all members of the Board of Directors of the Company who assumed office after
such date and whose appointment or nomination for election by the Company's
shareholders was approved by a vote of at least 50% of the Continuing Directors
in office immediately prior to such appointment or nomination or by the Huntsman
Group.
"Contribution Agreement" means the Contribution Agreement dated as of
April 15, 1999 (as amended and in effect on the Issue Date) between ICI,
Huntsman Specialty and Huntsman ICI Holdings LLC.
"Covenant Defeasance" has the meaning set forth in Section 8.01.
"Credit Facilities" means the senior secured Credit Agreement, dated
as of April 15, 1999 among the Company and the financial institutions party
thereto, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents). In each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented, extended or otherwise modified from time to time, and
any one or more debt facility, indenture or other agreement refinancing,
replacing (whether or not contemporaneously) or otherwise restructuring
(including increasing the amount of available borrowings thereunder (provided
that such increase in borrowings is permitted under Sec-
<PAGE>
-11-
tion 4.12) or making Restricted Subsidiaries of the Company a borrower,
additional borrower or guarantor thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether including any additional obligors or with the same or any other agent,
lender or group of lenders or with other financial institutions or lenders.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depositary" means DTC or the Common Depositary, as the case may be.
"Designated Senior Debt" means (i) Senior Debt under or in respect of
the Credit Facilities and (ii) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $100,000,000 and is specifically designated in the instrument evidencing
such Senior Debt as "Designated Senior Debt" by the Company.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Notes and to have satisfied all the obligations under this Indenture relating to
the Notes (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same upon compliance by the Company with the
provisions of Article Eight), except (i) the rights of the Holders of Notes to
receive, from the trust fund described in Article Eight, payment of the
principal of and the interest on such Notes when such payments are due, (ii) the
Company's obligations with respect to the Notes under Sections 2.03 through
2.07, 7.07 and 7.08 and (iii) the rights, powers, trusts, duties and immunities
of the Trustee hereunder.
<PAGE>
-12-
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Notes.
"Dollar Paying Agent" means an office or agency of the Company where
Dollar Notes may be presented for payment.
"Dollar Registrar" means an office or agency of the Company in the
borough of Manhattan, the City of New York, where Dollar Notes may be presented
for registration of transfer or exchange.
"Domestic Subsidiary" means any Subsidiary other than a Foreign
Subsidiary.
"DTC" means the Depository Trust Company, its nominees and successors.
"Equity Offering" has the meaning provided in paragraph 5 of the
Notes.
"euro" or "EU" means the currency introduced at the start of the third
stage of economic and monetary union pursuant to the Treaty of Rome establishing
the European Community, as amended by the Treaty on European Union, signed at
Maastricht on February 7, 1992.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.
"Euro Obligations" means non-callable government obligations of any
member nation of the European Union whose official currency is the Euro, rated
AAA or better by S&P and Aaa or better by Moodys.
"Euro Paying Agent" means an office or agency of the Company where
Euro Notes may be presented for payment.
"Euro Registrar" means an office or agency of the Company where Euro
Notes may be presented for registration of transfer or exchange.
"Event of Default" has the meaning provided in Section 6.01.
<PAGE>
-13-
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"Exchange Notes" means notes issued in exchange for the Notes pursuant
to the terms of the Registration Rights Agreement.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"Foreign Cash Equivalents" means (i) debt securities with a maturity
of 365 days or less issued by any member nation of the European Union,
Switzerland or any other country whose debt securities are rated by S&P and
Moody's A-1 or P-1, or the equivalent thereof (if a short-term debt rating is
provided by either) or at least AA or AA2, or the equivalent thereof (if a long-
term unsecured debt rating is provided by either) (each such jurisdiction, an
"Approved Jurisdiction") or any agency or instrumentality of an Approved
Jurisdiction, provided that the full faith and credit of the Approved
Jurisdiction is pledged in support of such debt securities or such debt
securities constitute a general obligation of the Approved Jurisdiction and (ii)
debt securities in an aggregate principal amount not to exceed $25 million with
a maturity of 365 days or less issued by any nation in which the Company or its
Restricted Subsidiaries have cash which is the subject of restrictions on export
or any agency or instrumentality of such nation, provided that the full faith
and credit of such nation is pledged in support of such debt securities or such
debt securities constitute a general obligation of such nation.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company
(other than a Guarantor) organized under the laws of, and conducting a
substantial portion of its business in, any jurisdiction other than the United
States or any state thereof or the District of Columbia.
"Funds" means the aggregate amount of U.S. Legal Tender and/or U.S.
Government Obligations (in the case of Dollar Notes) and euros and/or Euro
Obligations (in the case of the
<PAGE>
-14-
Euro Notes) deposited with the Trustee pursuant to Article Eight.
"GAAP" means generally accepted 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 or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Global Security" means a Regulation S Global Security (or
Unrestricted Global Security) or a Restricted Global Security.
"Guarantee" means the guarantee of a Guarantor of the obligations of
the Company under the Indenture and the Notes.
"Guarantor" means (i) each of TG, HICI Financial and Tioxide Americas,
Inc. and (ii) each of the Company's Restricted Subsidiaries that in the future
executes a supplemental indenture in which such Restricted Subsidiary agrees to
be bound by the terms of this Indenture as a Guarantor; provided that any Person
--------
constituting a Guarantor as described above shall cease to constitute a
Guarantor when its respective Guarantee is released in accordance with the terms
of this Indenture.
"Guarantor Senior Debt" means with respect to any Guarantor, (i) the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of a Guarantor, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Guarantee of such Guarantor. Without limiting the generality of the foregoing,
"Guarantor Senior Debt" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on, and all other amounts owing in respect of, (w) all monetary obligations of
every na-
<PAGE>
-15-
ture of a Guarantor in respect of the Credit Facilities, including, without
limitation, obligations to pay principal and interest, reimbursement obligations
under letters of credit, fees, expenses and indemnities, (x) all monetary
obligations of every nature of a Guarantor evidenced by a promissory note and
which is, directly or indirectly, pledged as security for the obligations of the
Company under the Credit Facilities, (y) all Interest Swap Obligations and (z)
all obligations under Currency Agreements, in each case whether outstanding on
the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor
Senior Debt" shall not include (i) any Indebtedness of such Guarantor to a
Restricted Subsidiary of such Guarantor or any Affiliate of such Guarantor or
any of such Affiliate's Subsidiaries other than as described in clause (x), (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer
or employee of such Guarantor or any Restricted Subsidiary of such Guarantor
(including, without limitation, amounts owed for compensation), (iii)
Indebtedness to trade creditors and other amounts incurred in connection with
obtaining goods, materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal, state, local or other
taxes owed or owing by such Guarantor, (vi) Indebtedness incurred in violation
of Section 4.12, (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of such
Guarantor.
"HICI Financial" means Huntsman ICI Financial LLC, a Delaware limited
liability company, or any Wholly Owned Restricted Subsidiary of the Company
which complies with all covenants applicable to HICI Financial under this
Indenture.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Holdings" means Huntsman ICI Holdings LLC, a Delaware limited
liability company.
"Holdings U.K." means Huntsman ICI Holdings (UK), a private unlimited
company incorporated under the laws of England and Wales, or any direct Wholly
Owned Restricted Subsidiary of the Company which complies with all covenants
applicable to Holdings U.K. under this Indenture.
"Holdings Zero Coupon Notes" means, collectively, the Senior Discount
Notes due 2009 and the Subordinated Discount
<PAGE>
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Notes due 2009 issued by Holdings, and any notes into which any such Holdings
Zero Coupon Notes may be exchanged or replaced pursuant to the terms of the
indenture pursuant to which such Holding Zero Coupon Notes are issued.
"Huntsman Affiliate" means Huntsman Corporation or any of its
Affiliates (other than Holdings and its Subsidiaries).
"Huntsman Corporation" means Huntsman Corporation, a Utah corporation.
"Huntsman Specialty" means Huntsman Specialty Chemicals Corporation, a
Utah corporation.
"ICI Affiliate" means ICI or any Affiliate of ICI.
"Indebtedness" means with respect to any Person, without duplication,
(i) all Obligations of such Person for borrowed money, (ii) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all Capitalized Lease Obligations of such Person, (iv) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business that are not overdue by 90 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (i) through (v) above and clause (viii)
below, (vii) all Obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the lesser of
the fair market value of such property or asset or the amount of the Obligation
so secured, (viii) all Obligations under Currency Agreements, Commodity
Agreements and Interest Swap Agreements of such Person and (ix) all Disqualified
Capital Stock issued by such Person with the amount of Indebtedness represented
by such Disqualified Capital Stock being equal to the greater of its voluntary
or involuntary liquidation preference and its maximum fixed repurchase price,
but excluding accrued dividends, if any. For purposes hereof, the "maximum
fixed repurchase price" of any Disqualified Capital Stock which does not have a
fixed repurchase price
<PAGE>
-17-
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock; provided, however, that notwithstanding the
-------- -------
foregoing, "Indebtedness" shall not include (i) advances paid by customers in
the ordinary course of business for services or products to be provided or
delivered in the future, (ii) deferred taxes or (iii) unsecured indebtedness of
the Company and/or its Restricted Subsidiaries incurred to finance insurance
premiums in a principal amount not in excess of the insurance premiums to be
paid by the Company and/or its Restricted Subsidiaries for a three year period
beginning on the date of any incurrence of such indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Purchasers" means Goldman, Sachs & Co, Deutsche Bank
Securities Inc., Chase Securities Inc., and Warburg Dillon Read LLC.
"Institutional Accredited Investor" means an accredited investor
within the meaning of Rule 501(a)(1), (2), (3), OR (7) under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate
<PAGE>
-18-
of interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
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 by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by the
Company and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. For the purposes of Section 4.03, (i)
"Investment" shall include and be valued at the fair market value of the net
assets of any Restricted Subsidiary at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the fair market value
of the net assets of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the original cost of such Investment plus the
cost of all additional Investments by the Company or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced by
the payment of dividends or distributions in connection with such Investment or
any other amounts received in respect of such Investment; provided that no such
--------
payment of dividends or distributions or receipt of any such other amounts shall
reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Common Stock of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, the Company no longer owns, directly or indirectly, greater than
50% of the outstanding Common Stock of such Restricted Subsidiary, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Notes.
<PAGE>
-19-
"Legal Holiday" has the meaning provided in Section 13.07.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest), but not including any interest in
accounts receivable and related assets conveyed by the Company or any of its
Subsidiaries in connection with any Qualified Securitization Transaction.
"LPC" means Louisiana Pigment Company.
"Legal Defeasance" has the meaning given to such term in Section 8.01.
"Maturity Date" means July 1, 2009.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash, Cash Equivalents or Foreign Cash Equivalents
including payments in respect of deferred payment obligations when received in
the form of cash, Cash Equivalents or Foreign Cash Equivalents (other than the
portion of any such deferred payment constituting interest) received by the
Company or any of its Restricted Subsidiaries from such Asset Sale net of (a)
all 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 after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is required to be
repaid in connection with such Asset Sale (d) the decrease in proceeds from
Qualified Securitization Transactions which results from such Asset Sale and (e)
appropriate amounts to be provided by the Company or any Restricted Subsidiary,
as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"Net Proceeds Offer" has the meaning provided in Section 4.15.
<PAGE>
-20-
"Net Proceeds Offer Amount" has the meaning provided in Section 4.15.
"Net Proceeds Offer Payment Date" has the meaning provided in Section
4.15.
"Net Proceeds Offer Trigger Date" has the meaning provided in Section
4.15.
"Non-U.S. Person" has the meaning assigned to such term in Regulation
S.
"Notes" means, collectively, the Notes and the Exchange Notes, treated
as a single class of securities under this Indenture, except as set forth
herein.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Financial Director, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 13.04 and 13.05, as they relate to the making of an
Officers' Certificate, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
13.04 and 13.05, as they relate to the giving of an Opinion of Counsel, and
delivered to the Trustee.
"Organizational Documents" means, with respect to any Person, such
Person's memorandum, articles or certificate of incorporation, bylaws,
partnership agreement, joint venture agreement, limited liability company
agreement or other similar governing documents and any document setting forth
the designation, amount and/or relative rights, limitations and preferences of
any class or series of such Person's Capital Stock.
<PAGE>
-21-
"Participants" means (i) with respect to the Dollar Notes,
institutions that have accounts with DTC or its nominee and (ii) with respect to
the Euro Notes, institutions that have accounts with Euroclear or their
respective nominees.
"Paying Agent" has the meaning provided in Section 2.03, except that,
during the continuance of a Default or Event of Default and for the purposes of
Articles Three and Eight and Sections 4.14 and 4.15, the Paying Agent shall not
be the Company or any Affiliate of the Company.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the Notes, this Indenture and the
Guarantees;
(ii) Indebtedness incurred pursuant to the Credit Facilities
(including the Notes) in an aggregate principal amount not exceeding $2.4
billion at any one time outstanding, less the amount of any payments made
by the Company under the Credit Facilities with the Net Cash Proceeds of
any Asset Sale (which are accompanied by a corresponding permanent
commitment reduction) pursuant to clause (iii)(A) of the first sentence of
Section 4.15;
(iii) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of any
prepayments with Net Cash Proceeds of any Asset Sale (which are accompanied
by a corresponding permanent commitment reduction) pursuant to Section
4.15;
(iv) Interest Swap Obligations of the Company relating to
Indebtedness of the Company or any of its Restricted Subsidiaries (or
Indebtedness which the Company or any its Restricted Subsidiaries
reasonably intends to incur within six months) and Interest Swap
Obligations of any Restricted Subsidiary of the Company relating to
Indebtedness of such Restricted Subsidiary (or Indebtedness which such
Restricted Subsidiary reasonably intends to incur within six months);
provided, however, that such Interest Swap Obligations are entered into to
-------- -------
protect the Company and its Restricted Subsidiaries from fluctuation in
interest rates on Indebtedness permitted under the Indenture to the extent
the notional principal amount of such Interest Swap Obligation, when
Incurred, does not ex-
<PAGE>
-22-
ceed the principal amount of the Indebtedness to which such Interest Swap
Obligation relates;
(v) Indebtedness under Commodity Agreements and Currency
Agreements; provided that in the case of Currency Agreements which relate
--------
to Indebtedness, such Currency Agreements do not increase the Indebtedness
of the Company and its Restricted Subsidiaries outstanding other than as a
result of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder;
(vi) Indebtedness of a Restricted Subsidiary of the Company to the
Company or to a Restricted Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Restricted Subsidiary of the
Company, in each case subject to no Lien held by a Person other than the
Company or a Restricted Subsidiary of the Company (other than the pledge of
intercompany notes under the Credit Facilities); provided that if as of any
--------
date any Person other than the Company or a Restricted Subsidiary of the
Company owns or holds any such Indebtedness or holds a Lien in respect of
such Indebtedness (other than the pledge of intercompany notes under the
Credit Facilities), such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the issuer of such
Indebtedness;
(vii) Indebtedness of the Company to a Restricted Subsidiary for
so long as such Indebtedness is held by a Restricted Subsidiary, in each
case subject to no Lien (other than Liens securing intercompany notes
pledged under the Credit Facilities); provided that (a) any Indebtedness of
the Company to any Restricted Subsidiary (other than pursuant to notes
pledged under the Credit Facilities) is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under this
Indenture and the Notes and (b) if as of any date any Person other than a
Restricted Subsidiary of the Company owns or holds any such Indebtedness or
any Person holds a Lien in respect of such Indebtedness (other than pledges
securing the Credit Facilities), such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of day-
<PAGE>
-23-
light overdrafts) drawn against insufficient funds in the ordinary course
of business; provided, however, that such Indebtedness is extinguished
-------- -------
within two business days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations in
connection with self-insurance or similar requirements in the ordinary
course of business;
(x) Refinancing Indebtedness;
(xi) Indebtedness arising from agreements of the Company or a
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred in connection with the
disposition of any business, assets or Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability in respect of
--------
all such Indebtedness shall at no time exceed the gross proceeds actually
received by the Company and the Subsidiary in connection with such
disposition;
(xii) Obligations in respect of performance bonds and completion,
guarantee, surety and similar bonds provided by the Company or any
Restricted Subsidiary in the ordinary course of business;
(xiii) guarantees by the Company or a Restricted Subsidiary of
Indebtedness incurred by the Company or a Restricted Subsidiary so long as
the incurrence of such Indebtedness by the Company or any such Restricted
Subsidiary is otherwise permitted by the terms of the Indenture;
(xiv) Indebtedness of the Company or any Restricted Subsidiary
incurred in the ordinary course of business not to exceed $35 million at
any time outstanding (A) representing Capitalized Lease Obligations or (B)
constituting purchase money Indebtedness incurred to finance property or
assets of the Company or any Restricted Subsidiary of the Company acquired
in the ordinary course of business; provided, however, that such purchase
-------- -------
money Indebtedness shall not exceed the cost of such property or assets and
<PAGE>
-24-
shall not be secured by any property or assets of the Company or any
Restricted Subsidiary of the Company other than the property and assets so
acquired;
(xv) Indebtedness of Foreign Subsidiaries to the extent that the
aggregate outstanding amount of Indebtedness incurred by such Foreign
Subsidiaries under this clause (xv) does not exceed the greater of (x) $50
million and (y) at any one time an amount equal to the sum of (A) 80% of
the consolidated book value of the accounts receivable of all Foreign
Subsidiaries and (B) 60% of the consolidated book value of the inventory of
all Foreign Subsidiaries;
(xvi) Indebtedness of the Company and its Domestic Subsidiaries
pursuant to overdraft lines or similar extensions of credit in an aggregate
amount not to exceed $20 million at any one time outstanding and
Indebtedness of Foreign Subsidiaries pursuant to overdraft lines or similar
extensions of credit in an aggregate principal amount not to exceed $60
million at any one time outstanding;
(xvii) the incurrence by a Securitization Entity of Indebtedness
in a Qualified Securitization Transaction that is not recourse to the
Company or any Subsidiary of the Company (except for Standard
Securitization Undertakings);
(xviii) so long as an Event of Default or Potential Event of
Default exists; Indebtedness of the Company to BASF or its Affiliates in an
aggregate outstanding amount not in excess of $50 million for the purposes
of financing up to 50% of the cost of installation, construction or
improvement of property relating to the manufacture of PO/MTBE;
(xix) Indebtedness of the Company to a Huntsman Affiliate or an
ICI Affiliate constituting Subordinated Indebtedness;
(xx) Indebtedness consisting of take-or-pay obligations contained
in supply agreements entered into in the ordinary course of business;
(xxi) Indebtedness of the Company to any of its Subsidiaries
incurred in connection with the purchase of accounts receivable and related
assets by the Company from any such Subsidiary which assets are
subsequently conveyed
<PAGE>
-25-
by the Company to a Securitization Entity in a Qualified Securitization
Transaction; and
(xxii) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $25 million at
any one time outstanding.
"Permitted Investments" means (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Restricted Subsidiary of the Company or that
will merge or consolidate into the Company or a Restricted Subsidiary of the
Company; provided that this clause (i) shall not permit any investment by the
--------
Company or a Domestic Restricted Subsidiary in a Foreign Subsidiary consisting
of a capital contribution by means of a transfer of property other than cash,
Cash Equivalents or Foreign Cash Equivalents other than transfers of property of
nominal value in the ordinary course of business; (ii) Investments in the
Company by any Restricted Subsidiary of the Company; provided that any
--------
Indebtedness evidencing such Investment is unsecured and subordinated (other
than pursuant to intercompany notes pledged under the Credit Facilities),
pursuant to a written agreement, to the Company's obligations under the Notes
and this Indenture; (iii) investments in cash and Cash Equivalents; (iv) loans
and advances to employees and officers of the Company and its Restricted
Subsidiaries in the ordinary course of business for travel, relocation and
related expenses; (v) Investments in Unrestricted Subsidiaries or joint ventures
not to exceed $75 million, plus (A) the aggregate net after-tax amount returned
in cash on or with respect to any Investments made in Unrestricted Subsidiaries
and joint ventures whether through interest payments, principal payments,
dividends or other distributions or payments, (B) the net after-tax cash
proceeds received by the Company or any Restricted Subsidiary from the
disposition of all or any portion of such Investments (other than to a
Restricted Subsidiary of the Company), (C) upon redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the fair market value of such Subsidiary
and (D) the net cash proceeds received by the Company from the issuance of
Specified Venture Capital Stock; (vi) Investments in securities received
pursuant to any plan of reorganzition or similar arrangement upon the bankruptcy
or insolvency of any debtors of the Company or its Restricted Subsidiaries;
(vii) Investments made by the Company or its Restricted Subsidiaries as a result
of consideration received in connection with an Asset Sale made in compliance
with Section 4.15; (viii) Investments existing on the Issue Date; (ix) any
Investment by the Company or a Wholly Owned Subsidiary of
<PAGE>
-26-
the Company in a Securitization Entity or any Investment by a Securitization
Entity in any other Person in connection with a Qualified Securitization
Transaction; provided that any Investment in a Securitization Entity is in the
form of a Purchase Money Note or an equity interest; (x) Investments by the
Company in Rubicon and LPC (each a "Joint Venture"), so long as: (A) such Joint
Venture does not have any Indebtedness for borrowed money at any time on or
after the date of such Investment (other that Indebtedness owing to the equity
holders of such Joint Venture), (B) the documentation govering such Joint
Venture does not contain a restriction on distributions to the Company, and (C)
such Joint Venture is engaged only in the business of manufacturing product used
or marketed by the Company and its Restricted Subsidiaries and/or the joint
venture partner, and business reasonably related thereto; (xi) Investments by
Foreign Subsidiaries in Foreign Cash Equivalents; (xii) loans to Holding for the
purposes described in clause (7) of the second paragraph of Section 4.03 which,
when aggregated with the payment made under such clause, will not exceed $3
million in any fiscal year; (xiii) any Indebtendess of the Company to any of its
Subsidiaries incurred in connection with the purchase of accounts receivable and
related assets by the Company from any such Subsidiary which assets are
subsequently conveyed by the Company to a Securitization Entity in a Qualified
Securitization Transaction; and (xiv) additional Investments in an aggregate
amount not exceeding $25 million at any one time outstanding.
"Permitted Junior Securities" means: (1) Capital Stock in the Company
or any Guarantor; or (2) debt securities of the Company or any Guarantor that
(A) are subordinated to all Senior Debt and any debt securities issued in
exchange for Senior Debt to substantially the same extent as, or to a greater
extent than, the Notes and the Guarantees are subordinated to Senior Debt
pursuant to the terms of the Indenture and (B) have a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of the
Notes.
"Permitted Tax Distribution" for any fiscal year means any payments in
compliance with clause (6) of the second paragaph under Section 4.03.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
<PAGE>
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"Physical Notes" shall have the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth on Exhibit A-1.
-----------
"pro forma" means, unless otherwise provided herein, with respect to
any calculation made or required to be made pursuant to the terms of this
Indenture, a calculation in accordance with Article 11 of Regulation S-X
promulgated under the Securities Act.
"Purchase Money Note" means a promissory note evidencing a line of
credit, or evidencing other Indebtedness owed to the Company or any Restricted
Subsidiary in connection with a Qualified Securitization Transaction, which note
shall be repaid from cash available to the maker of such note, other than
amounts required to be established as reserves, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts paid in connection with the purchase of newly generated accounts
receivable.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" has the meaning specified in
Rule 144A.
"Qualified Securitization Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its
Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell,
convey or otherwise transfer pursuant to customary terms to (a) a Securitization
Entity (in the case of a transfer by the Company or any of its Subsidiaries) and
(b) any other Person (in the case of transfer by a Securitization Entity), or
may grant a security interest in any accounts receivable (whether now existing
or arising or acquired in the future) of the Company or any of its Subsidiaries,
and any assets related thereto including, without
<PAGE>
-28-
limitation, all collateral securing such accounts receivable, all contracts and
contract rights and all guarantees or other obligations in respect of such
accounts receivable, proceeds of such accounts receivable and other assets
(including contract rights) which are customarily transferred or in respect of
which security interests are customarily granted in connection with asset
securitization transactions involving accounts receivable.
"Record Date" has the meaning provided in Section 2.05.
"Redemption Date" means, with respect to any Notes, the Maturity Date
of such Note or the earlier date on which such Note is to be redeemed by the
Company pursuant to paragraph 5 of the Notes.
"Redemption Price" has the meaning provided in Section 3.03.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance with
Section 4.12 or Indebtedness described in clause (iii) of the definition of
"Permitted Indebtedness", in each case that does not (1) result in an increase
in the aggregate principal amount of Indebtedness of such Person as of the date
of such proposed Refinancing (plus the amount of any premium required to be paid
under the terms of the instrument governing such Indebtedness and plus the
amount of reasonable expenses incurred by the Company in connection with such
Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
--------
Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Notes, then
such Refinancing Indebtedness shall be subordinate to the Notes at least
<PAGE>
-29-
to the same extent and in the same manner as the Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 30, 1999 among the Company, the Guarantors and the
Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" has the meaning specified in Section
2.01.
"Replacement Assets" has the meaning provided in Section 4.15.
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Designated Senior Debt; provided that if,
--------
and for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times constitute
the holders of a majority in outstanding principal amount of such Designated
Senior Debt in respect of any Designated Senior Debt.
"Restricted Dollar Denominated Global Security" means a Restricted
Global Security representing Dollar Notes.
"Restricted Euro Denominated Global Securities" means a Restricted
Global Security representing Euro Notes.
"Restricted Global Security" has the meaning specified in Section
2.01.
"Restricted Security" means a Note that constitutes a "restricted
security" within the meaning of Rule 144(a)(3) under the Securities Act;
provided, however, that the Trustee shall be entitled to request and
- -------- -------
conclusively rely on an Opinion of Counsel with respect to whether any Note
constitutes a Restricted Security.
"Restricted Subsidiary" of any Person means any Subsidiary of such
Person which at the time of determination is not an Unrestricted Subsidiary.
<PAGE>
-30-
"Rubicon" means Rubicon, Inc., a joint venture between ICI Americas
Inc. and Uniroyal Inc.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such property.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Securitization Entity" means a Wholly Owned Subsidiary of the Company
(or another Person in which the Company or any Subsidiary of the Company makes
an Investment and to which the Company or any Subsidiary of the Company
transfers accounts receivable or equipment and related assets) which engages in
no activities other than in connection with the financing of accounts receivable
or equipment and which is designated by the Board of Directors of the Company
(as provided below) as a Securitization Entity (a) no portion of the
Indebtedness or any other Obligations (contingent or otherwise) of which (i) is
guaranteed by the Company or any Subsidiary of the Company (other than the
Securitization Entity)(excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness)) pursuant to Standard
Securitization Undertakings, (ii) is recourse to or obligates the Company or any
Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property or asset of the
Company or any Subsidiary of the Company (other than the Securitization Entity),
directly or indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings and other than any
interest in the accounts receivable or equipment and related assets being
financed (whether in the form of any equity interest in such assets or
subordinated indebtedness payable primarily from such financed assets) retained
or acquired by the Company or any Subsidiary of the Company, (b) with which
neither the Company nor any Subsidiary of the Company has any material contract,
agreement, arrangement or understanding other than on terms no less favorable to
the Company or such Subsidiary than those that might be obtained at the time
from Persons that are not Affiliates of the Company, other than fees payable in
the
<PAGE>
-31-
ordinary course of business in connection with servicing receivables of such
entity, and (c) to which neither the Company nor any Subsidiary of the Company
has any obligation to maintain or preserve such entity's financial condition or
cause such entity to achieve certain levels of operating results. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
officers' certificate certifying that such designation complied with the
foregoing conditions.
"Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, "Senior Debt" shall also include the principal of, premium, if
any, interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all monetary
obligations of every nature of the Company under the Credit Facilities,
including, without limitation, obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) all Obligations under
Currency Agreements and Commodity Agreements, in each case whether outstanding
on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior
Debt" shall not include (i) any Indebtedness of the Company to a Restricted
Subsidiary of the Company or any Affiliate of the Company or any of such
Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of the Company or any Subsidiary of
the Company (including, without limitation, amounts owed for compensation),
(iii) Indebtedness to trade creditors and other amounts incurred in connection
with obtaining goods, materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal, state, local or other
taxes owed or owing by the Company, (vi) Indebtedness incurred in violation of
the
<PAGE>
-32-
provisions set forth under Section 4.12, (vii) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title 11,
United States Code, is without recourse to the Company and (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of the Company.
"Significant Subsidiary" means any Restricted Subsidiary of the
Company which, at the date of determination, is a "Significant Subsidiary" as
such term is defined in Regulation S-X under the Exchange Act.
"Specified Venture Capital Stock" means Qualified Capital Stock of the
Company or Holdings issued to a Person who is not an Affiliate of the Company
and the proceeds from the issuance of which are applied within 180 days after
the issuance thereof to an Investment in an Unrestricted Subsidiary or joint
venture.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company which are reasonably customary in an accounts
receivable securitization transaction.
"Subordinated Indebtedness" means Indebtedness of the Company or any
Guarantor which is expressly subordinated in right of payment to the Notes or
the Guarantee of such Guarantor, as the case may be.
"Subsidiary," with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Tax Sharing Agreement" means the provisions contained in the Limited
Liability Company Agreements of the Company and Holdings as in existence on the
Issue Date relating to distributions to be made to the members thereof with
respect to such members' income tax liabilities.
"TG" means Tioxide Group, or any direct Wholly Owned Restricted
Subsidiary of the Company which complies with all covenants applicable to TG
under this Indenture.
<PAGE>
-33-
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb), as amended, as in effect on the date hereof, except as otherwise
provided in Section 9.03.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters or, in the
case of a successor trustee, an officer assigned to the department, division or
group performing the corporate trust work of such successor.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"UK Holdco Note" means that certain unsecured promissory note issued
by Holdings U.K. in favor of HICI Financial.
"Unrestricted Global Security" has the meaning set forth in Section
2.01.
"Unrestricted Notes" means one or more Notes that do not and are not
required to bear the Private Placement Legend in the form set forth in Exhibit
-------
A-3 and A-4, including, without limitation, the Exchange Notes.
- -----------
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of
such Person that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary in the manner provided below, and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Company or any other Subsidiary
of the Company that is not a Subsidiary of the Subsidiary to be so designated;
provided that (x) the Company certifies to the Trustee that such designation
complies with Section 4.03 and (y) each Subsidiary to be so designated and each
of its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, the Company is able to incur at least $1.00 of additional
Indebtedness (other
<PAGE>
-34-
than Permitted Indebtedness) in compliance with Section 4.12 and (y) immediately
before and immediately after giving effect to such designation, no Default or
Event of Default shall have occurred and be continuing. Any such designation by
the Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the Board Resolution giving effect to such designation and
an officers' certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities (other than in the case of
a Foreign Subsidiary, directors' qualifying shares or an immaterial amount of
shares owned by other Persons pursuant to applicable law) are owned by such
Person or any Wholly Owned Subsidiary of such Person; provided, however, that
-------- -------
each of TG and Holdings U.K. shall be deemed to Wholly Owned Subsidiaries.
SECTION 1.02. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, that portion
of such provision that is required to be incorporated for this Indenture to be
qualified under the TIA is incorporated by reference in, and made a part of,
this Inden-
<PAGE>
-35-
ture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by the TIA by reference to another statute or defined by SEC 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) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP as in effect on the Issue Date;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular; and
(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.
<PAGE>
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ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
---------------
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A-1 (in the case
-----------
of Dollar Notes) and A-2 (in the case of Euro Notes). The Exchange Notes and
the Trustee's certificate of authentication relating thereto shall be
substantially in the form of Exhibit A-3 (in the case of Dollar Notes) and A-4
-----------
(in the case of Euro Notes). The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Notes and any notation, legend or endorsement thereon.
Each Note shall be dated the date of issuance and shall show the date of its
authentication. Each Note shall have an executed Guarantee from each of the
Guarantors endorsed thereon substantially in the form of Exhibit E hereto.
---------
The terms and provisions contained in the Notes annexed hereto as
Exhibit A, shall constitute, and are hereby expressly made, a part of this
- ---------
Indenture and, to the extent applicable, the Company, the Guarantors and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Restricted Global Securities. (i) The Notes shall be issued in the
----------------------------
form of one or more global Securities (the "Restricted Global Security") in
definitive, fully registered form without interest coupons, with the legend
provided for in Exhibit B hereto, except as otherwise permitted herein.
(ii) Each Restricted Dollar Denominated Global Security shall be
registered in the name of DTC or its nominee and deposited with the Trustee, at
its Corporate Trust Office, as custodian for DTC, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of a Restricted Dollar Denominated Global Security may from
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC, in connection with a corresponding decrease or
increase in the aggregate principal amount of a Regulation S Dollar Denominated
Global Security or an Unrestricted Dollar Denominated Global Security, as
hereinafter provided.
<PAGE>
-37-
(iii) Each Restricted Euro Denominated Global Security shall be
registered in the name of the Common Depositary or its nominee and deposited
with the Common Depositary, on behalf of Euroclear, duly executed by the Company
and authenticated by the Trustee as hereinafter provided for credit to the
account of Euroclear. The aggregate principal amount of a Restricted Euro
Denominated Global Security may from time to time be increased or decreased by
adjustments made on the records of the Common Depositary, in connection with a
corresponding decrease or increase in the aggregate principal amount of an
Unrestricted Euro Denominated Global Security, as hereinafter provided.
Regulation S Global Securities. (i) Dollar Notes offered and sold in
------------------------------
reliance on Regulation S shall be initially issued in the form of one or more
Global Securities in definitive, fully registered form without interest coupons,
with such applicable legends as are provided for in Exhibit A hereto, except as
otherwise permitted herein. Until such time as the Restricted Period (as
defined below) shall have terminated, such Global Securities shall be referred
to herein as the "Regulation S Global Security." After such time as the
Restricted Period shall have terminated, such Regulation S Global Securities
shall be referred to herein, as the "Unrestricted Global Securities."
(ii) Each Regulation S Dollar Denominated Global Security and
Unrestricted Dollar Denominated Global Security shall be registered in the name
of DTC or its nominee and deposited with the Trustee, at its Corporate Trust
Office, as custodian for DTC, duly executed by the Company and authenticated by
the Trustee as hereinafter provided, for credit to the respective accounts at
DTC of the depositaries for Euroclear or Cedelbank. The aggregate principal
amount of each Regulation S Dollar Denominated Global Security (or Unrestricted
Dollar Denominated Global Security) may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
DTC, in connection with a corresponding decrease or increase in the aggregate
principal amount of a Restricted Dollar Denominated Global Security, as
hereinafter provided.
Notes issued in exchange for interests in a Global Note pursuant to
Section 2.16 may be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A-1, A-2, A-3 or
----------- --- ---
A-4 (the "Physical Notes").
- ---
<PAGE>
-38-
SECTION 2.02. Execution and Authentication;
Aggregate Principal Amount.
-----------------------------
An Officer who shall have been duly authorized by all requisite
corporate actions shall attest to the Notes for the Company, and one officer
shall sign the Guarantees for the Guarantors by manual or facsimile signature.
If an Officer whose signature is on a Note or a Guarantee, as the case
may be, was an Officer at the time of such execution but no longer holds that
office or position at the time the Trustee authenticates the Note, the Note
shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature of
such representative of the Trustee shall be conclusive evidence that the Note
has been authenticated under this Indenture.
The Trustee shall authenticate (i) Dollar Notes for original issue in
an aggregate principal amount not to exceed $600,000,000 and Euro Notes for
original issue in an aggregate principal amount not to exceed EU200,000,000, and
(ii) Unrestricted Notes from time to time only in exchange for a like principal
amount of Notes, upon a written order of the Company in the form of an Officers'
Certificate of the Company. Each such written order shall specify the amount of
Notes to be authenticated and the date on which the Notes are to be
authenticated, whether such Notes are Unrestricted Notes and whether (subject to
Section 2.01) the Notes are to be issued as Physical Notes or Global Notes and
such other information as the Trustee may reasonably request. The aggregate
principal amount of Dollar Notes and Euro Notes outstanding at any time may not
exceed $600,000,000 and EU200,000,000, respectively, except as provided in
Sections 2.07 and 2.08.
Notwithstanding the foregoing, except as provided in Section 9.02, all
Notes issued under this Indenture shall vote and consent together on all matters
(as to which any of such Notes may vote or consent) as one class and no series
of Notes will have the right to vote or consent as a separate class on any
matter. For purposes of voting, the aggregate principal amount of outstanding
Euro Notes will be calculated using the noon buying rate in The City of New York
for cable transfers in euros as certified for customs purposes by the Federal
Reserve Bank of New York (the "Noon Buying Rate") of $1.0323 per euro on June
22, 1999.
<PAGE>
-39-
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as an Agent to deal with the Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 or EU1,000 and any integral multiple
thereof.
SECTION 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York), where
(a) Notes may be presented or surrendered for registration of transfer or for
exchange ("Registrar"), (b) Notes may be presented or surrendered for payment
("Paying Agent") and (c) notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company, upon
notice to the Trustee, may have one or more co-Registrars and one or more
additional paying agents reasonably acceptable to the Trustee. The term "Paying
Agent" includes any additional paying agent. The Company may change the Paying
Agent or Registrar without notice to any Holder.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar and Paying
Agent until such time as the Trustee has resigned or a successor has been
appointed. Any of the Registrar, the Paying Agent or any other agent may resign
upon 30 days' notice to the Company.
<PAGE>
-40-
SECTION 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Company or any other obligor on the Notes),
and shall notify the Trustee of any default by the Company (or any other obligor
on the Notes) in making any such payment. The Company at any time may require a
Paying Agent to distribute all assets held by it to the Trustee and account for
any assets 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 distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent and the completion of any
accounting required to be made hereunder, the Paying Agent shall have no further
liability for such assets.
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
the Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee five (5) Business
Days before each Interest Payment Date and at such other times as the Trustee
may request in writing a list as of the applicable Record Date and in such form
as the Trustee may reasonably require of the names and addresses of the Holders,
which list may be conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
---------------------
Subject to Sections 2.15 and 2.16, when Notes are presented to the
Registrar or a co-Registrar with a request to register the transfer of such
Notes or to exchange such Notes for an equal principal amount of Notes of other
authorized denominations, the Registrar or co-Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Notes presented or surrendered
-------- -------
for transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney
<PAGE>
-41-
duly authorized in writing. To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Notes at the
Registrar's or co-Registrar's written request. No service charge shall be made
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith. 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 pursuant to Section 3.03 and paragraph 5 of the 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 Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of a beneficial interest in a Global Note shall, by
acceptance of such beneficial interest, agree that transfers of beneficial
interests in such Global Notes may be effected only through a book entry system
maintained by the Holder of such Global Note (or its agent), and that ownership
of a beneficial interest in the Note shall be required to be reflected in a book
entry system.
SECTION 2.07. Replacement Notes.
-----------------
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note and
each of the Guarantors shall execute a Guarantee thereon if the Trustee's
requirements are met. If required by the Trustee or the Company, such Holder
must provide an indemnity bond or other indemnity, sufficient in the reasonable
judgment of the Company, the Guarantors and the Trustee, to protect the Company,
the Guarantors, the Trustee or any Agent from any loss which any of them may
suffer if a Note is replaced. The Company and the Trustee may charge such
Holder for its reasonable out-of-pocket expenses in replacing a Note, including
reasonable fees and expenses of counsel. Every replacement Note shall
constitute an additional obligation of the Company and every replacement
Guarantee shall constitute an additional obligation of the Guarantors.
SECTION 2.08. Outstanding Notes.
-----------------
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled
<PAGE>
-42-
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. Subject to Section 2.09, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender, U.S. Government Obligations, or a combination thereof (in the
case of Dollar Notes) or euros, Euro Obligations, or a combination thereof (in
the case of Euro Notes) sufficient to pay all of the principal, premium, if any,
and interest due on the Notes payable on that date and is not prohibited from
paying such money to the Holders thereof pursuant to the terms of this
Indenture, then on and after that date such Notes cease to be outstanding and
interest on them ceases to accrue.
If on any date which is no earlier than 60 days prior to a Redemption
Date, the Company has irrevocably deposited in trust with the Trustee U.S. Legal
Tender, U.S. Government Obligations or a combination thereof (in the case of
Dollar Notes) or euros, Euro Obligations or a combination thereof (in the case
of Euro Notes) in an amount sufficient to pay all of the principal, premium, if
any, and interest due on the Notes payable on such Redemption Date, together
with irrevocable instructions from the Company directing the Trustee to apply
such funds to the payment thereof on such Redemption Date pursuant to the terms
of this Indenture, then and after the date of such deposit such Notes shall be
deemed to be not outstanding for purposes of determining whether the Holders of
the required aggregate principal amount of Notes have concurred in any
direction, waiver, consent or notice which requires the consent of at least a
majority in aggregate principal amount of Notes then outstanding.
SECTION 2.09. Treasury Notes.
--------------
In determining whether the Holders of the required aggregate principal
amount of Notes have concurred in any direction, waiver, consent or notice,
Notes owned by the Company or an Affiliate shall be considered as though they
are not out-
<PAGE>
-43-
standing, except that for the purposes 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 considered. The
Company shall notify the Trustee, in writing, when it or any of its Affiliates
repurchases or otherwise acquires Notes, of the aggregate principal amount of
such Notes so repurchased or otherwise acquired.
SECTION 2.10. [intentionally omitted]
---------------------
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 transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel and, at the written direction of the Company, shall
dispose and deliver evidence of disposal of all Notes surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07, the Company may not
issue new Notes to replace Notes that the Company has paid or delivered to the
Trustee for cancellation. If the Company shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
------------------
The Company will pay interest on overdue principal from time to time
on demand at the rate of interest then borne by the Dollar Notes or Euro Notes,
as applicable. The Company shall, to the extent lawful, pay interest on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the rate of interest then borne by the Dollar Notes or
Euro Notes, as applicable. Interest on the Notes will be computed on the basis
of a 360-day year comprised of twelve 30-day months, and, in the case of a
partial month, the actual number of days elapsed.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest
<PAGE>
-44-
or the next succeeding Business Day if such date is not a Business Day. At least
15 days before the subsequent special record date, the Company shall mail to
each Holder, with a copy to the Trustee, a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(a) shall be paid to
Holders as of the regular record date for the Interest Payment Date for which
interest has not been paid.
SECTION 2.13. CUSIP Numbers.
-------------
The Company in issuing the Notes may use one or more "CUSIP" and/or
"ISIN" numbers, and if so, the Trustee shall use the CUSIP and/or "ISIN" numbers
in notices of redemption or exchange as a convenience to Holders; provided,
--------
however, that no representation is hereby deemed to be made by the Trustee as to
- -------
the correctness or accuracy of the CUSIP numbers printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes. The Company shall promptly notify the Trustee of any
change in the CUSIP or "ISIN" number.
SECTION 2.14. Deposit of Moneys.
-----------------
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Maturity Date, Redemption Date, Change of Control Payment Date, and Net Proceeds
Offer Payment Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date, and Net Proceeds Offer Payment Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date, and Net Proceeds Offer Payment Date, as the case may be.
SECTION 2.15. Book-Entry Provisions for Global Securities.
-------------------------------------------
Except as indicated below in this Section 2.15, the Notes shall be
represented only by Global Securities. The Global Securities shall be deposited
with a Depositary for such Notes (and shall be registered in the name of such
Depositary
<PAGE>
-45-
or its nominee). The Depositary for the Dollar Notes shall be DTC
unless the Company appoints a successor Depositary by delivery of a Company
Order to the Trustee specifying such successor Depositary. The Depositary for
the Euro Notes shall be First Chicago Clearing Centre unless, with the approval
of Euroclear, the Company appoints a successor Depositary (which shall be a
Common Depositary of Euroclear) by delivery of a Company Order to the Trustee
specifying such successor Depositary.
All payments on a Dollar Denominated Global Security will be made to
DTC or its nominee, as the case may be, as the registered owner and Holder of
such Dollar Denominated Global Security. All payments on a Euro Denominated
Global Security will be made to the order of the Common Depositary or its
nominee, as the case may be, as the registered holder of such Euro Denominated
Global Security. In each case, the Company will be fully discharged by payment
to or to the order of such Depositary from any responsibility or liability in
respect of each amount so paid. Upon receipt of any such payment in respect of
a Dollar Denominated Global Security, DTC will credit Participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such Dollar Denominated Global Security as shown on
the records of DTC. The Common Depositary will instruct the Euro Paying Agent
to make payments in respect of the Euro Notes to Euroclear in amounts
proportionate to their respective beneficial interests in the principal amount
of each Euro Denominated Global Security, and Euroclear will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of Euroclear.
Unless and until it is exchanged in whole or in part for Physical
Notes, a Global Security may not be transferred except as a whole by the
relevant Depositary or nominee thereof to another nominee of the Depositary or
to a successor of Depositary or a nominee of such successor.
Owners of beneficial interests in Global Securities shall be entitled
or required, as the case may be, but only under the circumstances described in
this Section 2.15, to receive physical delivery of Physical Notes.
Interests in a Global Security shall be exchangeable or transferable,
as the case may be, for Physical Notes if (i) in the case of a Dollar
Denominated Global Security, DTC notifies the Company that it is unwilling or
unable to continue as
<PAGE>
-46-
Depositary for such Dollar Denominated Global Security, or DTC ceases to be a
"Clearing Agency" registered under the United States Securities Exchange Act of
1934, and a successor depositary is not appointed by the Company within 120
days, (ii) in the case of a Euro Denominated Global Security, Euroclear and
Cedelbank notify the Company that they are unwilling or unable to continue as
clearing agencies for such Euro Denominated Global Security, (iii) in the case
of a Euro Denominated Global Security, the Common Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such Euro
Denominated Global Security, and a successor Common Depositary is not appointed
by the Company within one hundred twenty (120) days or (iv) in the case of any
Global Security, an Event of Default has occurred and is continuing with respect
thereto and the owner of a beneficial interest therein requests such exchange or
transfer. Upon the occurrence of any of the events described in the preceding
sentence, the Company shall cause the appropriate Physical Notes to be delivered
to the owners of beneficial interests in the Global Securities or the
Participants in DTC or Euroclear through which such owners hold their beneficial
interest. Physical Notes shall be exchangeable or transferable for interests in
other Physical Notes as described herein.
SECTION 2.16. Transfer and Exchange of Securities.
-----------------------------------
(a) Transfer and Exchange of Dollar Denominated Global Securities.
-------------------------------------------------------------
Notwithstanding any provisions of this Indenture or the Notes, transfers of a
Dollar Denominated Global Security, in whole or in part, transfers and exchanges
of interests therein of the kinds described in clauses (ii), (iii) and (iv)
below and exchange of interests in Dollar Denominated Global Securities or of
other Dollar Denominated Securities as described in clause (v) below, shall be
made only in accordance with this Section 2.16(a). Transfers and exchanges
subject to this Section 2.16 shall also be subject to the other provisions of
the Indenture that are not inconsistent with this Section 2.16.
(i) General. A Dollar Denominated Global Security may not be
-------
transferred, in whole or in part, to any Person other than DTC or a nominee
thereof or a successor to DTC or its nominee, and no such transfer to any
such other Person may be registered; provided that this clause (i) shall
not prohibit any transfer of a Dollar Denominated Security that is issued
in exchange for a Dollar Denominated Global Security but is not itself a
Dollar Denominated Global Security. No transfer of a Dollar Note of
<PAGE>
-47-
any series to any Person shall be effective under this Indenture or the
Dollar Notes of such series unless and until such Dollar Note has been
registered in the name of such Person. Nothing in this Section 2.16(a)(i)
shall prohibit or render ineffective any transfer of a beneficial interest
in a Dollar Denominated Global Security effected in accordance with the
other provisions of this Section 2.16(a).
(ii) Restricted Global Security to Regulation S Global Security.
----------------------------------------------------------
If the Holder of a beneficial interest in a Restricted Dollar Denominated
Global Security of any series wishes at any time to transfer such interest
to a Person who wishes to take delivery thereof in the form of a beneficial
interest in a Regulation S Dollar Denominated Global Security of such
series, such transfer may be effected, subject to the rules and procedures
of DTC, Euroclear and Cedelbank, in each case to the extent applicable (the
"Applicable Procedures"), only in accordance with the provisions of this
Section 2.16(a)(ii). Upon receipt by the Dollar Registrar of (A) written
instructions given in accordance with the Applicable Procedures from an
Agent Member directing the Dollar Registrar, to credit or cause to be
credited to a specified Agent Member's account a beneficial interest in a
Regulation S Dollar Denominated Global Security in a principal amount equal
to that of the beneficial interest in a Restricted Dollar Denominated
Global Security to be so transferred; (B) a written order given in
accordance with the Applicable Procedures containing information regarding
the account of the Agent Member (and/or the Euroclear or Cedelbank account,
as the case may be) to be credited with, and the account of the Agent
Member to be debited for, such beneficial interest and (C) a certificate in
substantially the form set forth in Exhibit C-1 given by the Holder of such
beneficial interest, the principal amount of a Restricted Dollar
Denominated Global Security shall be reduced, and the principal amount of a
Regulation S Dollar Denominated Global Security shall be increased, by the
principal amount of the beneficial interest in a Restricted Dollar
Denominated Global Security to be so transferred, in each case by means of
an appropriate adjustment on the records of the Dollar Registrar, and the
Dollar Registrar shall instruct DTC or its authorized representative to
make a corresponding adjustment to its records and to credit or cause to be
credited to the account of the Person specified in such instructions (which
shall be the Agent Member for Euroclear or Cedelbank or both, as the case
may be) a benefi-
<PAGE>
-48-
cial interest in a Regulation S Dollar Denominated Global Security having a
principal amount equal to the amount so transferred.
(iii) Restricted Dollar Denominated Global Security to
------------------------------------------------
Unrestricted Dollar Denominated Global Security. If the Holder of a
-----------------------------------------------
beneficial interest in a Restricted Dollar Denominated Global Security of
any series wishes at any time to transfer such interest to a Person who
wishes to take delivery thereof in the form of a beneficial interest in an
Unrestricted Dollar Denominated Global Security of such series, such
transfer may be effected, subject to the Applicable Procedures, only in
accordance with this Section 2.16(a)(iii). Upon receipt by the Dollar
Registrar, of (A) written instructions given in accordance with the
Applicable Procedures from an Agent Member directing the Dollar Registrar
to credit or cause to be credited to a specified Agent Member's account a
beneficial interest in an Unrestricted Dollar Denominated Global Security
in a principal amount equal to that of the beneficial interest in a
Restricted Dollar Denominated Global Security to be so transferred, (B) a
written order given in accordance with the Applicable Procedures containing
information regarding the account of the Agent Member (and, if applicable,
the Euroclear or Cedelbank account, as the case may be) to be credited
with, and the account of the Agent Member to be debited for, such
beneficial interest and (C) a certificate in substantially the form set
forth in Exhibit C-2 given by the Holder of such beneficial interest, the
principal amount of the Restricted Dollar Denominated Global Security shall
be reduced, and the principal amount of an Unrestricted Dollar Denominated
Global Security shall be increased, by the principal amount of the
beneficial interest in a Restricted Global Dollar Denominated Security to
be so transferred, in each case by means of an appropriate adjustment on
the records of the Dollar Registrar and the Dollar Registrar shall instruct
DTC or its authorized representative to make a corresponding adjustment to
its records and to credit or cause to be credited to the account of the
Person specified in such instructions a beneficial interest in an
Unrestricted Dollar Denominated Global Security having a principal amount
equal to the amount so transferred.
(iv) Regulation S Dollar Denominated Global Security or
--------------------------------------------------
Unrestricted Dollar Denominated Global Security to Restricted Dollar
--------------------------------------------------------------------
Denominated Global Security. If the Holder of a beneficial interest in a
---------------------------
Regulation S Dollar
<PAGE>
-49-
Denominated Global Security of any series or an Unrestricted Dollar
Denominated Global Security of any series wishes at any time to transfer
such interest to a Person who wishes to take delivery thereof in the form
of a beneficial interest in a Restricted Dollar Denominated Global Security
of such series, such transfer may be effected, subject to the Applicable
Procedures, only in accordance with this Section 2.16(a)(iv). Upon receipt
by the Dollar Registrar of (A) written instructions given in accordance
with the Applicable Procedures from an Agent Member directing the Dollar
Registrar to credit or cause to be credited to a specified Agent Member's
account a beneficial interest in a Restricted Dollar Denominated Global
Security in a principal amount equal to that of the beneficial interest in
a Regulation S Dollar Denominated Global Security or an Unrestricted Dollar
Denominated Global Security to be so transferred, (B) a written order given
in accordance with the Applicable Procedures containing information
regarding the account of the Agent Member to be credited with, and the
account of the Agent Member (and, if applicable, the Euroclear or Cedelbank
account, as the case may be) to be debited for, such beneficial interest
and (C) with respect to a transfer of a beneficial interest in a Regulation
S Dollar Denominated Global Security (but not an Unrestricted Dollar
Denominated Global Security) to a Person whom the transferor reasonably
believes is a "qualified institutional buyer" within the meaning of Rule
144A under the Securities Act, a certificate in substantially the form set
forth in Exhibit C-3 given by the Holder of such beneficial interest, the
principal amount of a Restricted Dollar Denominated Global Security shall
be increased, and the principal amount of a Regulation S Dollar Denominated
Global Security or an Unrestricted Dollar Denominated Global Security shall
be reduced, by the principal amount of the beneficial interest in a
Restricted Dollar Denominated Global Security to be so transferred, in each
case by means of an appropriate adjustment on the records of the Dollar
Registrar and the Dollar Registrar shall instruct DTC or its authorized
representative to make a corresponding adjustment to its records and to
credit or cause to be credited to the account of the Person specified in
such instructions a beneficial interest in the Restricted Dollar
Denominated Global Security having a principal amount equal to the amount
so transferred.
(v) Exchanges of Dollar Denominated Global Security for Dollar
----------------------------------------------------------
Denominated Non-Global Security. In the event
-------------------------------
<PAGE>
-50-
that a Dollar Denominated Global Security or any portion thereof is
exchanged for Dollar Denominated Securities other than Dollar Denominated
Global Securities, such other Dollar Denominated Securities may in turn be
exchanged (on transfer or otherwise) for Notes that are not Dollar
Denominated Global Securities or for beneficial interests in a Dollar
Denominated Global Security (if any is then Outstanding) only in accordance
with such procedures, which shall be substantially consistent with the
provisions of clauses (i) through (iv) above and (vi) below (including the
certification requirements intended to insure that transfers and exchanges
of beneficial interests in a Dollar Denominated Global Security comply with
Rule 144A, Rule 144 or Regulation S, as the case may be) and any Applicable
Procedures, as may be from time to time adopted by the Company and the
Trustee.
(vi) Beneficial Interest in Regulation S Dollar Denominated Global
-------------------------------------------------------------
Security to be Held Through Euroclear or Cedelbank. Until the termination
-----------------------------------------
of the Restricted Period with respect thereto, interests in a Regulation S
Global Security may be held only through Agent Members acting for and on
behalf of Euroclear and Cedelbank, provided that this clause (vi) shall not
prohibit any transfer in accordance with Section 2.16(a)(iv) hereof.
(b) Transfer and Exchange of Euro Denominated Global Securities.
-----------------------------------------------------------
Notwithstanding any provisions of this Indenture or the Euro Notes, transfers of
a Euro Denominated Global Security, in whole or in part, shall be made only in
accordance with this Section 2.16(b). Transfers and exchanges subject to this
Section 2.16 shall also be subject to the other provisions of the Indenture that
are not inconsistent with this Section 2.16.
(i) General. A Euro Denominated Global Security may not be
-------
transferred, in whole or in part, to any Person other than the Common
Depositary or a nominee thereof or a successor Common Depositary or its
nominee, and no such transfer to any such other Person may be registered;
provided that this clause (i) shall not prohibit any transfer of a Euro
Denominated Security that is issued in exchange for a Euro Denominated
Global Security but is not itself a Euro Denominated Global Security. No
transfer of a Euro Denominated Security to any Person shall be effective
under this Indenture or the Euro Denominated Securities unless and until
such Euro Denominated Security has been registered in the name of such
Person. Nothing in this
<PAGE>
-51-
Section 2.16(b)(i) shall prohibit or render ineffective any transfer of a
beneficial interest in a Euro Denominated Global Security effected in
accordance with the other provisions of this Section 2.16(b).
(ii) Restricted Euro Denominated Global Security to Unrestricted
-----------------------------------------------------------
Euro Denominated Global Security. If the Holder of a beneficial interest
--------------------------------
in a Restricted Euro Denominated Global Security wishes at any time to
transfer such interest to a Person who wishes to take delivery thereof in
the form of a beneficial interest in an Unrestricted Euro Denominated
Global Security, such transfer may be effected, subject to the Applicable
Procedures, only in accordance with this Section 2.16(b)(ii). Upon receipt
by the Euro Registrar of (A) written instructions given in accordance with
the Applicable Procedures from Euroclear or Cedelbank directing the Euro
Registrar to credit or cause to be credited to Euroclear's account a
beneficial interest in an Unrestricted Euro Denominated Global Security in
a principal amount equal to that of the beneficial interest in a Restricted
Euro Denominated Global Security to be so transferred, (B) a written order
given in accordance with the Applicable Procedures containing information
regarding the account of Euroclear to be credited with, and the account of
Euroclear to be debited for, such beneficial interest and (C) a certificate
in substantially the form set forth in Exhibit C-2 given by the Holder of
such beneficial interest, the principal amount of the Restricted Euro
Denominated Global Security shall be reduced, and the principal amount of
an Unrestricted Euro Denominated Global Security shall be increased, by the
principal amount of the beneficial interest in a Restricted Euro
Denominated Global Security to be so transferred, in each case by means of
an appropriate adjustment on the records of the Euro Registrar and the Euro
Registrar shall instruct the Common Depositary or its authorized
representative to make a corresponding adjustment to its records and to
credit or cause to be credited to the account of Euroclear a beneficial
interest in a Unrestricted Euro Denominated Global Security having a
principal amount equal to the amount so transferred.
(iii) Exchanges of Euro Denominated Global Security for Euro
------------------------------------------------------
Denominated Non-Global Security. In the event that a Euro Denominated
-------------------------------
Global Security or any portion thereof is exchanged for Notes other than
Euro Denominated Global Securities, such other Notes may in turn be
exchanged (on transfer or otherwise) for Notes that are not
<PAGE>
-52-
Euro Denominated Global Securities or for beneficial interests in a Euro
Denominated Global Security (if any is then Outstanding) only in accordance
with such procedures, which shall be substantially consistent with the
provisions of clauses (i) through (ii) above and (iv) below (including the
certification requirements intended to insure that transfers and exchanges
of beneficial interests in a Euro Denominated Global Security comply with
Rule 144A, Rule 144 or Regulation S, as the case may be) and any Applicable
Procedures, as may be from time to time adopted by the Company and the
Trustee.
(iv) Interest in Euro Denominated Global Security to be Held
-------------------------------------------------------
Through Euroclear or Cedelbank. Interests in a Euro Denominated Global
------------------------------
Security may be held only through Agent Members acting for and on behalf of
Euroclear.
(c) Global Securities. The provisions of clauses (i), (ii), (iii),
-----------------
and (iv) below shall apply only to Global Securities;
(i) General. Each Global Security authenticated under the
-------
Indenture shall be registered in the name of the appropriate Depositary or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor.
(ii) Transfer to Persons other than Depositary. Notwithstanding
-----------------------------------------
any other provision in the Indenture or the Securities, no Global Security
may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any person other than the appropriate Depositary or a nominee
thereof unless (A) in the case of a Dollar Denominated Global Security, DTC
notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security, or DTC ceases to be a "Clearing
Agency" registered under the United States Securities Exchange Act of 1934,
and a successor to DTC is not appointed by the Company within ninety (90)
days, (B) in the case of a Euro Denominated Global Security, Euroclear and
Cedelbank notify the Company that they are unwilling or unable to continue
as clearing agencies for such Euro Denominated Global Security, and
successor clearing agencies are not appointed by the Company within one
hundred twenty (120) days, (C) in the case of a Euro Denominated Global
Security, the Common Depositary notifies the Company that it is unwilling
or unable to continue as Depositary for
<PAGE>
-53-
such Euro Denominated Global Security, and a successor Common Depositary is
not appointed by the Company within one hundred twenty (120) days or (D) in
the case of any Global Security, an Event of Default has occurred and is
continuing with respect thereto and the owner of a beneficial interest
therein requests such exchange or transfer. Any Global Security exchanged
pursuant to clause (A), (B) or (C) above shall be so exchanged in whole and
not in part and any Global Security exchanged pursuant to clause (D) above
may be exchanged in whole or from time to time in part as directed by DTC.
Any Security issued in exchange for a Global Security or any portion
thereof shall be a Global Security, provided that any such Security so
issued that is registered in the name of a Person other than the
appropriate Depositary or a nominee thereof shall not be a Global Security.
(iii) Global Security to Physical Note. Notes in exchange for a
--------------------------------
Global Security or any portion thereof pursuant to clause (ii) above shall
be issued in definitive, fully registered form without interest coupons,
shall have an aggregate principal amount equal to that of such Global
Security or portion thereof to be so exchanged, shall be registered in such
names and be in such authorized denominations as the appropriate Depositary
shall designate and shall bear any legends required hereunder. Any Global
Security to be exchanged in whole shall be surrendered by the appropriate
Depositary to the appropriate Registrar. With regard to any Global
Security to be exchanged in part, either such Global Security shall be so
surrendered for exchange or, in the case of a Dollar Denominated Global
Security, if the Trustee is acting as custodian for DTC or its nominee with
respect to such Global Security or, in the case of a Euro Denominated
Global Security, if the Common Depositary is acting as Depositary for
Euroclear and Cedelbank, the principal amount thereof shall be reduced, by
an amount equal to the portion thereof to be so exchanged, by means of an
appropriate adjustment made on the records of the Trustee, as
Authenticating Agent, or of the Common Depositary. Upon any such surrender
or adjustment, the Trustee shall authenticate and deliver the Security
issuable on such exchange to or upon the order of the appropriate
Depositary or an authorized representative thereof.
(iv) In the event of the occurrence of any of the events specified
in clause (ii) above, the Company will promptly make available to the
Trustee a reasonable supply
<PAGE>
-54-
of Physical Notes in definitive, fully registered form, without interest
coupons.
(v) No Rights of Agent Members in Global Security. No Agent Member
---------------------------------------------
of any Depositary nor any other Persons on whose behalf Agent Members may
act (including Euroclear and Cedelbank and account Holders and Participants
therein) shall have any rights under the Indenture with respect to any
Global Security, or under any Global Security, and each Depositary or its
nominee, as the case may be, may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner and Holder of
such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the applicable
Depositary or such nominee, as the case may be, or impair, as between DTC,
Euroclear and Cedelbank, their respective Agent Members and any other
person on whose behalf an Agent Member may act, the operation of customary
practices of such Persons governing the exercise of the rights of a Holder
of any Note.
SECTION 2.17. Special Transfer Provisions.
---------------------------
(a) Transfers to Institutional Accredited Investors. If Securities
-----------------------------------------------
are being transferred to an Institutional Accredited Investor, the Securities
shall be accompanied by delivery of a transferee certificate for Institutional
Accredited Investors substantially in the form of Exhibit D hereto and an
opinion of counsel reasonably satisfactory to the Company to the effect that
such transfer is in compliance with the Securities Act.
(b) Other Transfers. If a Holder proposes to transfer an Initial
---------------
Security pursuant to any exemption from the registration requirements of the
Securities Act other than as provided for above, the Registrar shall only
register such transfer or exchange if such transferor delivers to the Registrar
and the Trustee an Opinion of Counsel satisfactory to the Company and the
Registrar that such transfer is in compliance with the Securities Act and the
terms of this Indenture; provided that the Company may, based upon the opinion
of its counsel, instruct the Registrar by a Company Order not to register such
transfer in any case where the proposed transferee is not a QIB, an
Institutional Accredited Investor or a non-U.S. Person.
<PAGE>
-55-
(c) General. By its acceptance of any Security bearing Legends, each
-------
Holder of such a Security acknowledges the restrictions on transfer of such
Security set forth in this Indenture and in the Legends and agrees that it will
transfer such Security only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15, 2.16 or this Section
2.17 for a period of two years, after which time such letters, notices and other
written communications shall at the written request of the Company be delivered
to the Company. The Company shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable time
upon the giving of reasonable prior written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to paragraph 5 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the aggregate principal amount of the Notes to be redeemed.
Such notice must be given at least 35 days prior to the Redemption Date (unless
a shorter notice shall be satisfactory to the Trustee), but shall not be given
more than 60 days before the Redemption Date. Any such notice may be cancelled
at any time prior to notice of such redemption being mailed to any Holder and
shall thereby be void and of no effect.
SECTION 3.02. Selection of Notes To Be Redeemed.
---------------------------------
If 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 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 EU1,000, as the case may be, or less shall be
redeemed in part. On and after the Redemption Date, interest shall cease to
accrue on the Notes or portions thereof called for redemption; provided,
--------
<PAGE>
-56-
further, however, that if a partial redemption is made with the proceeds of an
- ------- -------
Equity Offering, 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 DTC procedures), unless such method is otherwise
prohibited.
SECTION 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first-
class mail to each Holder whose Notes are to be redeemed at its registered
address, with a copy to the Trustee. At the Company's request, the Trustee
shall give the notice of redemption in the Company's name and at the Company's
expense. Each notice for redemption shall identify the Notes to be redeemed and
shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of accrued interest, if any,
to be paid (the "Redemption Price");
(3) the paragraph and subparagraph of the Notes pursuant to which the
Notes are being redeemed;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(6) that, unless the Company defaults in making the redemption
payment, interest, if any, on Notes called for redemption shall cease to
accrue on and after the Redemption Date, and the only remaining right of
the Holders of such Notes is to receive payment of the Redemption Price
upon surrender to the Paying Agent of the Notes redeemed;
(7) that, if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, and upon cancellation of such Note, a new Note or Notes in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder;
(8) that, if less than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate
<PAGE>
-57-
principal amount of Notes to be redeemed and the aggregate principal amount
of Notes to be outstanding after such partial redemption; and
(9) whether the redemption is conditioned on any events and what such
conditions are.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such rule, laws and regulations are applicable in connection with the
purchase of Notes.
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price. Upon surrender to the Trustee or Paying Agent, such Notes
called for redemption shall be paid at the Redemption Price, but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant record
dates referred to in the Notes. Interest shall accrue on or after the
Redemption Date and shall be payable only if the Company defaults in payment of
the Redemption Price.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or before the Redemption Date, the Company shall deposit with the
Paying Agent U.S. Legal Tender (in the case of Dollar Notes) and/or euros (in
the case of Euro Notes) sufficient to pay the Redemption Price of all Notes to
be redeemed on that date. The Paying Agent shall promptly return to the Company
any U.S. Legal Tender (in the case of Dollar Notes) and/or euros (in the case of
Euro Notes) so deposited that is not required for that purpose, except with
respect to monies owed as obligations to the Trustee pursuant to Article Seven.
Unless the Company fails to comply with the preceding paragraph and
defaults in the payment of such Redemption Price, interest on the Notes to be
redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Notes are presented for payment.
<PAGE>
-58-
SECTION 3.06. Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
----------------
The Company shall pay the interest on the Notes on the dates and in
the manner provided in the Notes. An installment of principal of or interest on
the Notes shall be considered paid on the date it is due if the Trustee or
Paying Agent holds on that date U.S. Legal Tender (in the case of Dollar Notes)
and/or euros (in the case of Euro Notes) designated for and sufficient to pay
the installment. Interest on the Notes will be computed on the basis of a 360-
day year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal, premium or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail 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 set
forth in Section 12.02.
SECTION 4.03. Limitation on Restricted Payments.
---------------------------------
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other
<PAGE>
-59-
than dividends or distributions payable solely in Qualified Capital Stock of the
Company) on or in respect of shares of the Company's Capital Stock to holders of
such Capital Stock, (b) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company or any warrants, rights or options to
purchase or acquire shares of any class of such Capital Stock, (c) make any
principal payment on, purchase, defease, redeem, prepay, decrease or otherwise
acquire or retire for value, prior to any scheduled final maturity, scheduled
repayment or scheduled sinking fund payment, any Indebtedness of the Company
that is subordinate or junior in right of payment to the Notes or (d) make any
Investment (other than Permitted Investments) (each of the foregoing actions set
forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted
Payment"), if at the time of such Restricted Payment or immediately after giving
effect thereto, (i) a Default or an Event of Default shall have occurred and be
continuing, (ii) the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
4.12, or (iii) the aggregate amount of Restricted Payments (including such
proposed Restricted Payment) made subsequent to the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair market value
of such property as determined reasonably and in good faith by the Board of
Directors of the Company) shall exceed the sum of: (x) 50% of the cumulative
Consolidated Net Income (or if cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss) of the Company earned from June 30, 1999 through
the last day of the last full fiscal quarter immediately preceding the date the
Restricted Payment occurs (the "Reference Date") (treating such period as a
single accounting period); plus (y) 100% of the aggregate net cash proceeds
received by the Company from any Person (other than a Subsidiary of the Company)
from the issuance and sale subsequent to the Issue Date and on or prior to the
Reference Date of Qualified Capital Stock of the Company (other than Specified
Venture Capital Stock); plus (z) without duplication of any amounts included in
clause (iii)(y) above, 100% of the aggregate net cash proceeds of any equity
contribution received by the Company from a holder of the Company's Capital
Stock.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit: (1) the payment of any
dividend within 60 days after the date of declaration of such dividend if the
dividend would have been permitted on the date of declaration; (2) the
acquisition of any shares of Capital Stock of the Company, either (i) solely in
exchange for shares of Qualified Capital Stock of
<PAGE>
-60-
the Company or (ii) if no Default or Event of Default shall have occurred and be
continuing, through the application of net proceeds of a substantially
concurrent sale or incurrence for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock of the Company; (3) the
acquisition of any Indebtedness of the Company that is subordinate or junior in
right of payment to the Notes either (i) solely in exchange for shares of
Qualified Capital Stock of the Company, or (ii) if no Default or Event of
Default shall have occurred and be continuing, through the application of net
proceeds of a substantially concurrent sale or incurrence for cash (other than
to a Subsidiary of the Company) of (A) shares of Qualified Capital Stock of the
Company or (B) Refinancing Indebtedness; (4) so long as no Default or Event of
Default shall have occurred and be continuing, repurchases by the Company of, or
dividends to Holdings to permit repurchases by Holdings of, Common Stock of the
Company or Holdings from employees of the Company or any of its Subsidiaries or
their authorized representatives upon the death, disability or termination of
employment of such employees, in an aggregate amount not to exceed $4 million in
any calendar year; (5) the redemption or repurchase of any Common Stock of the
Company held by a Restricted Subsidiary of the Company which obtained such
Common Stock directly from the Company; (6) distributions to the members of the
Company in accordance with the Tax Sharing Agreement; (7) payments to Holdings
for legal, audit and other expenses directly relating to the administration of
Holdings (including fees and expenses relating to the Holdings Zero Coupon
Notes) which when aggregated with loans made to Holdings in accordance with
clause (xvii) under the definition of "Permitted Investments" will not exceed
$3.0 million in any fiscal year; (8) the payment of consideration by a third
party to equity holders of the Company; (9) additional Restricted Payments in an
aggregate amount not to exceed $10 million since the Issue Date; (10) payments
of dividends on Disqualified Capital Stock issued in accordance with Section
4.12 and (11) distributions or investments to effect the transactions
contemplated by the Contribution Agreement and the financing thereof. In
determining the aggregate amount of Restricted Payments made subsequent to the
Issue Date in accordance with clause (iii) of the immediately preceding
paragraph, cash amounts expended pursuant to clauses (1), (2) and (4) shall be
included in such calculation.
Not later than the date of making any Restricted Payment pursuant to
clause (iii) of the second preceding paragraph or clause (9) of the immediately
preceding paragraph, the Company shall deliver to the Trustee an officers'
certificate stating that such Restricted Payment complies with this Inden-
<PAGE>
-61-
ture and setting forth in reasonable detail the basis upon which the required
calculations were computed, which calculations may be based upon the Company's
quarterly financial statements last provided to the Trustee pursuant to Section
4.09.
SECTION 4.04. Corporate Existence.
-------------------
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done all things reasonably necessary to preserve and keep in full
force and effect its corporate or other existence and the corporate or other
existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of each such Restricted Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Restricted Subsidiary; except for such noncompliances as are not in the
aggregate reasonably likely to have a material adverse effect on the financial
condition or results of operations of the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 4.05. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Restricted
Subsidiaries or properties of it or any of its Restricted Subsidiaries and (ii)
all material lawful claims for labor, materials, supplies and services that, if
unpaid, might by law become a Lien upon the property of it or any of its
Restricted Subsidiaries; except for such noncompliances as are not in the
aggregate reasonably likely to have a material adverse effect on the financial
condition or results of operations of the Company and its Restricted
Subsidiaries as a whole; provided, however, that there shall not be required to
-------- -------
be paid or discharged any such tax, assessment or charge, the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings and for which adequate provision has been made or where
the failure to effect such payment or discharge is not adverse in any material
respect to the Holders.
SECTION 4.06. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, make all reasonable efforts to
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maintain its material properties in normal condition (subject to ordinary wear
and tear) and make all reasonably necessary repairs, renewals or replacements
thereto as in the judgment of the Company may be reasonably necessary to the
conduct of the business of the Company and its Restricted Subsidiaries; except
for such noncompliances as are not in the aggregate reasonably likely to have a
material adverse effect on the financial condition or results of operations of
the Company and its Restricted Subsidiaries taken as a whole.
(b) The Company shall provide or cause to be provided, for itself and
each of its Restricted Subsidiaries, insurance (including appropriate self-
insurance) against loss or damage of the kinds that, in the reasonable, good
faith opinion of the Company, are reasonably adequate and appropriate for the
conduct of the business of the Company and such Restricted Subsidiaries.
SECTION 4.07. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each of the Company's fiscal years, an Officers' Certificate stating
that a review of its activities and the activities of its Restricted
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing officers with a view to determining whether it has
kept, observed, performed and fulfilled its obligations under this Indenture and
further stating, as to each such officer signing such certificate, that to the
best of his knowledge at the date of such certificate there is no Default or
Event of Default that has occurred and is continuing or, if such signers do know
of such Default or Event of Default, the certificate shall describe the Default
or Event of Default and its status with particularity. The Officers'
Certificate shall also notify the Trustee should the Company elect to change the
manner in which it fixes its fiscal year end.
(b) The annual financial statements delivered to the Trustee pursuant
to Section 4.09 shall be accompanied by a written report of the Company's
independent accountants that in conducting their audit of the financial
statements which are a part of such annual report or such annual financial
statements nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article Four, Five or Six
insofar as they relate to accounting matters or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any
<PAGE>
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Person for any failure to obtain knowledge of any such violation.
(c) So long as any of the Notes are outstanding (i) if any Default or
Event of Default has occurred and is continuing or (ii) if any Holder seeks to
exercise any remedy hereunder with respect to a claimed Default under this
Indenture or the Notes, the Company shall deliver to the Trustee as soon as
practicable by registered or certified mail or by telegram, telex or facsimile
transmission followed by hard copy by registered or certified mail an Officers'
Certificate specifying such event, notice or other action.
SECTION 4.08. Compliance with Laws.
--------------------
The Company shall comply, and shall cause each of its Restricted
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or results of operations of the Company and its Restricted Subsidiaries taken as
a whole.
SECTION 4.09. Reports to Holders.
------------------
Whether or not required by the Commission, so long as any Notes are
outstanding, after the date the Exchange Offer is required to be consummated,
the Company will furnish to the Trustee and the Holders of the Notes, within the
time periods specified in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report on
the annual financial statements by the Company's certified independent
accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports.
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If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes or schedules thereto
and in Management's Discussion and Analysis of Financial Condition and Results
of Operations, of the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the financial condition
and results of operations of the Unrestricted Subsidiaries of the Company.
In addition, whether or not required by the Commission, the Company
will file a copy of all the information and reports referred to in clauses (1)
and (2) above with the Commission for public availability within the time
periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request.
SECTION 4.10. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of, premium or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the obligations or the performance of this Indenture; and (to the extent
that it may lawfully do so) 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 4.11. Limitations on Transactions with Affiliates.
--------------------------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates
<PAGE>
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(each an "Affiliate Transaction"), other than (x) Affiliate Transactions
permitted under paragraph (b) below and (y) Affiliate Transactions on terms that
are no less favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Company or such Restricted Subsidiary. All Affiliate
Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) that involves an aggregate fair market value
of more than $5.0 million shall be approved by the Board of Directors of the
Company or such Restricted Subsidiary, as the case may be, such approval to be
evidenced by a Board Resolution stating that such Board of Directors has
determined that such transaction complies with the foregoing provisions. If the
Company or any Restricted Subsidiary of the Company enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than $10.0 million,
the Company or such Restricted Subsidiary, as the case may be, shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Restricted Subsidiary, as the case may be, from a financial point of view, from
an Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary of the Company as determined in good faith by the Company's Board of
Directors or senior management; (ii) transactions exclusively between or among
the Company and any of its Restricted Subsidiaries or exclusively between or
among such Restricted Subsidiaries, provided such transactions are not otherwise
prohibited by this Indenture; (iii) any agreement as in effect as of the Issue
Date or contemplated by the Contribution Agreement or any amendment thereto or
any transaction contemplated thereby (including pursuant to any amendment
thereto) or in any replacement agreement thereto so long as any such amendment
or replacement agreement is not more disadvantageous to the Holders in any
material respect than the original agreement; (iv) Permitted Investments and
Restricted Payments made in compliance with this Indenture; (v) transactions
between or among any of the Company, any of its Subsidiaries and any
Securitization Entity in connection with a Qualified Securitization Transaction,
in each case provided that such transactions are not otherwise prohibited by
this Indenture; and (vi) transactions with distributors or other purchases or
sales of goods or services,
<PAGE>
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in each case in the ordinary course of business and otherwise in compliance with
the terms of this Indenture which when taken together are fair to the Company or
the Restricted Subsidiaries as applicable, in the reasonable determination of
the Board of Directors of the Company or the senior management thereof, or are
on terms at least as favorable as might reasonably have been obtained at such
time from an unaffiliated party.
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
----------------------------------------------------
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, acquire, become liable, contingently or otherwise, with respect to,
or otherwise become responsible for payment of (collectively, "incur") any
Indebtedness (other than Permitted Indebtedness); provided, however, if no
-------- -------
Default or Event of Default shall have occurred and be continuing at the time of
or as a consequence of the incurrence of any such Indebtedness, the Company and
its Restricted Subsidiaries which are Guarantors may incur Indebtedness
(including, without limitation, Acquired Indebtedness) and Restricted
Subsidiaries of the Company which are not Guarantors may incur Acquired
Indebtedness, in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 2.0 to 1.0.
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting
---------------------------------------------------------------
Subsidiaries.
-------------
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or make
any other distributions on or in respect of its Capital Stock; (b) make loans or
advances or to pay any Indebtedness or other obligation owed to the Company or
any other Restricted Subsidiary of the Company; or (c) transfer any of its
property or assets to the Company or any other Restricted Subsidiary of the
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Indenture; (3) customary non-assignment
provisions of any contract or any lease governing a leasehold interest of any
Restricted Subsidiary of the Company; (4) any agreements existing at the time of
acquisition of any Person or the properties or assets of the Person so acquired
(including agreements governing Acquired In-
<PAGE>
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debtedness), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired; (5) agreements existing on the
Issue Date to the extent and in the manner such agreements are in effect on the
Issue Date; (6) restrictions imposed by any agreement to sell assets or Capital
Stock permitted under this Indenture to any Person pending the closing of such
sale; (7) any agreement or instrument governing Capital Stock of any Person that
is acquired; (8) Indebtedness or other contractual requirements of a
Securitization Entity in connection with a Qualified Securitization Transaction;
provided that such restrictions apply only to such Securitization Entity; (9)
Liens incurred in accordance with the covenant described under Section 4.18;
(10) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business; (11) the Credit
Facilities; (12) any restriction under an agreement governing Indebtedness of a
Foreign Subsidiary permitted under Section 4.12; (13) customary restrictions in
Capitalized Lease Obligations, security agreements or mortgages securing
Indebtedness of the Company or a Restricted Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such Capitalized
Lease Obligations, security agreements or mortgages; (14) customary provisions
in joint venture agreements and other similar agreements (in each case relating
solely to the respective joint venture or similar entity or the equity interests
therein) entered into in the ordinary course of business; (15) contracts entered
into in the ordinary course of business, not relating to Indebtedness, and that
do not, individually or in the aggregate, detract from the value of property or
assets of the Company or any Restricted Subsidiary in any manner material to the
Company or any Restricted Subsidiary; and (16) an agreement governing
Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred
pursuant to an agreement referred to in clause (2), (4), (5), (8), (11), (12) or
(13) above; provided, however, that the provisions relating to such encumbrance
-------- -------
or restriction contained in any such Indebtedness are no less favorable to the
Company in any material respect as determined by the Board of Directors of the
Company in their reasonable and good faith judgment than the provisions relating
to such encumbrance or restriction contained in agreements referred to in such
clause (2), (4), (5), (8), (11), (12) or (13).
SECTION 4.14. Change of Control.
-----------------
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Company purchase
<PAGE>
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all or a portion (equal to $1,000 or EU1,000, as the case may be, or an integral
multiple thereof) of such Holder's Notes in cash pursuant to the offer described
below (the "Change of Control Offer"), at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase.
(b) Prior to the mailing of the notice referred to below, but in any
event within 30 days following any Change of Control, the Company covenants to
(i) repay in full and terminate all commitments under Indebtedness under the
Credit Facilities and all other Senior Debt the terms of which require repayment
upon a Change of Control or offer to repay in full and terminate all commitments
under all Indebtedness under the Credit Facilities and all other such Senior
Debt and to repay the Indebtedness owed to each lender which has accepted such
offer or (ii) obtain the requisite consents under the Credit Facilities and all
other Senior Debt to permit the repurchase of the Notes as provided below. The
Company shall first comply with the covenant in the immediately preceding
sentence before it shall be required to repurchase Notes pursuant to the
provisions described below. The Company's failure to comply with the covenant
described in the immediately preceding sentence shall be governed by clause (3),
and not clause (2), of Section 6.01.
(c) Within 30 days following the date on which a Change of Control
occurs (the "Change of Control Date"), the Company shall send, by first class
mail, postage prepaid, a notice to each Holder of Notes at their last registered
address and the Trustee, which notice shall govern the terms of the Change of
Control Offer. The notice to the Holders shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Change of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to Section
4.14 of the Indenture and that all Notes validly tendered and not withdrawn
will be accepted for payment;
(2) the purchase price (including the amount of accrued interest, if
any) and the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed, other than as may
be required by law) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
<PAGE>
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(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 and Registrar for the Notes at the
address specified in the notice prior to the close of business on the third
Business Day prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the second Business Day prior to the
Change of Control Payment Date, a telegram, telex, 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;
(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; provided, however, that each Note purchased and each new
-------- -------
Note issued shall be in a principal amount of $1,000, EU1,000 or integral
multiples thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
(d) On or before the Change of Control Payment Date, the Company shall
(i) accept for payment Notes or portions thereof (in integral multiples of
$1,000 and EU1,000) validly tendered pursuant to the Change of Control Offer,
(ii) deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal
Tender and/or euros sufficient to pay the purchase price plus accrued and unpaid
interest, if any, 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. Upon receipt by the Paying
Agent of the monies specified in clause (ii) above and a copy of the Officers'
Certificate specified in clause (iii) above, the Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price plus accrued and unpaid interest, if any, out of
<PAGE>
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the funds deposited with the Paying Agent in accordance with the preceding
sentence. The Trustee shall promptly authenticate and mail or cause to be
transferred by book-entry to such Holders new Notes equal in principal amount to
any unpurchased portion of the Notes surrendered, provided that each such new
Note will be in the same currency as the surrendered Note and in a principal
amount of $1,000 or EU1,000, as the case may be, or an integral multiple
thereof. Upon the payment of the purchase price for the Notes accepted for
purchase, the Trustee shall return the Notes purchased to the Company for
cancellation. Any monies remaining after the purchase of Notes pursuant to a
Change of Control Offer shall be returned within three Business Days by the
Trustee to the Company except with respect to monies owed as obligations to the
Trustee pursuant to Article Seven. For purposes of this Section 4.14, the
Trustee shall act as the Paying Agent.
(e) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such rule, laws and regulations are applicable in connection with the
purchase of the Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws and regulations conflict with the provisions
of this Indenture relating to a Change of Control Offer, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations relating to such Change of Control Offer
by virtue thereof.
SECTION 4.15. Limitation on Asset Sales.
-------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or the
applicable Restricted Subsidiary, as the case may be, receives consideration 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
Company's Board of Directors); (ii) at least 75% of the consideration received
by the Company or the Restricted Subsidiary, as the case may be, from such Asset
Sale shall be in the form of cash, Cash Equivalents or Foreign Cash Equivalents
(provided that the amount of any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet) of the Company or any such
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of any such assets
shall be deemed to be cash for purposes of this provision) and is received at
the time of such disposition; and (iii) upon the con-
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summation of an Asset Sale, the Company shall apply, or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within
365 days of receipt thereof either (A) to prepay any Senior Debt, Guarantor
Senior Debt or Indebtedness of a Restricted Subsidiary that is not a Guarantor
and, in the case of any such Indebtedness under any revolving credit facility,
effect a permanent reduction in the availability under such revolving credit
facility, (B) to either (x) make an investment in or expenditures for properties
and assets (including Capital Stock of any entity) that replace the properties
and assets that were the subject of such Asset Sale or in properties and assets
(including Capital Stock of any entity) that will be used in the business of the
Company and its Subsidiaries as existing on the Issue Date or in businesses
reasonably related thereto ("Replacement Assets") or (y) the acquisition of all
of the capital stock or assets of any Person or division conducting a business
reasonably related to that of the Company or its Subsidiaries; provided that Net
--------
Cash Proceeds in excess of $30 million in the aggregate since the Issue Date
from Asset Sales involving assets of the Company or a Guarantor (other than the
Capital Stock of a Foreign Subsidiary) shall only be reinvested in (x) assets
which will be owned by the Company or a Guarantor and not constituting an
Investment or (y) the capital stock of a Person that becomes a Guarantor or (C)
a combination of prepayment, repurchase and investment permitted by the
foregoing clauses (iii)(A), (iii)(B) and (iii)(C). On the 366th day after an
Asset Sale or such earlier date, if any, as the Board of Directors of the
Company or of such Restricted Subsidiary determines not to apply the Net Cash
Proceeds relating to such Asset Sale as set forth in clauses (iii)(A), (iii)(B)
and (iii)(C) of the next preceding sentence (each, a "Net Proceeds Offer Trigger
Date"), such aggregate amount of Net Cash Proceeds which have not been applied
on or before such Net Proceeds Offer Trigger Date as permitted in clauses
(iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each a "Net
Proceeds Offer Amount") shall be applied by the Company or such Restricted
Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date
(the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45 days
following the applicable Net Proceeds Offer Trigger Date, from all Holders and
all holders of Indebtedness that is pari passu with the Notes containing
provisions requiring offers to purchase with the proceeds of sales of assets, on
a pro rata basis, that amount of Notes equal to the Net Proceeds Offer Amount at
a price equal to 100% of the principal amount of the Notes to be purchased, plus
accrued and unpaid interest thereon, if any, to the date of purchase; provided,
--------
however, that if at any time any non-cash consideration received by the
- -------
<PAGE>
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Company or any Restricted Subsidiary of the Company, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash (other than interest received with respect to any such non-cash
consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this Section 4.15. The Company shall not be required
to make a Net Proceeds Offer until there is an aggregate unutilized Net Proceeds
Offer Amount equal to or in excess of $30 million resulting from one or more
Asset Sales, at which time, the unutilized Net Proceeds Offer Amount, shall be
applied as required pursuant to this paragraph, provided, however, that the
-------- -------
first $30 million of Net Proceeds Offer Amount need not be applied as required
pursuant to this paragraph.
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01 and as a
result thereof the Company is no longer an obligor on the Notes, the successor
corporation shall be deemed to have sold the properties and assets of the
Company and its Restricted Subsidiaries not so transferred for purposes of this
Section 4.15, and shall comply with the provisions of this covenant with respect
to such deemed sale as if it were an Asset Sale. In addition, the fair market
value of such properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this Section 4.15.
(b) Notwithstanding the two immediately preceding paragraphs, the
Company and its Restricted Subsidiaries will be permitted to consummate an Asset
Sale without complying with such paragraphs to the extent (i) at least 80% of
the consideration for such Asset Sale constitutes Replacement Assets and (ii)
such Asset Sale is for fair market value; provided, however, that any
-------- -------
consideration not constituting Replacement Assets received by the Company or any
of its Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the two preceding paragraphs.
(c) Subject to the deferral right set forth in the final proviso of
Section 4.15(a), each notice of a Net Proceeds Offer pursuant to this Section
4.15 shall be mailed, by first-class mail, by the Company to Holders of Notes at
their last registered address not more than 30 days following the Net Proceeds
Offer Trigger Date, with a copy to the Trustee. The no-
<PAGE>
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tice 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 Section 4.15
of the Indenture, that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes tendered
-------- -------
in a Net Proceeds Offer plus accrued interest at the expiration of such
offer exceeds the aggregate amount of 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 EU1,000, as applicable, or multiples thereof
shall be purchased) and that the Net Proceeds Offer shall remain open for a
period of 20 Business Days or such longer periods as may be required by
law;
(2) the purchase price (including the amount of accrued interest) and
the Net Proceeds Offer Payment Date (which shall be not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date
and which shall be at least five Business Days after the Trustee receives
notice thereof from the Company);
(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 Net Proceeds Offer shall cease to
accrue interest after the Net Proceeds Offer Payment 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 Net Proceeds
Offer Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the second Business Day prior to the
Net Proceeds Offer Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Notes the holder delivered for purchase and
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a statement that such Holder is withdrawing his election to have such Note
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
Note surrendered; provided, however, that each Note purchased and each new
-------- -------
Note issued shall be in an original principal amount of $1,000, EU1,000 or
integral multiples thereof.
On or before the Net Proceeds Offer Payment Date, the Company shall
(i) accept for payment Notes or portions thereof (in integral multiples of
$1,000 and EU1,000) validly tendered pursuant to the Net Proceeds Offer, (ii)
deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal Tender
(in the case of Dollar Notes) and/or euros (in the case of Euro Notes)
sufficient to pay the purchase price plus accrued and unpaid interest, if any,
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. Upon receipt by the Paying Agent of the monies
specified in clause (ii) above and a copy of the Officers' Certificate specified
in clause (iii) above, the Paying Agent shall promptly mail to the Holders of
Notes so accepted payment in an amount equal to the purchase price plus accrued
and unpaid interest, if any, out of the funds deposited with the Paying Agent in
accordance with the preceding sentence. The Trustee shall promptly authenticate
and mail to such Holders new Notes equal in principal amount to any unpurchased
portion of the Notes surrendered. Upon the payment of the purchase price for
the Notes accepted for purchase, the Trustee shall return the Notes purchased to
the Company for cancellation. Any monies remaining after the purchase of Notes
pursuant to a Net Proceeds Offer shall be returned within three Business Days by
the Trustee to the Company except with respect to monies owed as obligations to
the Trustee pursuant to Article Seven. For purposes of this Section 4.15, the
Trustee shall act as the Paying Agent.
To the extent the amount of Notes tendered pursuant to any Net
Proceeds Offer is less than the amount of Net Cash Proceeds subject to such Net
Proceeds Offer, the Company may use any remaining portion of such Net Cash
Proceeds not required to fund the repurchase of tendered Notes for general
corporate purposes and such Net Proceeds Offer Amount shall be reset to zero.
<PAGE>
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The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such rule, laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent the
provisions of any securities laws and regulations conflict with the provisions
of this Indenture relating to a Net Proceeds Offer, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations relating to such Net Proceeds Offer by virtue
thereof.
SECTION 4.16. Prohibition on Incurrence of Senior Subordinated Debt.
------------------------------------------------------
The Company will not incur or suffer to exist Indebtedness that by its
terms is senior in right of payment to the Notes and subordinate in right of
payment to any other Indebtedness of the Company.
SECTION 4.17. Limitation on Preferred Stock of Restricted Subsidiaries.
---------------------------------------------------------
The Company will not permit any of its Restricted Subsidiaries to
issue any Preferred Stock (other than to the Company or to a Restricted
Subsidiary of the Company) or permit any Person (other than the Company or a
Restricted Subsidiary of the Company) to own any Preferred Stock of any
Restricted Subsidiary of the Company; provided, however, that (i) Class A Shares
-------- -------
and Class B Shares may be issued pursuant to the terms of the Contribution
Agreement; (ii) any Person which is not a Restricted Subsidiary of the Company
may issue Preferred Stock to equity holders of such Person in exchange for
equity interests if after such issuance such Person becomes a Restricted
Subsidiary; and (iii) Tioxide Southern Africa (Pty) Limited may issue Preferred
Stock to its equity holders in exchange for its equity interests.
SECTION 4.18. Limitation on Liens.
-------------------
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to create, incur, assume or permit or suffer to exist
any Liens of any kind upon any property or assets of the Company or any
Restricted Subsidiary now owned or hereafter acquired, which secures
Indebtedness pari passu with or subordinated to the Notes unless (i) if such
Lien secures Indebtedness which is pari passu with the Notes, then the Notes are
secured on an equal and ratable basis with the
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obligations so secured until such time as such obligation is no longer secured
by a Lien or (ii) if such Lien secures Indebtedness which is subordinated to the
Notes, any such Lien shall be subordinated to a Lien granted to the Holders of
the Notes in the same collateral as that securing such Lien to the same extent
as such subordinated Indebtedness is subordinated to the Notes.
SECTION 4.19. Limitation of Guarantees by Restricted Subsidiaries.
----------------------------------------------------
The Company will not permit any of its Restricted Subsidiaries,
directly or indirectly, by way of the pledge of any intercompany note or
otherwise, to assume, guarantee or in any other manner become liable with
respect to any Indebtedness of the Company or any other Restricted Subsidiary
(other than (A) Indebtedness under Currency Agreements and Commodity Agreements
in reliance on clause (v) of the definition of Permitted Indebtedness, (B)
Interest Swap Obligations incurred in reliance on clause (iv) of the definition
of Permitted Indebtedness or (C) any guarantee by a Foreign Subsidiary of
Indebtedness of another Foreign Subsidiary permitted under Section 4.12),
unless, in any such case (a) such Restricted Subsidiary that is not a Guarantor
executes and delivers a supplemental indenture to this Indenture, providing a
guarantee of payment of the Notes by such Restricted Subsidiary (the
"Guarantee") and (b) (x) if any such assumption, guarantee or other liability of
such Restricted Subsidiary is provided in respect of Senior Debt, the guarantee
or other instrument provided by such Restricted Subsidiary in respect of such
Senior Debt may be superior to the Guarantee pursuant to subordination
provisions no less favorable in any material respect to the Holders than those
contained in this Indenture and (y) if such assumption, guarantee or other
liability of such Restricted Subsidiary is provided in respect of Indebtedness
that is expressly subordinated to the Notes, the guarantee or other instrument
provided by such Restricted Subsidiary in respect of such subordinated
Indebtedness shall be subordinated to the Guarantee pursuant to subordination
provisions no less favorable in any material respect to the Holders than those
contained in this Indenture.
Notwithstanding the foregoing, any such Guarantee by a Restricted
Subsidiary of the Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged, without any further
action required on the part of the Trustee or any Holder, upon: (i) the
unconditional release of such Restricted Subsidiary from its liability in
respect of the Indebtedness in connection with which such Guarantee was
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executed and delivered pursuant to the preceding paragraph; or (ii) any sale or
other disposition (by merger or otherwise) to any Person which is not a
Restricted Subsidiary of the Company of all of the Capital Stock in, or all or
substantially all of the assets of, such Restricted Subsidiary or the parent of
such Restricted Subsidiary; provided that (a) such sale or disposition of such
--------
Capital Stock or assets is otherwise in compliance with the terms of this
Indenture and (b) such assumption, guarantee or other liability of such
Restricted Subsidiary has been released by the holders of the other Indebtedness
so guaranteed or (iii) such Guarantor becoming an Unrestricted Subsidiary in
accordance with this Indenture.
SECTION 4.20. Conduct of Business.
-------------------
The Company and its Restricted Subsidiaries (other than a
Securitization Entity) will not engage in any businesses which are not the same,
similar or related to the businesses in which the Company and its Restricted
Subsidiaries are engaged on the Issue Date, except to the extent that after
engaging in any new business, the Company and its Restricted Subsidiaries, taken
as a whole, remain substantially engaged in similar lines of business as are
conducted by them on the Issue Date. HICI Financial shall only conduct the
business of holding Indebtedness of Restricted Subsidiaries of the Company and
shall not incur or be liable for any Indebtedness other than guarantees
otherwise permitted under this Indenture. TG shall only conduct the business of
holding the equity interests in Restricted Subsidiaries and shall not incur or
be liable for any Indebtedness other than guarantees otherwise permitted under
this Indenture. Holdings U.K. shall only conduct the business of holding equity
interests and Indebtedness of Restricted Subsidiaries and shall not incur or be
liable for any Indebtedness other than Indebtedness owing to the Company or HICI
Financial. Funds directly or indirectly advanced to any Foreign Subsidiary by
the Company or any Domestic Subsidiary may only be so advanced if such funds are
(i) advanced directly by the Company or a Domestic Restricted Subsidiary, (ii)
contributed to HICI Financial as common equity and HICI Financial loans such
funds, directly or indirectly through Wholly Owned Restricted Subsidiaries, to
such Foreign Subsidiary or (iii) contributed to TG as common equity and TG
invests such funds in such Foreign Subsidiary.
SECTION 4.21. Capital Stock of Certain Subsidiaries.
-------------------------------------
The Company will at all times hold directly, or indirectly through a
Wholly Owned Restricted Subsidiary, (i) all
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issued and outstanding Capital Stock of TG, other than Class A Shares issued
pursuant to the terms of the Contribution Agreement, which will be held by an
ICI Affiliate and (ii) all issued and outstanding Capital Stock of Holdings
U.K., other than Class B Shares issued pursuant to the terms of the Contribution
Agreement, which will be held by a Huntsman Affiliate. Neither TG nor Holdings
U.K. will issue any Capital Stock (or any direct or indirect rights, options or
warrants to acquire such Capital Stock) to any Person other than the Company or
a Wholly Owned Restricted Subsidiary of the Company except to qualify directors
if required by applicable law or other similar legal requirements and the Class
A Shares and Class B Shares described in the preceding sentence. TG will not
make any direct or indirect distribution with respect to its Capital Stock to
any Person other than the Company or a Wholly Owned Restricted Subsidiary of the
Company except that after the UK Holdco Notes have been paid in full, dividends
may be paid on the Class A Shares of TG in an amount not to exceed 1% of the
dividends paid by TG. Holdings U.K. will not make any direct or indirect
distribution with respect to its Capital Stock to any Person other than the
Company or a Wholly Owned Restricted Subsidiary of the Company and other than
nominal dividends on the Class B Shares.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
----------------------------------------
(a) The Company will not, in a single transaction or a series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and its Restricted
Subsidiaries), whether as an entirety or substantially as an entirety to any
Person unless:
(i) either (1) the Company shall be the surviving or continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person that
acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the
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Company's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity") (x) shall be an entity organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and (y) shall expressly assume, by supplemental indenture (in form
and substance satisfactory to the Trustee), executed and delivered to the
Trustee, the due and punctual payment of the principal of, and premium, if
any, and interest on all the Notes and the performance of every covenant of
the Notes and this Indenture on the part of the Company to be performed or
observed;
(ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect
to any Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction), the Company
or such Surviving Entity, as the case may be, shall be able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.12;
(iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be incurred and any Lien
granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing; and
(iv) the Company or the Surviving Entity shall have delivered to
the Trustee an officers' certificate and an opinion of counsel, each
stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture
comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have
been satisfied.
(b) For purposes of this Section 5.01, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties and assets of one or
more Restricted Subsidiaries of the Company, the Capital Stock of which
constitutes all or substantially all of the properties or assets of
<PAGE>
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the Company, will be deemed to be the transfer of all or substantially all of
the properties and assets of the Company.
(c) Each Guarantor (other than any Guarantor whose Guarantee is to be
released in accordance with the terms of the Guarantee and this Indenture in
connection with any transaction complying with the provisions of Section 4.15)
will not, and the Company will not cause or permit any Guarantor to, consolidate
with or merge with or into any Person other than the Company or any other
Guarantor unless: (i) the entity formed by or surviving any such consolidation
or merger (if other than the Guarantor) or to which such sale, lease, conveyance
or other disposition shall have been made assumes by supplemental indenture all
of the obligations of the Guarantor on its Guarantee; (ii) immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; and (iii) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis, the
Company could satisfy the provisions of clause (ii) of the first paragraph of
this Section 5.01. Any merger or consolidation of a Guarantor with and into the
Company (with the Company being the surviving entity) or another Guarantor need
not comply with clause (a) above.
Notwithstanding anything in this Section 5.01 to the contrary, (a) the
Company may merge with an Affiliate that has no material assets or liabilities
and that is incorporated or organized solely for the purpose of reincorporating
or reorganizing the Company in another state of the United States or the
District of Columbia to realize tax benefits without complying with clause (ii)
of the first paragraph of this covenant and (b) any transaction characterized as
a merger under applicable state law where each of the constituent entities
survives, shall not be treated as a merger for purposes of this covenant, but
shall instead be treated as (x) an Asset Sale, if the result of such transaction
is the transfer of assets by the Company or a Restricted Subsidiary, or (y) an
Investment, if the result of such transaction is the acquisition of assets by
the Company or a Restricted Subsidiary.
SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger, or any transfer of all
or substantially all of the assets of the Company in accordance with Section
5.01 in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed
<PAGE>
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to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture and the Notes with the same effect as if such
surviving entity had been named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
Each of the following shall be an "Event of Default":
(1) the failure to pay interest on the Notes when the same becomes due
and payable and such Default continues for a period of 30 days (whether or
not such payment shall be prohibited by the subordination provisions
described under Article Ten);
(2) the failure to pay principal on any Notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or
not such payment shall be prohibited by the provisions described under
Article Ten);
(3) a default in the observance or performance of any other covenant
or agreement contained in this Indenture, which default continues for a
period of 60 days after the Company receives written notice thereof
specifying the default (and demanding that such default be remedied) from
the Trustee or the Holders of at least 25% of the outstanding principal
amount of the Notes (except in the case of a default with respect to
Section 5.01, which will constitute an Event of Default with such notice
requirement but without such passage of time requirement);
(4) the failure to pay at the final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company or the acceleration of the final stated maturity of any such
Indebtedness if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay
<PAGE>
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principal at final maturity or which has been accelerated, aggregates $25.0
million or more at any time and such Indebtedness has not been discharged
in full or such acceleration has not been rescinded or annulled within 30
days of such final maturity or acceleration;
(5) one or more judgments in an aggregate amount in excess of $25.0
million (which are not covered by third party insurance as to which the
insurer has not disclaimed coverage) shall have been rendered against the
Company or any of its Restricted Subsidiaries and such judgment or
judgments remain undischarged, unpaid or unstayed for a period of 60 days
after such judgment or judgments become final and nonappealable;
(6) the Company or any Restricted Subsidiary which is also a
Significant Subsidiary (A) commences a voluntary case or proceeding under
any Bankruptcy Law with respect to itself, (B) consents to the entry of a
judgment, decree or order for relief against it in an involuntary case or
proceeding under any Bankruptcy Law, (C) consents to the appointment of a
custodian of it or for substantially all of its property, (D) consents to
or acquiesces in the institution of a bankruptcy or an insolvency
proceeding against it or (E) makes a general assignment for the benefit of
its creditors;
(7) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any Restricted Subsidiary
which is also a Significant Subsidiary in an involuntary case or proceeding
under any Bankruptcy Law, which shall (A) approve as properly filed a
petition seeking reorganization, arrangement, adjustment or composition in
respect of the Company or any Significant Subsidiary, (B) appoint a
custodian of the Company or any Significant Subsidiary or for substantially
all of its property or (C) order the winding-up or liquidation of its
affairs; and such judgment, decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(8) any Guarantee of a Significant Subsidiary ceases to be in full
force and effect or any such Guarantee is declared to be null and void and
unenforceable or any of such Guarantee is found to be invalid or any of the
Guarantors denies its liability under its Guarantee (other than by reason
of release of a Guarantor in accordance with the terms of this Indenture).
<PAGE>
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SECTION 6.02. Acceleration.
------------
(a) If an Event of Default (other than an Event of Default specified
in Section 6.01(6) or (7) with respect to the Company) shall occur and be
continuing, the Trustee or the Holders of at least 25% in principal amount of
outstanding Notes may declare the principal of all the Notes, together with all
accrued and unpaid interest, to be due and payable by notice in writing to the
Company and, in the case of an acceleration notice from the Holders of at least
25% in principal amount of the outstanding Notes, the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), and the same shall become immediately due and payable or
if there are any amounts outstanding under the Designated Senior Debt, shall
become immediately due and payable upon the first to occur of an acceleration
under the Designated Senior Debt or 5 Business Days after receipt by the Company
and the Representative under the Designated Senior Debt of such Acceleration
Notice. If an Event of Default specified in Section 6.01(6) or (7) with respect
to the Company occurs and is continuing, then such amount will ipso facto become
---- -----
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder of the Notes.
(b) At any time after a declaration of acceleration with respect to
the Notes as described in the preceding paragraph, the Holders of a majority in
principal amount of the Notes then outstanding (by notice to the Trustee) may
rescind and cancel such declaration and its consequences if (i) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction, (ii) all existing Events of Default have been cured or waived
except nonpayment of principal of or interest on the Notes that has become due
solely by such declaration of acceleration, (iii) to the extent the payment of
such interest is lawful, interest (at the same rate specified in the Notes) on
overdue installments of interest and overdue payments of principal, which has
become due other than by such declaration of acceleration, has been paid, (iv)
the Company has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances and (v) in the event of the
cure or waiver of a Default or Event of Default of the type described in
Sections 6.01(6) and (7), the Trustee has received an Officers' Certificate and
Opinion of Counsel that such Default or Event of Default has been cured or
waived and the Trustee shall be entitled to conclusively rely upon such
Officers' Certificate and Opinion of Counsel. No such rescission shall affect
any subsequent De-
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fault or Event of Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, premium, if any, or accrued and unpaid 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 Noteholder 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 to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 6.07 and 9.02, the Holders of a majority in
principal amount of the Notes by notice to the Trustee may waive any existing
Default or Event of Default and its consequences, except a Default in the
payment of the principal of or interest on any Note as specified in clauses (1)
and (2) of Section 6.01.
SECTION 6.05. Control by Majority.
-------------------
Subject to Section 2.09, the Holders of a majority in aggregate
principal amount of the then 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, including, without limitation,
any remedies provided for in Section 6.03. Subject to Section 7.01, however, the
Trustee may, in its discretion, refuse to follow any direction that conflicts
with any law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of another Holder (it being understood that the
Trustee shall have no duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders) or that may involve the
Trustee in personal liability; provided, however, that the Trustee may take any
-------- -------
other action deemed proper by the Trustee, in its discretion, that is not
inconsistent with such direction.
<PAGE>
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SECTION 6.06. Limitation on Suits.
-------------------
A Holder may not pursue any remedy with respect to this Indenture or
the Notes unless:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default;
(2) Holders of at least 25% in aggregate principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holders offer to the Trustee indemnity or security against
any loss, liability or expense to be incurred in compliance with such
request which is satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 45 days after
receipt of the request and the offer of satisfactory indemnity or security;
and
(5) during such 45-day period the Holders of a majority in aggregate
principal amount of the then 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 to receive payment of principal of, premium and interest on a Note,
on or after the respective due dates expressed in such 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 in payment of principal or interest 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 of princi-
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pal and accrued interest remaining unpaid, together with interest on overdue
principal and, to the extent that payment of such interest is lawful, interest
on overdue installments of interest at the rate set forth 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, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property, and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, 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 it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07.
The Company's payment obligations under this Section 6.09 shall be secured in
accordance with the provisions of 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 Six, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Sections 6.09 and 7.07;
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Second: if the Holders are forced to proceed against the Company
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes
for principal, premium, if any, and interest, respectively; and
Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, 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 6.06 or 6.07.
SECTION 6.12. Expenses and Services After an Event of Default.
-----------------------------------------------
When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default described in this Article VI, the expenses and
compensation for services are intended to constitute expenses of administration
under any bankruptcy law.
<PAGE>
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such rights and powers vested in it by
this Indenture and use the same degree of care and skill in its exercise thereof
as a prudent Person would exercise or use under the circumstances in the conduct
of its 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 or the TIA and no duties, covenants,
responsibilities or obligations shall be implied in this Indenture that are
adverse to the Trustee.
(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 (including Officers'
Certificates) or opinions (including Opinions of Counsel) furnished to the
Trustee and conforming to the requirements of this Indenture. However, as
to any certificates or opinions which are required by any provision of this
Indenture to be delivered or provided 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) Notwithstanding anything to the contrary herein contained, the
Trustee may 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 7.01.
(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.
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(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 6.02, 6.04 or 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 paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree with the Company. Assets
held in trust by the Trustee need not be segregated from other assets except to
the extent required by law.
(g) In the absence of bad faith, negligence or willful misconduct on
the part of the Trustee, the Trustee shall not be responsible for the
application of any money by any Paying Agent other than the Trustee.
SECTION 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon 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 consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 13.04 and 13.05. The Trustee shall not be liable
for and shall be fully protected in respect of any action it takes or omits to
take in good faith in reliance on such Officers' Certificate, or an Opinion of
Counsel or advice of counsel.
<PAGE>
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(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent or attorney
appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith that it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate (including any Officers'
Certificate), statement, instrument, opinion (including any Opinion of Counsel),
notice, request, direction, consent, order, bond, debenture, or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled, upon reasonable notice to the Company, to examine the books, records,
and premises of the Company, personally or by agent or attorney.
(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, order or
direction of any of the Holders of the Notes pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred by it in compliance with such request, order or direction.
(g) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Notes shall be full and complete authorization and protection from liability
with respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(h) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(i) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty.
<PAGE>
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SECTION 7.03. 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, any
Restricted or Unrestricted Subsidiary, or their respective 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 must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, and it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be responsible for any
statement of the Company in this Indenture or the Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if
the Trustee has actual knowledge of such Default or Event of Default, the
Trustee shall mail to each Noteholder notice of the uncured Default or Event of
Default within 60 days after such Default or Event of Default occurs. Except in
the case of a Default or an Event of Default in the payment of interest or
principal of, premium or interest on, any Note, including an accelerated payment
and the failure to make payment on the Change of Control Payment Date pursuant
to a Change of Control Offer or on the Proceeds Purchase Date pursuant to a Net
Proceeds Offer and, except in the case of a failure to comply with Article Five,
the Trustee may withhold the notice if and so long as its Board of Directors,
the executive committee of its Board of Directors or a committee of its Board of
Directors and/or Trust Officers in good faith determines that withholding the
notice is in the interest of the Holders. The Trustee shall not be deemed to
have knowledge of a Default or Event of Default other than (i) any Event of
Default occurring pursuant to Sections 6.01(1) or 6.01(2); or (ii) any Default
or Event of Default of which a Trust Officer shall have received written
notification or obtained actual knowledge. As used herein, the term "actual
knowledge" means the actual fact or statement of knowing, without any duty to
make any investigation with regard thereto.
<PAGE>
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SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after April 1 of each year beginning with April 1,
1999, the Trustee shall, to the extent that any of the events described in TIA
(S) 313(a) occurred within the previous twelve months, but not otherwise, mail
to each Noteholder a brief report dated as of such date that complies with TIA
(S) 313(a). The Trustee also shall comply with TIA (S)(S) 313(b) and 313(c).
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any stock exchange, and if the Notes are so listed, the Trustee shall
comply with TIA (S) 313(d).
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, such compensation as may be agreed upon by the
Company and the Trustee. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses,
disbursements and advances incurred or made by it in connection with the
performance of its duties and the discharge of its obligations under this
Indenture. Such expenses shall include the reasonable fees and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee and its agents, employees,
officers, stockholders and directors for, and hold them harmless against, any
loss, liability or expense incurred by them except for such actions to the
extent caused by any negligence, bad faith or willful misconduct on their part,
arising out of or in connection with the acceptance or administration of this
trust including the reasonable costs and expenses of defending themselves
against or investigating any claim or liability in connection with the exercise
or performance of any of the Trustee's rights, powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee or any of its agents, employees, officers, stockholders and directors
for which it may seek indemnity. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee and its
<PAGE>
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agents, employees,officers, stockholders and directors subject to the claim may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel; provided, however, that the Company will not be required to pay
-------- -------
such fees and expenses if it assumes the Trustee's defense and there is no
conflict of interest between the Company and the Trustee and its agents,
employees, officers, stockholders and directors subject to the claim in
connection with such defense as reasonably determined by the Trustee; provided,
--------
further, that the Company shall not be liable to pay the fees and expenses of
- ------- more than one local counsel in any one jurisdiction. The Company need
not pay for any settlement made without its written consent. The Company need
not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, such expenses and the
compensation for such services shall be paid to the extent allowed under any
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing at least
30 days in advance. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by so notifying the Company and the
Trustee and may appoint a successor Trustee with the Company's consent. A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only with the successor Trustee's acceptance of
appointment as provided in this Section. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or 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
<PAGE>
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(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 notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the 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. Promptly after that, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, 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 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 the 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.
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, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided, however, that
-------- -------
such corporation shall be otherwise qualified and eligible under this Article
Seven.
<PAGE>
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SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1) and 310(a)(2). The Trustee (or in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA (S) 310(a)(2). The Trustee shall
comply with TIA (S) 310(b); provided, however, that there shall be excluded from
-------- -------
the operation of TIA (S) 310(b)(1) any indenture or indentures under which other
notes, or certificates of interest or participation in other notes, of the
Company are outstanding, if the requirements for such exclusion set forth in TIA
(S) 310(b)(1) are met. The provisions of TIA (S) 310 shall apply to the Company
and any other obligor of the Notes.
SECTION 7.11. Preferential Collection of Claims
Against the Company.
---------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein. The
provisions of TIA (S) 311 shall apply to the Company and any other obligor of
the Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations.
----------------------------------------
This Indenture will be Discharged and will cease to be of further
effect and the obligations of the Company under the Notes and this Indenture
shall terminate (except that the obligations under Sections 2.03 through 2.07,
7.01, 7.02, 7.07 and 7.08 and the rights, powers, trusts, duties and immunities
of the Trustee hereunder shall survive the effect of this Article Eight) when
(a) either (i) all Notes, theretofore authenticated and delivered (except lost,
stolen or destroyed Notes which have been replaced or paid and Notes for whose
payment money has theretofore been deposited in trust or segregated and
<PAGE>
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held in trust by the Company and thereafter repaid to the Company or discharged
from such trust) have been delivered to the Trustee for cancellation or (ii) all
Notes not theretofore delivered to the Trustee for cancellation have become due
and payable and the Company has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on the Notes to
the date of deposit together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof at maturity or
redemption, as the case may be; (b) the Company has paid all other sums payable
under this Indenture by the Company; and (c) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel stating that all
conditions precedent under this Indenture relating to the satisfaction and
discharge of this Indenture have been complied with; provided, however, that
-------- -------
such counsel may rely, as to matters of fact, on a certificate or certificates
of officers of the Company.
In addition, at the Company's option, either (a) the Company shall be
deemed to have been Discharged from any and all obligations with respect to the
Notes ("Legal Defeasance") after the applicable conditions set forth below have
been satisfied (except for the obligations of the Company under Sections 2.03,
2.04, 2.06, 2.07, 7.01, 7.02, 7.07 and this Section 8.01) or (b) the Company
shall cease to be under any obligation to comply with any term, provision or
condition set forth in Sections 4.03, 4.09 and 4.11 through 4.21 and Section
5.01 and thereafter any omission to comply with such obligations shall not
constitute a Default or Event of Default with respect to the Notes ("Covenant
Defeasance") after the applicable conditions set forth below have been
satisfied:
(1) The Company shall have irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust, for the benefit of the
Holders cash in U.S. Legal Tender, non-callable U.S. Government Obligations
or a combination thereof (in the case of Dollar Notes) and euros or Euro
Obligations (in the case of Euro Notes) that, together with the payment of
interest and premium thereon and principal in respect thereof in accordance
with their terms, will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay all the principal
of, premium, if any, and interest on the Notes on the dates such payments
are
<PAGE>
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due in accordance with the terms of such Notes, as well as the Trustee's
fees and expenses; provided, however, that no deposits made pursuant to
-------- -------
this Section 8.01(1) shall cause the Trustee to have a conflicting
interest as defined in and for purposes of the TIA; and provided, further,
-------- -------
that, as confirmed by an Opinion of Counsel, no such deposit shall result
in the Company, the Trustee or the trust becoming or being deemed to be an
"investment company" under the Investment Company Act of 1940;
(2) No Event of Default or Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit after giving
effect to such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of
which will be used to defease the Notes pursuant to this Article Eight) or
insofar as Events of Default pursuant to Section 6.01(6) or (7) are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(3) The Company shall have delivered to the Trustee an Opinion of
Counsel, to the effect that (A) either (i) the Company has assigned all its
ownership interest in the trust funds to the Trustee or (ii) the Trustee
has a valid perfected security interest in the trust funds and (B) assuming
no intervening bankruptcy of the Company between the date of the deposit
and the 124th day following the perfection of a security interest in the
deposit and that no Holder is an insider of the Company, after the 124th
day following the perfection of a security interest in the deposit, the
trust funds will not be subject to avoidance as a preference under Section
547 of the Federal Bankruptcy Code.
(4) The Company shall have paid or duly provided for payment of all
amounts then due to the Trustee pursuant to Section 7.07;
(5) No such deposit will result in a Default under this Indenture or
a breach or violation of, or constitute a default under, any other
instrument or material agreement to which the Company or any of its
Subsidiaries is a party or by which it or its property is bound;
(6) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the
<PAGE>
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Holders over any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company or others;
(7) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
or (B) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(8) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred; and
(9) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel to the effect that all conditions
precedent to Legal Defeasance or Covenant Defeasance, as the case may be,
have been complied with.
Notwithstanding the foregoing, the Opinion of Counsel required by
subparagraph 7 above need not be delivered if all Notes not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, (ii)
will become due and payable on the Maturity Date within one year, or (iii) are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company.
SECTION 8.02. Acknowledgment of Discharge by Trustee.
--------------------------------------
Subject to Section 8.05, after (i) the conditions of Section 8.01,
have been satisfied and (ii) the Company has de-
<PAGE>
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livered to the Trustee an Opinion of Counsel, stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon written
request of the Company shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in this Article Eight.
SECTION 8.03. Application of Trust Money.
--------------------------
The Trustee shall hold in trust Funds deposited with it pursuant to
Section 8.01. It shall apply the Funds through the Paying Agent and in
accordance with this Indenture to the payment of all the principal of, or
premium, if any, and interest on the Notes.
SECTION 8.04. Repayment to the Company.
------------------------
The Trustee and the Paying Agent shall promptly pay to the Company any
Funds held by them for the payment of all the principal of, or premium, if any,
and interest that remains unclaimed for one year; provided, however, that the
-------- -------
Trustee or such Paying Agent may, at the expense of the Company, cause to be
published once in a newspaper of general circulation in the City of New York or
mailed to each Holder, notice that such Funds remain unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed balance of such Funds then remaining
will be repaid to the Company. After payment to the Company, Holders entitled to
the Funds must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person and all liability of
the Trustee and Paying Agent with respect to such Funds shall cease.
SECTION 8.05. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any Funds 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 Section
8.01 until such time as the Trustee or Paying Agent is permitted to apply all
such Funds in accordance with Section 8.01; provided, however, that if the
-------- -------
Company has made any payment of principal, or premium, if any, and interest on
any Notes because of the reinstatement of its obligations,
<PAGE>
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the Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from Funds held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
--------------------------
The Company, when authorized by a Board Resolution, the Guarantors and
the Trustee, together, may amend or supplement this Indenture or the Notes
without the consent of any Holders:
(1) to cure any ambiguity, defect or inconsistency, so long as such
change does not, in the opinion of the Trustee, adversely affect the rights
of any of the Holders in any material respect;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(4) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA; or
(5) to make any other change that would provide any additional
benefit or rights to the Holders or that does not adversely affect in any
material respect the rights of any Noteholders hereunder;
provided, however, that the Company has delivered to the Trustee an
-------- -------
Opinion of Counsel and an Officers' Certificate, each stating that such
amendment or supplement complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
-----------------------
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, the Guarantors and the Trustee, together, with the written consent
of the Holder or Holders of at least a majority in principal amount of the then
outstanding Notes may make all other modifications, waivers and amendments
<PAGE>
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of this Indenture or the Notes, except that, without the consent of each Holder
of Notes affected thereby, no amendment or waiver may, directly or indirectly:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) change the method of calculation of or reduce the rate of or
change or have the effect of changing the time for payment of interest,
including defaulted interest, on any Notes;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Notes, or change the date on which any Notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price thereof;
(4) make any Notes payable in money other than that stated in the
Notes and this Indenture;
(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal and interest on such
Note on or after the due date thereof or to bring suit to enforce such
payment or permitting Holders of a majority in principal amount of the
Notes to waive Defaults or Events of Default;
(6) amend, change or modify in any material respect the obligation of
the Company to make and consummate a Change of Control Offer in the event
of a Change of Control or make and consummate a Net Proceeds Offer with
respect to any Asset Sale that has been consummated or modify any of the
provisions or definitions with respect thereto;
(7) modify or change any provision of this Indenture or the related
definitions affecting the subordination or ranking of the Notes or any
Guarantee in a manner which adversely affects the Holders; or
(8) release any Guarantor from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with the terms of
this Indenture.
Notwithstanding any provision to the contrary, if any amendment,
waiver or other modification will only effect the Dollar Notes or the Euro
Notes, only the consent of the holders
<PAGE>
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of at least a majority of the Dollar Notes or the Euro Notes, as the case may
be, shall be required.
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.
After an amendment, supplement or waiver under this Section 9.02
becomes effective (as provided in Section 9.04), the Company shall mail to the
Holders affected thereby a notice briefly describing the amendment, supplement
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 supplemental indenture.
SECTION 9.03. Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the 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. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to his Note or portion of his Note by notice to the
Trustee or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Notes have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver (at which time such amendment, supplement or
waiver shall become effective).
The Company may, but shall not be obligated to, fix such record date
as it may select for the purpose of determining the Holders entitled to consent
to any amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No
<PAGE>
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such consent shall be valid or effective for more than 120 days after such
record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (1)
through (8) of Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
a consenting Holder's Note; provided, however, that any such waiver shall not
-------- -------
impair or affect the right of any Holder to receive payment of principal of and
interest on a Note, on or after the respective due dates expressed in such Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates without the consent of such Holder.
SECTION 9.05. Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. 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 To Sign Amendments, Etc.
-------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to and adopted in accordance with this Article Nine;
provided, however, that the Trustee may, but shall not be obligated to, execute
- -------- -------
any such amendment, supplement or waiver which affects the Trustee's own rights,
duties or immunities under this Indenture. The Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel and
an Officers' Certificate each stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture. Such Opinion of Counsel shall not be an expense of
the Trustee.
<PAGE>
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ARTICLE TEN
SUBORDINATION OF NOTES
SECTION 10.01. Notes Subordinated to Senior Debt.
---------------------------------
Anything herein to the contrary notwithstanding, the Company, for
itself and its successors, and each Holder, by his or her acceptance of Notes,
agrees that the payment of all Obligations owing to the Holders in respect of
the Notes is subordinated, to the extent and in the manner provided in this
Article Ten, in right of payment to the prior payment in full in cash, Cash
Equivalents or Foreign Cash Equivalents, or such payment duly provided for to
the satisfaction of the holders of Senior Debt, of all Obligations on Senior
Debt, including without limitation, the Company's obligations under the Credit
Facilities.
This Article Ten shall constitute a continuing offer to all Persons
who become holders of, or continue to hold, Senior Debt, and such provisions are
made for the benefit of the holders of Senior Debt and such holders are made
obligees hereunder and any one or more of them may enforce such provisions.
SECTION 10.02. Suspension of Payment When Senior Debt Is in Default.
----------------------------------------------------
(a) Unless Section 10.03 shall be applicable, upon (1) the occurrence
and continuance of any default in the payment when due, whether at maturity,
upon any redemption, by declaration or otherwise, of any principal of, interest
on, unpaid drawings for letters of credit issued in respect of, or regularly
accruing fees with respect to, any Senior Debt (a "Payment Default") and (2)
receipt by the Trustee and the Company from a Representative of written notice
of such occurrence, then no payment (other than payments previously made
pursuant to Article Eight) or distribution of any assets of the Company of any
kind or character shall be made by or on behalf of the Company or any other
Person on its or their behalf on account of any Obligations under the Notes or
on account of the purchase, redemption or other acquisition of Notes for cash or
property or otherwise (except that Holders may receive (i) Permitted Junior
Securities and (ii) payments made from the trusts described in Section 8.01) and
until such Payment Default shall have been cured or waived or shall have ceased
to exist or such Senior Debt as to which such Payment Default relates shall have
<PAGE>
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been discharged or paid in full in cash, Cash Equivalents or Foreign Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, after which the Company shall resume making any and all
required payments in respect of the Notes, including any missed payments.
(b) Unless Section 10.03 shall be applicable, upon (1) the occurrence
and continuance of any event of default (other than a Payment Default) with
respect to any Designated Senior Debt (as such event of default is defined in
the instrument creating or evidencing such Designated Senior Debt) permitting
the holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof (a "Non-payment Default") and (2) the earlier of (i) receipt by
the Trustee and the Company from a Representative of written notice of such
occurrence stating that such notice is a "Payment Blockage Notice" pursuant to
this Section 10.02 or (ii) if such Non-payment Default results from the
acceleration of the Notes, the date of such acceleration, no payment (other than
payments previously made pursuant to Article Eight) or distribution of any
assets of the Company of any kind or character shall be made by or on behalf of
the Company or any other Person on its or their behalf on account of any
Obligations under the Notes or on account of the purchase or redemption or other
acquisition of Notes for cash or property or otherwise (except that Holders may
receive (i) Permitted Junior Securities and (ii) payments made from the trusts
described in Section 8.01) for a period (the "Payment Blockage Period")
commencing on the date of receipt by the Trustee of the written notice of a Non-
payment Default from such Representative or the date of the acceleration
referred to in clause (ii) above, as the case may be, unless and until the
earlier to occur of the following events: (w) 180 days shall have elapsed since
receipt of such notice or the date of the acceleration of the Notes, as the case
may be (provided no Designated Senior Debt shall theretofore have been
accelerated), (x) such Non-payment Default shall have been cured or waived or
shall have ceased to exist, (y) such Designated Senior Debt shall have been
discharged or paid in full in cash, Cash Equivalents or Foreign Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of such Designated Senior Debt, or (z) such Payment Blockage Period
shall have been terminated by written notice to the Company or the Trustee from
the Representative initiating such Payment Blockage Period or the holders of at
least a majority in principal amount of such issue of Designated Senior Debt
initiating such Payment Blockage Period, after which, in the case of clause (w),
(x), (y) or (z), the Company shall resume making any and all required payments
in respect of the Notes,
<PAGE>
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including any missed payments. Notwithstanding anything herein to the contrary,
(x) in no event will a Payment Blockage Period or successive Payment Blockage
Periods with respect to the same payment on the Notes extend beyond 180 days
from the date the payment on the Notes was due and (y) only one such Payment
Blockage Period may be commenced within any 360 consecutive days. For all
purposes of this Section 10.02(b), no event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Debt of the Company initiating such Payment
Blockage Period shall be, or be made, the basis for the commencement of a second
Payment Blockage Period by the holders or by the Representative of such
Designated Senior Debt whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants for a period commencing after the date
of commencement of such Payment Blockage Period that, in either case, would give
rise to an event of default pursuant to any provisions under which an event of
default previously existed or was continuing shall constitute a new event of
default for this purpose).
(c) In the event that, notwithstanding the foregoing, the Company
shall have made payment to the Trustee or directly to the Holder of any Note
prohibited by the foregoing provisions of this Section 10.02, then and in such
event such payment shall be segregated from other funds and held in trust by the
Trustee or such Holder or Paying Agent for the benefit of, and shall immediately
be paid over to, the holders of Senior Debt or to the Representatives or as a
court of competent jurisdiction shall direct.
SECTION 10.03. Notes Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation or Reorganization of Company.
---------------------------------------------------------
Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the benefit
of creditors or marshaling of assets of the Company or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating to
the Company or its property, whether voluntary or involuntary:
(a) the holders of all Senior Debt shall first be entitled to receive
payments in full in cash, Cash Equiva-
<PAGE>
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lents or Foreign Cash Equivalents, or such payment duly provided for to the
satisfaction of the holders of Senior Debt, of all amounts payable under
Senior Debt before the Holders will be entitled to receive any payment or
distribution of any kind or character is made on account of any Obligations
on the Notes or for the acquisition of any of the Notes for cash or
property or otherwise, and until all Obligations with respect to the Senior
Debt are paid in full in cash, Cash Equivalents or Foreign Cash
Equivalents, or such payment provided for to the satisfaction of the
holders of Senior Debt, any distribution to which the Holders would be
entitled shall be made to the holders of Senior Debt;
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the Holders
or the Trustee on behalf of the Holders would be entitled except for the
provisions of this Article Ten, shall be paid by the liquidating trustee or
agent or other Person making such a payment or distribution, directly to
the holders of Senior Debt or their representatives, ratably according to
the respective amounts of Senior Debt remaining unpaid held or represented
by each, until all Senior Debt remaining unpaid shall have been paid in
full in cash, Cash Equivalents or Foreign Cash Equivalents, or such payment
duly provided for to the satisfaction of the holders of Senior Debt, after
giving effect to any concurrent payment or distribution to the holders of
such Senior Debt; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether
such payment shall be in cash, property or securities, and the Company
shall have made payment to the Trustee or directly to the Holders or any
Paying Agent on account of any Obligations under the Notes before all
Senior Debt is paid in full in cash, Cash Equivalents or Foreign Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, such payment or distribution (subject to the
provisions of Sections 10.06 and 10.07) shall be received, segregated from
other funds, and held in trust by the Trustee or such Holder or Paying
Agent for the benefit of, and shall immediately be paid over by the Trustee
(if the notice required by Section 10.06 has been received by the Trustee)
or by the Holder to, the holders of Senior Debt or their representatives,
ratably according to the respective amounts of Senior Debt held or
represented by each,
<PAGE>
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until all Senior Debt remaining unpaid shall have been paid in full in
cash, Cash Equivalents or Foreign Cash Equivalents, or such payment duly
provided for to the satisfaction of the holders of Senior Debt, after
giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
(d) The consolidation of the Company with, or the merger of the
Company with or into, another Person or the liquidation or dissolution of
the Company following the conveyance, transfer or lease of its properties
and assets substantially as an entirety to another Person upon the terms
and conditions set forth in Article Five shall not be deemed a liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors or marshaling of assets of the Company, as the case may be, for
the purposes of this Article Ten; provided, however, that the Person formed
-------- -------
by such consolidation or the surviving entity of such merger or the Person
which acquires by conveyance, transfer or lease such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance, transfer or lease, comply with the
conditions set forth in such Article Five.
The Company shall give prompt notice to the Trustee prior to any
liquidation, dissolution, winding-up, reorganization, assignment for the benefit
of creditors or marshaling of assets.
SECTION 10.04. Holders To Be Subrogated to Rights of
Holders of Senior Debt.
-------------------------------------
Subject to the payment in full in cash, Cash Equivalents or Foreign
Cash Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, of all Senior Debt, the Holders of Notes shall be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of assets of the Company applicable to the Senior Debt until all
amounts owing on the Notes shall be paid in full in cash, Cash Equivalents or
Foreign Cash Equivalents, and for the purpose of such subrogation no payments or
distributions to the holders of Senior Debt by or on behalf of the Company, or
by or on behalf of the Holders by virtue of this Article Ten, which otherwise
would have been made to the Holders shall, as between the Company and the
Holders, be deemed to be payment by the Company to or on account of the Senior
Debt, it being understood that the provisions of this Article Ten are and are
<PAGE>
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intended solely for the purpose of defining the relative rights of the Holders,
on the one hand, and the holders of Senior Debt, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Ten shall have been
applied, pursuant to the provisions of this Article Ten, to the payment of all
amounts payable under the Senior Debt, then the Holders shall be entitled to
receive from the holders of such Senior Debt any such payments or distributions
received by such holders of Senior Debt in excess of the amount sufficient to
pay all amounts payable under or in respect of the Senior Debt in full in cash ,
Cash Equivalents or Foreign Cash Equivalents, or such payment duly provided for
to the satisfaction of the holders of Senior Debt.
Each Holder by purchasing or accepting a Note waives any and all
notice of the creation, modification, renewal, extension or accrual of any
Senior Debt of the Company and notice of or proof of reliance by any holder or
owner of Senior Debt of the Company upon this Article Ten and the Senior Debt of
the Company shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Article Ten, and all dealings between the Company
and the holders and owners of the Senior Debt of the Company shall be deemed to
have been consummated in reliance upon this Article Ten.
SECTION 10.05. Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Company other than the holders of the Senior Debt, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Ten, of the holders of Senior Debt in respect
of cash, property or Notes of the Company received upon the exercise of any such
remedy. Upon any payment or distribution of assets or securities of the Company
referred to in this Article Ten, the Trustee, subject to the provisions of
Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which any liqui-
<PAGE>
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dation, dissolution, winding-up or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent
or other Person making any payment or distribution to the Trustee or to the
Holders for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of Senior Debt and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article Ten. Nothing in this Article Ten shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.07. The Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Debt (or a trustee
on behalf of, or other representative of, such holder) to establish that such
notice has been given by a holder of such Senior Debt or a trustee or
representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Ten, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 10.06. Trustee Entitled To Assume Payments
Not Prohibited in Absence of Notice.
------------------------------------
The Trustee shall not at any time be charged with knowledge of the
existence of any facts that would prohibit the making of any payment to or by
the Trustee unless and until the Trustee or any Paying Agent shall have received
written notice thereof from the Company or from one or more holders of Senior
Debt or from any Representative therefor and, prior to the receipt of any such
notice, the Trustee, subject to the provisions of Sections 7.01 and 7.02, shall
be entitled in all respects conclusively to assume that no such fact exists.
<PAGE>
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SECTION 10.07. Application by Trustee of Assets
Deposited with It.
--------------------------------
U.S. Legal Tender, U.S. Government Obligations, Euros or Euro
Obligations deposited in trust with the Trustee pursuant to and in accordance
with Section 8.01 and 8.02 shall be for the sole benefit of the Holders of the
Notes and, to the extent allocated for the payment of Notes, shall not be
subject to the subordination provisions of this Article Ten. Otherwise, any
deposit of assets or securities by or on behalf of the Company with the Trustee
or any Paying Agent (whether or not in trust) for the payment of principal of or
interest on any Notes shall be subject to the provisions of this Article Ten;
provided, however, that if prior to the second Business Day preceding the date
- -------- -------
on which by the terms of this Indenture any such assets may become distributable
for any purpose (including, without limitation, the payment of either principal
of or interest on any Note) the Trustee or such Paying Agent shall not have
received with respect to such assets the notice provided for in Section 10.06,
then the Trustee or such Paying Agent shall have full power and authority to
receive such assets and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary received by it
on or after such date. The foregoing shall not apply to the Paying Agent if the
Company or any Subsidiary or Affiliate of the Company is acting as Paying Agent.
Nothing contained in this Section 10.07 shall limit the right of the holders of
Senior Debt to recover payments as contemplated by this Article Ten.
SECTION 10.08. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act by any such holder, or by any non-compliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
(b) Without limiting the generality of subsection (a) of this Section
10.08, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article Ten or the
obligations hereunder of the Holders of the Notes to
<PAGE>
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the holders of Senior Debt, do any one or more of the following: (1) change the
manner, place, terms or time of payment of, or renew or alter, Senior Debt or
any instrument evidencing the same or any agreement under which Senior Debt is
outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (3) release any Person
liable in any manner for the collection or payment of Senior Debt; and (4)
exercise or refrain from exercising any rights against the Company and any other
Person.
SECTION 10.09. Holders Authorize Trustee To Effectuate
Subordination of Notes.
---------------------------------------
Each Holder of the Notes by such Holder's acceptance thereof
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effect the subordination provisions
contained in this Article Ten, and appoints the Trustee such Holder's attorney-
in-fact for such purpose, including, in the event of any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of creditors
or marshaling of assets of the Company tending towards liquidation or
reorganization of the business and assets of the Company, the immediate filing
of a claim for the unpaid balance of such Holder's Notes in the form required in
said proceedings and cause said claim to be approved. If the Trustee does not
file a proper claim or proof of debt in the form required in such proceeding
prior to 30 days before the expiration of the time to file such claim or claims,
then any of the holders of the Senior Debt or their Representative is hereby
authorized to file an appropriate claim for and on behalf of the Holders of said
Notes. Nothing herein contained shall be deemed to authorize the Trustee or the
holders of Senior Debt or their Representative 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 or the holders of Senior Debt or their
Representative to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 10.10. Right of Trustee To Hold Senior Debt.
------------------------------------
The Trustee shall be entitled to all of the rights set forth in this
Article Ten in respect of any Senior Debt at any time held by it to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall
be construed to deprive the Trustee of any of its rights as such holder.
<PAGE>
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SECTION 10.11. No Suspension of Remedies.
-------------------------
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Ten shall not be
construed as preventing the occurrence of a Default or an Event of Default under
Section 6.01.
Nothing contained in this Article Ten shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Article Six or to pursue any rights or remedies hereunder
or under applicable law, subject to the rights, if any, under this Article Ten
of the holders, from time to time, of Senior Debt.
SECTION 10.12. No Fiduciary Duty of Trustee to
Holders of Senior Debt.
-------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and it undertakes to perform or observe such of its
covenants and obligations as are specifically set forth in this Article Ten, and
no implied covenants or obligations with respect to the Senior Debt shall be
read into this Indenture against the Trustee. The Trustee shall not be liable
to any such holders (other than for its willful misconduct or gross negligence)
if it shall pay over or deliver to the Holders of Notes or the Company or any
other Person, money or assets in compliance with the terms of this Indenture.
Nothing in this Section 10.12 shall affect the obligation of any Person other
than the Trustee to hold such payment for the benefit of, and to pay such
payment over to, the holders of Senior Debt or their Representative.
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. Unconditional Guarantee.
-----------------------
Subject to the provisions of this Article Eleven, each of the
Guarantors hereby, jointly and severally, unconditionally and irrevocably
guarantees, on a senior subordinated basis (such guarantees to be referred to
herein as the "Guarantee") to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of this Indenture, the Notes or the
obligations of the Company or any other
<PAGE>
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Guarantors to the Holders or the Trustee hereunder or thereunder, that: (a) the
principal of, premium, if any, and interest on the Notes (and any Additional
Interest payable thereon) shall be duly and punctually paid in full when due,
whether at maturity, upon redemption at the option of Holders pursuant to the
provisions of the Notes relating thereto, by acceleration or otherwise, and
interest on the overdue principal and (to the extent permitted by law) interest,
if any, on the Notes and all other obligations of the Company or the Guarantors
to the Holders or the Trustee hereunder or thereunder (including amounts due the
Trustee under Section 7.07 hereof) and all other obligations shall be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, the same shall be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed, or failing performance of any other obligation of the
Company to the Holders under this Indenture or under the Notes, for whatever
reason, each Guarantor shall be obligated to pay, or to perform or cause the
performance of, the same immediately. An Event of Default under this Indenture
or the Notes shall constitute an event of default under this Guarantee, and
shall entitle the Holders of Notes to accelerate the obligations of the
Guarantors hereunder in the same manner and to the same extent as the
obligations of the Company.
Each of the Guarantors hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, any release of any other Guarantor, the
recovery of any judgment against the Company, any action to enforce the same,
whether or not a Guarantee is affixed to any particular Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each of the Guarantors hereby waives the benefit of
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that its Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and this
Guarantee. This Guarantee is a guarantee of payment and not of collection. If
any Holder or the Trustee is required by any court or otherwise to return to
<PAGE>
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the Company or to any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Company or such Guarantor, any amount
paid by the Company or such Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor further agrees that, as between it, on the one
hand, and the Holders of Notes and the Trustee, on the other hand, (a) subject
to this Article Eleven, the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six hereof for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (b) in
the event of any acceleration of such obligations as provided in Article Six
hereof, such obligations (whether or not due and payable) shall forthwith become
due and payable by the Guarantors for the purpose of this Guarantee.
No stockholder, officer, director, employee or incorporator, past,
present or future, or any Guarantor, as such, shall have any personal liability
under this Guarantee by reason of his, her or its status as such stockholder,
officer, director, employee or incorporator.
Each Guarantor that makes a payment or distribution under its
Guarantee shall be entitled to a contribution from each other Guarantor in an
amount pro rata, based on the net assets of each Guarantor, determined in
accordance with GAAP.
SECTION 11.02. Limitations on Guarantees.
-------------------------
The obligations of each Guarantor under its Guarantee are limited to
the maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, will result in the obligations of
such Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.
SECTION 11.03. Execution and Delivery of Guarantee.
-----------------------------------
To further evidence the Guarantee set forth in Section 11.01, each
Guarantor hereby agrees that a notation of such Guarantee, substantially in the
form of Exhibit E hereto, shall be endorsed on each Note authenticated and
---------
delivered by
<PAGE>
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the Trustee. Such Guarantee shall be executed on behalf of each Guarantor by
either manual or facsimile signature of two Officers of each Guarantor, each of
whom, in each case, shall have been duly authorized to so execute by all
requisite corporate action. The validity and enforceability of any Guarantee
shall not be affected by the fact that it is not affixed to any particular Note.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 11.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which such Guarantee is endorsed or at any time thereafter, such
Guarantor's Guarantee of such Note shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of each Guarantor.
SECTION 11.04. Release of a Guarantor.
----------------------
(a) If no Default exists or would exist under this Indenture, upon
the sale or disposition of all of the Capital Stock of a Guarantor by the
Company, in a transaction or series of related transactions that either (i) does
not constitute an Asset Sale or (ii) constitutes an Asset Sale the Net Cash
Proceeds of which are applied in accordance with Section 4.15, or upon the
consolidation or merger of a Guarantor with or into any Person in compliance
with Article Five (in each case, other than to the Company or an Affiliate of
the Company), or if any Guarantor is dissolved or liquidated in accordance with
this Indenture, or if a Guarantor is designated an Unrestricted Subsidiary, such
Guarantor's Guarantee will be automatically discharged and released, and such
Guarantor and each Subsidiary of such Guarantor that is also a Guarantor shall
be deemed automatically discharged and released from all obligations under this
Article Eleven without any further action required on the part of the Trustee or
any Holder. Any Guarantor not so released or the entity surviving such
Guarantor, as applicable, shall remain or be liable under its Guarantee as
provided in this Article Eleven.
<PAGE>
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(b) The Trustee shall deliver an appropriate instrument evidencing
the release of a Guarantor upon receipt of a request by the Company or such
Guarantor accompanied by an Officers' Certificate and an Opinion of Counsel
certifying as to the compliance with this Section 11.04; provided, however, that
-------- -------
the legal counsel delivering such Opinion of Counsel may rely as to matters of
fact on one or more Officers Certificates of the Company.
The Trustee shall execute any documents reasonably requested by the
Company or a Guarantor in order to evidence the release of such Guarantor from
its obligations under its Guarantee endorsed on the Notes and under this Article
Eleven.
Except as set forth in Articles Four and Five and this Section 11.04,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.
SECTION 11.05. Waiver of Subrogation.
---------------------
Until this Indenture is discharged and all of the Notes are discharged
and paid in full, each Guarantor hereby irrevocably waives and agrees not to
exercise any claim or other rights which it may now or hereafter acquire against
the Company that arise from the existence, payment, performance or enforcement
of the Company's obligations under the Notes or this Indenture and such
Guarantor's obligations under this Guarantee and this Indenture, in any such
instance including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, and any right to participate in any
claim or remedy of the Holders against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including, without limitation, the right to take or receive from the Company,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Guarantor in violation of the preceding sentence and
any amounts owing to the Trustee or the Holders of Notes under the Notes, this
Indenture, or any other document or instrument delivered under or in connection
with such agreements or instruments, shall not have been paid in full, such
amount shall have been deemed to have been paid to such Guarantor for the
benefit of, and held in trust for the benefit of, the Trustee or the
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Holders and shall forthwith be paid to the Trustee for the benefit of itself or
such Holders to be credited and applied to the obligations in favor of the
Trustee or the Holders, as the case may be, whether matured or unmatured, in
accordance with the terms of this Indenture. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
11.05 is knowingly made in contemplation of such benefits.
SECTION 11.06. Immediate Payment.
-----------------
Each Guarantor agrees to make immediate payment to the Trustee on
behalf of the Holders of all Obligations owing or payable to the respective
Holders upon receipt of a demand for payment therefor by the Trustee to such
Guarantor in writing.
SECTION 11.07. No Set-Off.
----------
Each payment to be made by a Guarantor hereunder in respect of the
Obligations shall be payable in the currency or currencies in which such
Obligations are denominated, and shall be made without set-off, counterclaim,
reduction or diminution of any kind or nature.
SECTION 11.08. Obligations Absolute.
--------------------
The obligations of each Guarantor hereunder are and shall be absolute
and unconditional and any monies or amounts expressed to be owing or payable by
each Guarantor hereunder which may not be recoverable from such Guarantor on the
basis of a Guarantee shall be recoverable from such Guarantor as a primary
obligor and principal debtor in respect thereof.
SECTION 11.09. Obligations Continuing.
----------------------
The obligations of each Guarantor hereunder shall be continuing and
shall remain in full force and effect until all the obligations have been paid
and satisfied in full. Each Guarantor agrees with the Trustee that it will from
time to time deliver to the Trustee suitable acknowledgments of this continued
liability hereunder and under any other instrument or instruments in such form
as counsel to the Trustee may advise and as will prevent any action brought
against it in respect of any default hereunder being barred by any statute of
limitations now or hereafter in force and, in the event of the failure of a
Guarantor so to do, it hereby irrevocably appoints the
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Trustee the attorney and agent of such Guarantor to make, execute and deliver
such written acknowledgment or acknowledgments or other instruments as may from
time to time become necessary or advisable, in the judgment of the Trustee on
the advice of counsel, to fully maintain and keep in force the liability of such
Guarantor hereunder.
SECTION 11.10. Obligations Not Reduced.
-----------------------
The obligations of each Guarantor hereunder shall not be satisfied,
reduced or discharged solely by the payment of such principal, premium, if any,
interest, fees and other monies or amounts as may at any time prior to discharge
of this Indenture pursuant to Article Eight be or become owing or payable under
or by virtue of or otherwise in connection with the Notes or this Indenture.
SECTION 11.11. Obligations Reinstated.
----------------------
The obligations of each Guarantor hereunder shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
which would otherwise have reduced the obligations of any Guarantor hereunder
(whether such payment shall have been made by or on behalf of the Company or by
or on behalf of a Guarantor) is rescinded or reclaimed from any of the Holders
upon the insolvency, bankruptcy, liquidation or reorganization of the Company or
any Guarantor or otherwise, all as though such payment had not been made. If
demand for, or acceleration of the time for, payment by the Company is stayed
upon the insolvency, bankruptcy, liquidation or reorganization of the Company,
all such Indebtedness otherwise subject to demand for payment or acceleration
shall nonetheless be payable by each Guarantor as provided herein.
SECTION 11.12. Obligations Not Affected.
------------------------
The obligations of each Guarantor hereunder shall not be affected,
impaired or diminished in any way by any act, omission, matter or thing
whatsoever, occurring before, upon or after any demand for payment hereunder
(and whether or not known or consented to by any Guarantor or any of the
Holders) which, but for this provision, might constitute a whole or partial
defense to a claim against any Guarantor hereunder or might operate to release
or otherwise exonerate any Guarantor from any of its obligations hereunder or
otherwise affect such obligations, whether occasioned by default of any of the
Holders or otherwise, including, without limitation:
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(a) any limitation of status or power, disability, incapacity or other
circumstance relating to the Company or any other Person, including any
insolvency, bankruptcy, liquidation, reorganization, readjustment,
composition, dissolution, winding-up or other proceeding involving or
affecting the Company or any other Person;
(b) any irregularity, defect, unenforceability or invalidity in
respect of any indebtedness or other obligation of the Company or any other
Person under this Indenture, the Notes or any other document or instrument;
(c) any failure of the Company, whether or not without fault on its
part, to perform or comply with any of the provisions of this Indenture or
the Notes, or to give notice thereof to a Guarantor;
(d) the taking or enforcing or exercising or the refusal or neglect to
take or enforce or exercise any right or remedy from or against the Company
or any other Person or their respective assets or the release or discharge
of any such right or remedy;
(e) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Company or any other Person;
(f) any change in the time, manner or place of payment of, or in any
other term of, any of the Notes, or any other amendment, variation,
supplement, replacement or waiver of, or any consent to departure from, any
of the Notes or this Indenture, including, without limitation, any increase
or decrease in the principal amount of or premium, if any, or interest on
any of the Notes;
(g) any change in the ownership, control, name, objects, businesses,
assets, capital structure or constitution of the Company or a Guarantor;
(h) any merger or amalgamation of the Company or a Guarantor with any
Person or Persons;
(i) the occurrence of any change in the laws, rules, regulations or
ordinances of any jurisdiction by any present or future action of any
governmental authority or court amending, varying, reducing or otherwise
affecting, or purporting to amend, vary, reduce or otherwise affect,
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any of the Obligations or the obligations of a Guarantor under its
Guarantee; and
(j) any other circumstance, including release of the Guarantor
pursuant to Section 11.04 (other than by complete, irrevocable payment)
that might otherwise constitute a legal or equitable discharge or defense
of the Company under this Indenture or the Notes or of a Guarantor in
respect of its Guarantee hereunder.
SECTION 11.13. Waiver.
------
Without in any way limiting the provisions of Section 11.01 hereof,
each Guarantor hereby waives notice of acceptance hereof, notice of any
liability of any Guarantor hereunder, notice or proof of reliance by the Holders
upon the obligations of any Guarantor hereunder, and diligence, presentment,
demand for payment on the Company, protest, notice of dishonor or non-payment of
any of the Obligations, or other notice or formalities to the Company or any
Guarantor of any kind whatsoever.
SECTION 11.14. No Obligation To Take Action Against
the Company.
------------------------------------
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations or against the Company or any other Person or any
property of the Company or any other Person before the Trustee is entitled to
demand payment and performance by any or all Guarantors of their liabilities and
obligations under their Guarantees or under this Indenture.
SECTION 11.15. Dealing with the Company and Others.
-----------------------------------
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Guarantor
hereunder and without the consent of or notice to any Guarantor, may
(a) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Company or any
other Person;
(b) take or abstain from taking security or collateral from the
Company or from perfecting security or collateral of the Company;
<PAGE>
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(c) accept compromises or arrangements from the Company;
(d) apply all monies at any time received from the Company or from any
security upon such part of the Obligations as the Holders may see fit or
change any such application in whole or in part from time to time as the
Holders may see fit; and
(e) otherwise deal with, or waive or modify their right to deal with,
the Company and all other Persons and any security as the Holders or the
Trustee may see fit.
SECTION 11.16. Default and Enforcement.
-----------------------
If any Guarantor fails to pay in accordance with Section 11.06 hereof,
the Trustee may proceed in its name as trustee hereunder in the enforcement of
the Guarantee of any such Guarantor and such Guarantor's obligations thereunder
and hereunder by any remedy provided by law, whether by legal proceedings or
otherwise, and to recover from such Guarantor the obligations.
SECTION 11.17. Amendment, Etc.
--------------
No amendment, modification or waiver of any provision of this
Indenture relating to any Guarantor or consent to any departure by any Guarantor
or any other Person from any such provision will in any event be effective
unless it is signed by such Guarantor and the Trustee.
SECTION 11.18. Acknowledgment.
--------------
Each Guarantor hereby acknowledges communication of the terms of this
Indenture and the Notes and consents to and approves of the same.
SECTION 11.19. Costs and Expenses.
------------------
Each Guarantor shall pay on demand by the Trustee any and all costs,
fees and expenses (including, without limitation, legal fees on a solicitor and
client basis) incurred by the Trustee, its agents, advisors and counsel or any
of the Holders in enforcing any of their rights under any Guarantee.
<PAGE>
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SECTION 11.20. No Merger or Waiver; Cumulative Remedies.
----------------------------------------
No Guarantee shall operate by way of merger of any of the obligations
of a Guarantor under any other agreement, including, without limitation, this
Indenture. No failure to exercise and no delay in exercising, on the part of
the Trustee or the Holders, any right, remedy, power or privilege hereunder or
under this Indenture or the Notes, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder or under this Indenture or the Notes preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges in the Guarantee and under this
Indenture, the Notes and any other document or instrument between a Guarantor
and/or the Company and the Trustee are cumulative and not exclusive of any
rights, remedies, powers and privilege provided by law.
SECTION 11.21. Survival of Obligations.
-----------------------
Without prejudice to the survival of any of the other obligations of
each Guarantor hereunder, the obligations of each Guarantor under Section 11.01
shall survive the payment in full of the Obligations and shall be enforceable
against such Guarantor without regard to and without giving effect to any
defense, right of offset or counterclaim available to or which may be asserted
by the Company or any Guarantor.
SECTION 11.22. Guarantee in Addition to Other Obligations.
------------------------------------------
The obligations of each Guarantor under its Guarantee and this
Indenture are in addition to and not in substitution for any other obligations
to the Trustee or to any of the Holders in relation to this Indenture or the
Notes and any guarantees or security at any time held by or for the benefit of
any of them.
SECTION 11.23. Severability.
------------
Any provision of this Article Eleven which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction
unless its removal would substantially defeat the basic intent, spirit and
purpose of this Indenture and this Article Eleven.
<PAGE>
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SECTION 11.24. Successors and Assigns.
----------------------
Each Guarantee shall be binding upon and inure to the benefit of each
Guarantor and the Trustee and the other Holders and their respective successors
and permitted assigns, except that no Guarantor may assign any of its
obligations hereunder or thereunder.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated to
Guarantor Senior Debt.
-------------------------------------
Anything herein to the contrary notwithstanding, each of the
Guarantors, for itself and its successors, and each Holder, by his or her
acceptance of Guarantees, agrees that the payment of all Obligations owing to
the Holders in respect of its Guarantee (collectively, as to any Guarantor, its
"Guarantee Obligations") is subordinated, to the extent and in the manner
provided in this Article Twelve, to the prior payment in full in cash, Cash
Equivalents or Foreign Cash Equivalents, or such payment duly provided for to
the satisfaction of the holders of Guarantor Senior Debt, of all Obligations on
Guarantor Senior Debt of such Guarantor, including without limitation, the
Guarantors' obligations under the Credit Facilities.
This Article Twelve shall constitute a continuing offer to all Persons
who become holders of, or continue to hold, Guarantor Senior Debt, and such
provisions are made for the benefit of the holders of Guarantor Senior Debt and
such holders are made obligees hereunder and any one or more of them may enforce
such provisions.
SECTION 12.02. Suspension of Guarantee Obligations When
Guarantor Senior Debt Is in Default.
----------------------------------------
(a) Unless Section 12.03 shall be applicable, upon (1) the occurrence
of a Payment Default with respect to any Designated Senior Debt of a Guarantor
or guaranteed by a Guarantor (which Designated Senior Debt or guarantee, as the
case may be, constitutes Guarantor Senior Debt of such Guarantor) and (2)
receipt by the Trustee, the Company and such Guarantor from a Representative of
written notice of such occurrence, then no payment (other than payments
previously made pursuant
<PAGE>
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to Article Eight) or distribution of any assets of such Guarantor of any kind or
character shall be made by or on behalf of such Guarantor or any other Person on
its behalf on account of any Obligations under the Notes or on account of the
purchase, redemption or other acquisition of Notes for cash or property or
otherwise (except that Holders may receive (i) Permitted Junior Securities and
(ii) payments made from the trusts described in Section 8.01) until such Payment
Default shall have been cured or waived or shall have ceased to exist or such
Guarantor Senior Debt shall have been discharged or paid in full in cash, Cash
Equivalents or Foreign Cash Equivalents, or such payment duly provided for to
the satisfaction of the holders of Guarantor Senior Debt, after which such
Guarantor shall resume making any and all required payments in respect of its
obligations under this Guarantee, including any missed payments.
(b) Unless Section 12.03 shall be applicable upon (1) the occurrence
of any event of default (other than a Payment Default) with respect to any
Designated Senior Debt of a Guarantor (as such event of default is defined in
the instrument creating or evidencing such Designated Senior Debt of a
Guarantor) and (2) the earlier of (i) receipt by the Trustee, the Company and
such Guarantor from a Representative of written notice of such occurrence
stating that such notice is a "Payment Blockage Notice" pursuant to this Section
12.02 or (ii) if such Non-payment Default results from the acceleration of the
Securities, the date of the acceleration of the Securities, no payment (other
than payments previously made pursuant to Article Eight hereof) or distribution
of any assets of such Guarantor of any kind or character shall be made by on or
behalf of such Guarantor or any other Person on its or their behalf on account
of principal, premium, if any, or interest on the Notes or on account of the
purchase, redemption or other acquisition of Notes for cash or property or
otherwise (except that Holders may receive (i) Permitted Junior Securities and
(ii) payments made from the trusts described in Section 8.01) for a period (the
"Guarantor Payment Blockage Period") commencing on the date of receipt by the
Trustee of such notice or the date of the acceleration referred to in clause
(ii) above, as the case may be, unless and until the earlier to occur of the
following events: (w) 180 days shall have elapsed since receipt of such written
notice by the Trustee or the date of the acceleration of the Notes, as the case
may be (provided no Designated Senior Debt of a Guarantor shall theretofore have
been accelerated), (x) such Non-payment Default shall have been cured or waived
or shall have ceased to exist, (y) such Designated Senior Debt shall have been
discharged or paid in full in cash, Cash
<PAGE>
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Equivalents or Foreign Cash Equivalents, or such payment duly provided for to
the satisfaction of the holders of such Designated Senior Debt of a Guarantor or
(z) such Guarantor Payment Blockage Period shall have been terminated by written
notice to the Trustee from the Representative initiating Guarantor Payment
Blockage Period, or the holders of at least a majority in principal amount of
such issue of Guarantor Senior Debt, after which, in the case of clause (w),
(x), (y) or (z), such Guarantor shall resume making any and all required
payments in respect of its obligations under its Guarantee, including any missed
payments. Notwithstanding anything herein to the contrary, (x) in no event will
a Guarantor Payment Blockage Period or successive Guarantor Payment Blockage
Periods with respect to the same payment on a Guarantee extend beyond 180 days
from the date the payment on a Guarantee was due and (y) only one such Guarantor
Payment Blockage Period may be commenced within any 360 consecutive days. For
all purposes of this Section 12.02(b), no event of default which existed or was
continuing on the date of the commencement of any Guarantor Payment Blockage
Period with respect to the Designated Senior Debt of a Guarantor initiating such
Guarantor Payment Blockage Period shall be, or be made, the basis for the
commencement of a second Guarantor Payment Blockage Period by the holders or by
the agent or other representative of such Designated Senior Debt of a Guarantor
whether or not within a period of 360 consecutive days, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Guarantor Payment Blockage Period that, in either case,
would give rise to an event of default pursuant to any provisions under which an
event of default previously existed or was continuing shall constitute a new
event of default for this purpose).
(c) In the event that, notwithstanding the foregoing, a Guarantor
shall have made payment to the Trustee or directly to the Holder of any Note
prohibited by the foregoing provisions of this Section 12.02, then and in such
event such payment shall be segregated from other funds and held in trust by the
Trustee or such Holder or Paying Agent for the benefit of, and shall immediately
be paid over to, the holders of Designated Senior Debt of a Guarantor or to the
Representatives or as a court of competent jurisdiction shall direct.
<PAGE>
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SECTION 12.03. Guarantee Obligations Subordinated to Prior Payment of All
Guarantor Senior Debt on Dissolution, Liquidation or
Reorganization of Such Subsidiary Guarantor.
----------------------------------------------------------
Upon any payment or distribution of assets of any Guarantor of any
kind or character, whether in cash, property or securities to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors or marshaling of assets of such Guarantor, whether voluntary or
involuntary, or in a bankruptcy, reorganization, insolvency, receivership or
other similar proceeding relating to any Guarantor or its property, whether
voluntary or involuntary, but excluding any liquidation or dissolution of a
Guarantor into the Company or into another Guarantor:
(a) the holders of all Guarantor Senior Debt of such Guarantor shall
first be entitled to receive payments in full in cash, Cash Equivalents or
Foreign Cash Equivalents, or such payment duly provided for to the
satisfaction of the holders of Guarantor Senior Debt, of all amounts
payable under Guarantor Senior Debt before the Holders will be entitled to
receive any payment or distribution of any kind or character on account of
the Guarantee of such Guarantor, and until all Obligations with respect to
the Guarantor Senior Debt are paid in full in cash, Cash Equivalents or
Foreign Cash Equivalents, or such payment duly provided for to the
satisfaction of the holders of Guarantor Senior Debt, any distribution to
which the Holders would be entitled shall be made to the holders of
Guarantor Senior Debt of such Guarantor;
(b) any payment or distribution of assets of such Guarantor of any
kind or character, whether in cash, property or securities, to which the
Holders or the Trustee on behalf of the Holders would be entitled except
for the provisions of this Article Twelve shall be paid by the liquidating
trustee or agent or other Person making such a payment or distribution,
directly to the holders of Guarantor Senior Debt of such Guarantor or their
representatives, ratably according to the respective amounts of such
Guarantor Senior Debt remaining unpaid held or represented by each, until
all such Guarantor Senior Debt remaining unpaid shall have been paid in
full in cash, Cash Equivalents or Foreign Cash Equivalents, or such payment
duly provided for to the satisfaction of the holders of Guarantor Senior
Debt, after giving effect to any concurrent
<PAGE>
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payment or distribution to the holders of such Guarantor Senior Debt;
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of such Guarantor of any kind or character, whether
such payment shall be in cash, property or securities, and such Guarantor
shall have made payment to the Trustee or directly to the Holders or any
Paying Agent in respect of payment of the Guarantees before all Guarantor
Senior Debt of such Guarantor is paid in full in cash, Cash Equivalents or
Foreign Cash Equivalents, or such payment duly provided for to the
satisfaction of the holders of Guarantor Senior Debt, such payment or
distribution (subject to the provisions of Sections 12.06 and 12.07) shall
be received, segregated from other funds, and held in trust by the Trustee
or such Holder or Paying Agent for the benefit of, and shall immediately be
paid over by the Trustee (if the notice required by Section 12.06 has been
received by the Trustee) or by the Holder to, the holders of such Guarantor
Senior Debt or their representatives, ratably according to the respective
amounts of such Guarantor Senior Debt held or represented by each, until
all such Guarantor Senior Debt remaining unpaid shall have been paid in
full in cash, Cash Equivalents or Foreign Cash Equivalents, or such payment
duly provided for to the satisfaction of the holders of Guarantor Senior
Debt, after giving effect to any concurrent payment or distribution to the
holders of Guarantor Senior Debt.
Each Guarantor shall give prompt notice to the Trustee prior to any
dissolution, winding up, total or partial liquidation or total or reorganization
(including, without limitation, in bankruptcy, insolvency, or receivership
proceedings or upon any assignment for the benefit of creditors or any other
marshaling of such Guarantor's assets and liabilities).
SECTION 12.04. Holders of Guarantee Obligations To Be Subrogated to Rights of
Holders of Guarantor Senior Debt.
--------------------------------------------------------------
Subject to the payment in full in cash, Cash Equivalents or Foreign
Cash Equivalents, or such payment duly provided for to the satisfaction of the
holders of Guarantor Senior Debt, of all Guarantor Senior Debt, the Holders of
Guarantee Obligations of a Guarantor shall be subrogated to the rights of the
holders of Guarantor Senior Debt of such Guarantor to receive payments or
distributions of assets of such
<PAGE>
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Guarantor applicable to such Guarantor Senior Debt until all amounts owing on or
in respect of the Guarantee Obligations shall be paid in full in cash, Cash
Equivalents or Foreign Cash Equivalents, and for the purpose of such subrogation
no payments or distributions to the holders of such Guarantor Senior Debt by or
on behalf of such Guarantor, or by or on behalf of the Holders by virtue of this
Article Twelve, which otherwise would have been made to the Holders shall, as
between such Guarantor and the Holders, be deemed to be payment by such
Guarantor to or on account of such Guarantor Senior Debt, it being understood
that the provisions of this Article Twelve are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of such Guarantor Senior Debt, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Twelve shall have been
applied, pursuant to the provisions of this Article Twelve, to the payment of
all amounts payable under such Guarantor Senior Debt, then the Holders shall be
entitled to receive from the holders of such Guarantor Senior Debt any such
payments or distributions received by such holders of such Guarantor Senior Debt
in excess of the amount sufficient to pay all amounts payable under or in
respect of such Guarantor Senior Debt in full in cash, Cash Equivalents or
Foreign Cash Equivalents, or such payment duly provided for to the satisfaction
of the holders of Guarantor Senior Debt.
Each Holder by purchasing or accepting a Note waives any and all
notice of the creation, modification, renewal, extension or accrual of any
Guarantor Senior Debt of the Guarantors and notice of or proof of reliance by
any holder or owner of Guarantor Senior Debt of the Guarantors upon this Article
Twelve and the Guarantor Senior Debt of the Guarantors shall conclusively be
deemed to have been created, contracted or incurred in reliance upon this
Article Twelve, and all dealings between the Guarantors and the holders and
owners of the Guarantor Senior Debt of the Guarantors shall be deemed to have
been consummated in reliance upon this Article Twelve.
SECTION 12.05. Obligations of the Guarantors
Unconditional.
-----------------------------
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Guarantees is intended to or shall impair, as between the
Guarantors and the Holders, the obligation of the Guarantors, which is absolute
and unconditional, to
<PAGE>
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pay to the Holders all amounts due and payable under the Guarantees as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Guarantors other than the holders of the Guarantor Senior Debt, nor shall
anything herein or therein prevent the Trustee or any Holder from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article Twelve, of the
holders of Guarantor Senior Debt in respect of cash, property or securities of
the Guarantors received upon the exercise of any such remedy. Upon any payment
or distribution of assets of any Guarantor referred to in this Article Twelve,
the Trustee, subject to the provisions of Sections 7.01 and 7.02, and the
Holders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any liquidation, dissolution, winding up or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee or agent or other Person making any
payment or distribution to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Guarantor Senior Debt and other Indebtedness of any
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Twelve. Nothing in this Article Twelve shall apply to the claims of, or payments
to, the Trustee under or pursuant to Section 7.07. The Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself or itself to be a holder of any Guarantor Senior Debt (or a trustee on
behalf of, or other representative of, such holder) to establish that such
notice has been given by a holder of such Guarantor Senior Debt or a trustee or
representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Debt to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Guarantor Senior
Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Twelve, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
<PAGE>
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SECTION 12.06. Trustee Entitled To Assume Payments
Not Prohibited in Absence of Notice.
-----------------------------------
The Trustee shall not at any time be charged with knowledge of the
existence of any facts that would prohibit the making of any payment to or by
the Trustee unless and until the Trustee or any Paying Agent shall have received
notice thereof from the Company or any Guarantor or from one or more holders of
Guarantor Senior Debt or from any Representative therefor and, prior to the
receipt of any such notice, the Trustee, subject to the provisions of Sections
7.01 and 7.02, shall be entitled in all respects conclusively to assume that no
such fact exists.
SECTION 12.07. Application by Trustee of Assets
Deposited with It.
--------------------------------
U.S. Legal Tender, U.S. Government Obligations, Euros or Euro
Obligations deposited in trust with the Trustee pursuant to and in accordance
with Sections 8.01 and 8.02 shall be for the sole benefit of Holders of the
Notes and, to the extent allocated for the payment of Notes, shall not be
subject to the subordination provisions of this Article Twelve. Otherwise, any
deposit of assets or securities by or on behalf of a Guarantor with the Trustee
or any Paying Agent (whether or not in trust) for payment of the Guarantees
shall be subject to the provisions of this Article Twelve; provided, however,
-------- -------
that if prior to the second Business Day preceding the date on which by the
terms of this Indenture any such assets may become distributable for any purpose
(including, without limitation, the payment of either principal of or interest
on any Note) the Trustee or such Paying Agent shall not have received with
respect to such assets the notice provided for in Section 12.06, then the
Trustee or such Paying Agent shall have full power and authority to receive such
assets and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary received by it on or after
such date. The foregoing shall not apply to the Paying Agent if the Company or
any Subsidiary or Affiliate of the Company is acting as Paying Agent. Nothing
contained in this Section 12.07 shall limit the right of the holders of
Guarantor Senior Debt to recover payments as contemplated by this Article
Twelve.
SECTION 12.08. No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Guarantor Senior
Debt to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by
<PAGE>
-132-
any act or failure to act on the part of any Guarantor or by any act or failure
to act, by any such holder, or by any non-compliance by any Guarantor with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section
12.08, the holders of Guarantor Senior Debt may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Notes and
without impairing or releasing the subordination provided in this Article Twelve
or the obligations hereunder of the Holders of the Notes to the holders of
Guarantor Senior Debt, do any one or more of the following: (1) change the
manner, place, terms or time of payment of, or renew or alter, Guarantor Senior
Debt or any instrument evidencing the same or any agreement under which
Guarantor Senior Debt is outstanding; (2) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Guarantor Senior
Debt; (3) release any Person liable in any manner for the collection or payment
of Guarantor Senior Debt; and (4) exercise or refrain from exercising any rights
against the Guarantors and any other Person.
SECTION 12.09. Holders Authorize Trustee To Effectuate
Subordination of Guarantee Obligations.
---------------------------------------
Each Holder of the Guarantee Obligations by his acceptance thereof
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effect the subordination provisions
contained in this Article Twelve, and appoints the Trustee his attorney-in-fact
for such purpose, including, in the event of any liquidation, dissolution,
winding up, reorganization, assignment for the benefit of creditors or
marshaling of assets of any Guarantor tending towards liquidation or
reorganization of the business and assets of any Guarantor, the immediate filing
of a claim for the unpaid balance under its or his Guarantee Obligations in the
form required in said proceedings and cause said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding prior to 30 days before the expiration of the time to file such
claim or claims, then any of the holders of the Guarantor Senior Debt or their
Representative is hereby authorized to file an appropriate claim for and on
behalf of the Holders of said Guarantee Obligations. Nothing herein contained
shall be deemed to authorize the Trustee or the holders of Guarantor Senior Debt
<PAGE>
-133-
or their Representative to authorize or consent to or accept or adopt on behalf
of any holder of Guarantee Obligations any plan of reorganization, arrangement,
adjustment or composition affecting the Guarantee Obligations or the rights of
any Holder thereof, or to authorize the Trustee or the holders of Guarantor
Senior Debt or their Representative to vote in respect of the claim of any
holder of Guarantee Obligations in any such proceeding.
SECTION 12.10. Right of Trustee To Hold Guarantor
Senior Indebtedness.
----------------------------------
The Trustee shall be entitled to all of the rights set forth in this
Article Twelve in respect of any Guarantor Senior Debt at any time held by it to
the same extent as any other holder of Guarantor Senior Debt, and nothing in
this Indenture shall be construed to deprive the Trustee of any of its rights as
such holder.
SECTION 12.11. No Suspension of Remedies.
-------------------------
The failure to make a payment in respect of the Guarantees by reason
of any provision of this Article Twelve shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section 6.01.
Nothing contained in this Article Twelve shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Article Six or to pursue any rights or remedies hereunder
or under applicable law, subject to the rights, if any, under this Article
Twelve of the holders, from time to time, of Guarantor Senior Debt.
SECTION 12.12. No Fiduciary Duty of Trustee to
Holders of Guarantor Senior Debt.
--------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Guarantor Senior Debt, and it undertakes to perform or observe such
of its covenants and obligations as are specifically set forth in this Article
Twelve, and no implied covenants or obligations with respect to the Guarantor
Senior Debt shall be read into this Indenture against the Trustee. The Trustee
shall not be liable to any such holders (other than for its willful misconduct
or gross negligence) if it shall pay over or deliver to the holders of Guarantee
Obligations or the Guarantors or any other Person, money or assets in compliance
with the terms of this Indenture. Nothing in
<PAGE>
-134-
this Section 12.12 shall affect the obligation of any Person other than the
Trustee to hold such payment for the benefit of, and to pay such payment over
to, the holders of Guarantor Senior Debt or their Representative.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control. If any provision of this Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
SECTION 13.02. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company or any Guarantor:
HUNTSMAN ICI CHEMICALS LLC
500 Huntsman Way
Salt Lake City, Utah 84108
Attention: Office of General Counsel
with a copy to:
Skadden Arps Slate Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Phyllis Korff
if to the Trustee:
Bank One, N.A.
<PAGE>
-135-
100 East Broad Street OH-1-0181
Columbus, Ohio 43215
Attention: Corporate Trust Services
The Company, the Guarantors and the Trustee by written notice to each
other may designate additional or different addresses for notices. Any notice
or communication to the Company, the Guarantors or the Trustee shall be deemed
to have been given or made as of the date so delivered if personally delivered;
when answered back, if telexed; when receipt is acknowledged, if faxed; and five
(5) calendar days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee).
As long as the Securities are listed on the Luxembourg Stock Exchange
and notice is required by the rules of the Luxembourg Stock Exchange, such
notice shall be sufficiently given by publication of such notice to Holders of
the Securities in English in a leading newspaper having general circulation in
Luxembourg (which is expected to be the Luxembourg Wort) or, if such publication
is not practicable, in one other leading English language daily newspaper with
general circulation in Europe, such newspaper being published on each business
day in morning editions, whether or not it shall be published in Saturday,
Sunday or holiday editions.
Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar and shall be sufficiently given to him
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other
Holders.
------------------------------------
Holders may communicate pursuant to TIA (S) 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
(S) 312(c).
<PAGE>
-136-
SECTION 13.04. Certificate and Opinion as to
Conditions Precedent.
-----------------------------
Upon any request or application by the Company or the Guarantors to
the Trustee to take any action under this Indenture, the Company shall furnish
to the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, 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 to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action have
been complied with.
SECTION 13.05. 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 the Officers'
Certificate required by Section 4.07, 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 statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to
express an informed 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 each such
Person, such condition or covenant has been complied with.
<PAGE>
-137-
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
SECTION 13.07. Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York, Salt Lake City, Utah or at such place of payment are not required to be
open. If a payment date is a Legal Holiday at such place, payment may be made
at such place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
SECTION 13.08. Governing Law.
-------------
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Each
of the parties hereto agrees 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 13.09. No Adverse 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. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
--------------------------
A past, present or future director, officer, member, manager,
employee, stockholder or incorporator, as such, of the Company or any Guarantor
shall not have any liability for any obligations of the Company or any Guarantor
under the Notes, the Guarantees or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creations. Each Holder by
accepting a Note waives and releases all such
<PAGE>
-138-
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
SECTION 13.11. 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 13.12. Duplicate Originals.
-------------------
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 13.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
SECTION 13.14. Independence of Covenants.
-------------------------
All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
[Remainder of Page Intentionally Left Blank]
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
HUNTSMAN ICI CHEMICALS LLC
/s/ J. Kimo Esplin
By:------------------------------------
Name: J. Kimo Esplin
Title: Executive Vice President and
Chief Financial Officer
GUARANTORS
HUNTSMAN ICI FINANCIAL LLC
/s/ Samuel D. Scruggs
By:------------------------------------
Name: Samuel D. Scruggs
Title: Vice President - Deputy
General Counsel
Executed as a Deed by TIOXIDE AMERICAS INC.
L. Russell Healy
for and on behalf of /s/ L. Russell Healy
Tioxide Americas Inc. By:----------------------------------
in the presence of L. Russell Healy
Vice President and Treasurer
/s/ [Witness]
- ---------------------------
Witness
S-1
<PAGE>
TIOXIDE GROUP
By:/s/ J. Kimo Esplin
-------------------------------
Name: J. Kimo Esplin
Title: Director
BANK ONE, N.A., as Trustee
By:/s/ David B. Knox
-------------------------------
Name: David B. Knox
Title: Authorized Signor
<PAGE>
EXHIBIT A-1
-----------
[FORM OF RESTRICTED DOLLAR NOTE]
THIS SECURITY 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 BELOW. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3), OR (7)
UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 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 AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND IN CONNECTION
WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE
OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, 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
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. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATIONS
S UNDER THE SECURITIES ACT.
A-1-1
<PAGE>
HUNTSMAN ICI CHEMICALS LLC
10 1/8% Senior Subordinated Note due 2009
No. $[ ]
CUSIP
HUNTSMAN ICI CHEMICALS LLC, a Delaware limited liability company (the
"Company"), for value received, promises to pay to CEDE & CO. or registered
assigns, the principal sum of , on July 1, 2009.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
A-1-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
Dated: HUNTSMAN ICI CHEMICALS LLC
By:___________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 10 1/8% Senior Subordinated Notes due 2009 referred
to in the within-mentioned Indenture.
Dated:
Bank One, N.A., as Trustee
By:___________________________
Authorized Signature
A-1-3
<PAGE>
(REVERSE OF NOTE)
10 1/8% Senior Subordinated Note due 2009
1. Interest. HUNTSMAN ICI CHEMICALS LLC, a Delaware limited
--------
liability company (the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from June 30, 1999. The Company will pay interest semi-
annually in arrears on each January 1 and July 1 (each, an "Interest Payment
Date") and at stated maturity, commencing on January 1, 2000. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal, premium
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal, premium and interest by its check payable in such
U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, Bank One, N.A. (the
--------------------------
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Registrar or co-Registrar.
4. Indenture. The Company issued the Notes under an Indenture,
---------
dated as of June 30, 1999 (the "Indenture"), among the Company, each of the
Guarantors named therein and the Trustee. This Note is one of a duly authorized
issue of Notes of the Company designated as its dollar denominated 10 1/8%
A-1-4
<PAGE>
Senior Subordinated Notes due 2009 (the "Notes"), limited (except as otherwise
provided in the Indenture) in aggregate principal amount to $600,000,000, which
may be issued under the Indenture. The Notes and the Company's euro denominated
10 1/8% Senior Subordinated Notes due 2009 (the "Euro Notes") are treated as a
single class of securities under the Indenture unless otherwise specified in the
Indenture. Capitalized terms used herein shall have the meanings assigned to
them in the Indenture unless otherwise defined herein. 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 (15 U.S.C. (S)(S) 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything
to the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and the TIA for a statement of them. The
Notes are senior subordinated unsecured obligations of the Company.
5. Optional Redemption. (a) 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 July 1, 2004, 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 July 1 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>
2004 105.063%
2005 103.375%
2006 101.688%
2007 and thereafter 100.000%
</TABLE>
(b) At any time, or from time to time, on or prior to July 1, 2002,
the Company may, at its option, use the net cash proceeds of one or more Equity
Offerings (as defined below) to redeem up to 35% of the aggregate principal
amount of Notes originally issued at a redemption price equal to 110.125% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided, however, that at least 65% of the aggregate
-------- -------
principal amount of the Dollar Notes and Euro Notes originally issued remain
outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Company shall
make such redemption not more than 120 days after the consummation of any such
Equity Offering.
A-1-5
<PAGE>
As used in the preceding paragraph, "Equity Offering" means any sale
of Qualified Capital Stock of the Company or any capital contribution to the
equity of the Company.
(c) At any time on or prior to July 1, 2004, the Notes may be
redeemed, in whole or in part, at the option of the Company, upon not less than
30 nor more than 60 days' notice, at a redemption price (the "Make-Whole Price")
equal to the greater of (i) 100% of the principal amount thereof or (ii) as
determined by an Independent Investment Banker, the present value of (A) the
redemption price of such Notes at July 1, 2004 (as set forth below) plus (B) all
required interest payments due on such Notes through July 1, 2004 (excluding
accrued interest), discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at, in the case of
the Dollar Notes, the Adjusted Treasury Rate and, in the case of the Euro Notes,
the Adjusted Bund Rate, plus in each case accrued interest to the redemption
date.
"Adjusted Bund Rate" means, with respect to any redemption date, the
mid-market yield under the heading which represents the average for the
immediately prior week appearing on Reuters page AABBUND01, or its successor,
for the maturity corresponding to July 1, 2009 (if no maturity date is within
three months before or after July 1, 2009, yields for the two published
maturities most closely corresponding to July 1, 2009 shall be determined and
the Bund yield shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month), plus 0.50%. The Bund Rate
shall be calculated on the third Business Day preceding such redemption date.
"Adjusted Treasury Rate" means with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.50%.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the same time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Notes.
A-1-6
<PAGE>
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the Trustee obtains fewer than three such Reference Treasury Dealer Quotations,
the average of all such quotations.
"Independent Investment Banker" means any Reference Treasury Dealer
appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Goldman Sachs & Co., Deutche
Bank Securities Inc., Chase Securities Inc. and Warburg Dillon Read LLC and
their respective successors; provided, however, that if any of the foregoing
-------- -------
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Reference Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
6. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder whose Notes are to be redeemed at such Holder's registered address.
Notes in denominations larger than $1,000 may be redeemed in part.
7. Change of Control Offer. In the event of a Change of Control,
-----------------------
upon the satisfaction of the conditions set forth in the Indenture, the Company
shall be required to offer to repurchase all of the then outstanding Notes
pursuant to a Change of Control Offer at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest,
A-1-7
<PAGE>
if any, to the date of purchase. Holders of Notes that are the subject of such
an offer to repurchase shall receive an offer to repurchase and may elect to
have such Notes repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
8. Limitation on Asset Sales. Under certain circumstances set forth
-------------------------
in Section 4.15 of the Indenture, the Company is required to apply the net
proceeds from Asset Sales to offer to repurchase the Notes at a price equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon,
if any, to the date of repurchase.
9. Denominations; Transfer; Exchange. The Notes are in fully
---------------------------------
registered form only, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer or exchange of Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer or exchange of any Notes during a period beginning 15 days before the
mailing of a redemption notice for any Notes or portions thereof selected for
redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or non-callable U.S. Government
Obligations sufficient to pay the principal of, premium and interest on the
Notes to redemption or maturity and complies with the other provisions of this
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of, premium and interest on the
Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the then outstanding Notes and Euro Notes, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the then
out-
A-1-8
<PAGE>
standing Notes and Euro Notes. Without 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 uncertificated
Notes in addition to or in place of certificated Notes, or comply with Article
Five of the Indenture or make any other change that does not adversely affect in
any material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, pay dividends or make certain other restricted
payments, enter into transactions with Affiliates, create dividend or other
payment restrictions affecting Restricted Subsidiaries and merge or consolidate
with any other Person, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with this
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. 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 and Euro Notes may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has been offered indemnity or security
reasonably satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Notes and Euro Notes then outstanding to direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of Notes
notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines in good faith that
withholding notice is in their interest.
A-1-9
<PAGE>
17. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Restricted and Unrestricted
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No past, present or future
--------------------------
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation 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 of a Note by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the Trustee
--------------
or authenticating agent manually signs the certificate of authentication on this
Note.
20. Governing Law. This Note shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of laws to the extent that the application of
the laws of another jurisdiction would be required thereby.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note 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).
22. CUSIP/ISIN Numbers. The Company has caused CUSIP and/or ISIN
------------------
numbers to be printed on the Notes as a convenience to the Holders of the Notes.
No representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Registration Rights. Pursuant to the Registration Rights
-------------------
Agreement, the Company and the Guarantors will be obligated upon the occurrence
of certain events to consummate an exchange offer pursuant to which the Holder
of this Note shall have the right to exchange this Note for a 10 1/8% Senior
Subordinated Note due 2009, of the Company (an "Unrestricted Note") which have
been registered under the Securities Act, in like principal amount and having
terms identical in all material respects as this Note. The Holders shall be
entitled to
A-1-10
<PAGE>
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 Agreement.
24. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time. Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture.
25. Guarantees. This Note will be entitled to the benefits of
----------
certain senior subordinated Guarantees, if any, made for the benefit of the
Holders. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Guarantors, the Trustee and the Holders.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture. Requests may be made to: HUNTSMAN
ICI CHEMICALS LLC, 500 Huntsman Way, Salt Lake City, Utah 84108, Attention:
Office of General Counsel.
A-1-11
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- --------------------------------
- -------------------------------------------------------------------------------
(please print or type name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
- -------------------------------------------------------------------------------
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:___________________ ________________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee: _______________________________________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) June 30, 2000 the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
A-1-12
<PAGE>
[Check One]
---------
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; 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 to a "foreign purchaser" in compliance with
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; or
(6) ___ pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the registration
statement requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[_] The transferee is an Affiliate of the Company.
Unless one of the items 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, however, that if item
-------- -------
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4) and other information as the Trustee or the Company have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the reg-
A-1-13
<PAGE>
istration requirements of the Securities Act of l933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated:__________________ Signed:____________________________________________
(Sign exactly as name appears
on the other side of this
Note)
Signature Guarantee:___________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_________________ _______________________________
NOTICE: To be executed by an
executive officer
A-1-14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount: $_____________
Date:_____________________ Your Signature:___________________________________
(Sign exactly as your
name appears on the other
side of this Note)
Signature Guarantee:___________________________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
A-1-15
<PAGE>
EXHIBIT A-2
-----------
[FORM OF RESTRICTED EURO NOTE]
------------------------------
THIS SECURITY 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 BELOW. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3), OR (7)
UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 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 AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND IN CONNECTION
WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE
OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, 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
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. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATIONS
S UNDER THE SECURITIES ACT.
A-2-1
<PAGE>
HUNTSMAN ICI CHEMICALS LLC
10 1/8% Senior Subordinated Note due 2009
No. EU[ ]
ISIN
HUNTSMAN ICI CHEMICALS LLC, a Delaware limited liability company (the
"Company"), for value received, promises to pay to
or registered assigns, the principal sum of , on July 1, 2009.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
A-2-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
Dated: HUNTSMAN ICI CHEMICALS LLC
By:_____________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 10 1/8% Senior Subordinated Notes due 2009 referred
to in the within-mentioned Indenture.
Dated:
Bank One, N.A., as Trustee
By:_____________________________
Authorized Signature
A-2-3
<PAGE>
(REVERSE OF NOTE)
10 1/8% Senior Subordinated Note due 2009
1. Interest. HUNTSMAN ICI CHEMICALS LLC, a Delaware limited
--------
liability company (the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from June 30, 1999. The Company will pay interest semi-
annually in arrears on each January 1 and July 1 (each, an "Interest Payment
Date") and at stated maturity, commencing on January 1, 2000. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal, premium
and interest in euros. However, the Company may pay principal, premium and
interest by its check payable in euros. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, Bank One, N.A. (the
--------------------------
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Registrar or co-Registrar.
4. Indenture. The Company issued the Notes under an Indenture,
---------
dated as of June 30, 1999 (the "Indenture"), among the Company, each of the
Guarantors named therein and the Trustee. This Note is one of a duly authorized
issue of Notes of the Company designated as its euro denominated 10 1/8% Senior
Subordinated Notes due 2009 (the "Notes"), limited (except as otherwise provided
in the Indenture) in aggregate principal
A-2-4
<PAGE>
amount to EU200,000,000, which may be issued under the Indenture. The Notes and
the Company's dollar denominated 10 1/8% Senior Subordinated Notes due 2009 (the
"Dollar Notes") are treated as a single class of securities under the Indenture
unless otherwise specified in the Indenture. Capitalized terms used herein shall
have the meanings assigned to them in the Indenture unless otherwise defined
herein. 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 (15
U.S.C. (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of them. The Notes are senior subordinated unsecured
obligations of the Company.
5. Optional Redemption. (a) 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 July 1, 2004, 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 July 1 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>
2004 105.063%
2005 103.375%
2006 101.688%
2007 and thereafter 100.000%
</TABLE>
(b) At any time, or from time to time, on or prior to July 1, 2002,
the Company may, at its option, use the net cash proceeds of one or more Equity
Offerings (as defined below) to redeem up to 35% of the aggregate principal
amount of Notes originally issued at a redemption price equal to 110.125% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided, however, that at least 65% of the aggregate
-------- -------
principal amount of the Dollar Notes and Euro Notes originally issued remain
outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Company shall
make such redemption not more than 120 days after the consummation of any such
Equity Offering.
A-2-5
<PAGE>
As used in the preceding paragraph, "Equity Offering" means any sale
of Qualified Capital Stock of the Company or any capital contribution to the
equity of the Company.
(c) At any time on or prior to July 1, 2004, the Notes may be
redeemed, in whole or in part, at the option of the Company, upon not less than
30 nor more than 60 days' notice, at a redemption price (the "Make-Whole Price")
equal to the greater of (i) 100% of the principal amount thereof or (ii) as
determined by an Independent Investment Banker, the present value of (A) the
redemption price of such Notes at July 1, 2004 (as set forth below) plus (B) all
required interest payments due on such Notes through July 1, 2004 (excluding
accrued interest), discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at, in the case of
the Dollar Notes, the Adjusted Treasury Rate and, in the case of the Euro Notes,
the Adjusted Bund Rate, plus in each case accrued interest to the redemption
date.
"Adjusted Bund Rate" means, with respect to any redemption date, the
mid-market yield under the heading which represents the average for the
immediately prior week appearing on Reuters page AABBUND01, or its successor,
for the maturity corresponding to July 1, 2009 (if no maturity date is within
three months before or after July 1, 2009, yields for the two published
maturities most closely corresponding to July 1, 2009 shall be determined and
the Bund yield shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month), plus 0.50%. The Bund Rate
shall be calculated on the third Business Day preceding such redemption date.
"Adjusted Treasury Rate" means with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.50%.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the same time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Notes.
A-2-6
<PAGE>
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the Trustee obtains fewer than three such Reference Treasury Dealer Quotations,
the average of all such quotations.
"Independent Investment Banker" means any Reference Treasury Dealer
appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Goldman Sachs & Co., Deutche
Bank Securities Inc., Chase Securities Inc. and Warburg Dillon Read LLC and
their respective successors; provided, however, that if any of the foregoing
-------- -------
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Reference Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
6. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder whose Notes are to be redeemed at such Holder's registered address.
Notes in denominations larger than EU1,000 may be redeemed in part.
7. Change of Control Offer. In the event of a Change of Control,
-----------------------
upon the satisfaction of the conditions set forth in the Indenture, the Company
shall be required to offer to repurchase all of the then outstanding Notes
pursuant to a Change of Control Offer at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest,
A-2-7
<PAGE>
if any, to the date of purchase. Holders of Notes that are the subject of such
an offer to repurchase shall receive an offer to repurchase and may elect to
have such Notes repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
8. Limitation on Asset Sales. Under certain circumstances set forth
-------------------------
in Section 4.15 of the Indenture, the Company is required to apply the net
proceeds from Asset Sales to offer to repurchase the Notes at a price equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon,
if any, to the date of repurchase.
9. Denominations; Transfer; Exchange. The Notes are in fully
---------------------------------
registered form only, without coupons, in denominations of EU1,000 and integral
multiples of EU1,000. A Holder shall register the transfer or exchange of Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer or exchange of any Notes during a period beginning 15 days before the
mailing of a redemption notice for any Notes or portions thereof selected for
redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee euros or non-callable Euro Obligations sufficient
to pay the principal of, premium and interest on the Notes to redemption or
maturity and complies with the other provisions of this Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of, premium and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the then out-
<PAGE>
standing Notes and Dollar Notes, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the then outstanding
Notes and Dollar Notes. Without 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 uncertificated Notes in addition
to or in place of certificated Notes, or comply with Article Five of the
Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, pay dividends or make certain other restricted
payments, enter into transactions with Affiliates, create dividend or other
payment restrictions affecting Restricted Subsidiaries and merge or consolidate
with any other Person, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with this
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. 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 and Dollar Notes may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has been offered indemnity or security
reasonably satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Notes and Dollar Notes then outstanding to direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Notes notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines in good faith that
withholding notice is in their interest.
A-2-9
<PAGE>
17. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Restricted and Unrestricted
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No past, present or future
--------------------------
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation 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 of a Note by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the Trustee
--------------
or authenticating agent manually signs the certificate of authentication on this
Note.
20. Governing Law. This Note shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of laws to the extent that the application of
the laws of another jurisdiction would be required thereby.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note 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).
22. CUSIP/ISIN Numbers. The Company has caused CUSIP and/or ISIN
------------------
numbers to be printed on the Notes as a convenience to the Holders of the Notes.
No representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Registration Rights. Pursuant to the Registration Rights
-------------------
Agreement, the Company and the Guarantors will be obligated upon the occurrence
of certain events to consummate an exchange offer pursuant to which the Holder
of this Note shall have the right to exchange this Note for a 10 1/8% Senior
Subordinated Note due 2009, of the Company (an "Unrestricted Note") which have
been registered under the Securities Act, in like principal amount and having
terms identical in all material respects as this Note. The Holders shall be
entitled to
A-2-10
<PAGE>
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 Agreement.
24. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time. Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture.
25. Guarantees. This Note will be entitled to the benefits of
----------
certain senior subordinated Guarantees, if any, made for the benefit of the
Holders. Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Guarantors, the Trustee and the Holders.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture. Requests may be made to: HUNTSMAN
ICI CHEMICALS LLC, 500 Huntsman Way, Salt Lake City, Utah 84108, Attention:
Office of General Counsel.
A-2-11
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- ---------------------------------
- -------------------------------------------------------------------------------
(please print or type name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
- -------------------------------------------------------------------------------
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:____________________ _________________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee:___________________________________________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) June 30, 2000 the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
A-2-12
<PAGE>
[Check One]
--------
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; 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 to a "foreign purchaser" in compliance with
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; or
(6) ___ pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the registration
statement requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[_] The transferee is an Affiliate of the Company.
Unless one of the items 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, however, that if item
-------- -------
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4) and other information as the Trustee or the Company have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the reg-
<PAGE>
istration requirements of the Securities Act of l933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated:__________________ Signed:_________________________________________
(Sign exactly as name appears
on the other side of this
Note)
Signature Guarantee:___________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_____________________ _____________________________________________
NOTICE: To be executed by an
executive officer
A-2-14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount: EU_____________
Date:__________________________ Your Signature:______________________________
(Sign exactly as your
name appears on the other
side of this Note)
Signature Guarantee:___________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
A-2-15
<PAGE>
EXHIBIT A-3
-----------
[FORM OF DOLLAR NOTE]
HUNTSMAN ICI CHEMICALS LLC
10 1/8% Senior Subordinated Note due 2009
No. $[ ]
CUSIP
HUNTSMAN ICI CHEMICALS LLC, a Delaware limited liability company (the
"Company"), for value received, promises to pay to CEDE & CO. or registered
assigns, the principal sum of , on July 1, 2009.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
A-3-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: HUNTSMAN ICI CHEMICALS LLC
By:_________________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 10 1/8% Senior Subordinated Notes due 2009 referred
to in the within-mentioned Indenture.
Dated:
Bank One, N.A., as Trustee
By:_________________________________
Authorized Signature
A-3-2
<PAGE>
(REVERSE OF NOTE)
10 1/8% Senior Subordinated Note due 2009
1. Interest. HUNTSMAN ICI CHEMICALS LLC, a Delaware limited
--------
liability company (the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from June 30, 1999. The Company will pay interest semi-
annually in arrears on each January 1 and July 1 (each, an "Interest Payment
Date") and at stated maturity, commencing on January 1, 2000. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal, premium
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal, premium and interest by its check payable in such
U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, Bank One, N.A. (the
--------------------------
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Registrar or co-Registrar.
4. Indenture. The Company issued the Notes under an Indenture,
---------
dated as of June 30, 1999 (the "Indenture"), among the Company, each of the
Guarantors named therein and the Trustee. This Note is one of a duly authorized
issue of Notes of the Company designated as its dollar denominated 10 1/8%
Senior Subordinated Notes due 2009 (the "Notes"), limited (except as otherwise
provided in the Indenture) in aggregate principal amount to $600,000,000, which
may be issued under the Indenture. The Notes and the Company's euro denominated
10 1/8%
A-3-3
<PAGE>
Senior Subordinated Notes due 2009 (the "Euro Notes") are treated as a single
class of securities under the Indenture unless otherwise specified in the
Indenture. Capitalized terms used herein shall have the meanings assigned to
them in the Indenture unless otherwise defined herein. 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 (15 U.S.C. (S)(S) 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything
to the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and the TIA for a statement of them. The
Notes are senior subordinated unsecured obligations of the Company.
5. Optional Redemption. (a) 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 July 1, 2004, 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 July 1 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>
2004 105.063%
2005 103.375%
2006 101.688%
2007 and thereafter 100.000%
</TABLE>
(b) At any time, or from time to time, on or prior to July 1, 2002,
the Company may, at its option, use the net cash proceeds of one or more Equity
Offerings (as defined below) to redeem up to 35% of the aggregate principal
amount of Notes originally issued at a redemption price equal to 110.125% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided, however, that at least 65% of the aggregate
-------- -------
principal amount of the Dollar Notes and Euro Notes originally issued remain
outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Company shall
make such redemption not more than 120 days after the consummation of any such
Equity Offering.
A-3-4
<PAGE>
As used in the preceding paragraph, "Equity Offering" means any sale
of Qualified Capital Stock of the Company or any capital contribution to the
equity of the Company.
(c) At any time on or prior to July 1, 2004, the Notes may be
redeemed, in whole or in part, at the option of the Company, upon not less than
30 nor more than 60 days' notice, at a redemption price (the "Make-Whole Price")
equal to the greater of (i) 100% of the principal amount thereof or (ii) as
determined by an Independent Investment Banker, the present value of (A) the
redemption price of such Notes at July 1, 2004 (as set forth below) plus (B) all
required interest payments due on such Notes through July 1, 2004 (excluding
accrued interest), discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at, in the case of
the Dollar Notes, the Adjusted Treasury Rate and, in the case of the Euro Notes,
the Adjusted Bund Rate, plus in each case accrued interest to the redemption
date.
"Adjusted Bund Rate" means, with respect to any redemption date, the
mid-market yield under the heading which represents the average for the
immediately prior week appearing on Reuters page AABBUND01, or its successor,
for the maturity corresponding to July 1, 2009 (if no maturity date is within
three months before or after July 1, 2009, yields for the two published
maturities most closely corresponding to July 1, 2009 shall be determined and
the Bund yield shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month), plus 0.50%. The Bund Rate
shall be calculated on the third Business Day preceding such redemption date.
"Adjusted Treasury Rate" means with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.50%.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the same time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Notes.
A-3-5
<PAGE>
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the Trustee obtains fewer than three such Reference Treasury Dealer Quotations,
the average of all such quotations.
"Independent Investment Banker" means any Reference Treasury Dealer
appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Goldman Sachs & Co., Deutche
Bank Securities Inc., Chase Securities Inc. and Warburg Dillon Read LLC and
their respective successors; provided, however, that if any of the foregoing
-------- -------
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Reference Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
6. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder whose Notes are to be redeemed at such Holder's registered address.
Notes in denominations larger than $1,000 may be redeemed in part.
7. Change of Control Offer. In the event of a Change of Control,
-----------------------
upon the satisfaction of the conditions set forth in the Indenture, the Company
shall be required to offer to repurchase all of the then outstanding Notes
pursuant to a Change of Control Offer at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest,
A-3-6
<PAGE>
if any, to the date of purchase. Holders of Notes that are the subject of such
an offer to repurchase shall receive an offer to repurchase and may elect to
have such Notes repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
8. Limitation on Asset Sales. Under certain circumstances set forth
-------------------------
in Section 4.15 of the Indenture, the Company is required to apply the net
proceeds from Asset Sales to offer to repurchase the Notes at a price equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon,
if any, to the date of repurchase.
9. Denominations; Transfer; Exchange. The Notes are in fully
---------------------------------
registered form only, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer or exchange of Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer or exchange of any Notes during a period beginning 15 days before the
mailing of a redemption notice for any Notes or portions thereof selected for
redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or non-callable U.S. Government
Obligations sufficient to pay the principal of, premium and interest on the
Notes to redemption or maturity and complies with the other provisions of this
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of, premium and interest on the
Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the then out-
A-3-7
<PAGE>
standing Notes and Euro Notes, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the then outstanding
Notes and Euro Notes. Without 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 uncertificated Notes in addition
to or in place of certificated Notes, or comply with Article Five of the
Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, pay dividends or make certain other restricted
payments, enter into transactions with Affiliates, create dividend or other
payment restrictions affecting Restricted Subsidiaries and merge or consolidate
with any other Person, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with this
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. 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 and Euro Notes may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has been offered indemnity or security
reasonably satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Notes and Euro Notes then outstanding to direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of Notes
notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines in good faith that
withholding notice is in their interest.
A-3-8
<PAGE>
17. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Restricted and Unrestricted
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No past, present or future
--------------------------
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation 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 of a Note by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the Trustee
--------------
or authenticating agent manually signs the certificate of authentication on this
Note.
20. Governing Law. This Note shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of laws to the extent that the application of
the laws of another jurisdiction would be required thereby.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note 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).
22. CUSIP/ISIN Numbers. The Company has caused CUSIP and/or ISIN
------------------
numbers to be printed on the Notes as a convenience to the Holders of the Notes.
No representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time. Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture.
24. Guarantees. This Note will be entitled to the benefits of
----------
certain senior subordinated Guarantees, if any, made for the benefit of the
Holders. Reference is hereby made
A-3-9
<PAGE>
to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture. Requests may be made to: HUNTSMAN
ICI CHEMICALS LLC, 500 Huntsman Way, Salt Lake City, Utah 84108, Attention:
Office of General Counsel.
A-3-10
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
______________________________________
________________________________________________________________________________
(please print or type name and address)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:___________________ __________________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee:____________________________________________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) June 30, 2000 the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
A-3-11
<PAGE>
[Check One]
---------
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; 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 to a "foreign purchaser" in compliance with
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; or
(6) ___ pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the registration
statement requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[_] The transferee is an Affiliate of the Company.
Unless one of the items 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, however, that if item
-------- -------
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4) and other information as the Trustee or the Company have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the reg-
A-3-12
<PAGE>
istration requirements of the Securities Act of l933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated:______________ Signed:______________________________________________
(Sign exactly as name appears on the other
side of this Note)
Signature Guarantee:____________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:____________________ ______________________________________________
NOTICE: To be executed by an executive
officer
A-3-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount: $_____________
Date:______________ Your Signature:__________________________________________
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:____________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
A-3-14
<PAGE>
EXHIBIT A-4
-----------
[FORM OF EURO NOTE]
HUNTSMAN ICI CHEMICALS LLC
10 1/8% Senior Subordinated Note due 2009
No. EU[ ]
ISIN
HUNTSMAN ICI CHEMICALS LLC, a Delaware limited liability company (the
"Company"), for value received, promises to pay to or
registered assigns, the principal sum of , on July 1, 2009.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
A-4-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
Dated: HUNTSMAN ICI CHEMICALS LLC
By:_____________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 10 1/8% Senior Subordinated Notes due 2009 referred
to in the within-mentioned Indenture.
Dated:
Bank One, N.A., as Trustee
By:_____________________________
Authorized Signature
A-4-2
<PAGE>
(REVERSE OF NOTE)
10 1/8% Senior Subordinated Note due 2009
1. Interest. HUNTSMAN ICI CHEMICALS LLC, a Delaware limited
--------
liability company (the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from June 30, 1999. The Company will pay interest semi-
annually in arrears on each January 1 and July 1 (each, an "Interest Payment
Date") and at stated maturity, commencing on January 1, 2000. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal, premium
and interest in euros. However, the Company may pay principal, premium and
interest by its check payable in euros. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, Bank One, N.A. (the
--------------------------
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Registrar or co-Registrar.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of June 30, 1999 (the "Indenture"), among the Company, each of the Guarantors
named therein and the Trustee. This Note is one of a duly authorized issue of
Notes of the Company designated as its euro denominated 10 1/8% Senior
Subordinated Notes due 2009 (the "Notes"), limited (except as otherwise provided
in the Indenture) in aggregate principal
A-4-3
<PAGE>
amount to EU200,000,000, which may be issued under the Indenture. The Notes and
the Company's dollar denominated 10 1/8% Senior Subordinated Notes due 2009 (the
"Dollar Notes") are treated as a single class of securities under the Indenture
unless otherwise specified in the Indenture. Capitalized terms used herein shall
have the meanings assigned to them in the Indenture unless otherwise defined
herein. 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 (15
U.S.C. (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of them. The Notes are senior subordinated unsecured
obligations of the Company.
5. Optional Redemption. (a) 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 July 1, 2004, 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 July 1 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>
2004 105.063%
2005 103.375%
2006 101.688%
2007 and thereafter 100.000%
</TABLE>
(b) At any time, or from time to time, on or prior to July 1, 2002,
the Company may, at its option, use the net cash proceeds of one or more Equity
Offerings (as defined below) to redeem up to 35% of the aggregate principal
amount of Notes originally issued at a redemption price equal to 110.125% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided, however, that at least 65% of the aggregate
-------- -------
principal amount of the Dollar Notes and Euro Notes originally issued remain
outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Company shall
make such redemption not more than 120 days after the consummation of any such
Equity Offering.
A-4-4
<PAGE>
As used in the preceding paragraph, "Equity Offering" means any sale
of Qualified Capital Stock of the Company or any capital contribution to the
equity of the Company.
(c) At any time on or prior to July 1, 2004, the Notes may be
redeemed, in whole or in part, at the option of the Company, upon not less than
30 nor more than 60 days' notice, at a redemption price (the "Make-Whole Price")
equal to the greater of (i) 100% of the principal amount thereof or (ii) as
determined by an Independent Investment Banker, the present value of (A) the
redemption price of such Notes at July 1, 2004 (as set forth below) plus (B) all
required interest payments due on such Notes through July 1, 2004 (excluding
accrued interest), discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at, in the case of
the Dollar Notes, the Adjusted Treasury Rate and, in the case of the Euro Notes,
the Adjusted Bund Rate, plus in each case accrued interest to the redemption
date.
"Adjusted Bund Rate" means, with respect to any redemption date, the
mid-market yield under the heading which represents the average for the
immediately prior week appearing on Reuters page AABBUND01, or its successor,
for the maturity corresponding to July 1, 2009 (if no maturity date is within
three months before or after July 1, 2009, yields for the two published
maturities most closely corresponding to July 1, 2009 shall be determined and
the Bund yield shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month), plus 0.50%. The Bund Rate
shall be calculated on the third Business Day preceding such redemption date.
"Adjusted Treasury Rate" means with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.50%.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the same time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Notes.
A-4-5
<PAGE>
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the Trustee obtains fewer than three such Reference Treasury Dealer Quotations,
the average of all such quotations.
"Independent Investment Banker" means any Reference Treasury Dealer
appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Goldman Sachs & Co., Deutche
Bank Securities Inc., Chase Securities Inc. and Warburg Dillon Read LLC and
their respective successors; provided, however, that if any of the foregoing
-------- -------
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Reference Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
6. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder whose Notes are to be redeemed at such Holder's registered address.
Notes in denominations larger than EU1,000 may be redeemed in part.
7. Change of Control Offer. In the event of a Change of Control,
-----------------------
upon the satisfaction of the conditions set forth in the Indenture, the Company
shall be required to offer to repurchase all of the then outstanding Notes
pursuant to a Change of Control Offer at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest,
A-4-6
<PAGE>
if any, to the date of purchase. Holders of Notes that are the subject of such
an offer to repurchase shall receive an offer to repurchase and may elect to
have such Notes repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
8. Limitation on Asset Sales. Under certain circumstances set forth
-------------------------
in Section 4.15 of the Indenture, the Company is required to apply the net
proceeds from Asset Sales to offer to repurchase the Notes at a price equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon,
if any, to the date of repurchase.
9. Denominations; Transfer; Exchange. The Notes are in fully
---------------------------------
registered form only, without coupons, in denominations of EU1,000 and integral
multiples of EU1,000. A Holder shall register the transfer or exchange of Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer or exchange of any Notes during a period beginning 15 days before the
mailing of a redemption notice for any Notes or portions thereof selected for
redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
---------------------
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee euros or non-callable Euro Obligations sufficient
to pay the principal of, premium and interest on the Notes to redemption or
maturity and complies with the other provisions of this Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of, premium and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
the Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at least a majority in aggregate principal amount of
the then out-
A-4-7
<PAGE>
standing Notes and Dollar Notes, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the then out-standing
Notes and Dollar Notes. Without 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 uncertificated Notes in addition
to or in place of certificated Notes, or comply with Article Five of the
Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, pay dividends or make certain other restricted
payments, enter into transactions with Affiliates, create dividend or other
payment restrictions affecting Restricted Subsidiaries and merge or consolidate
with any other Person, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with this
----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. 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 and Dollar Notes may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has been offered indemnity or security
reasonably satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Notes and Dollar Notes then outstanding to direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Notes notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines in good faith that
withholding notice is in their interest.
A-4-8
<PAGE>
17. Trustee Dealings with Company. The Trustee under the Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Restricted and Unrestricted
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No past, present or future
--------------------------
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation 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 of a Note by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the Trustee
--------------
or authenticating agent manually signs the certificate of authentication on this
Note.
20. Governing Law. This Note shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of laws to the extent that the application of
the laws of another jurisdiction would be required thereby.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note 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).
22. CUSIP/ISIN Numbers. The Company has caused CUSIP and/or ISIN
------------------
numbers to be printed on the Notes as a convenience to the Holders of the Notes.
No representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time. Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture.
24. Guarantees. This Note will be entitled to the benefits of
----------
certain senior subordinated Guarantees, if any, made for the benefit of the
Holders. Reference is hereby made
A-4-9
<PAGE>
to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture. Requests may be made to: HUNTSMAN
ICI CHEMICALS LLC, 500 Huntsman Way, Salt Lake City, Utah 84108, Attention:
Office of General Counsel.
A-4-10
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
_____________________________________________
________________________________________________________________________________
(please print or type name and address)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:__________________ __________________________________________________
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee: __________________________________________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) June 30, 2000 the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
A-4-11
<PAGE>
[Check One]
---------
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; 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 to a "foreign purchaser" in compliance with
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; or
(6) ___ pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the registration
statement requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[_] The transferee is an Affiliate of the Company.
Unless one of the items 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, however, that if item
-------- -------
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4) and other information as the Trustee or the Company have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the reg-
A-4-12
<PAGE>
istration requirements of the Securities Act of l933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated: _________________ Signed: _____________________________________
(Sign exactly as name appears on the
other side of this Note)
Signature Guarantee: ___________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:__________________ ______________________________________________
NOTICE: To be executed by an executive
officer
A-4-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate
box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount: EU_____________
Date: _______________ Your Signature:__________________________________________
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:____________________________________________________________
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
A-4-14
<PAGE>
EXHIBIT B
---------
FORM OF LEGEND FOR GLOBAL Security
Any Global Security 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 SECURITY 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 NOTES 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 NOTE (OTHER THAN A TRANSFER OF THIS
NOTE 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, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE DESPOSITORY OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND
ANY PAYMENT IS MADE TO ITS NOMINEE OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, A NOMINEE OF THE DESPOSITORY, HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY OR ITS NOMINEE OR TO
A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE
WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE.
B-1
<PAGE>
EXHIBIT C-1
-----------
FORM OF TRANSFER CERTIFICATE
RESTRICTED GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
(Transfers pursuant to Sections 2.16(a)(ii) of the Indenture)
Bank One, N.A.
100 East Broad Street OH-1-0181
Columbus, Ohio 43215
Attention: Corporate Trust Services
Re: Huntsman ICI Chemicals LLC 10 1/8% Senior Subordinated Notes due 2009
(the "Securities")
Reference is hereby made to the Indenture, dated as of June 30, 1999
between the Company and Bank One, N.A., as trustee, (the "Indenture"). Terms
used but not defined herein and defined in Regulation S under the U.S.
Securities Act of 1933 (the "Securities Act") or in the Indenture shall have the
meanings given to them in Regulation S or the Indenture, as the case may be.
This certificate relates to U.S.$______ principal amount of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
[CUSIP][CINS][ISIN] No(s). ________________________________
CERTIFICATE No(s). _________________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the appropriate Depositary or an Agent Member in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to a
person (the "Transferee") who will take delivery in the form of an interest in
the Regulation S Global Security. In connection with such transfer, the Owner
hereby
C-1-1
<PAGE>
certifies that such transfer is being effected in accordance with Rule 904 under
the Securities Act and with all applicable securities laws of the states of the
United States and other jurisdictions. Accordingly, the Owner hereby further
certifies as follows:
1. the Owner is not a distributor of the Specified Securities, an
Affiliate of the Company or any such distributor or a person acting on behalf of
any of the foregoing;
2. the offer of the Specified Securities was not made to a person in the
United States;
3 either:
(a) at the time the buy order was originated, the Transferee was
outside the United States or the Owner and any person acting on its behalf
reasonably believed that the Transferee was outside the United States; or
(b) the transaction is being executed in, on or through the facilities
of the Eurobond market, as regulated by the Association of International Bond
Dealers, or another designated offshore securities market and neither the Owner
nor any person acting on its behalf knows that the transactions have been
prearranged with a buyer in the United States;
4. no directed selling efforts have been made in the United States by or
on behalf of the Owner or any Affiliate thereof;
5. if the Owner is a dealer in securities or has received a selling
concession, fee or other remuneration in respect of the Specified Securities,
and the transfer is to occur during the Restricted Period, then the requirements
of Rule 904(c)(1) have been satisfied;
6. the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
7. upon completion of the transaction, the beneficial interest being
transferred will be held through an Agent Member acting for and on behalf of
Euroclear or Cedelbank.
C-1-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers under the
Purchase Agreement.
Dated:
______________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By: __________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
C-1-3
<PAGE>
EXHIBIT C-2
-----------
FORM OF TRANSFER CERTIFICATE --
RESTRICTED GLOBAL SECURITY TO UNRESTRICTED
GLOBAL SECURITY
(Transfers Pursuant to Sections 2.16(a)(iii) and 2.16(b)(ii) of the Indenture)
Bank One, N.A.
100 East Broad Street OH-1-0181
Columbus, Ohio 43215
Attention: Corporate Trust Services
Re: Huntsman ICI Chemicals LLC 10 1/8% Senior Subordinated Notes due 2009
(the "Securities")
Reference is hereby made to the Indenture, dated as of June 30, 1999
between the Company and Bank One, N.A., as trustee, (the "Indenture"). Terms
used but not defined herein and defined in Regulation S under the U.S.
Securities Act of 1933 (the "Securities Act") or in the Indenture shall have the
meanings given to them in Regulation S or the Indenture, as the case may be.
This certificate relates to [U.S.$][EU]_____ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
[CUSIP][CINS][ISIN] No(s). _________________________
CERTIFICATE No(s). __________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the appropriate Depositary or an Agent Member in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to a
person (the "Transferee") who will take delivery in the form of an interest in
the Unrestricted Global Security. In connection with such transfer, the Owner
hereby
C-2-1
<PAGE>
certifies that such transfer is being effected in accordance with Rule 904 or
Rule 144 under the Securities Act and with all applicable securities laws of the
states of the United States and other jurisdictions. Accordingly, the Owner
hereby further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Specified Securities,
an Affiliate of the Company or any such distributor or a person acting
on behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
(C) either:
(i) at the time the buy order was originated, the Transferee
was outside the United States or the Owner and any person acting
on its behalf reasonably believed that the Transferee was outside
the United States; or
(i) the transaction is being executed in, on or through the
facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another designated
offshore securities market and neither the Owner nor any person
acting on its behalf knows that the transactions has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any Affiliate thereof;
(E) if the Owner is a dealer in securities or has received a
selling concession, fee or other remuneration in respect of the
Specified Securities, and the transfer is to occur during the
Restricted Period, then the requirements of Rule 904(c)(1) have been
satisfied; and
(F) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-2-2
<PAGE>
(2) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after [date one year after the
latest date of issuance of any of the Specified Securities] and is
being effected in accordance with the applicable amount, manner of
sale and notice requirements of Rule 144; or
(B) the transfer is occurring after [date two years after the
latest date of issuance of any of the Specified Securities] and the
Owner is not, and during the preceding three months has not been, an
Affiliate of the Company.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers under the
Purchase Agreement.
Dated:
________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:_____________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the
title of the person signing on behalf of the Undersigned must be stated.)
C-2-3
<PAGE>
EXHIBIT C-3
-----------
FORM OF TRANSFER CERTIFICATE --
REGULATION S GLOBAL SECURITY TO
RESTRICTED GLOBAL SECURITY
(Transfers to QIBs Pursuant to Sections 2.16(a)(iv) of the Indenture)
Bank One, N.A.
100 East Broad Street OH-1-0181
Columbus, Ohio 43215
Attention: Corporate Trust Services
Re: Huntsman ICI Chemicals LLC 10 1/8% Senior Subordinated Notes due 2009
(the "Securities")
Reference is hereby made to the Indenture, dated as of June 30, 1999
between the Company and Bank One, N.A., as trustee, (the "Indenture"). Terms
used but not defined herein and defined in Regulation S under the U.S.
Securities Act of 1933 (the "Securities Act") or in the Indenture shall have the
meanings given to them in Regulation S or the Indenture, as the case may be.
This certificate relates to U.S.$______ principal amount of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
[CUSIP][CINS][ISIN] No(s). _________________________
CERTIFICATE No(s). __________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the appropriate Depositary or an Agent Member in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to a
person (the "Transferee") who will take delivery in the form of an interest in
the Restricted Global Security. In connection with such transfer, the Owner
hereby
C-3-1
<PAGE>
certifies that such transfer is being effected in accordance with Rule 144A
under the Securities Act and with all applicable securities laws of the states
of the United States and other jurisdictions. Accordingly, the Owner hereby
further certifies as follows:
(1) the Specified Securities are being transferred to a person that
the Owner and any person acting on its behalf reasonably believe is a
"qualified institutional buyer" within the meaning of Rule 144A, acquiring
for its own account or for the account of a qualified institutional buyer;
and
(2) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner may
be relying on Rule 144A in connection with the transfer.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers under the
Purchase Agreement.
Dated:
__________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:_______________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the
title of the person signing on behalf of the Undersigned must be stated.)
C-3-2
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS
(Transfers Pursuant to Section 2.17(a) of the Indenture)
Bank One, N.A.
100 East Broad Street OH-1-0181
Columbus, Ohio 43215
Attention: Corporate Trust Services
Re: Huntsman ICI Chemicals LLC 10 1/8% Senior Subordinated Notes due 2009
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of June 30, 1999
between the Company and Bank One, N.A., as trustee (the "Indenture"). Terms
used but not defined herein have the meanings given to them in the Indenture.
This certificate relates to [U.S. $] [EU]____ principal amount of
Securities, which are evidenced by the following certificate(s) (the
"Securities"):
1. We understand that the Securities have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and may not be
sold except as permitted in the following sentence. We understand and agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, (x) that such Securities are being offered only in a
transaction not involving any public offering within two years after the date of
the original issuance of the Securities or if within three months after we cease
to be an affiliate (within the meaning of Rule 144 under the Securities Act) of
the Company, such Securities may be resold, pledged or transferred only (i) to
the Company, (ii) so long as the Securities are eligible for resale pursuant to
Rule 144A under the Securities Act ("Rule 144A"), to a person whom we reasonably
believe is a "qualified institution buyer" (as defined in Rule 144A) ("QIB")
that purchases for its own account or for the account of a QIB to whom notice is
given that the resale, pledge or transfer is being made in reliance on Rule 144A
(as indicated by the box checked by the transferor on the Certificate of
Transfer on the reverse of the certificate for the Securities), (iii) in an
offshore transaction in accordance with Regulation S under the Securities Act
(as indicated by the box checked by the transferor on the Certificate of
Transfer on the
D-1
<PAGE>
reverse of the Note if the Note is not in book-entry form), and, if such
transfer is being effected by certain transferors prior to the expiration of the
"40-day distribution compliance period" (within the meaning of Rule 903(b)(2) of
Regulation S under the Securities Act), a certificate that may be obtained from
the Trustee is delivered by the transferee, (iv) to an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the certificate for the Securities)
which has certified to the Company and the Trustee for the Securities that it is
such an accredited investor and is acquiring the Securities for investment
purposes and not for distribution (provided that no Securities purchased from a
foreign purchaser or from any person other than a QIB or an institutional
accredited investor pursuant to this clause (iii) shall be permitted to transfer
any Securities so purchased to an institutional accredited investor pursuant to
this clause (iv) prior to the expiration of the "applicable restricted period"
(within the meaning of Regulation S under the Securities Act), (v) pursuant to
an exemption from registration under the Securities Act provided by Rule 144 (if
applicable) under the Securities Act, or (vi) pursuant to an effective
registration statement under the Securities Act, in each case in accordance with
any applicable securities laws of any state of the United States, and we will
notify any purchaser of the Securities from us of the above resale restriction,
if then applicable. We further understand that in connection with any transfer
of the Securities by us that the Company and the Trustee for the Securities may
request, and if so requested we will furnish, such certificates, legal opinions
and other information as they may reasonably require to confirm that any such
transfer complies with the foregoing restrictions.
2. We are able to fend for ourselves in the transactions contemplated
by this Offering Circular, we have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for which we are acting
are each able to bear the economic risk of our or its investment and can afford
the complete loss of such investment.
3. We understand that the Company and others will rely upon the truth
and accuracy of the foregoing acknowledgments, representations and agreements
and we agree that if any of the acknowledgments, representations and warranties
deemed to have been made by us by our purchase of Securities, for our own
account or of one or more accounts as to each of which we exercise sole
investment discretion, are no longer accurate, we shall promptly notify the
Company.
D-2
<PAGE>
4. We are acquiring the Securities purchased by us for investment
purposes and not for distribution of our own account or for one or more accounts
as to each of which we exercise sole investment discretion and we are or such
account is an institutional "accredited investor" (as defined in rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act).
5. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
______________________________
(Name of Purchaser)
By:___________________________
Date:
D-3
<PAGE>
EXHIBIT E
---------
GUARANTEE
---------
For value received, the undersigned hereby unconditionally guarantees,
as principal obligor and not only as a surety, to the Holder of this Note the
cash payments in United States dollars of principal of, premium, if any, and
interest on this Note in the amounts and at the times when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Company
under the Indenture (as defined below) or the Notes, to the Holder of this Note
and the Trustee, all in accordance with and subject to the terms and limitations
of this Note, Article Eleven of the Indenture and this Guarantee. This
Guarantee will become effective in accordance with Article Eleven of the
Indenture and its terms shall be evidenced therein. The validity and
enforceability of any Guarantee shall not be affected by the fact that it is not
affixed to any particular Note.
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Indenture dated as of June 30, 1999, among HUNTSMAN ICI
CHEMICALS LLC as issuer (the "Company"), each of the Guarantors named therein
and Bank One, N.A., as trustee (the "Trustee"), as amended or supplemented (the
"Indenture").
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. The undersigned Guarantor hereby agrees 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 Guarantee.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
E-1
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly
executed.
Date:____________________
,
as Guarantor
By: _______________________________________
Name:
Title:
E-2
<PAGE>
EXHIBIT 4.4
Huntsman ICI Chemicals LLC
$600,000,000 10 1/8% Senior Subordinated Notes due 2009
EU200,000,000 10 1/8% Senior Subordinated Notes due 2009
unconditionally guaranteed as to the
payment of principal, premium,
if any, and interest by
Tioxide Group
Tioxide Americas Inc.
Huntsman ICI Financial LLC
------
Exchange and Registration Rights Agreement
------------------------------------------
June 30, 1999
Goldman, Sachs & Co.,
Deutsche Bank Securities Inc.
Chase Securities Inc.
Warburg Dillon Read LLC
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Huntsman ICI Chemicals LLC, a Delaware limited liability company (the
"Company"), proposes to issue and sell to the Purchasers (as defined herein)
upon the terms set forth in the Purchase Agreement (as defined herein)
$600,000,000 aggregate principal amount of its 10 1/8% Senior Subordinated Notes
due 2009 and EU200,000,000 aggregate principal amount of its 10 1/8% Senior
Subordinated Notes due 2009, which are unconditionally guaranteed by each of
Tioxide Group, Tioxide Americas Inc., and Huntsman ICI Financial LLC. As an
inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers
<PAGE>
thereunder, the Company and the Guarantors agree with the Purchasers for the
benefit of holders (as defined herein) from time to time of the Registrable
Securities (as defined herein) as follows:
1. Certain Definitions. For purposes of this Exchange and
Registration Rights Agreement, the following terms shall have the following
respective meanings:
"Base Interest" shall mean the interest that would otherwise accrue on
the Securities under the terms thereof and the Indenture, without giving
effect to the provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"Closing Date" shall mean the date on which the Securities are
initially issued.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for
the particular purpose.
"Effective Time," in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange
Registration Statement effective or as of which the Exchange Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall
mean the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration
Statement otherwise becomes effective.
"Electing Holder" shall mean any holder of Registrable Securities that
has returned a completed and signed Notice and Questionnaire to the Company
in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.
"Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto in
Section 3(c) hereof.
"Exchange Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Guarantee" shall have the meaning assigned thereto in the Indenture.
2
<PAGE>
"Guarantor" shall have the meaning assigned thereto in the Indenture.
The term "holder" shall mean each of the Purchasers and other persons
who acquire Registrable Securities from time to time (including any
successors or assigns), in each case for so long as such person owns any
Registrable Securities.
"Indenture" shall mean the Indenture, dated as of June 30, 1999,
between the Company, the Guarantors and Bank One, N.A., as Trustee, as the
same shall be amended from time to time relating to the Securities.
"Notice and Questionnaire" means a Notice of Registration Statement
and Selling Securityholder Questionnaire substantially in the form of
Exhibit A hereto.
The term "person" shall mean a corporation, association, partnership,
limited liability company, organization, business, individual, government
or political subdivision thereof or governmental agency.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
June 22, 1999, between the Purchasers and the Company relating to the
Securities.
"Purchasers" shall mean the Purchasers named in Schedule I to the
Purchase Agreement.
"Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (provided that any Exchange Security that, pursuant to
the last two sentences of Section 2(a), is included in a prospectus for use
in connection with resales by broker-dealers shall be deemed to be a
Registrable Security with respect to Sections 5, 6 and 9 until resale of
such Registrable Security has been effected within the 180-day period
referred to in Section 2(a)(4)); (ii) in the circumstances contemplated by
Section 2(b) hereof, a Shelf Registration Statement registering such
Security under the Securities Act has been declared or becomes effective
and such Security has been sold or otherwise transferred by the holder
thereof pursuant to and in a manner contemplated by such effective Shelf
Registration Statement; (iii) such Security is sold pursuant to Rule 144
under circumstances in which any legend borne by such Security relating to
restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company or pursuant to the Indenture; (iv)
such Security is eligible to be sold pursuant to paragraph (k) of Rule 144;
or (v) such Security shall cease to be outstanding.
"Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
3
<PAGE>
"Resale Period" shall have the meaning assigned thereto in Section
2(a) hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate of
the Company within the meaning of Rule 405, (ii) a holder who acquires
Exchange Securities outside the ordinary course of such holder's business,
(iii) a holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Securities and (iv) a holder that is a broker-dealer, but only with respect
to Exchange Securities received by such broker-dealer pursuant to an
Exchange Offer in exchange for Registrable Securities acquired by the
broker-dealer directly from the Company.
"Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as
the same shall be amended from time to time.
"Securities" shall mean, collectively, the dollar denominated 10 1/8%
Senior Subordinated Notes due 2009 and the euro denominated 10 1/8% Senior
Subordinated Notes due 2009 of the Company to be issued and sold to the
Purchasers, and securities issued in exchange therefor or in lieu thereof
pursuant to the Indenture (other than Exchange Securities). Each Security
is entitled to the benefit of the guarantee provided for in the applicable
Indenture (the "Guarantee") and, unless the context otherwise requires, any
reference herein to a "Security," an "Exchange Security" or a "Registrable
Security" shall include a reference to the related Guarantee.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned thereto
in Section 2(b) hereof.
"Special Interest" shall have the meaning assigned thereto in Section
2(c) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.
4
<PAGE>
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to
use its reasonable best efforts to file under the Securities Act, as soon as
practicable, but no later than 60 days after the Closing Date, a registration
statement relating to an offer to exchange (such registration statement, the
"Exchange Registration Statement", and such offer, the "Exchange Offer") any and
all of the Registrable Securities for a like aggregate principal amount of debt
securities issued by the Company and guaranteed by the Guarantors, which debt
securities and guarantee are substantially identical to the Securities and the
related Guarantees, respectively (and are entitled to the benefits of a trust
indenture which is substantially identical to the applicable Indenture or is
such Indenture and which has been qualified under the Trust Indenture Act),
except that they have been registered pursuant to an effective registration
statement under the Securities Act and do not contain provisions for
registration rights or the additional interest contemplated in Section 2(c)
below (such new debt securities hereinafter called "Exchange Securities"). The
Company agrees to use its reasonable best efforts to cause the Exchange
Registration Statement to become effective under the Securities Act as soon as
practicable, but no later than 210 days after the Closing Date. The Exchange
Offer will be registered under the Securities Act on the appropriate form and
will comply with all applicable tender offer rules and regulations under the
Exchange Act. The Company further agrees to use its reasonable best efforts to
commence and complete the Exchange Offer promptly, but no later than 45 days
after such registration statement has become effective, hold the Exchange Offer
open for at least 30 days and exchange Exchange Securities for all Registrable
Securities that have been properly tendered and not withdrawn on or prior to the
expiration of the Exchange Offer. The Exchange Offer will be deemed to have
been "completed" only if the debt securities and related guarantee received by
holders other than Restricted Holders in the Exchange Offer for Registrable
Securities are, upon receipt, transferable by each such holder without
restriction under the Securities Act and without material restrictions under the
blue sky or securities laws of a substantial majority of the States of the
United States of America, it being understood that broker-dealers receiving
Exchange Notes will be subject to certain prospectus delivery requirements with
respect to resale of the Exchange Notes. The Exchange Offer shall be deemed to
have been completed upon the earlier to occur of (i) the Company having
exchanged the Exchange Securities for all outstanding Registrable Securities
pursuant to the Exchange Offer and (ii) the Company having exchanged, pursuant
to the Exchange Offer, Exchange Securities for all Registrable Securities that
have been properly tendered and not withdrawn before the expiration of the
Exchange Offer, which shall be on a date that is at least 30 days following the
commencement of the Exchange Offer. The Company agrees (x) to include in the
Exchange Registration Statement a prospectus for use in any resales by any
holder of Exchange Securities that is a broker-dealer and (y) to keep such
Exchange Registration Statement effective for a period (the "Resale Period")
beginning when Exchange Securities are first issued in the Exchange Offer and
ending upon the earlier of the expiration of the 120th day after the Exchange
Offer has been completed or such time as such broker-dealers no longer own any
Registrable Securities. With respect to such Exchange Registration Statement,
such holders shall have the benefit of the rights of indemnification and
contribution set forth in Sections 6(a), (c), (d) and (e) hereof.
5
<PAGE>
Each holder that participates in the Exchange Offer will be required,
as a condition to its participation in the Exchange Offer, to represent to the
Company in writing (which may be contained in the applicable letter of
transmittal) (i) that any Exchange Securities to be received by it will be
acquired in the ordinary course of its business, (ii) that at the time of the
commencement of the Exchange Offer such holder will have no arrangement or
understanding with any Person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Securities in violation of the
provisions of the Securities Act, (iii) that such holder is not an affiliate of
the Company within the meaning of the Securities Act and (iv) that such holder
is not acting on behalf of a Person who could not make the foregoing
representations. In addition, each broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making or other trading activities will be required to
represent that the Securities being tendered by such broker-dealer were acquired
in ordinary trading or market-making activities. A broker-dealer that is not
able to make the foregoing representation will not be permitted to participate
in the Exchange Offer.
(b) If (i) on or prior to the time the Exchange Offer is completed
existing Commission interpretations are changed such that the debt securities or
the related guarantee received by holders other than Restricted Holders in the
Exchange Offer for Registrable Securities are not or would not be, upon receipt,
transferable by each such holder without restriction under the Securities Act,
(ii) the Exchange Offer has not been completed within 255 days following the
Closing Date or (iii) the Exchange Offer is not available to any holder of the
Securities by reason of U.S. law or Commission policy (other than due solely to
the status of such holder as an affiliate of the Company within the meaning of
the Securities Act), the Company shall, in lieu of (or, in the case of clause
(iii), in addition to) conducting the Exchange Offer contemplated by Section
2(a), file under the Securities Act as soon as practicable, but no later than
the later of 60 days after the time such obligation to file arises, a "shelf"
registration statement providing for the registration of, and the sale on a
continuous or delayed basis by the holders of, all of the Registrable
Securities, pursuant to Rule 415 or any similar rule that may be adopted by the
Commission (such filing, the "Shelf Registration" and such registration
statement, the "Shelf Registration Statement"). The Company agrees to use its
reasonable best efforts (x) to cause the Shelf Registration Statement to become
or be declared effective no later than 150 days after such Shelf Registration
Statement is filed and to keep such Shelf Registration Statement continuously
effective for a period ending on the earlier of the second anniversary of the
Effective Time or such time as there are no longer any Registrable Securities
outstanding, provided, however, that (I) no holder shall be entitled to be named
as a selling securityholder in the Shelf Registration Statement or to use the
prospectus forming a part thereof for resales of Registrable Securities unless
such holder is an Electing Holder and (II) the Company shall be permitted to
take any action that would suspend the effectiveness of a Shelf Registration
Statement or result in holders covered by a Shelf Registration Statement not
being able to offer and sell such Securities if (i) such action is required by
law or (ii) such action is taken by the Company in good faith and for valid
business reasons involving a material undisclosed event, and (y) after the
Effective Time of the Shelf Registration Statement, within 30 days following the
request of any holder of Registrable Securities that is not then an Electing
Holder, to take any action reasonably necessary to enable such holder to use the
prospectus forming a part thereof for resales of Registrable Securities,
including, without limitation, any action necessary to
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<PAGE>
identify such holder as a selling securityholder in the Shelf Registration
Statement, provided, however, that nothing in this Clause (y) shall relieve any
such holder of the obligation to return a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(d)(iii) hereof. The
Company further agrees to supplement or make amendments to the Shelf
Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or rules and regulations
thereunder for shelf registration, and the Company agrees to furnish to each
Electing Holder copies of any such supplement or amendment prior to its being
used or promptly following its filing with the Commission.
(c) In the event that (i) the Company has not filed the Exchange
Registration Statement or Shelf Registration Statement on or before the date on
which such registration statement is required to be filed pursuant to Section
2(a) or 2(b), respectively, or (ii) such Exchange Registration Statement or
Shelf Registration Statement has not become effective or been declared effective
by the Commission on or before the date on which such registration statement is
required to become or be declared effective pursuant to Section 2(a) or 2(b),
respectively, or (iii) the Exchange Offer has not been completed within 45 days
after the initial effective date of the Exchange Registration Statement relating
to the Exchange Offer (if the Exchange Offer is then required to be made) or
(iv) any Exchange Registration Statement or Shelf Registration Statement
required by Section 2(a) or 2(b) hereof is filed and declared effective but
shall thereafter either be withdrawn by the Company or shall become subject to
an effective stop order issued pursuant to Section 8(d) of the Securities Act
suspending the effectiveness of such registration statement (except as
specifically permitted herein) without being succeeded immediately by an
additional registration statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default" and each
period during which a Registration Default has occurred and is continuing, a
"Registration Default Period"), then, as liquidated damages for such
Registration Default, subject to the provisions of Section 9(b), special
interest ("Special Interest"), in addition to the Base Interest, shall accrue at
a per annum rate of 0.25% for the first 90 days of the Registration Default
Period, at a per annum rate of 0.50% for the second 90 days of the Registration
Default Period, at a per annum rate of 0.75% for the third 90 days of the
Registration Default Period and at a per annum rate of 1.0% thereafter for the
remaining portion of the Registration Default Period; provided, however, that
Special Interest shall not accrue if the failure of the Company to comply with
its obligations hereunder is a result of the failure of any of the holders,
underwriters, Purchasers or placement or sales agents to fulfill their
respective obligations hereunder.
(d) The Company shall take, and shall cause the Guarantors to take,
all actions necessary or advisable to be taken by it to ensure that the
transactions contemplated herein are effected as so contemplated, including all
actions necessary or desirable to register the Guarantees under the registration
statement contemplated in Section 2(a) or 2(b) hereof, as applicable.
(e) Any reference herein to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time and any reference herein to
any post-effective amendment to a registration statement as
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<PAGE>
of any time shall be deemed to include any document incorporated, or deemed to
be incorporated, therein by reference as of such time.
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company shall qualify the Indenture
under the Trust Indenture Act.
(b) In the event that such qualification would require the appointment
of a new trustee under the Indenture, the Company shall appoint a new
trustee thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (the
"Exchange Registration"), if applicable, the Company shall, as soon as
reasonably practicable (or as otherwise specified):
(i) use its reasonable best efforts to prepare and file with
the Commission, as soon as practicable but no later than 60 days after
the Closing Date, an Exchange Registration Statement on any form which
may be utilized by the Company and which shall permit the Exchange
Offer and resales of Exchange Securities by broker-dealers during the
Resale Period to be effected as contemplated by Section 2(a), and use
its best reasonable efforts to cause such Exchange Registration
Statement to become effective as soon as practicable thereafter, but
no later than 210 days after the Closing Date;
(ii) after the Effective Time of the Exchange Registration
Statement, except as permitted hereunder, as soon as practicable
prepare and file with the Commission such amendments and supplements
to such Exchange Registration Statement and the prospectus included
therein as may be necessary to effect and maintain the effectiveness
of such Exchange Registration Statement for the periods and purposes
contemplated in Section 2(a) hereof and as may be required by the
applicable rules and regulations of the Commission and the
instructions applicable to the form of such Exchange Registration
Statement, and promptly provide each broker-dealer holding Exchange
Securities with such number of copies of the prospectus included
therein (as then amended or supplemented), in conformity in all
material respects with the requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder, as such broker-dealer may reasonably request prior to the
expiration of the Resale Period, for use in connection with resales of
Exchange Securities;
8
<PAGE>
(iii) after the Effective Time of the Exchange Registration
Statement and during the Resale Period promptly notify each broker-
dealer that has requested copies of the prospectus included in such
registration statement, and confirm such advice in writing, (A) with
respect to such Exchange Registration Statement or any post-effective
amendment, when the same has become effective, (B) of the issuance by
the Commission of any stop order suspending the effectiveness of such
Exchange Registration Statement or the initiation or threatening of
any proceedings for that purpose, (C) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of the Exchange Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (D)
at any time during the Resale Period when a prospectus is required to
be delivered under the Securities Act, that such Exchange Registration
Statement, prospectus, prospectus amendment or supplement or post-
effective amendment does not conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture
Act and the rules and regulations of the Commission thereunder or
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, which such notice, in the case of clauses (B), (C) and (D)
shall required any broker-dealer to suspend the use of such prospectus
until further notice;
(iv) in the event that the Company would be required, pursuant
to Section 3(e)(iii)(D) above, to notify any broker-dealers holding
Exchange Securities, prepare and furnish to each such holder a
reasonable number of copies of a prospectus supplemented or amended so
that, as thereafter delivered to purchasers of such Exchange
Securities during the Resale Period, such prospectus shall conform in
all material respects to the applicable requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; provided, however, the
Company shall not be required to amend or supplement such prospectus
if (i) not permitted by law or (ii) the Company in good faith and for
valid business reasons and such misstatement or omission involves a
material undisclosed event;
(v) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such Exchange Registration Statement
or any post-effective amendment thereto at the earliest practicable
date unless the Company in good faith and for valid business reasons
determines that to do so would involve disclosing a material
undisclosed event;
(vi) use its best efforts to (A) register or qualify the
Exchange Securities under the securities laws or blue sky laws of such
jurisdictions as are contemplated by
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<PAGE>
Section 2(a) no later than the commencement of the Exchange Offer,
(B) keep such registrations or qualifications in effect and comply
with such laws so as to permit the continuance of offers, sales and
dealings therein in such jurisdictions until the expiration of the
Resale Period and (C) take any and all other actions as may be
reasonably necessary or advisable to enable each broker-dealer holding
Exchange Securities to consummate the disposition thereof in such
jurisdictions; provided, however, that neither the Company nor the
Guarantors shall be required for any such purpose to (1) qualify as a
foreign corporation in any jurisdiction wherein it would not otherwise
be required to qualify but for the requirements of this Section
3(c)(vi), (2) consent to general service of process or taxation in any
such jurisdiction or (3) make any changes to its incorporating
documents or limited liability agreement or any other agreement
between it and its stockholders or members;
(vii) provide a CUSIP number for all Exchange Securities, not
later than the applicable Effective Time;
(viii) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as
soon as practicable but no later than 18 months after the effective
date of such Exchange Registration Statement, an earning statement of
the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).
(d) In connection with the Company's obligations with respect to the
Shelf Registration, if applicable, the Company shall, as soon as
reasonably practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as reasonably
practicable but in any case within the time periods specified in
Section 2(b), a Shelf Registration Statement on any form which may be
utilized by the Company and which shall register all of the
Registrable Securities for resale by the holders thereof in accordance
with such method or methods of disposition as may be specified by such
of the holders as, from time to time, may be Electing Holders and use
its best efforts to cause such Shelf Registration Statement to become
effective as soon as reasonably practicable but in any case within the
time periods specified in Section 2(b);
(ii) prior to the Effective Time of the Shelf Registration
Statement, mail the Notice and Questionnaire to the holders of
Registrable Securities; no holder shall be entitled to be named as a
selling securityholder in the Shelf Registration Statement as of the
Effective Time, and no holder shall be entitled to use the prospectus
forming a part thereof for resales of Registrable Securities at any
time, unless such holder has returned a completed and signed Notice
and Questionnaire to the Company by the deadline for response set
forth therein; provided, however, holders of Registrable Securities
shall have at least 28 calendar days from the date on which the Notice
and
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<PAGE>
Questionnaire is first mailed to such holders to return a completed
and signed Notice and Questionnaire to the Company;
(iii) after the Effective Time of the Shelf Registration
Statement, upon the request of any holder of Registrable Securities
that is not then an Electing Holder, promptly send a Notice and
Questionnaire to such holder; provided that the Company shall not be
required to take any action to name such holder as a selling
securityholder in the Shelf Registration Statement or to enable such
holder to use the prospectus forming a part thereof for resales of
Registrable Securities until such holder has returned a completed and
signed Notice and Questionnaire to the Company;
(iv) after the Effective Time of the Shelf Registration
Statement, except as permitted hereunder, as soon as reasonably
practicable prepare and file with the Commission such amendments and
supplements to such Shelf Registration Statement and the prospectus
included therein as may be necessary to effect and maintain the
effectiveness of such Shelf Registration Statement for the period
specified in Section 2(b) hereof and as may be required by the
applicable rules and regulations of the Commission and the
instructions applicable to the form of such Shelf Registration
Statement, and furnish to the Electing Holders copies of any such
supplement or amendment simultaneously with or prior to its being used
or filed with the Commission;
(v) comply with the provisions of the Securities Act with
respect to the disposition of all of the Registrable Securities
covered by such Shelf Registration Statement in accordance with the
intended methods of disposition by the Electing Holders provided for
in such Shelf Registration Statement;
(vi) provide (A) the Electing Holders, (B) the underwriters
(which term, for purposes of this Exchange and Registration Rights
Agreement, shall include a person deemed to be an underwriter within
the meaning of Section 2(a)(11) of the Securities Act), if any,
thereof, (C) any sales or placement agent, if any, therefor, (D)
counsel for any such underwriter or agent and (E) not more than one
counsel for all the Electing Holders a copy of such Shelf Registration
Statement, each prospectus included therein or filed with the
Commission and each amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of such
Shelf Registration Statement, and throughout the period specified in
Section 2(b), make available at reasonable times at the Company's
principal place of business or such other reasonable place for
inspection by the persons referred to in Section 3(d)(vi) who shall
certify to the Company that they have a current intention to sell the
Registrable Securities pursuant to the Shelf Registration such
financial and other information and books and records of the Company,
and cause the officers, employees, counsel and independent
11
<PAGE>
certified public accountants of the Company to respond to such
inquiries, as shall be reasonably necessary, in the reasonable
judgment of the respective counsel referred to in such Section, to
conduct a reasonable investigation within the meaning of Section 11 of
the Securities Act; provided, however, that each such party shall be
required to maintain in confidence and not to disclose to any other
person any information or records reasonably designated by the Company
as being confidential, until such time as (A) such information becomes
a matter of public record (whether by virtue of its inclusion in such
registration statement or otherwise), or (B) such person shall be
required so to disclose such information pursuant to a subpoena or
order of any court or other governmental agency or body having
jurisdiction over the matter (subject to the requirements of such
order, and only after such person shall have given the Company prompt
prior written notice of such requirement), or (C) such information is
set forth in such Shelf Registration Statement or the prospectus
included therein or in an amendment to such Shelf Registration
Statement or an amendment or supplement to such prospectus in order
that such Shelf Registration Statement, prospectus, amendment or
supplement, as the case may be, complies with applicable requirements
of the federal securities laws and the rules and regulations of the
Commission and does not contain an untrue statement of a material fact
or omit to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances then existing;
(viii) promptly notify each of the Electing Holders, any sales
or placement agent therefor and any underwriter thereof (which
notification may be made through any managing underwriter that is a
representative of such underwriter for such purpose) and confirm such
advice in writing, (A) with respect to such Shelf Registration
Statement or any post-effective amendment, when the same has become
effective, (B) of the issuance by the Commission of any stop order
suspending the effectiveness of such Shelf Registration Statement or
the initiation or threatening of any proceedings for that purpose, (C)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, or (D) if at any time when a prospectus is required
to be delivered under the Securities Act, that such Shelf Registration
Statement, prospectus, prospectus amendment or supplement or post-
effective amendment does not conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture
Act and the rules and regulations of the Commission thereunder or
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, which such notice, in the case of clauses (B), (C) and (D)
shall require the suspension of the use of such prospectus until
further notice;
(ix) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment
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<PAGE>
thereto at the earliest practicable date unless the Company in good
faith and for valid business reasons determines that to do so would
involve disclosing a material undisclosed event;
(x) if reasonably requested by any managing underwriter or
underwriters, any placement or sales agent or any Electing Holder,
promptly incorporate in a prospectus supplement or post-effective
amendment such information as is required by the applicable rules and
regulations of the Commission and as such managing underwriter or
underwriters, such agent or such Electing Holder specifies should be
included therein relating to the terms of the sale of such Registrable
Securities, including information with respect to the principal amount
of Registrable Securities being sold by such Electing Holder or agent
or to any underwriters, the name and description of such Electing
Holder, agent or underwriter, the offering price of such Registrable
Securities and any discount, commission or other compensation payable
in respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of
the Registrable Securities to be sold by such Electing Holder or agent
or to such underwriters; and make all required filings of such
prospectus supplement or post-effective amendment promptly after
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(xi) furnish to each Electing Holder, each placement or sales
agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(d)(vi) a conformed copy of
such Shelf Registration Statement, each such amendment and supplement
thereto (in each case including, upon request, all exhibits thereto
and documents incorporated by reference therein) and such number of
copies of the prospectus included in such Shelf Registration Statement
(including each preliminary prospectus and any summary prospectus), in
conformity in all material respects with the applicable requirements
of the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, and such other documents, as
such Electing Holder, agent, if any, and underwriter, if any, may
reasonably request that may be required in connection with the
offering and disposition of the Registrable Securities owned by such
Electing Holder, offered or sold by such agent or underwritten by such
underwriter and to permit such Electing Holder, agent and underwriter
to satisfy the prospectus delivery requirements of the Securities Act;
and the Company hereby consents to the use of the prospectus contained
in the Exchange Registration Statement at the Effective Time thereof
and any amendment or supplement thereto by each such Electing Holder
and by any such agent and underwriter, in each case in the form most
recently provided to such person by the Company, in connection with
the offering and sale of the Registrable Securities covered by such
prospectus or any such supplement or amendment thereto;
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<PAGE>
(xii) use reasonable best efforts to (A) register or qualify
the Registrable Securities to be included in such Shelf Registration
Statement under such securities laws or blue sky laws of such
jurisdictions as any Electing Holder and each placement or sales
agent, if any, therefor and underwriter, if any, thereof shall
reasonably request, (B) keep such registrations or qualifications in
effect and comply with such laws so as to permit the continuance of
offers, sales and dealings therein in such jurisdictions during the
period the Shelf Registration is required to remain effective under
Section 2(b) above and for so long as may be necessary to enable any
such Electing Holder, agent or underwriter to complete its
distribution of Securities pursuant to such Shelf Registration
Statement and (C) take any and all other actions as may be reasonably
necessary or advisable to enable each such Electing Holder, agent, if
any, and underwriter, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities; provided, however, that
neither the Company nor the Guarantors shall be required for any such
purpose to (1) qualify as a foreign corporation in any jurisdiction
wherein it would not otherwise be required to qualify but for the
requirements of this Section 3(d)(xii), (2) consent to general service
of process or taxation in any such jurisdiction or (3) make any
changes to its incorporating documents or limited liability agreement
or any other agreement between it and its stockholders or members;
(xiii) unless any Registrable Securities shall be in book-
entry only form, cooperate with the Electing Holders and the managing
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
sold, which certificates, if so required by any securities exchange
upon which any Registrable Securities are listed, shall be penned,
lithographed or engraved, or produced by any combination of such
methods, on steel engraved borders, and which certificates shall not
bear any restrictive legends; and, in the case of an underwritten
offering, enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale
of the Registrable Securities;
(xiv) enter into one or more underwriting agreements,
engagement letters, agency agreements, "best efforts" underwriting
agreements or similar agreements, as appropriate, including customary
provisions relating to indemnification and contribution (such
indemnification and contribution obligations of the Company to be no
more extensive than those contained in the Purchase Agreement), and
take such other actions in connection therewith as any Electing
Holders aggregating at least 20% in aggregate principal amount of the
Registrable Securities at the time outstanding shall reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities;
(xv) whether or not an agreement of the type referred to in
Section 3(d)(xvi) hereof is entered into and whether or not any
portion of the offering con-
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templated by the Shelf Registration is an underwritten offering or is
made through a placement or sales agent or any other entity, (A) make
such representations and warranties to the Electing Holders and the
placement or sales agent, if any, therefor and the underwriters, if
any, thereof in form, substance and scope as are customarily made in
connection with an offering of debt securities pursuant to any
appropriate agreement or to a registration statement filed on the form
applicable to the Shelf Registration; (B) obtain an opinion of counsel
to the Company in customary form and covering such matters, of the
type customarily covered by such an opinion, as the managing
underwriters, if any, or as any Electing Holders of at least 20% in
aggregate principal amount of the Registrable Securities at the time
outstanding may reasonably request, addressed to such Electing Holder
or Electing Holders and the placement or sales agent, if any, therefor
and the underwriters, if any, thereof and dated the effective date of
such Shelf Registration Statement (or if such Shelf Registration
Statement contemplates an underwritten offering of a part or all of
the Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto) (it being agreed that the
matters to be covered by such opinion shall include the due
incorporation and good standing of the Company and the Guarantors; the
qualification of the Company and the Guarantors to transact business
as foreign corporations; the due authorization, execution and delivery
of the relevant agreement, if any, of the type referred to in Section
3(d)(xvi) hereof; the due authorization, execution, authentication and
issuance, and the validity and enforceability, of the Securities; the
absence of governmental approvals required to be obtained in
connection with the Shelf Registration, the offering and sale of the
Registrable Securities, this Exchange and Registration Rights
Agreement or any agreement of the type referred to in Section
3(d)(xvi) hereof, except such approvals as may have been obtained or
may be required under state securities or blue sky laws; the material
compliance as to form of such Shelf Registration Statement and any
documents incorporated by reference therein and of the Indenture with
the requirements of the Securities Act and the Trust Indenture Act and
the rules and regulations of the Commission thereunder, respectively;
and, if addressed to any underwriters, as of the date of the opinion
and of the Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, the absence from such Shelf
Registration Statement and the prospectus included therein, as then
amended or supplemented, and from the documents incorporated by
reference therein (in each case other than the financial statements
and other financial or accounting information contained therein) of an
untrue statement of a material fact or the omission to state therein a
material fact necessary to make the statements therein not misleading
(in the case of such documents, in the light of the circumstances
existing at the time that such documents were filed with the
Commission under the Exchange Act)); (C) obtain a "cold comfort"
letter or letters from the independent certified public accountants of
the Company addressed to the selling Electing Holders, the placement
or sales agent, if any, therefor or the underwriters, if any, thereof,
dated (i) the effective date of such Shelf Registration Statement and
(ii) the effective date of any prospectus supplement to the prospectus
included in such Shelf Registration Statement or post-effective
amendment to such Shelf Registration Statement which includes
unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such
prospectus (and, if such Shelf Registration Statement contemplates an
underwritten offering pursuant to any prospectus supplement to the
prospectus included in such Shelf Registration
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Statement or post-effective amendment to such Shelf Registration
Statement which includes unaudited or audited financial statements as
of a date or for a period subsequent to that of the latest such
statements included in such prospectus, dated the date of the closing
under the underwriting agreement relating thereto), such letter or
letters to be in customary form and covering such matters of the type
customarily covered by letters of such type; and (D) deliver such
documents and certificates, including officers' certificates, as may
be reasonably requested by any Electing Holders of at least 20% in
aggregate principal amount of the Registrable Securities at the time
outstanding or the placement or sales agent, if any, therefor and the
managing underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above or
those contained in Section 5(a) hereof and the compliance with or
satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the Company
or the Guarantors;
(xvi) notify in writing each holder of Registrable Securities
of any proposal by the Company to amend or waive any provision of this
Exchange and Registration Rights Agreement in any material respect
pursuant to Section 9(h) hereof and of any such amendment or waiver
effected pursuant thereto, each of which notices shall contain the
text of the amendment or waiver proposed or effected, as the case may
be;
(xvii) in the event that any broker-dealer registered under
the Exchange Act shall underwrite any Registrable Securities or
participate as a member of an underwriting syndicate or selling group
or "assist in the distribution" (within the meaning of the Conduct
Rules (the "Conduct Rules") of the National Association of Securities
Dealers, Inc. ("NASD") or any successor thereto, as amended from time
to time) thereof, whether as a holder of such Registrable Securities
or as an underwriter, a placement or sales agent or a broker or dealer
in respect thereof, or otherwise, cooperate with such broker-dealer in
connection with any filings required to be made by the NASD;
(xviii) comply with all applicable rules and regulations of
the Commission, and make generally available to its securityholders as
soon as practicable but in any event not later than 18 months after
the effective date of such Shelf Registration Statement, an earning
statement of the Company and its subsidiaries complying with Section
11(a) of the Securities Act (including, at the option of the Company,
Rule 158 thereunder).
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<PAGE>
(e) In the event that the Company would be required, pursuant to
Section 3(d)(viii)(D) above, to notify the Electing Holders, the placement
or sales agent, if any, therefor and the managing underwriters, if any,
thereof, the Company shall as soon as reasonably practicable prepare and
furnish to each of the Electing Holders, to each placement or sales agent,
if any, and to each such underwriter, if any, a reasonable number of copies
of a prospectus supplemented or amended so that, as thereafter delivered to
purchasers of Registrable Securities, such prospectus shall conform in all
material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder and shall not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing; provided, however, the Company shall not be required to
amend or supplement such prospectus if (i) not permitted by law or (ii) the
Company in good faith and for valid business reasons and such misstatement
or omission involves a material undisclosed event. Each Electing Holder
agrees that upon receipt of any notice from the Company pursuant to Section
3(d)(viii)(D) hereof, such Electing Holder shall forthwith discontinue the
disposition of Registrable Securities pursuant to the Shelf Registration
Statement applicable to such Registrable Securities until such Electing
Holder shall have received copies of such amended or supplemented
prospectus, and if so directed by the Company, such Electing Holder shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Electing Holder's possession of the
prospectus covering such Registrable Securities at the time of receipt of
such notice.
(f) In the event of a Shelf Registration, in addition to the
information required to be provided by each Electing Holder in its Notice
and Questionnaire, the Company may require such Electing Holder to furnish
to the Company such additional information regarding such Electing Holder
and such Electing Holder's intended method of distribution of Registrable
Securities as may be required in order to comply with the Securities Act.
Each such Electing Holder agrees to (i) notify the Company as promptly as
practicable of (A) any inaccuracy or change in information previously
furnished by such Electing Holder to the Company or (B) of the occurrence
of any event in either case as a result of which any prospectus relating to
such Shelf Registration contains or would contain an untrue statement of a
material fact regarding such Electing Holder or such Electing Holder's
intended method of disposition of such Registrable Securities or omits to
state any material fact regarding such Electing Holder or such Electing
Holder's intended method of disposition of such Registrable Securities
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and (ii)
promptly to furnish to the Company any additional information required to
correct and update any previously furnished required information or so that
such prospectus shall not contain, with respect to such Electing Holder or
the disposition of such Registrable Securities, an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing.
17
<PAGE>
(g) Until the expiration of two years after the Closing Date, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144) to, resell any of the Securities that have been reacquired by
any of them except pursuant to an effective registration statement under
the Securities Act.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses, (b) all fees and
expenses in connection with the qualification of the Securities for offering and
sale under the State securities and blue sky laws referred to in Section
3(d)(xii) hereof under the laws of such jurisdictions as any managing
underwriters or the Electing Holders may designate, including any fees and
disbursements of counsel for the Electing Holders or underwriters in connection
with such qualification, (c) all expenses relating to the preparation, printing,
production, distribution and reproduction of each registration statement
required to be filed hereunder, each prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the foregoing, and
the expenses of preparing the Securities for delivery, (d) messenger, telephone
and delivery expenses relating to the preparation of documents referred in
clause (c) above, (e) fees and expenses of the Trustee under the Indenture, (f)
internal expenses (including all salaries and expenses of the Company's officers
and employees performing legal or accounting duties), (g) fees, disbursements
and expenses of counsel and independent certified public accountants of the
Company (including the expenses of any opinions or "cold comfort" letters
required by or incident to such performance and compliance), (h) reasonable
fees, disbursements and expenses of one counsel for the Electing Holders
retained in connection with a Shelf Registration, as selected by the Electing
Holders of at least a majority in aggregate principal amount of the Registrable
Securities held by Electing Holders (which counsel shall be reasonably
satisfactory to the Company), (j) any fees charged by securities rating services
for rating the Securities, and (k) fees, expenses and disbursements of any other
persons, including special experts, retained by the Company in connection with
such registration (collectively, the "Registration Expenses"). To the extent
that any Registration Expenses are incurred, assumed or paid by any holder of
Registrable Securities or any placement or sales agent therefor or underwriter
thereof, the Company shall reimburse such person for the full amount of the
reasonable Registration Expenses so incurred, assumed or paid promptly after
receipt of a request therefor. Notwithstanding the foregoing, the holders of
the Registrable Securities being registered shall pay all agency fees and
commissions and underwriting discounts and commissions attributable to the sale
of such Registrable Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above.
5. Representations and Warranties.
The Company and the Guarantors represent and warrant to, and agree
with, each Purchaser and each of the holders from time to time of Registrable
Securities that:
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<PAGE>
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; and at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act,
other than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(d)(viii)(D) or Section
3(c)(iii)(D) hereof until (ii) such time as the Company furnishes an
amended or supplemented prospectus pursuant to Section 3(e) or Section
3(c)(iv) hereof, each such registration statement, and each prospectus
(including any summary prospectus) contained therein or furnished pursuant
to Section 3(d) or Section 3(c) hereof, as then amended or supplemented,
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by a holder
of Registrable Securities, a placement or sales agent or an underwriter
expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or
were filed with the Commission, as the case may be, will conform or
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and, as of such effective or filing
date, none of such documents will contain or contained an untrue statement
of a material fact or will omit or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by a holder
of Registrable Securities, a placement or sales agent or an underwriter
expressly for use therein.
(c) The compliance by the Company with all of the provisions of this
Exchange and Registration Rights Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any subsidiary of the Company is a
party or by which the Company or any subsidiary of the Company is bound or
to which any of the property or assets of the Company or any subsidiary of
the Company is subject, except for such conflict, breach or default which
(x) would not have a material adverse effect on the business, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole (any such event, a "Material Adverse
Effect") or (y) have been waived nor
19
<PAGE>
will such action result in any violation of the provisions of the
certificate of incorporation, as amended, or the by-laws of the Company or
the Guarantors or violate any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any subsidiary of the Company or any of their properties except
for such violation which would not have a Material Adverse Effect; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
consummation by the Company and the Guarantors of the transactions
contemplated by this Exchange and Registration Rights Agreement, except the
registration under the Securities Act of the Securities, qualification of
the Indenture under the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
State securities or blue sky laws in connection with the offering and
distribution of the Securities.
(d) This Exchange and Registration Rights Agreement has been duly
authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company and the Guarantors. The Company
and the Guarantors, jointly and severally, will indemnify and hold harmless each
broker dealer selling Exchange Securities during the Resale Period, and each of
the Electing Holders of Registrable Securities included in a Shelf Registration
Statement against any losses, claims, damages or liabilities, joint or several,
to which such holder may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Exchange Registration Statement or
Shelf Registration Statement, as the case may be, under which such Registrable
Securities were registered under the Securities Act, or any preliminary, final
or summary prospectus contained therein or furnished by the Company to any such
holder, or 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 will reimburse such holder for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that (i) neither the
Company nor any Guarantor shall be liable to any such person in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, or preliminary, final or
summary prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by any holder,
placement or sales agent or underwriter expressly for use therein and (ii) such
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any holder, placement agent or underwriter (or any person controlling
such person) to the extent that any loss, claim, damage or liability of such
person results from the fact that such person sold Securities to a person as to
whom it shall be established that there was not sent or given, a copy of the
final prospectus (or the final prospectus as amended or supplemented) at or
prior to the confirmation of the sale of such Securities to such person if (x)
the Com-
20
<PAGE>
pany has previously furnished copies thereof in sufficient quantity to such
indemnified person and the loss, claim, damage or liability of such indemnified
person results from an untrue statement or omission of a material fact contained
in such preliminary prospectus which was identified at such time to such
indemnified person and corrected in the final prospectus (or the final
prospectus as amended or supplemented) and (y) such loss, liability, claim,
damage or expense would have been eliminated by the delivery of such corrected
final prospectus or the final prospectus as then amended or supplemented.
(b) Indemnification by the Holders and any Agents and Underwriters.
The Company may require, as a condition to including any Registrable Securities
in any registration statement filed pursuant to Section 2(b) hereof or to
entering into any underwriting agreement with respect thereto, that the Company
shall have received an undertaking reasonably satisfactory to it from the
Electing Holder of such Registrable Securities and from each underwriter named
in any such underwriting agreement, severally and not jointly, to (i) indemnify
and hold harmless the Company , the Guarantors, and all other holders of
Registrable Securities, against any losses, claims, damages or liabilities to
which the Company, the Guarantors or such other holders of Registrable
Securities may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in such registration statement, or any preliminary,
final or summary prospectus contained therein or furnished by the Company to any
such Electing Holder, agent or underwriter, or 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, in each case to the extent, but only to
the extent, that such 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 such Electing Holder or underwriter
expressly for use therein, and (ii) reimburse the Company and the Guarantors for
any legal or other expenses reasonably incurred by the Company and the
Guarantors in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that no such Electing
Holder shall be required to undertake liability to any person under this Section
6(b) for any amounts in excess of the dollar amount of the proceeds to be
received by such Electing Holder from the sale of such Electing Holder's
Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party otherwise than under the indemnification provisions of or
contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the de-
21
<PAGE>
fense thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party. No indemnifying party shall be liable under this Section 6(c) for any
settlement of any claim or action effected without its consent, which consent
shall not be unreasonably withheld.
(d) Contribution. If for any reason the indemnification provisions
contemplated by Section 6(a) or Section 6(b) are unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party 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 proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 6(d) were determined by
pro rata allocation (even if the holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 6(d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no holder shall be required to contribute any
amount in excess of the amount by which the dollar or euro amount of the
proceeds received by such holder from the sale of any Registrable Securities
(after deducting any fees, discounts and commissions applicable thereto) exceeds
the amount of any damages which such holder has otherwise been required
22
<PAGE>
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission, and no underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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. The holders' and any underwriters' obligations in this
Section 6(d) to contribute shall be several in proportion to the principal
amount of Registrable Securities registered or underwritten, as the case may be,
by them and not joint.
(e) The obligations of the Company and the Guarantors under this
Section 6 shall be in addition to any liability which the Company or the
Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each officer, director and partner of each holder, agent and
underwriter and each person, if any, who controls any holder, agent or
underwriter within the meaning of the Securities Act; and the obligations of the
holders and any agents or underwriters contemplated by this Section 6 shall be
in addition to any liability which the respective holder, agent or underwriter
may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company or the Guarantors and to each person, if
any, who controls the Company or a Guarantor within the meaning of the
Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by the Shelf Registration are to be sold pursuant to an underwritten
offering, the managing underwriter or underwriters thereof shall be designated
by Electing Holders holding at least a majority in aggregate principal amount of
the Registrable Securities to be included in such offering, provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Company.
(b) Participation by Holders. Each holder of Registrable Securities
hereby agrees with each other such holder that no such holder may participate in
any underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Registrable Securities that to
the extent it shall be required to do so under the Exchange Act, the Company
shall timely file the reports required to be filed by it under the Exchange Act
or the Securities Act (including the reports under Section 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder,
23
<PAGE>
and shall take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitations of the exemption provided by Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or any similar or
successor rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities in connection with that holder's
sale pursuant to Rule 144, the Company shall deliver to such holder a written
statement as to whether it has complied with such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant, registration
rights with respect to Registrable Securities or any other securities which
would be inconsistent with the terms contained in this Exchange and Registration
Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if the Company fails to perform any of its
obligations hereunder and that the Purchasers and the holders from time to time
of the Registrable Securities may be irreparably harmed by any such failure, and
accordingly agree that the Purchasers and such holders, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
compel specific performance of the obligations of the Company under this
Exchange and Registration Rights Agreement in accordance with the terms and
conditions of this Exchange and Registration Rights Agreement, in any court of
the United States or any State thereof having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, if delivered personally or by courier,
or three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Company, to it
at 500 Huntsman Way, Salt Lake City, Utah 84108, and if to a holder, to the
address of such holder set forth in the security register or other records of
the Company, or to such other address as the Company or any such holder may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this
Exchange and Registration Rights Agreement shall be binding upon, shall inure to
the benefit of and shall be enforceable by the parties hereto and the holders
from time to time of the Registrable Securities and the respective successors
and assigns of the parties hereto and such holders. In the event that any
transferee of any holder of Registrable Securities shall acquire Registrable
Securities, in any manner, whether by gift, bequest, purchase, operation of law
or otherwise, such transferee shall, without any further writing or action of
any kind, be deemed a beneficiary hereof for all purposes and such Registrable
Securities shall be held subject to all of the terms of this Exchange and
Registration Rights Agreement, and by taking and holding such Registrable
Securities such transferee shall be entitled to receive the benefits of, and be
conclusively deemed to have agreed to be bound by all of the applicable terms
and provi-
24
<PAGE>
sions of this Exchange and Registration Rights Agreement. If the Company shall
so request, any such successor, assign or transferee shall agree in writing to
acquire and hold the Registrable Securities subject to all of the applicable
terms hereof.
(e) Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this Exchange
and Registration Rights Agreement or made pursuant hereto shall remain in full
force and effect regardless of any investigation (or statement as to the results
thereof) made by or on behalf of any holder of Registrable Securities, any
director, officer or partner of such holder, any agent or underwriter or any
director, officer or partner thereof, or any controlling person of any of the
foregoing, and shall survive delivery of and payment for the Registrable
Securities pursuant to the Purchase Agreement and the transfer and registration
of Registrable Securities by such holder and the consummation of an Exchange
Offer.
(f) Governing Law. This Exchange and Registration Rights Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without reference to the conflict of law rules thereof.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are inserted for
convenience only, do not constitute a part of this Exchange and Registration
Rights Agreement and shall not affect in any way the meaning or interpretation
of this Exchange and Registration Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration
Rights Agreement and the other writings referred to herein (including the
Indenture and the form of Securities) or delivered pursuant hereto which form a
part hereof contain the entire understanding of the parties with respect to its
subject matter. This Exchange and Registration Rights Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Exchange and Registration Rights Agreement may be amended
and the observance of any term of this Exchange and Registration Rights
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument duly executed by
the Company and the holders of at least a majority in aggregate principal amount
of the Registrable Securities at the time outstanding. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any amendment or waiver effected pursuant to this Section 9(h), whether or not
any notice, writing or marking indicating such amendment or waiver appears on
such Registrable Securities or is delivered to such holder.
(i) Inspection. For so long as this Exchange and Registration Rights
Agreement shall be in effect, this Exchange and Registration Rights Agreement
and a complete list of the names and addresses of all the holders of Registrable
Securities shall be made available for inspection and copying on any business
day by any holder of Registrable Securities for proper purposes only (which
shall include any purpose related to the rights of the holders of Registrable
Securities under the Securities, the Indenture and this Agreement) at the
offices of the Trustee under the Indenture.
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<PAGE>
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
26
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers, the
Guarantors and the Company. It is understood that your acceptance of this
letter on behalf of each of the Purchasers is pursuant to the authority set
forth in a form of Agreement among Purchasers, the form of which shall be
submitted to the Company for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
Huntsman ICI Chemicals LLC
By: /s/ J. Kimo Esplin
-------------------------------
Name: J. Kimo Esplin
Title: Executive Vice President and
Chief Financial Officer
Tioxide Group
By: /s/ J. Kimo Esplin
-------------------------------
Name: J. Kimo Esplin
Title: Director
Tioxide Americas Inc.
By: /s/ L. Russell Healy
-------------------------------
Name: L. Russell Healy
Title: Vice President and Treasurer
Huntsman ICI Financial LLC
By: /s/ Samuel D. Scruggs
-------------------------------
Name: Samuel D. Scruggs
Title: Vice President - Deputy
General Counsel
27
<PAGE>
Accepted as of the date hereof:
Goldman, Sachs & Co.
Deutsche Bank Securities Inc.
Chase Securities Inc.
Warburg Dillon Read LLC
By: Goldman, Sachs & Co.
/s/ Goldman, Sachs & Co.
- ----------------------------------------
(Goldman, Sachs & Co.)
28
<PAGE>
Exhibit A
Huntsman ICI Chemicals LLC
INSTRUCTION TO DTC/EUROCLEAR PARTICIPANTS
-----------------------------------------
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE] /*/
------------------------------
The Depository Trust Company ("DTC") or Euroclear has identified you as a
Participant through which beneficial interests in the Huntsman ICI Chemicals LLC
(the "Company") [ ]% Senior Subordinated Notes due 2009 or [ ]% Senior
Subordinated Notes due 2009 (together, the "Securities") are held.
The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of the
- ------------------------------------------------------------------------------
enclosed materials as soon as possible as their rights to have the Securities
- --------------------------------------
included in the registration statement depend upon their returning the Notice
and Questionnaire by [Deadline For Response]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Huntsman ICI
Chemicals LLC, 500 Huntsman Way, Salt Lake City, Utah 84108, (801) 532-5200.
- ---------------------
/*/Not less than 28 calendar days from date of mailing.
<PAGE>
Huntsman ICI Chemicals LLC
Notice of Registration Statement
and
Selling Securityholder Questionnaire
------------------------------------
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement") among Huntsman ICI Chemicals LLC
(the "Company"), the Guarantors named therein and the Purchasers named therein.
Pursuant to the Exchange and Registration Rights Agreement, the Company has
filed with the United States Securities and Exchange Commission (the
"Commission") a registration statement on Form [__] (the "Shelf Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities Act"), of the Company's [ ]% Senior
Subordinated Notes due 2009 and [ ]% Senior Subordinated Notes due 2009
(together, the "Securities"). A copy of the Exchange and Registration Rights
Agreement has been filed as an exhibit to the Shelf Registration Statement. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Exchange and Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined below) is entitled
to have the Registrable Securities beneficially owned by it included in the
Shelf Registration Statement. In order to have Registrable Securities included
in the Shelf Registration Statement, this Notice of Registration Statement and
Selling Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the address set
forth herein for receipt ON OR BEFORE [Deadline for Response]. Beneficial
owners of Registrable Securities who do not complete, execute and return this
Notice and Questionnaire by such date (i) will not be named as selling
securityholders in the Shelf Registration Statement and (ii) may not use the
prospectus forming a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Shelf Registration Statement and
related prospectus.
The term "Registrable Securities" is defined in the Exchange and Registration
----------------------
Rights Agreement.
2
<PAGE>
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable Securities
hereby elects to include in the Shelf Registration Statement the Registrable
Securities beneficially owned by it and listed below in Item (3). The
undersigned, by signing and returning this Notice and Questionnaire, agrees to
be bound with respect to such Registrable Securities by the terms and conditions
of this Notice and Questionnaire and the Exchange and Registration Rights
Agreement, including, without limitation, Section 6 of the Exchange and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and the Trustee for the Securities the Notice of Transfer set forth in Appendix
A to the Prospectus and as Exhibit B to the Exchange and Registration Rights
Agreement.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
3
<PAGE>
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
---------------------------------------------------------------------
(b) Full Legal Name of Registered Holder (if not the same as in (a) above)
of Registrable Securities Listed in Item (3) below:
---------------------------------------------------------------------
(c) Full Legal Name of DTC Participant (if applicable and if not the same
as (b) above) Through Which Registrable Securities Listed in Item (3)
below are Held:
---------------------------------------------------------------------
(2) Address for Notices to Selling Securityholder:
________________________________
________________________________
________________________________
Telephone: ________________________________
Fax: ________________________________
Contact Person: ________________________________
(3) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(a) Principal amount of Registrable Securities beneficially owned: ______
CUSIP No(s). of such Registrable Securities: ________________________
(b) Principal amount of Securities other than Registrable Securities
beneficially owned:
_____________________________________________________________________
CUSIP No(s). of such other Securities:_______________________________
(c) Principal amount of Registrable Securities which the undersigned
wishes to be included in the Shelf Registration Statement: __________
4
<PAGE>
CUSIP No(s). of such Registrable Securities to be included in the
Shelf Registration Statement:________________________________________
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other
securities of the Company, other than the Securities listed above in Item
(3).
State any exceptions here: _______________________________________________
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any of
its affiliates, officers, directors or principal equity holders (5% or
more) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during
the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder intends
to distribute the Registrable Securities listed above in Item (3) only as
follows (if at all): Such Registrable Securities may be sold from time to
time directly by the undersigned Selling Securityholder or, alternatively,
through underwriters, broker-dealers or agents. Such Registrable Securities
may be sold in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time
of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (i) on any
national securities exchange or quotation service on which the Registered
Securities may be listed or quoted at the time of sale, (ii) in the over-
the-counter market, (iii) in transactions otherwise than on such exchanges
or services or in the over-the-counter market, or (iv) through the writing
of options. In connection with sales of the Registrable Securities or
otherwise, the Selling Securityholder may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the
Registrable Securities in the course of hedging the positions they assume.
The Selling Securityholder may also sell Registrable Securities short and
deliver Registrable Securities to close out such short positions, or loan
or pledge Registrable Securities to broker-dealers that in turn may sell
such securities.
5
<PAGE>
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.
In the event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (3) above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Company in connection with the
preparation of the Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Exchange and Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:
(i) To the Company:
_________________________
_________________________
_________________________
_________________________
_________________________
(ii) With a copy to:
_________________________
_________________________
_________________________
_________________________
6
<PAGE>
_________________________
Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the Company and the
Selling Securityholder (with respect to the Registrable Securities beneficially
owned by such Selling Securityholder and listed in Item (3) above). This
Agreement shall be governed in all respects by the laws of the State of New
York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated:________________
__________________________________________________________________________
Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable Securities)
By: ______________________________________________________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
_________________________
_________________________
_________________________
_________________________
_________________________
7
<PAGE>
Exhibit B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Bank One, N.A.
Huntsman ICI Chemicals LLC
c/o Bank One, N.A.
100 East Broad Street
8th Floor
Columbus, OH 43215
Attention: Trust Officer
Re: Huntsman ICI Chemicals LLC (the "Company")
10 1/8% Senior Subordinated Notes due 2009
Dear Sirs:
Please be advised that ________________________________________ has transferred
$___________________________________ and/or EU__________ aggregate principal
amount of the above-referenced Notes pursuant to an effective Registration
Statement on Form [______] (File No. 333-_________) filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated [date] or in supplements thereto, and that the aggregate principal amount
of the Notes transferred are the Notes listed in such Prospectus opposite such
owner's name.
Dated:
Very truly yours,
____________________________
(Name)
By:___________________________
(Authorized Signature)
<PAGE>
EXHIBIT 10.1
CONFORMED COPY
As of 15 April 1999
(as amended by Amending
Agreements dated 4 and 30 June 1999
and by a further Amending Agreement
dated 30 June 1999)
IMPERIAL CHEMICAL INDUSTRIES PLC
HUNTSMAN SPECIALTY CHEMICALS CORPORATION
HUNTSMAN ICI HOLDINGS, LLC
HUNTSMAN ICI CHEMICALS, LLC
=====================================
CONTRIBUTION AGREEMENT
in respect of the contribution of the
Polyurethanes, Tioxide, Relevant
Petrochemicals and PO/MTBE businesses
to Huntsman ICI Holdings, LLC
=====================================
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Clause Page
<S> <C>
1. DEFINITIONS AND INTERPRETATION.............................................................. 1
2. SALE OF SALE SHARES AND LOCAL BUSINESSES................................................... 29
3. CONSIDERATION.............................................................................. 34
4. CONDITIONS................................................................................. 42
5. CONDUCT BEFORE CLOSING..................................................................... 47
6. CLOSING.................................................................................... 53
7. CLOSING STATEMENT.......................................................................... 69
8. PURCHASER INDEMNITIES...................................................................... 78
9. EMPLOYEES.................................................................................. 79
10. WARRANTIES AND INDEMNITIES................................................................. 81
11. OTHER PROVISIONS RELATING TO THE WARRANTIES AND INDEMNITIES................................ 84
12. LIMITATIONS ON CLAIMS...................................................................... 86
13. FURTHER LIMITATIONS ON CLAIMS.............................................................. 94
14. MANAGEMENT OF PRE-CLOSING TAX AFFAIRS AND CONDUCT OF OTHER TAX AFFAIRS..................... 99
15. CONTINUING ARRANGEMENTS BETWEEN THE RETAINED GROUP AND THE BUSINESS........................ 102
16. JOINT VENTURE INTERESTS.................................................................... 112
17. INSURANCE.................................................................................. 117
18. POST CLOSING UNDERTAKINGS.................................................................. 119
19. DOMAIN NAMES............................................................................... 123
20. COSTS...................................................................................... 123
21. PERFORMANCE BY GROUP MEMBERS............................................................... 126
</TABLE>
Page I
<TABLE>
<S> <C>
22. ANNOUNCEMENTS.............................................................................. 126
23. RESTRICTIONS ON THE VENDORS................................................................ 127
24. ENTIRE AGREEMENT........................................................................... 131
25. VARIATION.................................................................................. 133
26. ASSIGNMENT................................................................................. 133
27. SEVERABILITY............................................................................... 134
28. COUNTERPARTS............................................................................... 134
29. NOTICES.................................................................................... 135
30. INDIA AND PAKISTAN......................................................................... 136
31. GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS......................................... 137
32. EXERCISE OF RIGHTS AND REMEDIES............................................................ 137
33. CONFIDENTIALITY............................................................................ 138
34. ANILINE PIPE............................................................................... 139
SCHEDULE 1....................................................................................... 140
SCHEDULE 2....................................................................................... 149
SCHEDULE 3....................................................................................... 151
SCHEDULE 4....................................................................................... 152
SCHEDULE 5....................................................................................... 176
SCHEDULE 6....................................................................................... 201
SCHEDULE 7....................................................................................... 203
SCHEDULE 8....................................................................................... 205
SCHEDULE 9....................................................................................... 208
SCHEDULE 10...................................................................................... 240
SCHEDULE 11...................................................................................... 244
SCHEDULE 12...................................................................................... 293
</TABLE>
Page II
<PAGE>
<TABLE>
<S> <C>
SCHEDULE 13...................................................................................... 304
SCHEDULE 14...................................................................................... 319
SCHEDULE 14A..................................................................................... 358
SCHEDULE 15...................................................................................... 381
SCHEDULE 16...................................................................................... 383
SCHEDULE 17...................................................................................... 393
SCHEDULE 18...................................................................................... 426
SCHEDULE 19...................................................................................... 441
SCHEDULE 20...................................................................................... 452
SCHEDULE 21...................................................................................... 478
SCHEDULE 22...................................................................................... 482
SCHEDULE 23...................................................................................... 486
SCHEDULE 24...................................................................................... 489
</TABLE>
Page III
EXHIBIT 10.1
THIS CONTRIBUTION AGREEMENT was made as of 15 April 1999 and amended by Amending
Agreements dated 4 and 30 June 1999 and by a further Amending Agreement dated
30 June 1999
Between:
IMPERIAL CHEMICAL INDUSTRIES PLC, a company incorporated in England and Wales
whose registered office is at Imperial Chemical House, Millbank, London SW1P 3JF
(ICI);
HUNTSMAN SPECIALTY CHEMICALS CORPORATION, a corporation incorporated under the
laws of Delaware whose principal office is at 500 Huntsman Way, Salt Lake City,
Utah, USA (HSCC);
HUNTSMAN ICI HOLDINGS, LLC a limited liability company formed under the laws of
Delaware whose principal place of business is at 500 Huntsman Way, Salt Lake
City, Utah, USA (the Purchaser); and
HUNTSMAN ICI CHEMICALS, LLC a limited liability company formed under the laws of
Delaware, whose principal place of business is at 500 Huntsman Way, Salt Lake
City, Utah, USA (HIC).
Whereas:
(A) As at the date of this Agreement, members of ICI's Group carry on the ICI
Business (as defined below) and HSCC carries on the PO/MTBE Business (as defined
below).
(B) The parties are entering into this Agreement to set out the arrangements
agreed between them for the establishment of the Purchaser's Group and the
transfer to it of the relevant companies, businesses and/or assets comprising
the ICI Business and the PO/MTBE Business and, amongst other things, to set out
the terms governing their relationship between the signing of this Agreement and
the completion of those arrangements.
It Is Agreed as follows:
Definitions And Interpretation
1.1 In this Agreement, except so far as the context otherwise requires, the
following terms shall have the following meanings:
<PAGE>
Accounting Period means any period by reference to which any income, profits or
gains, or any other amounts relevant for the purposes of Tax, are measured or
determined;
Accounts means, in relation to the year ended on the Accounts Date:
(a) in the case of the ICI Business, the audited special purpose accounts
relating to the ICI Business, together with any notes, reports or
statements included in or annexed to them, as set out in Exhibit A; and
(b) in the case of the PO/MTBE Business, the audited accounts relating to the
PO/MTBE Business, together with any notes, reports or statements included
in or annexed to them, as set out in Exhibit B;
Accounts Date means 31 December 1998;
Additional Employees means the Employees named as Additional Employees at
paragraph 1 of Schedule 19;
Ancillary Agreements means the agreements in the agreed form referred to in
clause 15 and the other agreements to be entered into pursuant to clause 15;
Assumed Liabilities means all debts, obligations and liabilities to the extent
that they relate to the carrying on of the ICI Business or the PO/MTBE Business,
as the case may be, by the Business Vendors, both prior to and after Closing but
other than the Excluded Liabilities;
Books and Records means all books and records of any Business Vendor containing
information which relates to the ICI Business or the PO/MTBE Business or on
which any such information is recorded, including all forms of computer or
machine readable material but excluding:
(a) all books and records which need to be retained for the purposes of VAT as
referred to in clause 3.12;
(b) any physical embodiments of the Business Information which are transferred
pursuant to clause 2.6(i); and
(c) the Tax Documents and other records referred to in clause 14.12;
BPCL means BP Chemicals Limited;
Business Assets has the meaning given in clause 2;
Business Cash Float means the cash held as petty cash by any of the Business
Vendors for the purposes of the ICI Business or the PO/MTBE Business;
Page 2
<PAGE>
Business Contracts means all the contracts, arrangements and engagements
(including without limitation, in the case of the ICI Business, the benefit of
the Compensation Agreement dated 28 November 1997 between ICI and ICI Holland
BV) relating either exclusively to the ICI Business or the PO/MTBE Business or
relating in part to the ICI Business or the PO/MTBE Business (but then only to
the extent that the same do so relate) to which any Business Vendor is (itself
or through an agent) a party or the benefit of which is held in trust for or has
been assigned to it and which, in any case, are current or unperformed or in
respect of which it has any rights, liability or obligation as at Closing (or
the relevant Delayed Closing Date, as the case may be), but excluding:
(a) contracts with Business Employees and Excluded Employees relating to their
employment (save that any loans from members of the Vendor's Group to
Employees and any other contracts with Business Employees which do not
relate to their employment shall be Business Contracts);
(b) contracts of insurance relating to the ICI Business or the PO/MTBE Business
(which, for the avoidance of doubt, are subject to the provisions of clause
17);
(c) leases, licences and contracts (if any) to the extent they create interests
in land or (as the case may be) confer rights of occupation in relation to
the Properties;
(d) Business IP Licences and Business IT Licences;
(e) the Ancillary Agreements;
(f) the new Raw Materials Agreement dated 24 July 1996 between ICI Chemicals &
Polymers Limited, ICI Wilhelmshaven GmbH, EVC International NV, European
Vinyls Corporation (International) SA/NV, European Vinyls Corporation (UK)
Limited, European Vinyls Corporation (Deutschland) GmbH and European Vinyls
Corporation (Italia) S.p.A.;
(g) the agreement for the conversion of Raw Materials into Vinyl Chloride
Monomer for supply to ICI Chemicals & Polymers Limited dated 24 July, 1996
between European Vinyls Corporation UK Limited, European Vinyls Corporation
(Deutschland) GmbH and ICI Chemicals & Polymers Limited;
Page 3
<PAGE>
(h) the agreement for the exclusive distribution of Vinyl Chloride Monomer
dated 15 November 1994 between ICI Chemicals & Polymers Limited and
European Vinyls Corporations (UK) Limited;
(i) naphtha contracts between ICI Chemical Industries Limited and Phillips
Petroleum Company and between ICI Chemical Industries Limited and Phillips
Imperial Petroleum Limited (as amended) dated 1st January, 1970, 1 October,
1971 and 5 August, 1980; and
(j) the Texaco Purchase Agreement; and
(k) bank accounts;
Business Day means a day (excluding Saturdays) on which banks generally are open
in London, Rotterdam, Salt Lake City and New York City for the transaction of
normal banking business;
Business Employee means any employee of any Business Vendor working for more
than 50% of his time in the ICI Business immediately prior to Closing (including
any employee temporarily absent from work), but does not include a Company
Employee or an Excluded Employee;
Business Goodwill means the goodwill of any Business Vendor in relation to the
ICI Business or, as the case may be, the PO/MTBE Business together with the
right for the Purchaser or the Designated Purchaser to represent itself as
carrying on any of the Polyurethanes Business, the Tioxide Business or the
Relevant Petrochemicals Business or, as the case may be, the PO/MTBE Business in
succession to the Business Vendors but excluding, for the avoidance of doubt,
any rights to the "ICI" name, the letters ICI and the ICI Roundel and any right
to the "Huntsman" name and Huntsman Logo;
Business Information means all Information that Relates to the ICI Business (in
the case of ICI) or to the PO/MTBE Business (in the case of HSCC) and is owned,
or the rights in which are owned, by any Business Vendor;
Business IPR means:
(a) all Intellectual Property Rights (excluding Intellectual Property Rights in
computer software) owned by or on behalf of any Business Vendor which
Relate to the ICI Business (in the case of ICI) or the PO/MTBE Business (in
the case of HSCC) including (without limitation) the Registered Rights of
each Business Vendor, brief details of which are set out in the IP Annex;
Page 4
<PAGE>
(b) all Intellectual Property Rights in computer software owned by or on behalf
of HSCC which Relate to the PO/MTBE Business; and
(c) Business Owned Software;
Business IP Licences means all licences of Intellectual Property Rights or
Business Information granted to or by any Business Vendor or the benefit of
which are held in trust for or have been assigned to it and which, in any case,
are current or unperformed or in respect of which it has any rights, liability
or obligation as at Closing (or Delayed Closing, as the case may be) which
Relate to the ICI Business (in the case of ICI) or to the PO/MTBE Business (in
the case of HSCC) or relating in part to such business (but then only to the
extent that the same do so relate) including without limitation those licences
set out in the IP Annex, but excluding the Business IT Licences;
Business IT Licences means all licences of computer software granted to or by
any Business Vendor or the benefit of which are held in trust for or have been
assigned to it and which, in any case, are current or unperformed or in respect
of which it has any rights, liability or obligation as at Closing (or the
relevant Delayed Closing Date, as the case may be) used exclusively in the ICI
Business (in the case of ICI) or the PO/MTBE Business (in the case of HSCC) or
relating in part to the relevant Business (but then only to the extent that the
same do so relate);
Business Owned Software shall have the meaning set out in Schedule 20;
Business Plant and Machinery means all the plant, machinery and other equipment
including computer equipment but not software and related work in progress and
motor vehicles beneficially owned by any Business Vendor and used or to be used
exclusively or primarily in the ICI Business or, as the case may be, the PO/MTBE
Business;
Business Stocks means all Stocks beneficially owned by any Business Vendor
exclusively or primarily for the purposes of the ICI Business or the PO/MTBE
Business including items which, although subject to reservation of title by the
relevant sellers, are under the control of any Business Vendor (including where
held by a consignee), but excluding raw materials held on consignment from
suppliers;
Business Vendors means, in respect of the ICI Business, any member of ICI's
Group other than the Companies (and, for the avoidance of doubt, other than any
Non-Controlled Joint Venture), including the companies listed in column 1 of
Schedule 2 and, in respect of the PO/MTBE Business, HSCC (and Business Vendor
means any one of those companies);
Page 5
<PAGE>
Claim means any Warranty Claim, any Tax Covenant Claim, any claim under the
Environmental Covenant, any claim under clauses 10.3, 10.4 or 12.17, any claim
under clauses 8.1(a), 9 or 18.13 (for the purposes of clauses 12.3, 12.8(e),
12.13 and 13 only) and any claim under clauses 8.1(b) and 10.2 (for the purposes
of clauses 12.8(e), 12.13 and 13 only);
Closing means the completion of the sale and purchase of the ICI Business and
the PO/MTBE Business and related matters in accordance with clause 6;
Closing Adjustments Date means the first day of the calendar month following the
calendar month in which the Closing Date falls;
Closing Date means the date on which Closing occurs pursuant to clause 6;
Closing Statement means, in relation to the ICI Business or, as the case may be,
the PO/MTBE Business, the closing statement as at 00.01 am, applicable local
time, on the first day of the calendar month following the calendar month in
which the Closing Date falls, prepared in accordance with the provisions of
clause 7 and Schedule 8, and Closing Statements shall be construed accordingly;
Closing Working Capital means, in relation to any Company or any Business
Vendor, the working capital of that Company (or, in the case of the Controlled
Joint Venture or LPC, the JV Percentage of such working capital) or Business
Vendor (only in relation to its Local Business), comprising the items referred
to in paragraph 2(c) of Schedule 8, expressed in dollars, as at 00.01 am,
applicable local time, on the Closing Adjustments Date as set out in the Closing
Statement;
Code means the US Internal Revenue Code of 1986, as amended;
Companies means the entities listed in column 2 of Part I, column 3 of Part A of
Part II and column 2 of Part B of Part II and column 2 of Part III of Schedule
1, together with such entities as become Companies from time to time in
accordance with Schedule 18, and Company means any one of them (provided that
LPC shall also be deemed to be a Company for the purpose of the definitions of
Provisional Cash Balance, Final Cash Balance, Provisional Financial Debt, Final
Financial Debt, Final Intra Group Cash Balance, Final Intra Group Debt, Closing
Working Capital and Intra Group Trading Indebtedness and of clauses 1.5, 3.4,
3.6, 3.7 and 7 and Schedule 8);
Company Employee means any employee of any of the Companies immediately prior to
Closing who is not an Excluded Employee;
Page 6
<PAGE>
Computer Systems means IT systems (hardware, software and networks
infrastructure) and all embedded information technology contained in material
plant, machinery and equipment used exclusively or predominantly in the ICI
Business (in the case of ICI) or in the PO/MTBE Business (in the case of HSCC);
Conditions means the conditions set out in clause 4.1;
Confidentiality Agreements means (a) the agreement dated 25 September, 1997
between ICI (on behalf of ICI's Group (as defined in such agreement)) and
Huntsman Corporation relating to confidentiality and other related issues as
amended by a letter dated 24 October, 1997 between Huntsman Corporation and ICI,
a letter dated 27 February 1998 between Huntsman Corporation and ICI Chemicals
and Polymers and a letter dated 3 March, 1998 between Huntsman Corporation and
ICI (the First Confidentiality Agreement); and (b) the agreement entered into by
Huntsman Corporation on 18 February, 1999 between ICI and Huntsman Corporation
relating to confidentiality and other related issues (the Second Confidentiality
Agreement);
Controlled Joint Venture means the company listed in column 2 of Part III of
Schedule 1;
Co-operation Agreement means the agreement entered into between ICI and HSCC at
the same time as this Agreement, as amended;
Costs means liabilities, losses, damages, costs (including reasonable legal
costs), charges, penalties and expenses (including Tax);
Cracker means the plants at Wilton known as JVO6, JVB3 and GTU and the other
plant and related infrastructure listed in Schedule 24 which are used for (a)
the production of ethylene, propylene, butadiene and other co-products
(products) and (b) the storage, processing and distribution of feedstocks and
products;
Dames & Moore Reliance Agreement means an agreement in the agreed form entitling
certain persons (including, for the avoidance of doubt, the Purchaser, its
lenders and debt finance providers) to rely on the reports prepared by Dames &
Moore in respect of the environmental condition of certain properties of the ICI
Business;
Data Room means, in the case of the ICI Business, such of the contents of the
rooms made available to HSCC at the offices of ICI's Solicitors as are
identified in the index contained in Exhibit C (being the contents as at 6 p.m.
on 26 March 1999) and, in the case of the PO/MTBE Business, such of the
Page 7
<PAGE>
contents of the rooms made available to ICI at the offices of ICI's Solicitors
as are identified in the index contained in Exhibit D (being the contents as at
6 p.m. on 26 March 1999);
Delayed Asset has the meaning given in clause 6.3;
Delayed Business has the meaning given in clause 6.3;
Delayed Closing Date means the date on which closing takes place of the transfer
of any Delayed Assets, Delayed Business or Delayed Company which is not
transferred at Closing or has not been transferred to TGL (as defined in
Schedule 18) or one of its Subsidiaries prior to Closing (which in each case,
unless the parties otherwise agree, shall be the last day in the relevant
calendar month which is both a working day in the relevant jurisdiction and is
also a Business Day) and Delayed Closing means the completion of the sale and
purchase of the relevant Delayed Assets, Delayed Business or Delayed Company;
Delayed Company has the meaning given in clause 6.3;
Designated Purchasers means (i) the companies (or companies to be incorporated)
listed in column 4 of Part I of Schedule 1 and column 3 of Schedule 2; (ii) in
relation to the Joint Venture Interests (other than those in NPU and Arabian
Polyol Co. Ltd), the Purchaser; and (iii) in relation to Business IP Licences
and Business IT Licences relating to the ICI Business, the Purchaser or its
nominee, and Designated Purchaser means any one of them;
Disclosed Matters means any fact, matter, event or circumstance which is fairly
disclosed in the relevant Disclosure Letter or:
(a) in respect of the Warranties in paragraphs 2.2, 5.3, 5.5, 5.6, 5.7, 8.1,
8.2, 9, 11, 12, 13.1, 13.2, 13.3, 13.5, 14, 15, 17.2, 17.5, 17.11, 17.13,
17.14, 17.15, 17.16 and 25.1, insofar as it relates to matters covered by
the foregoing paragraphs of Schedule 9 only, in the documents in the Data
Room;
(b) in respect of the Warranties given by ICI in paragraph 16 of Schedule 9, in
those documents in the Data Room relating to the ICI Business as follows:
(i) Polyurethanes
Part 1, Section 1.2; Part 1A, Section 1.2; Part 5; and Part 5A of
the Data Room;
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(ii) Tioxide
Any document which has as the second element of its code the
number 2 (Codes are as shown in the Tioxide Data Room index. For
example, document reference TEL 2.1/01);
(iii) Relevant Petrochemicals
Part 6 of Pheasant I and Part 6 of Pheasant V of the Data Room;
(c) in respect of the Warranties given by ICI in paragraphs 19, 20, 21 and 22
of Schedule 9, in those documents in the Data Room relating to the ICI
Business as follows:
(i) Polyurethanes
Part 4 and Part 4A of the Data Room;
(ii) Tioxide
Any document which has as the second element of its code the
number 13
Any document which has as the second element of its code the
number 14
(Codes are as shown in the Tioxide Data Room index. For example,
document reference TEL 13.1/07);
(iii) Relevant Petrochemicals
Project Pheasant (1), Part 2, Volume 1 of 1
Project Pheasant (3), Part 2, Volume 1 of 1
Project Pheasant (5), Part 2, Volume 1 of 1
(d) in respect of the Warranties given by HSCC in paragraph 16 of Schedule 9,
in those documents in the Data Room relating to the PO/MTBE Business;
(e) in respect of the Warranties given by HSCC in paragraphs 19, 20, 21 and 22
of Schedule 9, in documents 1 to 10 inclusive in the section headed "HSCC
Financial Index" in Volumes 2 and 3 of the Data Room relating to the
PO/MTBE Business;
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and/or which is deemed to be disclosed in the Disclosure Letters in accordance
with their respective terms or for which the relevant Vendor is stated not to be
liable in the Disclosure Letters;
Disclosure Letters means the disclosure letters in the agreed form from ICI to
the Purchaser and from HSCC to the Purchaser, in each case delivered immediately
before the signing of this Agreement;
dollar or $ means the lawful currency of the United States of America;
Employee means any Company Employee or Business Employee;
Environmental Consultants Agreements means the agreements between ICI and Dames
& Moore dated 10 March 1999 for the carrying out of certain environmental
consultancy services;
Environmental Covenant means the covenant set out in Schedule 14 and 14A as
applicable;
Environmental Matters means:
(a) pollution or contamination;
(b) the disposal, release, spillage, deposit, escape, discharge, leak or
emission of, Hazardous Materials or Waste;
(c) exposure of any person to Hazardous Materials or Waste;
(d) the creation or existence of any noise, vibration, radiation, common law or
statutory nuisance, or other material adverse impact on the Environment;
(e) use and recovery of packaging;
(f) matters relating to human health and safety or the condition or protection
of the Environment, arising out of the manufacturing, processing,
treatment, keeping, handling, use, possession, transportation or presence
of Hazardous Materials or Waste;
Euro/Dollar Rate has the meaning given to it in Clause 3.17;
Event means any event, transaction, action or omission, any change in the
residence of any person for the purposes of any Tax and shall also include
Closing;
Excluded Assets means the assets owned by the Business Vendors or the Companies
set out in Schedule 12;
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Excluded Employees means the Employees or groups of Employees described or named
at paragraph 2 of Schedule 19;
Excluded Liabilities means (a) any Tax or amounts in respect of Tax of any
Business Vendor or in relation to any Business Assets (which, for the avoidance
of doubt shall include ICI's US Business and ICI's US Assets) arising in respect
of any period of account for Tax purposes ending on or before Closing or in
respect of acts, events or occurrences occurring on or before Closing and with
respect to a Straddle Period the portion of such Straddle Period deemed to end
on and include the Closing Date; (b) all borrowings and indebtedness (including,
without limitation, by way of acceptance credits, discounting or similar
facilities, finance leases, loan stocks, bonds, debentures, notes, debt or
inventory financing or sale and lease back arrangements, overdrafts or any other
arrangement the purpose of which is to raise money) owed by a Business Vendor,
together with accrued interest on such amounts, to a Financial Institution
(other than indebtedness resulting from operating leases); (c) all amounts owed
to a member of ICI's or HSCC's Retained Group (apart from (i) indebtedness
resulting from operating leases and (ii) Intra Group Trading Indebtedness); (d)
any liability or obligation of any Business Vendor to the extent it arises out
of any business other than the ICI Business or the PO/MTBE Business, as the case
may be, and all liabilities and obligations under any guarantees, indemnities,
counter-indemnities and letters of comfort of any nature whatsoever given by any
of the Business Vendors in respect of any obligations or liabilities of any
other member of ICI's Retained Group or HSCC's Retained Group; (e) any liability
or obligation of ICI or of HSCC or any member of their respective Retained
Groups arising under this Agreement or the Ancillary Agreements or any other
agreement to be entered into pursuant to this Agreement; (f) any obligation of
either Vendor pursuant to clause 20; and (g) any liability or obligation of ICI
or of HSCC or any member of their respective Retained Group in relation to any
Environmental Matters existing or arising prior to or at Closing;
Excluded Properties has the meaning given to it in Schedule 17;
Final Cash Balance means, in relation to any Company, the aggregate amount (or,
in the case of the Controlled Joint Venture or LPC, the JV Percentage of such
aggregate amount), expressed in dollars and calculated as at 00.01 am,
applicable local time, on the Closing Adjustments Date, of its cash at bank,
cash in hand or cash equivalents and amounts owed to that Company by members of
ICI's Retained Group (apart from amounts representing Intra Group Trading
Indebtedness), in each case as reflected in the books of that Company, but
excluding all Tax assets or rights to
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repayments of Tax and amounts in respect of such Tax assets or rights to
repayments of Tax;
Final Consideration has the meaning given in clause 3.7;
Final Financial Debt means, in relation to any Company, the aggregate amount
(or, in the case of a Controlled Joint Venture or LPC, the JV Percentage of such
aggregate amount) expressed in dollars and calculated as at 00.01 am, applicable
local time, on the Closing Adjustments Date of (a) all borrowings and
indebtedness (including, without limitation, by way of acceptance credits,
discounting or similar facilities, finance leases, loan stocks, bonds,
debentures, notes, debt or inventory financing or sale and lease back
arrangements, overdrafts or any other arrangements the purpose of which is to
raise money), together with accrued interest on such amounts, of that Company
(as reflected in the books of that Company) owed to a Financial Institution
(apart from indebtedness resulting from operating leases); (b) all amounts owed
to a member of ICI's Retained Group by that Company (as reflected in the books
of that Company), other than amounts representing Intra Group Trading
Indebtedness and Prime Debt; and (c) the Prime Debt, but excluding all Tax
Liabilities and, for the avoidance of doubt, excluding the amount of any debt
created pursuant to Schedule 18 which remains outstanding;
Final Intra Group Cash Balance means, in relation to any Company, that part of
its Final Cash Balance which represents amounts owed to that Company by members
of ICI's Retained Group as at 00.01 am, applicable local time, on the Closing
Adjustments Date;
Final Intra Group Debt means, in relation to any Company, that part of its Final
Financial Debt which represents amounts owed by that Company to members of ICI's
Retained Group (including, for the avoidance of doubt, Prime Debt) as at 00.01
am, applicable local time, on the Closing Adjustments Date;
Financial Institution means any banking, financial, acceptance, credit, lending
or other similar institution or organisation and any institutional investor,
which in each case is not a member of ICI's Group;
Financing Agreements means the Senior Credit Agreement, the Senior Subordinated
Credit Agreement and the Senior Subordinated Indenture together with all notes,
guarantees, security agreements and other instruments issued or entered into
pursuant to or in connection therewith;
Group means, in relation to ICI or the Purchaser, that party and its
Subsidiaries for the time being and, in relation to HSCC, any undertaking
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which controls, is controlled by or is under common control with HSCC and HSCC
itself;
Group Information means all Information owned by, or the rights to which are
owned by, the Companies;
Group IPR means all Intellectual Property Rights owned by the Companies;
HSCC's Solicitors means Slaughter and May of 35 Basinghall Street, London EC2V
5DB;
Huntsman Logo means the logo used by HSCC and Huntsman Corporation as depicted
in the IP Annex;
Huntsman Trade Mark Licence means the trade mark licence between Huntsman Group
Intellectual Property Holdings Corporation and the Purchaser in the agreed form
set out in the IP Annex;
ICI/BP Joint Venture Agreements has the meaning given in the Co-operation
Agreement;
ICI Business means the Polyurethanes Business, the Tioxide Business and the
Relevant Petrochemicals Business;
ICI Retained Software shall have the meaning set out in Schedule 20;
ICI Roundel means the logo used by ICI as depicted in the IP Annex;
ICI's Accountants means KPMG Audit Plc;
ICI's Bank Account means an account or accounts to be nominated by ICI 5
Business Days before Closing;
ICI's Solicitors means Freshfields of 65 Fleet Street, London EC4Y 1HS;
ICI's US Assets means the Business Assets of ICI Americas Inc. and ICI Americas
Inc.'s Joint Venture Interest in Rubicon Inc. as well as ICI American Holdings
Inc.'s ownership interest in Tioxide Americas Inc. or its successor;
ICI's US Business means the Polyurethanes Business which is carried on by ICI in
the United States of America making use of ICI's US Assets;
ICI Trade Mark Licence means the trade mark licence between ICI and the
Purchaser in the agreed form appearing in the IP Annex;
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Income, Profits or Gains includes any standard or measure for the purposes of
any Tax and shall also include any income, profits or gains which are deemed to
be earned, accrued or received for the purposes of any Tax and a reference to
income, profits or gains as being earned, accrued or received on or before a
particular date or in respect of a particular period shall mean income, profits
or gains which are regarded as having been or are deemed to have been earned,
accrued or received on or before that date or in respect of that period for the
purposes of any Tax;
Independent Firm means Ernst & Young or, for the purposes of clauses 4.9 or 7,
such other independent firm as is appointed pursuant to clause 4.9(b) or clause
7.14 respectively;
Information means all information, know-how and techniques (whether or not
confidential and in whatever form held) including, without limitation, all:
(a) formulae, designs, specifications, drawings, data, manuals and
instructions;
(b) customer lists, sales, marketing and promotional literature;
(c) business plans and forecasts; and
(d) technical or other expertise;
Initial Consideration has the meaning given in clause 3.4 or 3.5, as applicable;
Institutional Lenders means Lenders as defined in the Senior Credit Agreement;
Intellectual Property Rights means patents, trade marks, service marks, trade
names, business names, rights in designs, copyright (including rights in
computer software and moral rights), database rights, rights in domain names and
all other intellectual property rights, in each case whether registered or
unregistered and including applications for the grant of any of the foregoing
rights, and all rights or forms of protection having equivalent or similar
effect to any of the foregoing which may subsist anywhere in the world but
excluding Information;
Interest Rate means 7% per annum;
Intra Group Guarantees means, as at the Closing Date (or, as the case may be,
the Delayed Closing Date), all guarantees, indemnities, counter-indemnities,
assurances, commitments and letters of comfort of any nature whatsoever:
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(a) given to any person by any Company or any entity in which a Joint Venture
Interest is held in respect of any liability of any member of the Retained
Group (other than Assumed Liabilities);
or (as the context may require)
(b) given to any person by any member of ICI's Retained Group in respect of any
liability of a Company or any entity in which a Joint Venture Interest is
held;
Intra Group Trading Indebtedness means all debts outstanding as at Closing
between the Companies and members of the Retained Group, or between the Local
Businesses, on the one hand, and other business units of the Retained Group on
the other, in respect of intra group trading activities in the ordinary and
usual course of business (comprising all accrued payment obligations in respect
of products, goods, services and support supplied, commissions for services
relating to sales and employment costs chargeable in connection with any such
trading activities);
IP Annex means the file of documents marked "IP Annex" and initialled by the
parties for the purposes of identification only;
IPR Assignments means the assignments of Business IPR referred to in clause 2.7;
Joint Venture Agreement means any contract or arrangement, including any
amendment or variation thereof, to which any member of ICI's Group is a party
with other persons who are not members of ICI's Group, in relation to its
holding of any Joint Venture Interest (including, without limitation, any
articles of association, by-laws or other constitutional documents of any
company in which a Joint Venture Interest is held);
Joint Venture Interests means the shares or limited partnership interests held
by members of ICI's Group which are identified in column 3 of Parts III and IV
of Schedule 1 (save that, for the purposes of clauses 16.1 to 16.5 and 16.7 to
16.15, it shall only mean such of those shares or limited partnership interests
as are held in Arabian Polyol Co Ltd and NPU);
JV Finco means a Delaware limited liability company;
JV Percentage means 60 per cent. in the case of the Controlled Joint Venture,
and 50 per cent. in the case of LPC;
LLC Agreement means the limited liability company agreement relating to the
Purchaser in the agreed form;
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Local Business means, in relation to each Business Vendor, that part of the ICI
Business which is carried on by that Business Vendor and, in relation to HSCC,
the PO/MTBE Business, and Local Businesses shall be construed accordingly;
LPC means Louisiana Pigment Company L.P.;
Material Adverse Change means an adverse change in the ICI Business or the
PO/MTBE Business, as the case may be, occurring before and continuing
immediately prior to Closing and whether occurring before or after the date of
this Agreement (provided that no account shall be taken of any event which
occurred before the date of this Agreement unless and to the extent only that
such event constitutes a breach of the Warranties given at the date of this
Agreement), such that the enterprise value of the ICI Business or PO/MTBE
Business, as the case may be, (as determined, in the event of any dispute
between the parties, by the Independent Firm pursuant to clause 4.9) is reduced
by (Pounds)125 million or more as a result of such change. For this purpose the
following shall be excluded from the calculation of the amount of the reduction
in enterprise value of the ICI Business or the PO/MTBE Business, as the case may
be:
(a) any effect resulting from industry consolidations or any adverse changes
affecting capital or foreign exchange markets in general or adverse changes
in general economic conditions in the economies and/or industries in which
the ICI Business or PO/MTBE Business, as the case may be, operates or by
which it is affected;
(b) the effects of any action or steps taken pursuant to and in accordance with
this Agreement;
(c) any loss, damage, cost or liability to the extent that:
(i) the relevant Vendor has, pursuant to an indemnity obligation,
compensated the Purchaser in respect of it by a payment in cash
which, in the bona fide opinion of the relevant Vendor, satisfies
in full the indemnity obligation;
(ii) the ICI Business or the PO/MTBE Business has otherwise been
compensated therefor by receipt of insurance proceeds; or
(iii) it has otherwise been fully and effectively remedied on or prior
to Closing;
material adverse effect on the relevant Business means:
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(a) in relation to the Polyurethanes Business, a present or future reduction of
the net assets of the Polyurethanes Business of (Pounds)5 million or more,
a present or future reduction in annual trading profits (after deducting
all charges except Taxation) of the Polyurethanes Business of (Pounds)1
million or more or a present or future reduction in annual turnover of the
Polyurethanes Business of (Pounds)8 million or more;
(b) in relation to the Tioxide Business, a present or future reduction of the
net assets of the Tioxide Business of (Pounds)5 million or more, a present
or future reduction in annual trading profits (after deducting all charges
except Taxation) of the Tioxide Business of (Pounds)1 million or more or a
present or future reduction in annual turnover of the Tioxide Business of
(Pounds)5 million or more;
(c) in relation to the Relevant Petrochemicals Business, a present or future
reduction of the net assets of the Relevant Petrochemicals Business of
(Pounds)1 million or more, a present or future reduction in annual trading
profits (after deducting all charges except Taxation) of the Relevant
Petrochemicals Business of (Pounds)1 million or more or a present or future
reduction in annual turnover of the Relevant Petrochemicals Business of
(Pounds)6 million or more;
(d) in relation to the PO/MTBE Business, a present or future reduction of the
net assets of the PO/MTBE Business of (Pounds)3.2 million or more, a
present or future reduction in annual trading profits (after deducting all
charges except Taxation) of the PO/MTBE Business of (Pounds)1 million or
more or a present or future reduction in annual turnover of the PO/MTBE
Business of (Pounds)3.5 million or more;
Material Contracts means contracts (save for any employment-related contracts)
to which any Relevant Company or, in respect of the Business, any Business
Vendor is a party or the benefit of which is held in trust or has been assigned
to any such person (a) which at Closing have in excess of 12 months to run and
which in that time can reasonably be expected to involve income or expenditure,
in respect of the Tioxide, Relevant Petrochemicals or PO/MTBE Businesses, in
excess of $200,000 per annum or, in respect of the Polyurethanes Business, in
excess of $1 million per annum (save that in respect of the Polyurethanes
Business it shall be those contracts which can reasonably be expected to involve
income or expenditure in excess of $8 million in respect of the Warranty in
paragraph 13.1 of Schedule 9 only); (b) which at Closing have less than 12
months to run and which in that time can reasonably be expected to involve
income or expenditure, in respect of the Polyurethanes, Tioxide, Relevant
Petrochemicals or PO/MTBE Businesses, in excess of $1,000,000 (save that in
respect of the Polyurethanes Business it
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shall be those contracts which can reasonably be expected to involve income or
expenditure in excess of $8,000,000 in respect of the Warranty in paragraph 13.1
of Schedule 9 only); or (c) which are material agency, distributorship or joint
venture agreements;
Members' Agreement means the agreement, in the form set out in Exhibit C to the
Subscription Agreement, to be entered into at Closing between the Purchaser,
HSCC, BT Capital Investors, L.P., Chase Equity Associates, L.P. and The Goldman
Sachs Group, Inc. relating, inter alia, to certain future rights in respect of
transfers of interests in the Purchaser;
Non-Controlled Joint Ventures means the companies and limited partnerships
details of which are set out in column 2 of Part IV of Schedule 1;
NPU means Nippon Polyurethane Industry Co. Ltd;
Olefins Agreements has the meaning given to it in the Co-operation Agreement;
Olefins Manufacturing Business has the meaning given to it in paragraph (e) of
the definition of Relevant Petrochemicals Business;
Polyurethanes Business shall have the meaning set out in Schedule 21;
Permitted Encumbrances means (a) security interests in the ordinary course of
business or by operation of law, security interests arising under sales
contracts with title retention provisions and equipment leases with third
parties entered into in the ordinary course of business and security interests
for Taxes and other governmental charges which are not due and payable or which
may thereafter be paid without penalty, and (b) other imperfections in title and
encumbrances, if any, which do not materially impair the continued use and
operation of the assets to which they relate;
Pie Crust Leases means the leases in the agreed form relating to the Aromatics
and North Tees Logistics Plants, Teesside, England;
PO/MTBE Business means
(i) the business, operations and assets owned by HSCC for the manufacturing of
propylene oxide and methyl tertiary butyl ether (MTBE) at its Port Neches,
Texas plant (PO/MTBE plant) and the marketing, sale and distribution of
MTBE and of propylene oxide from the PO/MTBE plant; and
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(ii) HSCC's right to have propylene glycol manufactured by Huntsman
Petrochemical Corporation (HPC) at HPC's Port Neches, Texas plant and the
marketing, sale and distribution of such propylene glycol.
For the avoidance of doubt, the PO/MTBE Business shall not include the MTBE
business, operations and assets of HPC at HPC's C4 plant in Port Neches, Texas,
or the manufacturing, marketing, sale or distribution of MTBE from such C4
plant;
PO/MTBE Technology Transfer Agreement means the agreement of that name in the
agreed form in the IP Annex;
Pre-Closing Tax Affairs means the Tax affairs of the Companies for which ICI or
its agent is responsible under clause 14.1;
Prime Debt means, in relation to Tioxide Americas Inc., Tioxide Europe SA
(France), Tioxide Europe Srl, Tioxide Europe SA (Spain) and ICI Holland BV, the
actual amount of inter-company indebtedness outstanding from any such company to
any of ICI, ICI Finance plc, ICI Omicron BV, ICI American Holdings Inc., or
Mortar Investments International Limited immediately prior to Closing, the
parties' estimates of which are set out in sub-paragraphs (a) to (e) of
paragraph 17 of Schedule 4;
Properties means the land and buildings used, owned or occupied exclusively or
primarily in relation to the ICI Business or, as the case may be, the PO/MTBE
Business at the date of this Agreement, short details of which are set out in
Part I of Schedule 17;
Provisional Cash Balance means, in relation to any Company, the provisional
amount of the Final Cash Balance (excluding any part of the Final Cash Balance
which represents amounts owed by members of ICI's Retained Group), expressed in
dollars, as estimated by ICI in accordance with clause 3.6;
Provisional Financial Debt means, in relation to any Company, the provisional
amount of the Final Financial Debt, expressed in dollars, as estimated by ICI in
accordance with clause 3.6;
Purchaser's Accountants means Deloitte and Touche;
Purchaser's Relief means, for the purposes of the Tax Covenant and provisions of
this Agreement relating thereto, a relief to the extent that it either arises in
respect of an Event occurring or period commencing after the Closing Date or in
respect of such part of a Straddle Period as falls after the Closing Date;
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Receivables means debtors of the Business Vendors for the purposes of, or in
connection with, the ICI Business or the PO/MTBE Business (including trade
debtors, other debtors, accrued income, prepayments and royalty receivables), in
each case including such part of such amounts as relates to VAT;
Registered Rights means in relation to any jurisdiction, any Group IPR or
Business IPR which is the subject of registration (or application for
registration) with any competent authority in that jurisdiction;
Regulatory Action means:
(a) any injunction, order or judgment of a court of competent jurisdiction; or
(b) any order, judgment, decision or conclusive determination made, given,
taken or expressed by a competent supranational, governmental, statutory or
regulatory authority, body or agency; or
(c) an enactment or direction of a legislative body;
Related Persons means, in relation to the relevant person, any of its agents,
directors, officers, employees, advisers or consultants and any other person
which the relevant person has engaged or instructed in connection with the
transactions contemplated by this Agreement;
Relates to means exclusively or predominantly used in, developed or acquired for
use in and Relate to shall be construed accordingly;
Relevant Competition Authority means any national, supranational, governmental
or other agency or body responsible for the application of anti-trust,
competition or merger control legislation in any jurisdiction other than the
United States where the receipt of anti-trust, competition or merger control
clearance or approval is mandatory prior to Closing and, for the avoidance of
doubt, shall include the German Bundeskartellamt and the Canadian Competition
Bureau;
Relevant Petrochemicals Business means the business comprising:
(a) the manufacture, marketing, distribution and sale of benzene, xylenes,
cyclohexane, cumene, ethyl benzene and paraxylene and other co-products
carried on by ICI Chemicals and Polymers Limited from the plants known as
Aromatics 1 and 2 at the North Tees site and the Paraxylene plant at the
Wilton site, Teesside, England (the Aromatics Business);
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(b) the storage, distribution and logistics business carried on by ICI
Chemicals and Polymers Limited from the facilities (excluding the Olefins
facilities) at the North Tees site, Teesside, England and known as North
Tees Logistics (the North Tees Logistics Business);
(c) the sourcing, purchasing and supply of feedstocks for the Cracker and the
marketing, distribution and sale of ethylene, propylene, butadiene and
other co-products of the Cracker carried on by ICI Chemicals and Polymers
Limited but excluding the Olefins Manufacturing Business (the Olefins
Business);
(d) the marketing, distribution and sale of hydrogen through the hydrogen
distribution infrastructure of ICI Chemicals and Polymers Limited at the
Billingham, North Tees and Wilton sites, Teesside, England (the Hydrogen
Business); and
(e) the manufacture of ethylene, propylene, butadiene and other co-products and
the related feedstock and product storage, processing and distribution
activities carried on by ICI Chemicals & Polymers Limited at the Cracker
both (a) for the purposes of the Olefins Business and (b) on behalf of BPCL
under the ICI/BP Joint Venture Agreements, but excluding the Olefins
Business (the Olefins Manufacturing Business);
Relevant VAT Jurisdiction means, in respect of each Business Vendor, the
jurisdiction in which it is incorporated or carries on business or in which
assets which are to be sold pursuant to this Agreement are located;
relief includes, unless the context otherwise requires, any allowance, credit,
deduction, exemption or set off in respect of any Tax or relevant to the
computation of any Income, Profits or Gains for the purposes of any Tax, or any
right to repayment of or saving of Tax, and any reference to the use or set off
of relief shall be construed accordingly;
Repeated Warranties means the Warranties set out in paragraphs 1, 2, 3, 4, 5.2,
5.3, 5.4, 5.6, 6, 7.1, 8.4, 8.5, 8.6, 8.7, 11, 12.1, 13.7, 16.2(A) and (B),
16.3(A) and (B), 17 (excluding the Warranty set out in paragraph 17.14), 18, 23
and 25.2 of Schedule 9;
Retained Group means ICI or HSCC, as the case may be, and each member of its
respective Group (apart, in the case of ICI's Group, from the Companies);
Retained Share Selling Company Group means the relevant Share Selling Company
and any other company or companies (other than the Companies)
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which either are or become, or have within the six years ending at Closing been,
Subsidiaries of the relevant Share Selling Company or treated as members of the
same group as the relevant Share Selling Company for any Tax purpose;
Retirement Benefits Schemes has the meaning given to that expression in Schedule
11 (Pensions);
Sale Shares means (a) the entire issued share capital of the Companies listed in
column 2 of Part I of Schedule 1 (excluding the Class A Shares in the capital of
TGL referred to in paragraph 1 of Schedule 18) and (b) the Joint Venture
Interests (other than those in NPU and Arabian Polyol Co Ltd);
Schedule 18 Business means any business which is to be transferred pursuant to
paragraphs 5 or 6 of Schedule 18;
Schedule 18 Company means any Company which is to be transferred pursuant to
paragraphs 2(c) or 4 of Schedule 18 by the transfer of shares or membership
interests in it or in its holding undertaking;
Selling Companies means (a) in respect of the ICI Business, the Share Selling
Companies and the Business Vendors and (b) in respect of the PO/MTBE Business,
HSCC (and, in each case, Selling Company means any one of them);
Senior Credit Agreement means the $1,940,000,000 Credit Agreement between HIC as
borrower, Bankers Trust Company as Administrative Agent and others dated as of
15 April 1999 as amended or supplemented from time to time;
Senior Subordinated Credit Agreement means the $800,000,000 Senior Subordinated
Credit Agreement between HIC as borrower, Goldman Sachs Credit Partners L.P. as
Joint Lead Agent and others dated as of 15 April 1999 as amended or supplemented
from time to time;
Senior Employee means any Employee employed at ICI Job Grade 40 and above;
Senior Subordinated Indenture has the meaning given to it in the Senior
Subordinated Credit Agreement;
Share Selling Companies means the companies listed in column 1 of Part I of
Schedule 1 and, in relation to the Joint Venture Interests other than those in
NPU and Arabian Polyol Co Ltd, means ICI Americas Inc. and Share Selling Company
means any one of them;
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Spot Rate means the spot rate of exchange (closing mid-point) on the relevant
date, as quoted in the London edition of the Financial Times first published
thereafter or, where no such rate of exchange is published in respect of that
date, at the rate quoted by Citibank N.A. as at the close of business in London
on that date;
Stock means the stocks of fuels, raw materials, consumables, stocks-in-process,
work-in-progress, finished stocks, goods for resale, stores, spare parts, loose
tools and fittings and packaging materials beneficially owned by any Company or
Business Vendor for the purpose of the ICI Business or the PO/MTBE Business (as
the case may be);
Straddle Period has the meaning set forth in clause 14.9;
Subscription Agreement means the agreement dated as of 3 June between the
Purchaser, BT Capital Investors, L.P., Chase Equity Associates, L.P. and The
Goldman Sachs Group, Inc. relating to the subscription by the latter three
parties for membership units in the Purchaser;
Systems House Entity means any Delayed Company or Delayed Business identified in
Schedule 6 as being a systems house;
Tax means (a) taxes on Income, Profits and Gains, and (b) all other taxes,
levies, duties, imposts, charges and withholdings of any nature, including any
excise, property, sales, transfer, franchise and payroll taxes and any national
insurance or social security contributions, together with all penalties, charges
and interest relating to any of the foregoing or to any late or incorrect return
in respect of any of them, regardless of whether such taxes, levies, duties,
imposts, charges, withholdings, penalties and interest are chargeable directly
or primarily against or attributable directly or primarily to any Company or any
other person and of whether any amount in respect of them is recoverable from
any other person;
Tax Authority means any taxing or other authority, in any jurisdiction,
competent to impose any liability to Tax;
Tax Claim means the issue of any notice, demand, assessment, letter or other
document by or on behalf of any Tax Authority or the taking of any other action
by or on behalf of any Tax Authority (including the imposition of any
withholding), from which notice, demand, assessment, letter, document or action
it appears that a Tax Liability may be imposed on any Company;
Tax Covenant Claim means any claim under the Tax Covenant or in respect of any
breach of a Tax Warranty;
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Tax Covenant means the covenant relating to Tax set out in Schedule 13;
Tax Documents means the Tax Returns, claims and other documents which ICI or its
agent is required to prepare on behalf of the Relevant Companies under clause
14.1(a) and (b);
Tax Liability means:
(a) a liability of any Company to make or suffer an actual payment of Tax (or
amounts in respect of Tax, which shall include, for the avoidance of doubt,
any payments for group relief or advance corporation tax and any payments
on account of Tax); and
(b) the use or set off of any Purchaser's Relief in circumstances where, but
for such use or set off, any Company would have had an actual liability to
Tax in respect of which the Purchaser would have been able to make a Tax
Covenant Claim (the amount of the Tax Liability for these purposes being
deemed to be:
(i) where the Purchaser's Relief was a deduction from or offset
against Tax, the amount of that Purchaser's Relief; and
(ii) where the Purchaser's Relief was a deduction from or offset
against Income, Profits or Gains, the amount of the Tax which has
been saved (ignoring for this purpose the availability of any
credit for advance corporation tax) in consequence of the use or
set-off of the Purchaser's Relief),
provided that the Purchaser shall procure that reliefs other than any
Purchaser's Relief are used, so far as reasonably practicable, to
offset any such actual liability to Tax;
Tax Return means any return, report, information return or other document
required to be made to any Tax Authority with respect to Tax or of any amount or
information relevant for the purposes of Tax, including any related accounts,
computations and attachments;
Tax Warranties means the warranties on the part of each Vendor set out in
paragraphs 19 to 22 (inclusive) of Schedule 9;
Taxes Act means the UK Income and Corporation Taxes Act 1988;
Technology Transfer Agreement means the agreement of that name in the agreed
form in the IP Annex;
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Texaco Environmental Losses means any "Environmental Losses" (as defined in
Section 6.1 of the Texaco Purchase Agreement) for which HSCC would be entitled
to indemnification under Part Six of the Texaco Purchase Agreement if such
losses were incurred by HSCC or the relevant member of HSCC's Group;
Texaco Purchase Agreement means the Purchase and Sale Agreement dated 21 March
1997 between Texaco Inc. and HSCC relating to the acquisition by HSCC of the
PO/MTBE Business;
TGL means Tioxide Group Limited;
Time Limit means the latest date on which a Tax Document can be executed or
delivered to a relevant Tax Authority either without incurring interest or a
penalty, or in order to ensure that such Tax Document is effective;
Tioxide Business means the development, manufacture, marketing, distribution and
sale of titanium dioxide pigments and coproducts and by-products and titanium
dioxide pigments that incorporate organometallic compounds as carried on by the
Companies listed under the heading "Tioxide" in column 2 of part I, column 3 of
part II and column 2 of part III of Schedule 1 and by any other member of ICI's
Group, but, for the avoidance of doubt, shall not include:
(a) the manufacture or sale of any organometallic compounds excepting that
manufacture, sale or disposal of a titanium dioxide pigment which
incorporates in its composition an organometallic compound shall not be
considered to be the manufacture, sale or disposal of an organometallic
compound as such;
(b) the manufacture (other than for subsequent sale to ACMA Ltd on agreed
terms) or sale (other than for transfer to ACMA Ltd on agreed terms as
aforesaid) of any form of Ultrafine Titanium Dioxide.
In this definition Ultrafine Titanium Dioxide means titanium dioxide of
ultraviolet-attenuating grade having a ratio of absorbance response at 308 nm
(A308) to absorbance response at 524 nm (A524) of not less than 5 as defined in
U.S. Pharmacopeia, amendment published in Pharmacopeia Forum, Volume 22, Number
4, Page 2636 which is set out in Exhibit E;
Title Deeds means the originals or (where appropriate) certified copies or
abstracts of such material deeds and documents relating to the title of the
estate or interest of the Companies or the Business Vendors, as the case may be,
to the Properties immediately prior to Closing (or, as the case may be,
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Delayed Closing) which are in the possession or under the control of the Vendor;
Transaction Agreements means this Agreement, the Ancillary Agreements, the
Disclosure Letters and any other agreements referred to in this Agreement and to
be entered into in accordance with this Agreement on the date of this Agreement
or on or prior to Closing (or, where applicable, any Delayed Closing);
Transferred Properties means the estates or interests of each Business Vendor in
the Properties which are denoted as such in Part I of Schedule 17 and each and
every part thereof and Transferred Property shall be construed accordingly;
Underwriters means Lenders as defined in the Senior Subordinated Credit
Agreement;
US Newco has the meaning given in Schedule 18;
VAT means value added tax or any similar sales or turnover tax;
VAT legislation means any relevant enactment in relation to VAT and all notices,
provisions and conditions made or issued thereunder including the terms of any
agreement reached with any relevant Tax Authority and any concession made by any
relevant Tax Authority in relation to VAT;
Vendors means ICI and HSCC and Vendor means either of them;
Warranted Joint Ventures means Rubicon Inc. and LPC;
Warranties means the warranties set out in Schedule 9 (and shall include, for
the avoidance of doubt, the warranty set out in paragraph 25 of Schedule 9 and
the Repeated Warranties);
Warranty Claim means any claim in respect of any breach of a Warranty; and
Working Capital Range means, in the case of the ICI Business, $451,338,300 to
$491,133,720 and, in the case of the PO/MTBE Business, $39.1 million to $44.1
million.
1.2 In this Agreement, unless the context otherwise requires:
(a) references to persons shall include individuals, bodies corporate (wherever
incorporated), unincorporated associations and partnerships;
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(b) the headings are inserted for convenience only and shall not affect the
construction of this Agreement;
(c) references to one gender include all genders;
(d) any reference to an enactment or statutory provision is a reference to it
as it may have been, or may from time to time be, amended, modified,
consolidated or re-enacted (with or without modification) and includes all
instruments or orders made under such enactment but, where any such
amendment, consolidation or re-enactment would increase or reduce either
Vendor's liability under the Warranties, such amendment, consolidation or
re-enactment of such legislation shall not be taken to increase or reduce
the liability of either Vendor under the Warranties;
(e) any reference to a document in the agreed form is to the form of the
relevant document agreed between the parties and initialled by them or on
their behalf for identification purposes;
(f) references to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or any
other legal concept shall, in respect of any jurisdiction other than
England, be deemed to include the legal concept which most nearly
approximates in that jurisdiction to the English legal term; and
(g) Subsidiary means, in relation to an undertaking (the holding undertaking),
any other undertaking in which the holding undertaking (or persons acting
on its or their behalf) for the time being directly or indirectly holds or
controls either:
(a) a majority of the voting rights normally exercisable at general
meetings of the members of that undertaking; or
(b) the right to appoint or remove directors having a majority of the
voting rights exercisable at meetings of the board of directors
or other body exercising management powers of that undertaking on
all, or substantially all, matters,
and any undertaking which is a Subsidiary of another undertaking is also a
Subsidiary of any further undertaking of which that other is a Subsidiary.
For this purpose, undertaking means a body corporate or partnership or an
unincorporated association carrying on trade or a business with or without
a view to profit. In relation to an undertaking which is not a company,
expressions in this Agreement appropriate to companies are to be construed
as references to the corresponding
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persons, officers, documents or organs (as the case may be) appropriate to
undertakings of that description.
(h) In determining whether or not there has been a material adverse change in
the financial position of the ICI Business or the PO/MTBE Business for the
purpose of paragraph 18(b) of Schedule 9, the following shall not be taken
into account:
(i) any effect resulting from industry consolidations or any adverse
changes affecting capital or foreign exchange markets in general
or adverse changes in general economic conditions in the
economies and/or industries in which the ICI Business or the
PO/MTBE Business, as the case may be, operates or by which it is
affected;
(ii) the effect of any action or steps taken pursuant to and in
accordance with this Agreement;
(iii) any loss, damage, cost or liability to the extent that:
(aa) ICI or, as the case may be, HSCC has, pursuant to an
indemnity obligation, compensated the Purchaser in respect
of it by a payment in cash which, in ICI's or, as the case
may be, HSCC's bona fide opinion, satisfies in full the
indemnity obligations;
(bb) the ICI Business or the PO/MTBE Business, as the case may
be, has otherwise been compensated therefor by receipt of
insurance proceeds; or
(cc) it has otherwise been fully and effectively remedied on or
prior to Closing.
1.3 The Schedules comprise schedules to this Agreement and form part of this
Agreement. Accordingly any reference to this Agreement shall include the
Schedules.
1.4 Agreed deletion
1.5 For the purposes of calculating the Final Financial Debt, Final Cash
Balance and Closing Working Capital for any Company and the Closing Working
Capital for any Business Vendor, any amounts which are to be included in the
calculation of that Final Financial Debt, Final Cash Balance or Closing Working
Capital and which are expressed in a currency other than dollars shall be
converted into dollars:
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(a) in the calculation of the Closing Working Capital for any Company or
Business Vendor, using the Spot Rate on the Closing Date; and
(b) in the calculation of any Final Financial Debt or Final Cash Balance for
any Company, using the Spot Rate on the Closing Date (save that any element
of any Final Financial Debt or Final Cash Balance which is a Final Intra
Group Debt (including, for the avoidance of doubt, any Prime Debt) or, as
the case may be, a Final Intra Group Cash Balance shall be converted from
the relevant currency into dollars at the Spot Rate on the date which is 2
Business Days before the date on which the payment for the purpose of which
such Final Intra Group Debt or Final Intra Group Cash Balance is being
calculated is to be made).
For the purposes of clauses 7.1, 7.2 and 7.2A, the Final Financial Debt and
Final Cash Balance in relation to any Company shall be deemed to have been
determined or agreed when the amounts of all relevant items have been agreed in
the applicable currency. Those items which are required by this clause 1.5 to
be converted into dollars using the Spot Rate on the date which is 2 Business
Days before the date of the relevant payment shall then be calculated prior to
the making of such payment.
1.6 Where it is necessary to determine whether a monetary amount, limit or
threshold set out in this Agreement has been reached or exceeded (as the case
may be) and the value of any sum to be taken into account in making that
determination is expressed in a currency other than the currency in which such
monetary amount, limit or threshold is expressed, such sum shall be translated
into the currency in which such monetary amount, limit or threshold is expressed
at the Spot Rate on the relevant date. The relevant date for the purposes of
any Claim shall be the Business Day on which the party against whom the Claim is
made receives written notification of that Claim or, if that day is not a
Business Day, the Business Day next following.
Sale Of Sale Shares and Local Businesses
2.1 On and subject to the terms set out in this Agreement:
(a) ICI agrees with HIC that ICI shall sell the Sale Shares in TGL with all
rights attaching or accruing to them at Closing and that HIC shall purchase
the Sale Shares in TGL;
(b) ICI agrees with the Purchaser as trustee for Huntsman ICI Polyurethanes
(UK) Limited that ICI shall sell the Sale Shares (other than those in TGL)
set opposite ICI's name in column 3 of Part I of Schedule 1 with all rights
attaching or accruing to them at Closing and that Huntsman ICI
Polyurethanes (UK) Limited shall purchase the
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relevant Sale Shares and the Purchaser undertakes to procure that Huntsman
ICI Polyurethanes (UK) Limited shall purchase the relevant Sale Shares; and
(c) ICI agrees with the Purchaser that ICI shall procure that the relevant
Share Selling Company shall sell the Sale Shares set opposite its name in
column 3 of Part IV of Schedule 1 with all rights attaching or accruing to
them at Closing and the Purchaser shall purchase the relevant Sale Shares.
Upon the transfer of any Sale Shares at Closing or, as the case may be, at
Delayed Closing, ICI, or the relevant Share Selling Company, shall transfer
legal and beneficial title to those Sale Shares.
2.2 The Sale Shares shall, without prejudice to and save as provided in clause
16 in relation to Joint Venture Interests, be sold or transferred free from all
liens, charges and encumbrances and all other rights exercisable by third
parties.
2.3 The Purchaser (or, as the case may be, the relevant Designated Purchaser)
shall, save as specifically provided herein, be entitled from Closing (or, as
the case may be, Delayed Closing) to exercise all rights attached or accruing to
the Sale Shares including, without limitation, the right to receive all
dividends, distributions or any return of capital declared, paid or made by any
of the Companies on or after Closing (or, as the case may be, Delayed Closing).
2.4 ICI (for itself and on behalf of the other members of its Group) waives all
rights of pre-emption and other similar or comparable rights over any of the
Sale Shares conferred upon it in any way and shall procure that no later than
Closing all rights of pre-emption and other similar or comparable rights over
and in respect of any Sale Shares (other than Joint Venture Interests, to which
the provisions of clause 16 shall apply) conferred upon or held by any other
person are waived so as to permit the sale and purchase of the Sale Shares under
this Agreement.
2.5 For the avoidance of doubt, Part I of the Law of Property (Miscellaneous
Provisions) Act 1994 shall not apply for the purpose of this clause 2.
2.6 On and subject to the terms set out in this Agreement, ICI agrees with the
Purchaser as trustee for each Designated Purchaser that ICI shall sell or
procure the sale by each Business Vendor of, and that each Designated Purchaser
shall purchase or procure the purchase of, the Business Assets listed below
which relate to the ICI Business and the Purchaser undertakes to
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procure that each Designated Purchaser shall purchase or acquire the Business
Assets listed below which relate to the ICI Business and HSCC shall sell or
procure the sale of, and the Purchaser shall purchase or procure the purchase
of, the Business Assets listed below which relate to the PO/MTBE Business, in
each case as at and with effect from Closing, or, as the case may be, Delayed
Closing but, subject to the ICI/BP Joint Venture Agreements, free from all
liens, charges and encumbrances and all other rights exercisable by third
parties (subject as indicated in this Agreement, including without limitation in
clauses 6.11 and 6.14 and Schedules 17 and 20):
(a) the Business Goodwill;
(b) the Business Plant and Machinery;
(c) the Business Stocks;
(d) the benefit (subject to the burden) of the Business Contracts;
(e) the Receivables;
(f) subject to the provisions of Schedule 17, the Transferred Properties;
(g) subject to clause 18.5, such of the Books and Records as relate exclusively
or primarily to the ICI Business (in the case of ICI) or the PO/MTBE
Business (in the case of HSCC);
(h) the Business Cash Float;
(i) the Business IPR (excluding the Business Owned Software) and the Business
Information including all physical embodiments of the Business Information
howsoever stored or held;
(j) subject to the provisions of Schedule 20, the Business Owned Software;
(k) the benefit, subject to the burden, of the Business IP Licences and the
Business IT Licences;
(l) all other property rights and all other assets of whatsoever nature to
which such Business Vendor is entitled and which are used exclusively or
primarily in the ICI Business (in the case of ICI) or the PO/MTBE Business
(in the case of HSCC),
(together the Business Assets of the ICI Business or the PO/MTBE Business, as
the case may be) but excluding the following assets:
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(i) cash at bank or other cash equivalents used in the ICI Business
or the PO/MTBE Business of each Business Vendor;
(ii) amounts recoverable in respect of Tax arising in respect of any
period of account for Tax purposes ending on or before Closing,
or in respect of any acts, events or occurrences occurring on or
before Closing and, with respect to a Straddle Period, the
portion of such Straddle Period deemed to end on and include the
Closing Date;
(iii) the benefit of any insurance policy of any Business Vendor or any
other member of the relevant Vendor's Retained Group relating to
the ICI Business or the PO/MTBE Business or any of the Business
Assets or Business Employees (any such policy, for the avoidance
of doubt, being subject to the provisions of clause 17);
(iv) any rights of any member of the relevant Vendor's Retained Group
arising under any of the Transaction Agreements;
(v) any Books and Records which comprise or contain information which
may be legally privileged to the extent they relate to the sale
or proposed sale of the whole or part of any of the ICI Business
or the PO/MTBE Business (including such information as relates to
the negotiations of the transactions contemplated by this
Agreement);
(vi) in relation to HSCC, all right, title and interest in and to the
"Huntsman" name and trade mark and Huntsman Logo (except, for the
avoidance of doubt, as licensed to the Purchaser under the HSCC
Trade Mark Licence);
(vii) in relation to ICI, all right, title and interest in and to the
"ICI" name and trade mark (excepting for the avoidance of doubt,
as licensed to the Purchaser under the ICI Trade Mark Licence),
the letters "I.C.I." and the ICI Roundel; and
(viii) the Excluded Assets listed in Schedule 12.
2.7 The Business IPR (other than the Registered Rights comprised in the
Business IPR) shall be assigned to the Purchaser (in the case of the Business
IPR relating to the PO/MTBE Business) or the relevant Designated Purchaser (in
the case of the Business IPR relating to the ICI Business) at Closing (or, as
the case may be, Delayed Closing) pursuant to this Agreement and the Registered
Rights comprised in the Business IPR shall be assigned to the
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Purchaser (in the case of the Business IPR relating to the PO/MTBE Business) or
the relevant Designated Purchaser (in the case of the Business IPR relating to
the ICI Business) at Closing (or, as the case may be, Delayed Closing) pursuant
to assignments in the form set out in the IP Annex or such other form as the
Purchaser may reasonably require to comply with any requirements of any
applicable local law. The Purchaser may require that separate assignments are
entered into in relation to Registered Rights in particular jurisdictions and
may specify what proportion of the consideration allocated to Business IPR shall
be attributed to any assignment entered into pursuant to this clause 2.7. ICI
and HSCC shall, and shall procure that each relevant member of their respective
Groups and each member of the Purchaser's Group shall, at the reasonable request
of the Purchaser or the relevant Designated Purchaser (as the case may be), do,
execute and deliver, all such further acts, deeds, documents, instruments of
assignment and transfer as may be necessary to complete the sale and purchase of
the Business IPR and the Business Information in accordance with the terms of
this Agreement.
2.8 ICI, HSCC and the Purchaser shall enter into the Technology Transfer
Agreement and HSCC and the Purchaser shall enter into the PO/MTBE Technology
Transfer Agreement at Closing pursuant to the agreed forms appearing in the IP
Annex.
2.9 The Purchaser shall, and shall procure that the relevant Designated
Purchaser shall, assume and be responsible for the Assumed Liabilities as at and
with effect from Closing (or, where such Assumed Liabilities relate to a Delayed
Business or Delayed Asset, as at and with effect from Delayed Closing).
2.10 Agreed Deletion.
2.11 Nothing in this Agreement shall transfer to the Purchaser or any
Designated Purchaser any of the assets set out in paragraphs 2.6(i) to (viii)
above or, save as otherwise provided in Schedules 14 and/or 14A, make the
Purchaser or any Designated Purchaser responsible for any of the Excluded
Liabilities.
2.12 The terms of Schedule 17 shall apply in relation to the Properties and the
Excluded Properties.
2.13 The parties shall comply with the provisions of Schedule 20. For the
avoidance of doubt the terms of Schedule 20 shall apply in relation to all
Intellectual Property Rights arising in Business Owned Software and ICI Retained
Software.
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Consideration
3.1 The aggregate consideration:
(a) for the ICI Business shall be the aggregate of the consideration payable
for the Sale Shares and each Local Business together with the assumption of
the relevant Assumed Liabilities; and
(b) for the PO/MTBE Business shall be the aggregate of the consideration
payable with respect to the relevant Local Business together with the
assumption of the relevant Assumed Liabilities,
in each case as more particularly determined with respect to each component
thereof in accordance with the subsequent provisions of this clause 3.
3.2 Subject to adjustment in accordance with clause 3.4, the consideration in
respect of the ICI Business is to be satisfied by:
(a) the payment by HIC of the sum of $343,989,155 to ICI in respect of the
transfer of the entire issued share capital of TGL (excluding the Class A
Shares);
(b) the payment by Huntsman ICI Polyurethanes (UK) Limited of $364,100,000 to
ICI in respect of the Sale Shares in Impkemix (No 46) Ltd, the Sale Shares
in ICI Europe Ltd and the Business Assets relating to the Polyurethanes
Business in the United Kingdom (other than those referred to in paragraph
(d) below);
(c) the payment by Huntsman ICI Petrochemicals (UK) Limited of $80,000,000 to
ICI Chemicals and Polymers Limited in respect of the transfer of the
Business Assets relating to the Relevant Petrochemicals Business (other
than the Olefins Manufacturing Business);
(d) the payment by HIC of the sum of $200,000,000 to ICI in respect of the
Business Information and Business IPR relating to the Polyurethanes
Business;
(e) the issue by the Purchaser of a membership interest of 30 per cent. of the
membership units in the Purchaser and the distribution by the Purchaser of
$250,000,000 to ICI Americas Inc. in respect of ICI's US Business, agreed
by the Vendors to have a net value of $520,000,000; and
(f) the payment by Huntsman ICI Petrochemicals (UK) Limited of $200,000,000 to
ICI Chemicals and Polymers Limited in respect of the
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transfer of the Business Assets relating to the Olefins Manufacturing
Business.
In addition to the consideration for the ICI Business, HIC is to pay the sum of
$115,474,000 (which is exclusive of any amount in respect of any applicable VAT)
to ICI in respect of its covenants set out in clause 23.
3.3 The consideration in respect of the PO/MTBE Business, agreed by the Vendors
to have a net value of $900,000,000, is to be satisfied by the issue to HSCC of
a membership interest of 70 per cent. of the membership units in the Purchaser
and the making of the distribution described in paragraph 8 of Schedule 4.
3.4 The initial consideration in respect of any Sale Shares shall be equal to
the amount set out in Part I of Schedule 6 in respect of them:
(a) less the Provisional Financial Debt (other than Prime Debt) in relation to
the Company whose issued share capital comprises the relevant Sale Shares
and to Companies which are its Subsidiaries at Closing (other than any
Schedule 18 Company); and
(b) plus the Provisional Cash Balance in relation to the Company whose issued
share capital comprises the relevant Sale Shares and Companies which are
its Subsidiaries at Closing (other than any Schedule 18 Company).
The amount of that initial consideration or agreed value in relation to the Sale
Shares is referred to as the Initial Consideration. The consideration payable
at Closing in respect of such Sale Shares under Schedule 4 shall be adjusted by
the amounts of such reduction and/or increase.
The consideration payable by the transferee to the transferor in respect of the
transfer of any Schedule 18 Company (where shares or membership interests are
being transferred in that Schedule 18 Company and not in its holding
undertaking), whether paid upon completion of the transfer of that Schedule 18
Company prior to Closing or paid at Closing pursuant to Clause 6.2, shall be:
(i) reduced by the amount of the Provisional Financial Debt (other than Prime
Debt) in relation to such Schedule 18 Company and to any other Schedule 18
Company which is its Subsidiary at the time the shares in such Schedule 18
Company are transferred; and
(ii) increased by the amount of the Provisional Cash Balance in relation to such
Schedule 18 Company
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and to any other Schedule 18 Company which is its Subsidiary at the time
the shares in such Schedule 18 Company are transferred.
3.5 The initial consideration in relation to each Local Business shall be the
amount set out in Part I of Schedule 6 opposite the name of the relevant
Business Vendor and shall be apportioned amongst its Business Assets as
appropriate or as agreed between the relevant Vendor (on its own behalf and as
agent for the Business Vendors) and the Purchaser (or, as the case may be, the
relevant Designated Purchaser), who shall negotiate in good faith with a view to
agreeing the allocation. The amount of that initial consideration or agreed
value in relation to the Local Business of each Business Vendor is referred to
as the Initial Consideration.
3.6 ICI shall, acting in good faith, estimate the Provisional Financial Debt
and the Provisional Cash Balance in relation to each Company as accurately as is
reasonably possible and shall notify the Purchaser in writing of such amounts
(and shall provide such other information and/or evidence in relation to such
amounts as the Purchaser may reasonably request), at least four (4) Business
Days prior to the Closing Date, each such amount being expressed in dollars
provided that, except in relation to Prime Debt, the amounts of which shall be
the estimated amounts set out in paragraph 17 of Schedule 4, amounts owed to
members of ICI's Retained Group shall be deemed to be nil for the purposes of
calculating Provisional Financial Debt. The Provisional Financial Debt and
Provisional Cash Balance in relation to each Company which does not become a
member of the Purchaser's Group at Closing shall be zero.
3.7 Following the finalisation of the Closing Statements and the agreement or
determination of the Final Financial Debt and the Final Cash Balance in relation
to each Company, and the Closing Working Capital in relation to each Company or
Local Business, in accordance with clause 7 and Schedule 8, the Initial
Consideration for the Sale Shares of a Company or for a Local Business shall be
adjusted to reflect the amount in dollars of any payment made in respect of that
Company and Companies which are its Subsidiaries at Closing (other than any
Schedule 18 Company) or Local Business (other than any Schedule 18 Business)
under clause 7.1 and/or clauses 7.4 and 7.5 or 7.6 (but not to reflect any
amount of interest paid pursuant thereto). The final consideration for the sale
of the Sale Shares of a Company or for a Local Business (the Final
Consideration) shall comprise the Initial Consideration for such sale as so
adjusted. The Final Consideration for any Joint Venture Interest (other than
those in NPU and Arabian Polyol Co Ltd) shall be the same as the Initial
Consideration for it. For the avoidance of doubt, in accordance with the second
paragraph of Schedule 18, this clause 3.7 applies to transfers of businesses and
companies
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pursuant to Schedule 18 to adjust the consideration in respect of the transfer
of any such company or business as if it were Initial Consideration for Sale
Shares or a Local Business.
3.8 The Final Consideration for the Sale Shares or for each Local Business as
so determined and as otherwise adjusted in accordance with this Agreement, shall
be adopted by the relevant Vendor (on behalf of itself and each of the other
Share Selling Companies and Business Vendors within its Group) and the Purchaser
(on behalf of itself and each of the Designated Purchasers) for all purposes
(including Tax) except: (i) as otherwise required by law; (ii) as agreed by the
parties in writing; (iii) as otherwise agreed by the parties in this Agreement;
or (iv) in the case of the values listed in Part II of Schedule 6 and in the
application of this clause 3.8 to transactions referred to in Schedule 18 only,
for the purposes of determining the quantum of liability (and whether or not any
financial threshold which determine whether or not there will be a liability
have been exceeded) in respect of any claim under the Transaction Agreements.
3.9 If any payment is made by ICI to the Purchaser pursuant to a claim under
the Tax Covenant, the Environmental Covenant or any indemnity under this
Agreement or pursuant to any Warranty Claim, the payment shall so far as
possible be made by way of reduction to the Final Consideration payable with
respect to the Sale Shares of the appropriate Company or the appropriate
Business Assets. If any payment is made by HSCC to the Purchaser pursuant to a
Warranty Claim or pursuant to any indemnity under this Agreement the payment
shall so far as possible be made by way of reduction in the Final Consideration
payable with respect to the PO/MTBE Business, which shall be deemed to have been
reduced by the amount of such payment.
3.10 Any sum payable by the Purchaser for itself or as agent for the Designated
Purchasers to either Vendor for itself or (on the basis described in clause
11.1) as agent for the Share Selling Companies or the Business Vendors within
its Group under this Agreement (including the payment for ICI's covenants
contained in clause 23) is exclusive of any amounts in respect of applicable
VAT.
3.11 The parties to this Agreement shall use all reasonable efforts to ensure,
if possible, that the transfers of the Local Businesses are treated as transfers
of businesses as going concerns for the purposes of any applicable VAT
legislation or fall within any other applicable exemption from VAT in accordance
with any relevant provision, to ensure that such transfers are not subject to
VAT in any Relevant VAT Jurisdiction. If it is not so treated, the Vendor shall
notify the Purchaser and the Purchaser (for itself where it is the
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Designated Purchaser and otherwise as agent for the Designated Purchaser) shall
pay to the Vendor as agent for the relevant Business Vendor by way of additional
consideration for the relevant Local Business a sum equal to the amount of VAT
determined to be chargeable against delivery by the relevant Business Vendor of
an appropriate VAT invoice. The Purchaser shall reimburse to the relevant Vendor
as agent for the Business Vendor any penalties and interest arising in
connection therewith except where the penalties and interest are attributable to
any delay or default on the part of the Vendor or the relevant Business Vendor.
3.12 Prior to Closing (or, in the case of any Delayed Business or Delayed
Assets, Delayed Closing) each Business Vendor shall apply to HM Customs & Excise
in the UK or the relevant Tax Authority in any Relevant VAT Jurisdiction for a
direction pursuant to section 49(1) of the Value Added Tax Act 1994 or any other
applicable VAT legislation that each Business Vendor be permitted to retain all
records of its Local Business for VAT purposes and shall supply a copy of such
application and the response to the Designated Purchaser.
3.13 Following Closing (or, in the case of any Delayed Business or Delayed
Assets, Delayed Closing), each Business Vendor shall procure that, if
appropriate, such records are preserved for period of not less than 6 years from
the date of the relevant record (or for such longer period as may be required by
law) and shall, if appropriate, procure that each Designated Purchaser (or its
agents) is given, on the giving of not less than 3 days' notice, reasonable
access to those records during normal business hours.
3.14 Prior to Closing each Business Vendor that is transferring land located in
the United Kingdom as part of the transfer of the Local Businesses, shall give
the Purchaser (for itself where it is the Designated Purchaser and otherwise as
agent for the Designated Purchaser) details of all elections which have been
made under any VAT legislation in respect of that land to waive the exemption
from VAT in respect of that land.
3.15 In the event that the Purchaser (for itself where it is the Designated
Purchaser and otherwise as agent for the Designated Purchaser) has paid an
amount in respect of VAT to either Vendor as agent for the relevant Business
Vendor in respect of the transfer of a Local Business or any asset in accordance
with clause 3.11 of this Agreement and an adjustment is made to the
consideration payable under this Agreement for that Local Business or asset
pursuant to any provision of this Agreement, with the effect that the relevant
Business Vendor has made a payment to the relevant Designated Purchaser, the
relevant Business Vendor shall in addition to the payment of the adjustment
amount refund an amount in respect of VAT on such
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adjustment amount provided that if the Business Vendor has already accounted for
such VAT to the relevant Tax Authority, no amount shall be refunded under this
clause unless and to the extent that the relevant Business Vendor has received
effective repayment or credit in respect of such VAT and such Business Vendor
shall take all reasonable steps to obtain such repayment or credit.
3.16 For valuable consideration given, ICI for itself and otherwise as agent
for the Share Selling Companies undertakes and agrees to covenant with the
Purchaser for itself where it is the Designated Purchaser and otherwise as agent
for the Designated Purchaser as set out in Schedule 13 and to perform the
obligations set out in such Schedule 13.
3.17 For the purposes of this clause 3.17, the following terms will have the
following meanings:
Available Euro Sum means the aggregate of the sums which, on or prior to
Closing, the Purchaser and its Subsidiaries (i) are entitled to receive in euros
under the Senior Credit Agreement and (ii) are entitled to receive in euros
under the Senior Subordinated Credit Agreement or, as the case may be, are
entitled to receive pursuant to the bonds constituted under the Senior
Subordinated Indenture and issued by the Purchaser or one of its Subsidiaries to
third party investors or are to receive pursuant to bonds to be so constituted
and issued;
Euro/Dollar Rate means 1 to $1.081061; and
Total Dollar Sum means the aggregate of the sums in dollars which the Purchaser
is obliged to pay (or of which the Purchaser is obliged to procure the payment
by any member of the Purchaser's Group or by any Company) to any member of ICI's
Retained Group under Schedule 4, being the sum resulting from the following
calculation:
$ 2,025,474,000 + a - (b + c)
where:
a is the aggregate of all Provisional Cash Balances;
b is the aggregate of all Provisional Financial Debts (other than Prime
Debts); and
c is the aggregate of the sums which result from making the calculations
set out in clause 6.3(c)(ii) in respect of any Delayed Companies or
Delayed Businesses which have been identified as
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such by the notification made by ICI to the Purchaser in accordance
with this clause.
Not later than 4 Business Days before Closing, (i) ICI shall notify the
Purchaser of any entities or businesses which will be Delayed Companies or, as
the case may be, Delayed Businesses and (ii) the parties shall calculate the
Total Dollar Sum and make the calculations necessary to implement the remainder
of this clause.
Notwithstanding that the payment obligations set out in Schedule 4 and the
corresponding provisions of clause 3.2 refer only to payments being made of
dollar amounts, the Purchaser shall in aggregate be obliged at Closing to pay,
or procure the payment of, (i) the sum in Euros (the Total Euros Paid) which is
the lesser of 938,649,160 and the sum arising from the calculation in paragraph
(a) below and (ii) the sum in dollars resulting from the calculation in
paragraph (b) below:
(a) c + ( 1/2 x (d - c))
where:
c is the Available Euro Sum; and
d is one half of the Total Dollar Sum, converted into euros at the
Euro/Dollar Rate;
(b) e - f
where:
e is the Total Dollar Sum; and
f is the Total Euros Paid, converted into dollars at the Euro/Dollar Rate.
The Total Euros Paid shall be allocated amongst the payments to be made pursuant
to the following paragraphs of Schedule 4 in the order stated (where a paragraph
of Schedule 18 is shown against a paragraph of Schedule 4, the allocation is
made to the element of the payment pursuant to that paragraph of Schedule 4
which constitutes repayment of the sum outstanding under the note created under
that paragraph of Schedule 18):
Schedule 4 Schedule 18
17(b)
17(c)
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17(d)
17(e)
39
47
49 5 (only the element of the sum payable under
the note which relates to the transfer of
assets by ICI Belgium NV/SA)
49 5 (only the element of the sum payable under
the note which relates to the transfer of
assets by ICI Espana SA)
49 5 (only the element of the sum payable under
the note which relates to the transfer of
assets by Deutsche ICI GmbH)
41
44
43 4(g)
35
11
Those payments to which the Total Euros Paid are allocated shall be paid in
euros rather than dollars and the amount of euros to be paid in each case shall
be the euro equivalent of the dollar amount of the payment concerned, converted
at the Euro/Dollar Rate. Where ICI makes any election under any of paragraphs 8
to 12 (inclusive) of Schedule 18, any euros which are allocated to a payment to
which that election relates shall be allocated to the repayment of the relevant
element of any loan made by ICI Finance plc as a result of that election. If,
when all of the euros comprising the Total Euros Paid have been allocated, a
particular payment can only partly be made in euros, that payment shall be made
by the payment of the aggregate amount of euros outstanding from the Total Euros
Paid (the Remaining Euros) and the balance shall be paid in dollars, such amount
being the sum in dollars which results from the following calculation:
g - h
where:
g is the sum in dollars which would have been paid in making the relevant
payment had no euros been left to allocate to it;
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h is the Remaining Euros converted into dollars at the Euro/Dollar Rate.
Conditions
4.1 The obligations of the parties under clause 2 are conditional upon the
following conditions being fulfilled (or waived):
(a) the passing on or before 25 June 1999 at a duly convened general meeting of
ICI of a resolution (or more than one if so required by the London Stock
Exchange) by the shareholders of ICI approving transactions contemplated by
this Agreement;
(b) any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act 1976 to the consummation of the transactions contemplated
by this Agreement having expired or terminated;
(c) there being:
(i) no conditions set out in Schedule 15 which remain to be
satisfied;
(ii) no outstanding Regulatory Action or other law or regulation which
makes unlawful or otherwise prohibits or restricts completion of
the transfer of any Sale Shares, Company, Local Business,
Business Assets or Non-Controlled Joint Venture (as such term is
read in accordance with clause 6.3(a)(i)) at Closing or the
transfer of any shares or assets before Closing pursuant to
Schedule 18 or the entering into or performance of any of the
Ancillary Agreements which are in the agreed form; and
(iii) no consents from any third party which are required in order to
transfer any Sale Shares, Company, Local Business, or Business
Assets (other than Business Contracts, Business IP Licences,
Business IT Licences and Transferred Properties) or Non-
Controlled Joint Venture (as such term is read in accordance with
clause 6.3(a)(i)) at Closing or to transfer any shares or assets
before Closing pursuant to Schedule 18 which have yet to be
obtained,
which will (aa) prevent the entering into, or performance of, any of the
Ancillary Agreements which are in the agreed form or (bb) prevent either
Vendor from being in a position to comply with its obligations under clause
6.2 and Schedule 4 (after taking account of the provisions of clause 6.3)
on the last Business Day of the then current calendar
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month (or at any time which is less than 3 Business Days before the end of
any calendar month, on the last Business Day of the next calendar month or
such earlier date as the parties agree);
(d) immediately prior to Closing:
(i) on or before 30 June 1999, the availability of financing to be
provided under or pursuant to the Financing Agreements; or
(ii) thereafter, the availability of financing sufficient to allow the
Purchaser to comply with its obligations at Closing, on terms
that are no less favourable, taken in the aggregate, than the
financing to be provided under or pursuant to the Financing
Agreements;
(e) the consent of HM Treasury having been obtained to those elements of the
matters referred to in this Agreement which require such consent; and
(f) no Material Adverse Change in the ICI Business or the PO/MTBE Business
having occurred and continuing immediately prior to Closing.
Each party (other than HSCC and the Purchaser in relation to Condition 4.1(f) in
the case of a Material Adverse Change in the ICI Business and other than ICI and
the Purchaser in relation to Condition 4.1(f) in the case of a Material Adverse
Change in the PO/MTBE Business) shall use all reasonable endeavours to procure
(so far as it lies within its respective powers to do so) that each of the
Conditions, to the extent that they are not waived, are fulfilled as soon as
possible, but in any event before 31 October 1999 (the Termination Date).
4.2 In each of the jurisdictions specified in Schedule 15, the transfer of
companies or businesses (as applicable) pursuant to Schedule 18 shall be subject
to the conditions specified in respect of that jurisdiction in that Schedule and
ICI and the Purchaser shall each use all reasonable endeavours to procure the
satisfaction of those conditions as soon as practicable after the date of this
Agreement.
4.3 Each of ICI and HSCC shall, so far is reasonably necessary, and as promptly
as practicable, provide the other with such reasonable assistance as the other
requests (a) in making or supporting the other and the members of the
Purchaser's Group in making applications for environmental and operational
change of control consents and (b) in providing information which is requested
by any governmental or regulatory body or other person whose consents, approvals
or other actions are required in order to complete the sale
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and purchase of the Sale Shares and the Local Businesses (including, for the
avoidance of doubt, the Federal Trade Commission (FTC) or other competition
authorities).
4.4 Without prejudice to the generality of their obligations under clauses 4.1,
4.2 and 4.3:
(a) each of ICI and HSCC shall, as soon as practicable and in any event no
later than 10 Business Days after the date of this Agreement, file with the
FTC the notification and report form, if any, required for the transactions
contemplated by this Agreement pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976; and
(b) as soon as practicable and in any event no later than 10 Business Days
after the date of this Agreement (or such later date as may be jointly
agreed by ICI and HSCC and permitted by the Relevant Competition
Authority), HSCC (and, in the event that a separate filing is required,
ICI) shall submit a merger or other competition or anti-trust filing, as
applicable, to each Relevant Competition Authority, save where ICI and HSCC
jointly agree otherwise.
4.5 ICI undertakes and agrees with HSCC that, on or before 8 June 1999, the
directors of ICI will post a circular to shareholders of ICI (the Circular)
containing (a) a notice duly convening the extraordinary general meeting of ICI
referred to in clause 4.1(a) to be held as soon as practicable after the date of
this Agreement and in any event on or before 25 June 1999 and including the text
of the resolution (or more than one if so required by the London Stock Exchange)
approving the arrangements envisaged by this Agreement and (b) (subject to the
fiduciary duties of the directors) a recommendation from the directors to the
shareholders of ICI to vote in favour of the resolution (or resolutions) and
that neither ICI nor any member of ICI's Group nor any of their respective
Related Persons will solicit or encourage any other offer for all or any part of
the ICI Business from the date of this Agreement until Closing, the Termination
Date or the date on which this Agreement is terminated in accordance with its
terms, whichever first occurs (provided that neither ICI nor any member of its
Group shall be required to contravene any Joint Venture Agreement). Without
prejudice to the generality of the foregoing, HSCC shall give ICI such
assistance as it shall reasonably require in connection with the preparation of
the Circular and in particular shall procure that the Purchaser's Accountants
shall provide such financial information as is necessary for the purpose of
preparing the Circular and any supporting documentation customarily prepared in
connection with such a circular.
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4.6 If the Conditions are not satisfied or waived on or before the Termination
Date, this Agreement shall automatically terminate.
4.7 If this Agreement terminates or is terminated in accordance with this
clause 4 then the obligations of each party under this Agreement (except for
obligations under clauses 12.17, 20, 22, 24, 25, 26, 28, 29, 31 and 33) shall
automatically terminate, provided that the rights and liabilities of the parties
which have accrued prior to termination (save for any under clause 5.1) shall
subsist.
4.8 No Condition may be waived except by written agreement of the parties, save
that HSCC shall be entitled to waive the Conditions set out in clause 4.1(c) and
(f) in relation to the ICI Business without obtaining the consent of the other
parties and ICI shall be entitled to waive the Conditions set out in clause
4.1(c) and (f) in relation to the PO/MTBE Business without obtaining the consent
of the other parties. In any event no Condition may be waived without obtaining
the prior consent of Bankers Trust Company and Goldman Sachs Credit Partners
L.P. (as representatives for these purposes of the providers of finance under
the Financing Agreements). If the parties agree that they wish to waive any
Condition (or, where any party can unilaterally waive a Condition in accordance
with the provisions of this clause 4.8, where it elects to do so) the parties
undertake to each other to use their respective reasonable endeavours to obtain
such consent of Bankers Trust Company and Goldman Sachs Credit Partners L.P.
The parties shall waive the Condition set out in clause 4.1(c) in relation to
the ICI Business if the ICI Transferred Value (as defined in clause 6.3) is at
least (Pounds)914.47 million but less than (Pounds)933.7 million and Bankers
Trust Company and Goldman Sachs Credit Partners L.P. have granted their consent
to such a waiver. HSCC shall not have an obligation under clause 4.1 to use
reasonable endeavours to procure such consent, but it agrees not to raise any
objection to the giving by Bankers Trust Company and Goldman Sachs Credit
Partners L.P. of such consent.
4.9 Each party shall notify the other parties as soon as reasonably practicable
after it becomes aware that any Condition has been satisfied. If either Vendor
considers at any time prior to Closing that a Material Adverse Change in the
others Business has occurred, it shall promptly serve a written notice on the
other Vendor (a MAC Notice) giving reasonable details thereof. If either Vendor
delivers a MAC Notice and the other Vendor does not accept that a Material
Adverse Change has occurred, either Vendor may instruct the Independent Firm to
determine whether there is a Material Adverse Change and if so shall notify the
other of such instruction. If the matter is so referred to the Independent
Firm:
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(a) each Vendor may make written representations to the Independent Firm in
relation to the alleged Material Adverse Change (with copies to the other
Vendor) within 5 Business Days of such referral. The Independent Firm
shall be instructed to notify the Vendors and the Purchaser of its
determination within 10 Business Days of such referral;
(b) if the Independent Firm shall for any reason be unable or unwilling to act,
another independent firm of chartered accountants shall be appointed to act
in its place, by agreement of the Vendors and, in default of such agreement
within 5 Business Days of the Vendors becoming aware that the Independent
Firm is unable or unwilling to act, at the request of either Vendor, by the
President of the Institute of Chartered Accountants in England and Wales
for the time being;
(c) in making its determination, the Independent Firm shall act as expert and
not as arbitrator and the determination by the Independent Firm shall, in
the absence of manifest error, be final and binding on the Vendors and the
Purchaser and shall be deemed to have been accepted and approved by each of
them. The fees and the costs of the Independent Firm shall be shared by
the Vendors equally unless otherwise directed by the Independent Firm
(which shall have the authority to make such direction if it deems it
equitable);
(d) each Vendor shall and shall procure that each other relevant member of its
Group shall give the Independent Firm reasonable access at all reasonable
times to all books and records, and all computer files relating to the
business of any Company or any Local Business, in their respective
possession or control and generally shall provide the Independent Firm with
such other information and assistance (including without limitation access
to senior operational executives) as the Independent Firm may reasonably
request.
4.10 If any fact which makes any of the Conditions incapable of being satisfied
on or before the Termination Date comes to the knowledge of any party at any
time prior to Closing, then that party shall notify the other parties of that
fact. The parties shall then first negotiate in good faith and use their
reasonable endeavours to agree an alternative set of arrangements which place
the Purchaser in no worse a position than it would have been in had the relevant
Condition been capable of being satisfied, so far as is practicable in the time
available before the Termination Date. If such endeavours and negotiations in
good faith have taken place and it has not been possible to agree to such an
alternative set of arrangements, then any party shall be entitled to treat this
Agreement as terminated by written notice to the other
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parties, provided that no party shall be entitled to treat this Agreement as
terminated where that party is in breach of its obligations under clauses 4.1 to
4.9 where such breach has contributed materially to the non-satisfaction of the
Condition.
4.11 Agreed deletion.
4.12 If the Olefins Manufacturing Business is a Delayed Business, then until
such time as a transfer of the Olefins Manufacturing Business takes place:
(a) the definition of Business under the Technology Transfer Agreement shall be
deemed modified to exclude that part of the Relevant Petrochemicals
Business comprised in the Olefins Manufacturing Business; and
(b) the provisions of the Technology Transfer Agreement in respect of
Collaboration Agreements, ICI Projects and ICI Technology Projects shall be
disapplied insofar as they relate to the Olefins Manufacturing Business.
Conduct before Closing
5.1 Subject to:
(a) such of the consents set out in Schedule 15 having been obtained and such
of the Conditions having been satisfied or waived as are (in each case)
required in relation to the implementation of the relevant transaction;
(b) there being no outstanding Regulatory Action which makes unlawful or
otherwise prohibits or restricts the implementation of the relevant
transaction; and
(c) such consents as are required from third parties to the implementation of
the relevant transaction having been obtained,
ICI shall take or procure that the necessary actions are taken in order to (or,
where so provided in Schedule 18, use reasonable endeavours to) implement the
transactions set out in Schedule 18 and ICI shall, and shall procure that each
member of its Group shall, do, execute and deliver all such acts, deeds,
documents, instruments of assignment and transfers as may be necessary to
implement such transactions and give effect to them, provided that if, in ICI's
reasonable opinion, the implementation of any one or more of those transactions
would have a prejudicial effect on any member of ICI's Retained Group, ICI
shall, subject to the prior consent of the Purchaser (such consent
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not to be unreasonably withheld or delayed), be entitled to implement such other
steps at its own cost as would achieve substantially the same position as
between the parties as would result from the implementation of the relevant
transaction and in addition ICI shall bear any incremental Tax costs arising by
reference to or as a result of the implementation of such alternative steps.
5.2 ICI (in relation to its Group) and HSCC (in relation to its Group) shall
ensure that neither the Purchaser nor any of the Purchaser's Subsidiaries nor
any company incorporated pursuant to Schedule 18 shall carry on any business or
have any assets or liabilities of any nature whatsoever before Closing, except
for any business, assets or liabilities transferred to or assumed by it pursuant
to any transaction contemplated by this clause 5. Each Vendor shall indemnify
the other Vendor on an after Tax basis (for itself and on behalf of each member
of such other Vendor's Group) against all costs suffered or incurred as a result
of a breach by it of its obligation under this clause 5.2.
5.3 Subject to clause 5.1, ICI (in relation to the ICI Business) and HSCC (in
relation to the PO/MTBE Business) will ensure that, until Closing (or, in the
case of Delayed Businesses, Delayed Companies or Delayed Assets, until Delayed
Closing):
(a) the ICI Business and the PO/MTBE Business (as the case may be) is conducted
in the ordinary and normal course of business as a going concern and
without any alteration in its nature or manner (save for routine and
unimportant matters), on sound commercial principles consistent with those
applied by that party during the financial period ended on the Accounts
Date; and
(b) all reasonable measures are taken, consistent with past practice, to
protect and maintain the assets comprised in the ICI Business and the
PO/MTBE Business, as the case may be.
5.4 For the purpose of this clause 5.4, the term "Company" includes any Non-
Controlled Joint Venture. Subject to clause 5.1, but without prejudice to the
generality of clause 5.3, until Closing (or, in the case of Delayed Assets,
Delayed Businesses or Delayed Companies, until Delayed Closing) each of ICI and
HSCC will ensure, in respect of the ICI Business or the PO/MTBE Business
respectively (and, in relation to any Controlled Joint Venture or Non-Controlled
Joint Venture, only in so far as ICI or HSCC (as the case may be) is able in
accordance with the terms of any joint venture agreement or legally permitted to
do so and provided that no member of ICI's Group shall be required by this
clause 5.4 to conduct its relationship with the Controlled Joint Venture or Non-
Controlled Joint Venture in a manner which
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is inconsistent with existing budgets, business plans, delegations of authority
and practices in place in relation to that Joint Venture at the date of this
Agreement), that without the prior written consent of the other:
(a) no Company changes, or agrees to change, its authorised or issued share
capital or issues, or agrees to issue, any shares, debentures or other
securities or grants, or agrees to grant, any options over any shares,
debentures or other securities;
(b) save for the redemption of its issued preference share capital by Tioxide
Canada, Inc., as disclosed in the Disclosure Letter, no Company declares or
pays any dividend or makes any other form of distribution to its members or
reduces its share capital or purchases its own shares;
(c) no Company acquires or disposes of any shares, debentures or other
securities in any other company or grants or acquires any option over any
shares, debentures or other securities or makes any commitment or enters
into any agreement to do so;
(d) no Company or Business Vendor (in relation to the ICI Business or the
PO/MTBE Business, as the case may be) will dispose of, or agree to dispose
of or grant or agree to grant any option or other right over or licence of,
any business or assets comprised in the relevant Business (except in the
ordinary course of business on normal arm's length terms);
(e) no Company or Business Vendor (in relation to the ICI Business or the
PO/MTBE Business as the case may be) will embark on a programme, submit any
bid or tender or make any contract or commitment in relation to the
relevant Business which is likely to involve more than US$25 million (save
for the renewal of an existing leasehold interest in any property on arm's
length terms) by reference to:
(i) value; or
(ii) capital expenditure or costs; or
(iii) liabilities,
or (whatever the sum involved) is likely (aa) to result in any material
change in the nature of the operations, liabilities and activities of the
ICI Business or the PO/MTBE Business or (bb) to involve any abnormal or
unusual commitment;
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(f) no Company or Business Vendor (in relation to the ICI Business or the
PO/MTBE Business) makes any contract with any other member of ICI's Group
(if it is a member of ICI's Group) or with any other member of HSCC's Group
(if it is a member of HSCC's Group) except for contracts on arm's length
terms and in the ordinary course of business or as otherwise contemplated
in this Agreement;
(g) there is no material change in the extent of the insurance cover relating
to the activities of the relevant Business and no failure to maintain
adequate insurance cover relating to the activities of the relevant
Business;
(h) no Company or Business Vendor shall make, terminate or materially vary any
employment agreement or terms or employment-related arrangement with any
director or Senior Employee or group of 20 or more Employees or hire
(except in the ordinary course of business or where reasonably necessary to
meet an identified business need or to replace departing employees) a
material number of additional employees. This does not apply to renewing
any existing agreements or arrangements and/or promotions and improvements
in terms and conditions awarded in the normal course of employment;
(i) no Company or Business Vendor (in relation to the ICI Business or the
PO/MTBE Business) will create, grant or issue, or agree to create, grant or
issue, any mortgages, charges (other than liens arising by operation of
law), debentures or other securities or redeem or agree to redeem any such
securities or (other than in the ordinary course of business) give, or
agree to give, any guarantees or indemnities;
(j) no Company or Business Vendor (in relation to the ICI Business or the
PO/MTBE Business) will borrow (other than by bank overdraft or similar
facility in the ordinary course of business and within limits subsisting at
the date of this Agreement and other than anything of the nature of Intra-
Group Financial Debt) any money or agree so to do;
(k) no Company shall alter the provisions of its constitutional documents or
adopt or pass further regulations or resolutions inconsistent therewith or
change its accounting reference date;
(l) save where the intention to do so has been disclosed in the Disclosure
Letter relating to the Tioxide Business, no Company shall discontinue or
cease to operate all or a material part of its business;
(m) no Company (excluding any Non-Controlled Joint Venture) shall pass any
resolutions in general meeting or by way of written resolution
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(save for the conduct of routine ordinary business at any annual general
meeting or, in the case of any Non Controlled Joint Venture for the conduct
of routine ordinary business by written resolution or at any general
meeting), including, without limitation, any resolution for winding-up, or
capitalise any profits or any sum standing to the credit of share premium
account or capital redemption reserve fund or any other reserve;
(n) no Company or Business Vendor shall make any material change to the
accounting procedures or principles by reference to which its accounts are
drawn up; and
(o) no Company or Business Vendor (in relation to the ICI Business (in the case
of ICI) and the PO/MTBE Business (in the case of HSCC)) will abandon,
cancel or allow to lapse any Registered Rights other than in the ordinary
course of business consistent with past practice.
HSCC and ICI shall each consider and provide a response to any request for such
consent as promptly as reasonably practicable.
5.5 Notwithstanding clauses 5.1 to 5.4, the Retained Olefins Business may be
transferred (in accordance with and subject to the terms of the Co-operation
Agreement) to the Operations Company (as defined therein).
5.6 ICI and HSCC shall each use reasonable endeavours to take or ensure that
the necessary actions are taken in order to procure that the A Notes (as defined
in Schedule 4) are available for marketing in accordance with the A Registration
Rights Agreement (as defined in Schedule 4) or at such earlier time as may be
agreed upon by the parties to such A Registration Rights Agreement, but no
earlier than the marketing of the most junior fixed-rate dollar-denominated
high-yield notes of HIC, including by providing all necessary assistance in the
preparation of the relevant registration statement or other marketing document
within such timetable, and that their respective accountants provide required
financial information and customary supporting documentation in connection
therewith.
5.7 ICI shall use its reasonable endeavours to minimise the level of the Final
Cash Balance of each Company at Closing, subject to any legal constraints on its
ability to do so, by the payment of any dividends or otherwise. For the
avoidance of doubt, ICI shall not be treated as being in breach of its
obligations under this clause 5.7 if it requests consent to the payment of a
dividend or any other step which it wishes to take in connection with its
obligations under this clause 5.7 from the Purchaser pursuant to clause 5.4 and
the Purchaser does not give such consent to the extent that
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failure to give such consent leads to a failure to minimise the Final Cash
Balance of any Company.
5.8 ICI shall as soon as reasonably practicable after the date of this
Agreement and in any event at least 15 Business Days prior to Closing provide
HSCC with a list of all filings and office actions required to be made in the 3
months after the Closing Date in respect of the Registered Rights.
5.9 ICI shall use all reasonable endeavours to procure the signing by Dames &
Moore of the Dames & Moore Reliance Agreement in favour of such persons as are
nominated by the Purchaser provided that nothing in this clause shall require
ICI to take any steps to procure such signature other than such signature as is
contemplated in the Environmental Consultant's Agreement.
5.10 HSCC undertakes to use its best endeavours to procure that the relevant
directors of each of TGL, Holdco 1, Holdco 2, UK Polyurethanes, UK Relevant
Petrochemicals and Tioxide UK (each as defined in clause 1, Schedule 4 or
Schedule 18) form the opinions, and make the statutory declarations, envisaged
in Sections 155 et seq of the Companies Act 1985 in relation to the financial
assistance identified in the draft board resolutions and statutory declarations
in the Exhibits to the Senior Credit Agreement, provided that nothing in this
clause (i) shall require any such director (or shall require HSCC to procure any
such director) to contravene any law or act in a manner inconsistent with his
fiduciary or other legal duties in relation to any such company, or (ii) shall
require HSCC to procure that any such company is capitalised or has assets or
other funds available to it to an extent which would allow any such director to
form such opinion or give such a statutory declaration. For the avoidance of
doubt, proviso (ii) above shall not affect any obligation which HSCC may have in
the absence of this clause.
5.11 The Purchaser and HSCC shall each procure that, without the prior written
consent of ICI:
(a) no amendment materially adverse to ICI is made to the Subscription
Agreement or to the Member's Agreement;
(b) no consent is given by or on behalf of the Purchaser to the assignment of
any rights or obligations of any party to the Subscription Agreement; and
(c) save for any agreement entered into to implement any transfer of interests
in the Purchaser made pursuant to and in accordance with the LLC Agreement
or the Members' Agreement, neither the Purchaser nor HSCC shall enter into
any agreement with any other person
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(including without limitation any other member of the Purchaser) relating
to the present or future transfer of interests of the Equity Investors (as
defined in the LLC Agreement) in the Purchaser,
in each case at any time on or prior to the date on which there ceases to be a
member of ICI's Group holding any interests (other than Class A Shares in TGL)
in any member of the Purchaser's Group.
Closing
6.1 Subject to clauses 6.11 and 6.14 and Schedule 16, beneficial ownership and
risk in respect of each of the Business Assets shall pass to the Designated
Purchaser on Closing. Closing shall take place at such place or places outside
the United Kingdom as are agreed between ICI and HSCC. Closing shall take place
on the final Business Day in the first calendar month in which, at least 3
Business Days before the end of that calendar month, Conditions 4.1(a), (b) and
(e) have been satisfied or waived provided that Condition 4.1(c) is satisfied or
waived at that time and further provided that Conditions 4.1(c), (d) and (f)
remain satisfied immediately prior to Closing, or on such other date as may be
agreed between the parties.
6.2 Subject to clause 6.3:
(a) ICI agrees (i) with HIC in relation to the transfer of the Sale Shares in
TGL, (ii) with the Purchaser as trustee for Huntsman ICI Polyurethanes (UK)
Limited in relation to the transfer of the Sale Shares (other than those in
TGL) set opposite ICI's name in column 3 of Part I of Schedule 1, (iii)
with the Purchaser in relation to the transfer of the Sale Shares set
opposite its name in column 3 of Part IV of Schedule 1 and (iv) with the
Purchaser as trustee for each other Designated Purchaser in relation to the
transfer of the Local Businesses that ICI and each Share Selling Company
and Business Vendor and each Designated Purchaser shall at Closing transfer
Sale Shares and Local Businesses and shall do, or procure the doing of, all
those things listed in relation to them in Schedule 4; and
(b) HSCC agrees with the Purchaser that HSCC shall at Closing transfer the
PO/MTBE Business and shall do, or procure the doing of, all those things
listed in relation to it in Schedule 4.
The parties shall also make the adjustments referred to in clause 3.4. If any
transaction is required to be implemented under Schedule 18 and has not been
implemented prior to Closing, then the Purchaser shall procure that, at Closing,
either it or a member of its Group or a Company shall pay to ICI or its designee
any sums which would have been paid pursuant to Schedules 4
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and/or 18 to a member of ICI's Group had such transaction been implemented (the
amount of such payment being reduced where applicable pursuant to clause
6.3(c)(ii), being adjusted pursuant to clause 3.4 and as otherwise provided in
this Agreement and being paid in dollars and/or euros as determined under clause
3.17). For the avoidance of doubt:
(i) subject to being reduced pursuant to clause 6.3(c)(ii) and being
adjusted pursuant to clause 3.4 and as otherwise provided in this
Agreement, any such sum which would have been paid pursuant to
Schedules 4 and/or 18 shall be paid to ICI or its designee
regardless of whether the business or share transfer to which it
relates has been effected and of whether any loan note of which
it is expressed to constitute the repayment has been issued; and
(ii) the provisions of this final paragraph of clause 6.2 shall apply
in respect of the sums to be paid pursuant to Schedule 4 in
relation to the transfers of the Joint Venture Interests in NPU
and Arabian Polyol Co Ltd and of the preference shares in the
capital of Tioxide (Malaysia) Sdn Bhd (to which neither clause
3.4 nor clause 6.3(c)(ii) apply).
If the Olefins Manufacturing Business is not transferred to a member of the
Purchaser's Group at Closing, then Huntsman ICI Petrochemicals (UK) Limited
shall nevertheless pay the sum of $200,000,000 to ICI Chemicals & Polymers
Limited as envisaged by paragraph 22 of Schedule 4, but such payment shall be
subject to a condition subsequent that Delayed Closing takes place in respect of
the Olefins Manufacturing Business.
6.3(a) For the purposes of this clause 6.3 only:
(i) any reference to a Non-Controlled Joint Venture shall be read as
a reference to Rubicon Inc. and LPC;
(ii) the Value of a Company, Non-Controlled Joint Venture or Local
Business shall mean the book value of the fixed assets of the
relevant entity or business at 31 December 1998, as identified in
Exhibit F.
(b) Where insufficient of the Business Assets of any Local Business are able
to be transferred at Closing for the relevant Local Business to be able
to continue to operate for all practical purposes in the manner in which
it operated immediately prior to Closing, then (i) none of the Business
Assets comprised in such Local Business shall be transferred at Closing,
(ii) the provisions of Schedule 16 shall apply in relation to
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such Local Business and (iii) for the purposes of paragraph (c) below,
that Local Business shall be treated as not having been transferred at
Closing. Where sufficient of the Business Assets of any Local Business
are able to be transferred at Closing for the relevant Local Business to
be able to continue to operate for all practical purposes in the manner
in which it operated immediately prior to Closing, then such Local
Business shall transfer at Closing and shall be treated as having done
so for the purposes of paragraph (c) below. The provisions of clause
6.3(b) shall also apply in respect of any transfer of a business which
is to be effected pursuant to Schedule 18 to determine whether that
business shall be treated as having been transferred at Closing for the
purposes of paragraph (c) below.
(c) ICI shall be deemed to have complied with its obligations under clause
6.2 and Schedule 4 to transfer Sale Shares and Local Businesses if the
aggregate of the Values of the Companies, Non-Controlled Joint Ventures
and Local Businesses (excluding the Olefins Manufacturing Business)
which have been transferred to a member of the Purchaser's Group (such
aggregate being the ICI Transferred Value) is more than (Pounds)933.7
million (and shall be deemed not to have complied with such obligations
if such aggregate is less than the ICI Transferred Value), in which
event:
(i) ICI shall, on the terms of Schedule 16, remain subject to a
continuing obligation to transfer any Company or Non-Controlled
Joint Venture (a Delayed Company) and any Local Business (a
Delayed Business) which it does not transfer at Closing (without
prejudice to the remaining provisions of this clause 6 and to the
provisions of Schedule 16). Any Schedule 18 Company or Schedule
18 Business the transfer of which to a member of the Purchaser's
Group has not taken place on or prior to Closing shall be treated
for the purposes of this Agreement as a Delayed Company or a
Delayed Business, as the case may be ;
(ii) the consideration to be paid or transferred in respect of any
such Delayed Company (or of its holding undertaking) or Delayed
Business under Schedule 18 (in the case of any Delayed Company or
Delayed Business which is a Schedule 18 Company or Schedule 18
Business) or, as the case may be, under Schedule 4 (in the case
of any Delayed Company or Delayed Business which is not a
Schedule 18 Company or Schedule 18 Business) shall be reduced by:
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(aa) in the case of any Delayed Company or Delayed Business which
is not a Systems House Entity, the sum resulting from the
following calculation:
a
1/4 x --------------------- x $2,426,550,000
(Pounds)962.6 million
where a is the Value of the relevant Delayed Company or
Delayed Business; and
(bb) in the case of any Delayed Company or Delayed Business which
is a Systems House Entity, the sum which is one-quarter of
the value shown against that Delayed Company or Delayed
Business in Part II of Schedule 6;
(iii) if Delayed Closing takes place in respect of any such Delayed
Company or Delayed Business on or before the second anniversary
of Closing, the Purchaser shall pay to the Vendor:
(aa) the sum resulting from the following calculation in the case
of an entity which is not a Systems House Entity:
c
1/4 x --------------------- x $2,426,550,000
(Pounds)962.6 million
where c is the Value of the relevant Delayed Company or
Delayed Business; and
(bb) in the case of any entity which is a Systems House Entity,
the sum which is one quarter of the value shown against that
entity in Part II of Schedule 6.
Such payment shall be by way of adjustment to the consideration
payable in respect of such Delayed Company or its holding
undertaking or in respect of such Delayed Business under Schedule
4 (where such Delayed Company or Delayed Business is not a
Schedule 18 Company or Schedule 18 Business) or Schedule 18
(where such Delayed Company or Delayed Business is a Schedule 18
Company or Schedule 18 Business).
(d) For the purpose of paragraph (c) above, Tioxide (Malaysia) Sdn Bhd (Tioxide
Malaysia) shall be deemed to have been transferred at Closing if the
ordinary shares in Tioxide Group Limited, have been transferred with
Tioxide Malaysia being a Subsidiary of it at the time
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of such transfer, regardless of whether the 24,200,000 Cumulative
Redeemable Preference Shares of US$1 each in the capital of Tioxide
Malaysia (the Preference Shares) have been transferred by ICI Omicron BV
pursuant to Schedule 18 on or prior to Closing. If the Preference Shares
have not been transferred on or prior to Closing pursuant to Schedule 18,
then, from Closing, ICI shall procure that ICI Omicron BV shall act in
accordance with the Purchaser's instructions in respect of such Preference
Shares and account for any dividend or other distribution made or paid by
Tioxide Malaysia in respect of them. Should the Preference Shares not have
been transferred to a member of the Purchaser's Group or to a transferee
nominated by the Purchaser on or before the second anniversary of Closing,
ICI shall pay to the Purchaser the Fair Value of the Preference Shares, as
determined in accordance with the process set out in paragraph 7 of
Schedule 16 (for which purpose, any reference to a Delayed Company shall be
read as a reference to the Preference Shares).
(e) HSCC shall be deemed to have complied with its obligations under clause 6.2
and Schedule 4 to transfer its Local Business only if the Business Assets
which it is able to transfer at Closing are sufficient for its Local
Business to be able to continue to operate for all practical purposes in
the manner in which it operated immediately prior to Closing.
(f) Where any consent or agreement of any third party is required to the
transfer of any of the Business Assets (other than a Property, Business
Contract, Business IP Licence or Business IT Licence) comprised in a Local
Business which has transferred and such consent or agreement has not been
obtained at or before Closing, the sale of the relevant Business Asset (a
Delayed Asset) shall not take effect, notwithstanding Closing, until that
consent or agreement has been obtained and the provisions of Schedule 16
shall apply in respect of it.
(g) For the purposes of this clause 6.3, ICI Chemicals & Polymers Limited shall
be treated as being a Business Vendor in respect of two separate Local
Businesses, being (i) on the one hand, the Olefins Manufacturing Business
and (ii) on the other hand, the remainder of the business which it is to
sell under this Agreement. For the avoidance of doubt, C&P's being unable
to transfer the Local Business comprising the Olefins Manufacturing
Business at Closing shall not prevent the Conditions being satisfied and
shall not prevent ICI from being deemed under this clause 6.3 to have
complied with its obligations under clause 6.2 and Schedule 4. If the
Olefins
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Manufacturing Business is not transferred to a member of the Purchaser's
Group at Closing, then:
(i) the Olefins Agreements shall be deemed to be Ancillary Agreements
and shall be entered into at Closing in accordance with the
applicable provisions of Schedule 4 and the Olefins Manufacturing
Business will be carried on, until Delayed Closing, subject to
and in accordance with the Co-operation Agreement and the Olefins
Agreements;
(ii) the Olefins Manufacturing Business shall constitute a Delayed
Business for the purposes of the definitions of "Delayed Closing
Date" and "Delayed Closing" (save where the latter term is used
in clause 7.5, which shall not apply in relation to any Delayed
Closing in respect of the Olefins Manufacturing Business),
clauses 2.9, 3.12, 3.13, 4.12 and this 6.3 (other than paragraphs
(c)(ii) and (iii)) and paragraphs 9 and 11 of Schedule 16;
(iii) for the avoidance of doubt, notwithstanding any provision to the
contrary in this Agreement, the provisions of clause 5 and of
Schedule 16 (other than those set out in paragraphs 9 and 11 of
that Schedule) shall not apply in respect of the Olefins
Manufacturing Business.
(h) BPCL has an interest in certain assets pursuant to the ICI/BP Joint Venture
Agreements, which interest (the BPCL Interest) the Purchaser, or another
member of its Group, is purchasing from BPCL under an asset sale agreement
(Asset Sale Agreement). It is acknowledged by the parties that the fact
that ICI is, by reason of the BPCL Interest, selling less than a 100%
interest in the Business Assets relating to the Olefins Manufacturing
Business is not relevant to the measure of the Costs of the Purchaser (or
the relevant member of the Purchaser's Group) and its ability to recover in
respect thereof if there is a breach of or claim under any of the
Warranties or any of the other provisions of this Agreement (and,
accordingly, no discount shall be applied to the assessment of the Costs of
the Purchaser (or the relevant member of the Purchaser's Group) and the
amount of its claim by reason of the BPCL Interest and the fact that ICI
is, by reason of the BPCL Interest, selling less than a 100% interest in
the Business Assets relating to the Olefins Manufacturing Business). In
reliance on this acknowledgement, the Purchaser has agreed with BPCL that
the Asset Sale Agreement will not contain equivalent warranties,
indemnities or other protections in respect of those matters which are
covered by
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warranties, indemnities and other protections given in this Agreement. For
the avoidance of doubt, the parties acknowledge that ICI undertakes no
obligation, makes no representation and gives no warranty in respect of or
relating to BPCL's ownership of, title to or interest in any assets.
(i) The use of ICI Group Ethylene Systems agreement dated 15 November, 1994
between ICI Chemicals & Polymers Limited, ICI Wilhelmshaven GmbH, European
Vinyls Corporation (International) SA/NV, European Vinyls Corporation
(Deutschland) GmbH and European Vinyls Corporation (UK) Limited shall be
excluded from the definition of Business Contracts save that upon and after
the transfer of the Olefins Manufacturing Business pursuant to this
Agreement, such agreement shall be a Business Contract to the extent that
it relates to the UK System (as defined therein) and shall continue to be
excluded from the definition of Business Contract to the extent that it
relates to the German System (as defined therein).
6.4 If, on the Delayed Closing in respect of any Delayed Company or Delayed
Business, or on the completion at any time after Closing of the transfer of the
Joint Venture Interest in NPU or Arabian Polyol Co Ltd or of the preference
shares in the capital of Tioxide (Malaysia) Sdn Bhd, it is necessary for the
consideration for such transfer to be paid within the relevant jurisdiction in
order to comply with the requirements of local law or in order for the
purchasing entity to be able to benefit from a relevant investment credit, then:
(a) if payment may be made in dollars, then the Purchaser shall procure that
the relevant purchasing entity shall pay to the relevant selling entity the
amount in dollars which would have been paid in respect of the transfer of
such shares or business pursuant to Schedule 4 or 18 had such transfer
taken place at or prior to Closing and had account been taken of any
adjustment made to that sum under clause 3.4 but not of the effect of
clause 6.3(c)(ii) or of clause 3.17 (the Dollar Price);
(b) if it is necessary for the payment to be made in the relevant local
currency, then the Purchaser shall instead procure the payment of the
amount resulting from converting the Dollar Price into that local currency
at the Spot Rate on the date which is three (3) Business Days prior to the
date of the relevant transfer;
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(c) ICI shall pay or procure the payment to the Purchaser of the amount in
Dollars paid at Closing pursuant to clause 6.2 in respect of the relevant
shares or business,
and, in the case of any Delayed Company or Delayed Business, the provisions of
clause 6.3(c)(iii) shall not apply on the Delayed Closing.
6.5 If either ICI or HSCC fails to comply with any of its obligations under
clause 6.2 (or to be deemed so to have complied pursuant to clause 6.3) then,
save where the failure relates to a minor or technical matter not going to
title, the other may at its option and without prejudice to any other remedies
available to it:
(a) defer Closing to a date not later than the end of the calendar month after
the calendar month in which Closing is required to take place under clause
6.1 (and so that the provisions of this clause 6 shall apply to Closing as
deferred), provided that, if such deferred Closing Date would fall after
the Termination Date, then the obligations of each party under this
Agreement (except for obligations under clauses 12.17, 20, 22, 24, 25, 26,
28, 29, 31 and 33) shall automatically terminate (save that the rights and
liabilities of the parties which have accrued prior to termination shall
subsist); or
(b) proceed to Closing so far as practicable (without prejudice to its rights
under this Agreement or any other agreement referred to herein).
All documents to be delivered by any party at Closing shall be held in escrow,
on a basis to be agreed between the parties in advance of Closing, such that
they will not become effective until the parties have complied with their
Closing obligations to such an extent that the agreed escrow condition is
satisfied.
6.6 Any cash sum to be paid by the Purchaser to ICI or any member of ICI's
Group at Closing shall be paid by the Purchaser (as agent for and on behalf of
itself and each of the Designated Purchasers) to ICI's Bank Account in
immediately available funds and ICI shall receive such payment on its own
account and as agent for each Selling Company.
6.7 The Tax Covenant and the Environmental Covenant shall each come into effect
at Closing.
6.8 At Closing, each Vendor shall procure that:
(a) the members of its Retained Group expressed to be parties thereto, and the
Purchaser shall procure that the members of the Purchaser's Group
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expressed to be parties thereto, shall enter into the Ancillary Agreements;
and
(b) those directors of each of the Companies (and Non-Controlled Joint Ventures
(where such directors are appointed by any member of ICI's Group))
nominated by the Purchaser in writing no later than 5 Business Days prior
to Closing shall resign and shall deliver a letter to the relevant Company
waiving all rights and claims they might have against such Company and the
Purchaser shall procure that each such Company shall grant to such
resigning directors full discharge of any claims it might have against such
resigning director (save in the case of fraud or any criminal matter).
6.9 Each party agrees with the other parties (on behalf of themselves and the
members of their respective Groups) to indemnify and keep indemnified the other
parties and each member of their respective Groups against any Cost which it may
incur or suffer as a result of any document delivered pursuant to this clause 6
being unauthorised, invalid or for any other reason ineffective for its purpose
or as a result of any document required to be delivered pursuant to clause 6.2
and Schedule 4 not being so delivered.
6.10 If the contract of employment of any Business Employee terminates or does
not transfer to a member of the Purchaser's Group at Closing (or, where
applicable, at the Delayed Closing Date relating to such Business Employee) by
operation of law, the Purchaser shall procure that the relevant member of the
Purchaser's Group shall immediately offer to employ any such person upon
becoming aware that his contract of employment has not transferred, or will not
transfer, or has terminated, such offer to be on terms and conditions that are
not less favourable to him as a whole than the terms and conditions applicable
to him immediately prior to Closing (or, as the case may be, the Delayed Closing
Date relating to such Business Employee or the date of termination) and as if
there was continuity of service, such employment to take effect at Closing (or,
where applicable, at the Delayed Closing Date) or, if later, as soon as the
relevant member of the Purchaser's Group has become so aware that the contract
of employment of such Business Employee has not transferred or will not transfer
and the relevant Vendor shall procure that, on the making of such an offer (or,
if later, at Closing or as the case may be at the Delayed Closing Date), any
such Business Employee who wishes to accept such offer is released from his
employment with that Vendor's Retained Group. In determining whether an offer
is on terms and conditions no less favourable as a whole for the purpose of this
clause 6.10, no account shall be taken of any success bonus or incentive paid or
provided to an Employee in relation to the sale of the Polyurethanes Business,
the Relevant Petrochemicals Business or the Tioxide Business insofar as such
bonus or
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incentive is in addition to (and not in substitution for) any other bonus or
incentive to which such Employee would otherwise have been eligible.
6.11 Save in relation to the Properties (to which the provisions of Schedule 17
shall apply) and Business IP Licences (to which clauses 6.12 to 6.16, 6.18 and
6.19 shall apply) and Business IT Licences (to which clauses 6.12 to 6.17 and
6.19 shall apply) insofar as the Business Assets comprise the benefit and burden
of Business Contracts which cannot effectively be or are not permitted to be
assigned or transferred by the relevant Business Vendor to the Purchaser or
relevant Designated Purchaser except by agreements of novation or without
obtaining a consent, approval or waiver from a third party (Consents) then the
following provisions shall apply:
(a) this Agreement shall not constitute an assignment or an attempted
assignment of the relevant Business Contract if, or to the extent that,
such an assignment or attempted assignment would constitute a breach of
such Business Contract;
(b) the relevant Vendor (on behalf of itself and each relevant Business Vendor)
and the Purchaser shall each use reasonable endeavours to procure that such
Business Contracts are novated or that the necessary Consents are obtained
and this Agreement shall constitute an assignment of such Business Contract
with effect from the time when all Consents required in respect of such
assignment have been obtained;
(c) unless or until each such Business Contract is so novated or assigned or
any necessary Consent is obtained, the relevant Business Vendor shall hold
any such Business Contract and any moneys, goods or other benefits received
thereunder as agent of the Purchaser (or the relevant Designated Purchaser)
and shall accordingly, promptly on receipt of the same, account for and pay
or deliver to the Purchaser (or the relevant Designated Purchaser) such
moneys, goods and other benefits less any reasonable direct out-of-pocket
costs and expenses of performance of that Business Contract incurred by
that Business Vendor (to the extent clause 6.11(d) does not apply)
(excluding, for the avoidance of doubt, management time) and the Vendor
shall comply with all reasonable requests of the Purchaser in relation to
that Business Contract or the performance thereof; and
(d) the Purchaser shall, or shall procure that the relevant Designated
Purchaser shall, at its cost, assist the relevant Business Vendor to
perform all its obligations (or, at the relevant Vendor's request, procure
the performance of all of the obligations of the Business
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Vendor) under any such Business Contract as sub-contractor of the relevant
Business Vendor provided that sub-contracting is permissible under the
terms of the relevant Business Contract and where sub-contracting is not
permissible, the Purchaser shall, provided that this is permissible under
the terms of the relevant Business Contract, perform any such Business
Contract as agent for the relevant Business Vendor, and in performing such
agency or sub-contracting role shall indemnify the relevant Business Vendor
(save to the extent that the Costs are caused by the Business Vendor's
failure to comply with its obligations under this clause or to take
reasonable care in performing any obligations under the relevant Business
Contract which remain to be performed by it and save in respect of the
Costs of third party claims in respect of such arrangement) on an after Tax
basis against all Costs suffered or reasonably incurred in connection with
any such Business Contracts provided that the Purchaser or relevant
Designated Purchaser shall not be obliged to indemnify the relevant
Business Vendor in respect of its internal administrative costs (including
costs of the time of its employees) the sub-contracting or agency or
arrangements described in this sub-paragraph;
(e) no effect shall however be given to sub-paragraphs (c) or (d) above if any
other party under the relevant Business Contract repudiates the contract,
refuses to deal with the relevant Business Vendor or the Purchaser or
relevant Designated Purchaser as contemplated by the said sub-paragraphs
(but then only for as long as it persists with such refusal) or if giving
effect thereto would constitute a breach of the relevant Business Contract
in which case the relevant Vendor, the relevant Business Vendor, the
Purchaser and any Designated Purchaser will use their respective reasonable
endeavours to make such other arrangements between themselves as may be
permissible to implement as far as possible the effective transfer of the
benefits and burden of such Business Contract to the Purchaser, or
Designated Purchaser or if such arrangements cannot be made in respect of
such Business Contract, the Business Vendor and the Purchaser (or the
relevant Designated Purchaser) shall use their respective reasonable
endeavours to procure that such Business Contract is terminated without
liability to either of them (in such a manner that the Purchaser or
Designated Purchaser may, if it so requires, negotiate a new contract on
its own behalf) and neither the Vendor, nor Business Vendor, the Purchaser
or the Designated Purchaser shall have any further obligation to the other
relating to the Business Contract after such termination.
Without prejudice to the generality of the preceding provisions of this clause
6.11 and of clause 18.2(a), ICI and the Purchaser shall each use their
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respective reasonable endeavours to procure the consent of Enron Teesside
Operations Limited (ETOL) and Enron Gas and Petrochemicals Trading Limited
(EGPTL) as may be required to the assignment (to the extent they relate to the
ICI Business) of (i) the Utilities Agreement relating to the Polyurethanes
Business dated 31 December 1998 between ETOL, EGPTL and ICI; (ii) the Services
Agreement relating to Services from the Teesside Utilities and Services Business
to the Polyurethanes Business dated 31 December 1998 between ETOL and ICI; (iii)
the Utilities Agreement relating to the ICI Hydrocarbons Business dated 31
December 1998 between ICI Chemicals and Polymers Ltd (C&P), EGPTL and ETOL; (iv)
the Services Agreement relating to Services from the Teesside Utilities and
Services Business to the ICI Hydrocarbons business dated 31 December 1998
between C&P and ETOL, and (v) the Services and the Utilities Agreement relating
to Services to the Teesside Utilities and Services Business of Enron from the
ICI Hydrocarbons Business dated 31 December 1998 between C&P and ETOL, and to
use such endeavours to procure the release of ICI (and any other members of
ICI's Group) from any guarantees of such agreements given by it in relation to
such Agreements. If ETOL's or EGPTL's consent to any such assignment or release
cannot be so obtained, or should ETOL's or EGPTL's consent to the assignment be
obtained only on the basis that a member of ICI's Group will continue to act as
guarantor in relation to any such Agreement(s), then ICI undertakes to continue
to act as guarantor (or to procure that any other member of ICI's group as is
currently such a guarantor so continues) in respect of any such Agreements until
the earlier of the date on which ETOL or EGPTL agrees to the release of such
guarantee or the second anniversary of Closing, provided that, with effect from
Closing, the Purchaser enters into a counter indemnity in favour of ICI in
respect of any liability which may arise under such guarantee.
6.12 Subject to clause 6.15, insofar as the benefit of any of the Business IP
Licences and Business IT Licences can effectively be assigned in favour of the
Purchaser (in the case of the PO/MTBE Business) or the relevant Designated
Purchaser (in the case of the ICI Business) with effect from the Closing Date,
the relevant Vendor shall at its own expense in respect of Business IP Licences
and Business IT Licences procure their assignment to or novation in favour of
the Purchaser (in the case of the PO/MTBE Business) or the relevant Designated
Purchaser (in the case of the ICI Business) with effect from the Closing Date.
6.13 Subject to clause 6.15, in relation to any Business IP Licences and
Business IT Licences referred to at clause 6.12, as part of the consideration
for the assignment of the Business IPR and the Business Information, the
Purchaser (in the case of the PO/MTBE Business) or the relevant Designated
Purchaser (in the case of the ICI Business) shall:
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(a) on the Closing Date accept assignments from the relevant Business Vendor
of, or enter into a novation agreement in respect of, such Business IP
Licences and Business IT Licences;
(b) from the Closing Date carry out, perform and discharge all the obligations
and liabilities created by or arising under such Business IP Licences and
Business IT Licences after the Closing Date (so far as the Purchaser or
Designated Purchaser, as applicable, is lawfully able to do so); and
(c) from the Closing Date indemnify ICI or the relevant Business Vendor as the
case may be against all costs, claims, charges, expenses, demands,
liabilities or penalties on an after Tax basis in respect of any failure
on the part of the Purchaser or Designated Purchaser, as applicable, to
carry out, perform and discharge those obligations and liabilities,
provided that this indemnity shall not apply to the extent that the
obligation or liability in question has arisen out of any breach of the
relevant Business IP Licence or Business IT Licence by ICI or the relevant
Business Vendor prior to the Closing Date.
6.14 Subject to clause 6.15, insofar as the benefit or burden of any of the
Business IP Licences or Business IT Licences cannot effectively be assigned to
the Purchaser (in the case of the PO/MTBE Business) or the relevant Designated
Purchaser (in the case of the ICI Business) except by an agreement or novation
with or consent to the assignment from the third party:
(a) the relevant Vendor shall use all reasonable endeavours with the co-
operation of the Purchaser to procure such novation or assignment either
prior to Closing or (i) with respect to Business IP Licences within 90
days after Closing and (ii) with respect to Business IT Licences within
270 days after Closing (with each of the relevant Vendor, the Purchaser
and any Designated Purchaser bearing its own internal administrative costs
(including the cost of employee time) in connection with any action taken
pursuant to this clause 6.14(a)). After a period of 90 days after Closing,
the parties shall review together on a month by month basis the progress
of the assignment and novation of Business IT Licences;
(b) this Agreement shall not constitute an assignment or an attempted
assignment of the Business IP Licence or Business IT Licence if, or to the
extent that such an assignment or attempted assignment would constitute a
breach of such licence;
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(c) until the relevant Business IP Licence or Business IT Licence is novated or
assigned, the Purchaser shall, or shall procure that the relevant
Designated Purchaser shall, at its cost as the relevant Business Vendor's
sub-contractor (if such sub-contracting is permissible under the relevant
Business IP Licence or Business IT Licence), or where such sub-contracting
is not permissible, as the relevant Business Vendor's agent (if such agency
arrangement is permissible under the relevant Business IP Licence or
Business IT Licence), perform all the obligations of the relevant Business
Vendor under the relevant Business IP Licence or Business IT Licence to be
discharged after the Closing Date, and shall indemnify the relevant
Business Vendor against all claims, charges, expenses, demands, liabilities
or penalties on an after Tax basis in respect of any failure on the part of
the Purchaser (in the case of the PO/MTBE Business) or the relevant
Designated Purchaser (in the case of the ICI Business) to perform those
obligations, provided that the Purchaser or relevant Designated Purchaser
shall not be obliged to indemnify the relevant Business Vendor in respect
of its internal administrative costs (including the costs of employee
time); and
(d) unless or until each such Business IP Licence or Business IT Licence is
novated or assigned, the relevant Business Vendor shall (if permissible
under the relevant licence) hold any such Business IP Licence or Business
IT Licence and any moneys, goods or other benefits received thereunder as
agent of the Purchaser (in the case of the PO/MTBE Business) or the
relevant Designated Purchaser (in the case of the ICI Business) and shall
accordingly, promptly on receipt of the same, account for and pay or
deliver to the Purchaser (in the case of the PO/MTBE Business) or the
relevant Designated Purchaser (in the case of the ICI Business) such
moneys, goods and other benefits;
(e) until the relevant Business IP Licence or Business IT Licence is novated or
assigned, the relevant Business Vendor shall (so far as it lawfully may)
give all reasonable assistance to the Purchaser (in the case of the PO/MTBE
Business) or the relevant Designated Purchaser (in the case of the ICI
Business) (at the Purchaser's request) to enable the Purchaser or relevant
Designated Purchaser to enforce its rights under the Business IP Licence or
Business IT Licence, provided always that:
(i) if the relevant Business IP Licence or Business IT Licence
prohibits the Purchaser (in the case of the PO/MTBE Business) or
the relevant Designated Purchaser (in the case of the ICI
Business) from acting as the relevant Business Vendor's
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sub-contractor or agent (as referred to in paragraph (c) above)
and/or prohibits the relevant Business Vendor from acting as the
Purchaser's or relevant Designated Purchaser's agent (as referred
to in paragraph (d) above) the relevant Business Vendor shall, to
the extent that the relevant Business Vendor is reasonably able
(and to the extent permitted by the relevant Business IP Licence
or Business IT Licence), do all such acts and things at the
Purchaser's or relevant Designated Purchaser's cost as the
Purchaser or relevant Designated Purchaser may reasonably require
to enable due performance of each such Business IP Licence or
Business IT Licence and to provide the Purchaser or relevant
Designated Purchaser with the benefits, subject to the burden, of
such Business IP Licence or Business IT Licence (including, for
the avoidance of doubt, by accounting to the Purchaser or relevant
Designated Purchaser for any money received after the Closing Date
by the relevant Business Vendor pursuant to any such Business IP
Licence or Business IT Licence, as soon as reasonably practicable
after receipt by the relevant Business Vendor);
(ii) where a third party refuses to give consent or agree to a novation
of a Business IP Licence or Business IT Licence or where a
Business IP Licence or Business IT Licence is used or relates in
or to the ICI Business (in the case of ICI) or the PO/MTBE
Business (in the case of HSCC) although not exclusively or
predominantly and where partial assignment or novation is not
permitted under the terms of such licence and, in each case, where
sub-licensing is permitted under the relevant licence, the
relevant Business Vendor shall on the request of the Purchaser
grant to the Purchaser or relevant Designated Purchaser a sub-
licence (with retrospective effect from Closing) of its rights
under the relevant Business IP Licence or Business IT Licence on
terms no less favourable to the Purchaser or relevant Designated
Purchaser than the terms of the relevant Business IP Licence or
Business IT Licence are to the relevant Business Vendor.
6.15 In relation to any Business IP Licences or Business IT Licences which are
used or relate in or to the ICI Business (in the case of ICI) or the PO/MTBE
Business (in the case of HSCC) although not exclusively or predominantly,
references to assignment or novation in clauses 6.12, 6.13, and 6.14 shall be
deemed to be references to partial assignment or novation where the same is
permitted under the terms of the relevant Business IP Licence or Business IT
Licence.
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6.16 The parties acknowledge that some of the data constituting Business
Information to be delivered by ICI to the Purchaser may be formatted using third
party software and may contain run-time elements of such third party software.
Subject always to the express provisions of this Agreement, the Purchaser
acknowledges that ICI will not be required to transfer or assign licences to the
Purchaser to use such third party software elements. For the avoidance of
doubt, ICI shall have no liability to the Purchaser in connection with the use
of such third party software elements by the Purchaser.
6.17 Any licence fees (other than internal administrative costs (including the
cost of employee time)) incurred in relation to the obtaining of new licences to
replace any Business IT Licence pursuant to clause 6.14(a) which have not within
270 days after Closing been assigned to or novated in favour of the Purchaser
shall be borne in equal proportions by the relevant Business Vendor and the
Purchaser.
6.18 Any expenses (other than internal administrative costs (including the cost
of employee time)) incurred in relation to the obtaining of third party consents
pursuant to clause 6.14(a) or incurred by the Purchaser or any member of the
Purchaser's Group in relation to the obtaining of new licences to replace any
Business IP Licence which has not within 90 days after Closing been assigned to
or novated in favour of the Purchaser or to replace any software licences
referred to in clauses 6.16 shall be borne in equal proportions by the relevant
Business Vendor and the Purchaser.
6.19 ICI shall indemnify the Purchaser and each member of the Purchaser's Group
against any costs, claims, charges, expenses, demands, liabilities or penalties
arising from the failure by ICI to comply with its obligations under clause
6.14(a).
6.20 ICI will as from Closing revoke the guarantee given by it pursuant to
Section 403 paragraph 1 sub f book 2 of the Dutch Civil Code (a Section 403
Guarantee) in respect of the Companies registered in The Netherlands.
6.21 Whenever this Agreement provides for a Vendor to contribute any US asset
to the Purchaser save for ICI American Holdings Inc.'s interest in Tioxide
Americas Inc. or its successor, such Vendor may transfer such US asset directly
to HIC and, for the purposes of calculating the Capital Accounts of any party
(as defined and determined in the LLC Agreement), such transfer shall be deemed
to have been made first to the Purchaser, followed by a contribution of such
assets by the Purchaser to HIC.
6.22 Notwithstanding any other provision of this Agreement, ICI shall be deemed
to be unable to comply with its obligations under clause 6.2
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(including for the purposes of clause 4.1(c)) where it is unable to transfer any
Joint Venture Interest (other than NPU or Arabian Polyol Company Ltd.) at
Closing.
6.23 The parties to this Agreement agree that, as between them, the aggregate
liability of each party to this Agreement and its respective Group in respect of
any Business Contract which is the subject of any novation agreement entered
into by any member(s) of their respective Groups shall be no greater and no less
than it would have been had no such novation been effected (provided that, for
the avoidance of doubt, this clause shall not be taken to deem such novation not
to have taken place for the purposes of any other provision of this Agreement)
and liabilities in respect of such Business Contract had, as between the parties
to this Agreement, only been governed by this Agreement and that each party to
this Agreement shall make, or procure that members of its Group make, such
payments to the other parties or to members of their respective Groups as are
necessary to ensure that is the case. The provisions of this clause 6.23 shall
apply in respect of any bank account of a Business Vendor which is novated in
favour of a Designated Purchaser as if such bank account were a Business
Contract, provided that the parties shall procure that effect is given to the
obligations of the relevant Business Vendor and Designated Purchaser in
paragraphs 1(g) and (k) of any such novation agreement entered into in the
agreed form.
Closing Statement
7.1 The following payments shall be made: (i) in the case of any Company which
has become a member of the Purchaser's Group on or prior to the date on which
the Final Financial Debt and the Final Cash Balance for that Company has been
determined, within five (5) Business Days of such determination; or (ii) in the
case of any Company which has not become a member of the Purchaser's Group on or
prior to the date on which the Final Financial Debt and the Final Cash Balance
is determined in relation to it, at the Delayed Closing (if any) in respect of
that Company. If:
(a) the Final Financial Debt in relation to any Company is greater than the
Provisional Financial Debt in relation to it, ICI shall pay to the
Purchaser an amount in dollars equal to the difference;
(b) the Final Financial Debt in relation to any Company is less than the
Provisional Financial Debt in relation to it, the Purchaser shall pay to
ICI an amount in dollars equal to the difference;
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(c) the Final Cash Balance in relation to any Company is greater than the
Provisional Cash Balance in relation to it, the Purchaser shall pay to ICI
an amount in dollars equal to the difference; and
(d) the Final Cash Balance in relation to any Company is less than the
Provisional Cash Balance in relation to it, ICI shall pay to the Purchaser
an amount in dollars equal to the difference.
In the case of Companies in respect of which Sale Shares are to be transferred
at Closing (or any Subsidiary of such a Company which is not a Schedule 18
Company), ICI shall make or receive any payment pursuant to paragraphs (a) to
(d) above on behalf of itself or the relevant other Share Selling Company and
the Purchaser shall make or receive any payment pursuant to paragraphs (a) to
(d) above on behalf of itself or the relevant other Designated Purchaser. In
the case of Schedule 18 Companies, ICI shall make or receive any payment
pursuant to paragraphs (a) to (d) above on behalf of itself or the relevant
other member of ICI's Group which is the transferor of such Schedule 18 Company
or of its holding company under Schedule 18 and the Purchaser shall make or
receive any payment pursuant to paragraphs (a) to (d) above on behalf of the
member of the Purchaser's Group which is the transferee of such Schedule 18
Company or of its holding company under Schedule 18, save that any payment under
paragraphs (a) to (d) above in relation to ICI Holland BV shall be made between
Huntsman ICI Investments (Netherlands) BV and ICI Omicron BV direct and not
between ICI and the Purchaser on their respective behalfs.
Any payment under paragraphs (a) to (d) above shall be made by way of adjustment
(aa) in the case of any such payment relating to a Schedule 18 Company, to the
consideration payable in respect of that Schedule 18 Company or its holding
undertaking under Schedule 18 or (bb) in the case of any Company which is not a
Schedule 18 Company, to the Initial Consideration paid for the Sale Shares in
that Company or its holding undertaking.
Any payment under paragraphs (a) to (d) above shall be made together with an
amount equal to interest on such payment at the Interest Rate (accrued daily)
for the period from and including the relevant Closing Adjustments Date to but
excluding the date of payment (save in relation to that part of any Final
Financial Debt which is a Final Intra Group Debt and to which clause 7.2(a) or
clause 7.2A applies, where the amount of interest to be paid shall be the
aggregate amount referred to in clause 7.2(a) or as the case may be clause 7.2A,
and save in relation to that part of any Final Cash Balance which is a Final
Intra Group Cash Balance and to which clause 7.2(b) applies, where the amount of
interest to be paid shall be the aggregate amount referred to in
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clause 7.2(b)). Where any payments are to be made pursuant to paragraphs (a) to
(d) of this clause 7.1 by the Purchaser (on behalf of itself or the relevant
other Designated Purchasers or transferees under Schedule 18) to ICI (on behalf
of itself or the relevant other Share Selling Companies or transferors under
Schedule 18) (or vice versa) on the same date, such payments shall be aggregated
(unless applicable local regulations require the payment concerned to be made in
the relevant jurisdiction between the relevant parties) and the net amount due
from the Purchaser to the Vendor (or vice versa) shall be paid. To the extent
that any such payments are aggregated and netted against each other, each of ICI
and the Purchaser undertakes to the other that it shall, immediately after the
making of such payments, enter into such transactions with any other member of
its Group as are necessary to ensure that such member of its Group receives and
pays all amounts which would have been received or paid on its behalf by the
Purchaser or ICI had the payments envisaged by paragraphs (a) to (d) been made
individually.
Any payments which fall to be made under this clause 7.1 and clause 7.2 in
respect of any sum outstanding as of the Closing Adjustments Date between ICI
Holland BV and ICI Finance plc shall only be made at such time as allows
Huntsman ICI Investments (Netherlands) B.V. to be in a position to make that
element of the payment it is required to make under clause 7.1 in a tax
efficient manner and to avoid the need for Huntsman ICI Investments
(Netherlands) B.V. to incur borrowings in order to make the payment, provided
that such payments shall in any event be made no later than the first
anniversary of Closing and, for the avoidance of doubt, they shall be made
simultaneously. The Purchaser shall consult with ICI as to the timing and
structure of the transactions necessary to allow Huntsman ICI Investments
(Netherlands) B.V. to make that element of the payment that it is required to
make under clause 7.1 and shall have due regard to the views expressed by ICI.
Further, the Purchaser shall procure that no step will be taken by any member of
its Group which, in ICI's reasonable opinion, would result in ICI having to
account separately in the ICI Group consolidated balance sheet for (i) any Intra
Group Cash Balance owed to ICI Holland BV by ICI Finance plc and (ii) any
obligation to any member of ICI's Group arising under clause 7.1 in respect of
that Intra Group Cash Balance.
7.2 Within five (5) Business Days of the agreement or determination of the
Final Financial Debt and the Final Cash Balance in relation to each of the
Companies:
(a) in the case of any Final Intra Group Debt owed by that Company other than
Prime Debt, the Purchaser shall procure that the amount of such debt,
together with the aggregate of the interest on each amount owed
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to ICI or any other member of ICI's Retained Group comprised in such Final
Intra Group Debt at the rate applicable to such amount owed in accordance
with the terms on which it was lent for the period from and including the
relevant Closing Adjustments Date to but excluding the date of payment,
shall be paid by the relevant Company to ICI (on behalf of itself or the
other member(s) of ICI's Retained Group to which such debt is owed); and
(b) in the case of any Final Intra Group Cash Balance, ICI shall procure that
the amount of such debt, together with the aggregate of the interest on
each amount owed by ICI or any other member of ICI's Retained Group
comprised in such Final Intra Group Cash Balance at the rate applicable to
such amount owed in accordance with terms on which it was lent for the
period from and including the relevant Closing Adjustments Date to but
excluding the date of payment, shall be paid by ICI or the relevant other
member of ICI's Retained Group to the Purchaser (on behalf of the Company
to which such debt is owed).
The parties acknowledge that, in certain jurisdictions, members of ICI's
Retained Group may be prohibited by law, regulations or by instruments or
agreements which are binding on them from lending money to companies which are
not part of ICI's Retained Group, or Companies may be subject to exchange
control restrictions which prevent them from repaying debts owed by them to
members of ICI's Retained Group, and the parties agree to co-operate in good
faith to procure that, in such jurisdictions, payments under this clause are
made at such a time (which may be before or after the time set out in this
clause) as is necessary to allow such members of ICI's Retained Group and
Companies to comply with such laws, regulations, instruments or agreements
binding on them. All payments referred in this clause 7.2 shall be made in
immediately available funds in dollars, converted from the relevant currency at
the Spot Rate on the date which is two Business Days before the date on which
the relevant payment is made. In the event that the repayment of a Final Intra
Group Debt or Final Intra Group Cash Balance is made for this reason at a
different time to when it would otherwise be required to be made under this
clause 7.2, the element of any payment which is required to be made pursuant to
clause 7.1 that reflects the existence of that amount shall instead be paid at
the same time as such amount is paid under this clause 7.2.
7.2A The Purchaser shall procure that the estimated amount of the Prime Debt is
repaid at Closing pursuant to paragraph 17 of Schedule 4. Within five (5)
Business Days of the determination of the Prime Debt in relation to any relevant
Company:
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(a) in the case that the Prime Debt owed by the Company to ICI or any other
member of ICI's Retained Group is greater than the estimated amount of the
Prime Debt of that Company repaid at Closing pursuant to paragraph 17 of
Schedule 4, the Purchaser shall procure that the difference, together with
the aggregate of the interest on each amount owed to ICI or any other
member of ICI's Retained Group comprised in such difference at the rate
applicable to such amount owed in accordance with the terms on which it was
lent for the period from and including the relevant Closing Adjustments
Date to but excluding the date of payment, shall be paid by the relevant
Company to ICI (on behalf of itself or the other member(s) of ICI's
Retained Group to which such debt is owed); and
(b) in the case that the Prime Debt owed by the Company to ICI or any other
member of ICI's Retained Group is less than the estimated amount of the
Prime Debt of that Company repaid at Closing pursuant to paragraph 17 of
Schedule 4, ICI shall procure that the difference, together with interest
on such payment at the Interest Rate (accrued daily) for the period from
and including the relevant Closing Adjustments Date to but excluding the
date of payment, shall be paid by ICI (on behalf of itself or the other
member(s) of ICI's Retained Group to whom the payment was made) to the
Purchaser (on behalf of itself or the relevant Company which made the
payment).
7.3 If the aggregate Closing Working Capital (in relation to the ICI Business)
for all of the Companies and Local Businesses (in relation to the ICI Business),
after taking account of the aggregate of the intra-business elimination of
profit on stock (in relation to each of the Polyurethanes Business and the
Tioxide Business) as set out in the Closing Statement, is within the Working
Capital Range (in relation to the ICI Business) then no payment shall be made in
respect of Closing Working Capital (in relation to the ICI Business) in respect
of any Companies and Local Businesses, whether at Closing or at the time of any
Delayed Closing.
7.4 If clause 7.3 does not apply, the lower end of the Working Capital Range
(in relation to the ICI Business) shall be adjusted by deducting the aggregate
of the figures shown in column 4 of Schedule 7 which relate to any Companies and
any Local Businesses (in relation to the ICI Business) which have not been
transferred to the Purchaser at Closing. The upper end of the Working Capital
Range (in relation to the ICI Business) shall be adjusted by deducting the
aggregate of the figures shown in column 6 of Schedule 7 which relate to any
Companies and any Local Businesses (in relation to the ICI Business) which have
not been transferred to the Purchaser at Closing. If the aggregate Closing
Working Capital (in relation to the ICI Business) in
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respect of Companies and Local Businesses which have been transferred at
Closing, after taking account of the aggregate of the intra-business elimination
of profit on stock (in relation to each of the Polyurethanes Business and the
Tioxide Business) as set out in the Closing Statement:
(a) falls within such adjusted Working Capital Range, then no payment shall be
made by ICI or the Purchaser in respect of the Closing Working Capital (in
relation to the ICI Business) of Companies and Local Businesses which are
transferred at Closing;
(b) is below such adjusted Working Capital Range (in relation to the ICI
Business), then ICI shall pay an amount in dollars equal to the difference
between such Closing Working Capital and the lower end of the Working
Capital Range (as so adjusted) to the Purchaser (on behalf of HIC) by way
of adjustment to the Initial Consideration payable with respect to the Sale
Shares in TGL within 5 Business Days of finalisation of the Closing
Statements for all of the Companies and Local Businesses (in relation to
the ICI Business); or
(c) is above such adjusted Working Capital Range (in relation to the ICI
Business), the Purchaser (on behalf of HIC) shall pay an amount in dollars
equal to the difference between such Closing Working Capital and the higher
end of the Working Capital Range (as adjusted) to ICI by way of adjustment
to the Initial Consideration payable with respect to the Sale Shares in TGL
within 5 Business Days of finalisation of the Closing Statement for all of
the Companies and Local Businesses (in relation to the ICI Business).
7.5 If clause 7.3 does not apply, if the Closing Working Capital (in relation
to the ICI Business) in relation to any Company or Local Business (in relation
to the ICI Business) which is transferred at a Delayed Closing:
(i) is equal to or greater than the figure specified in column 4 of Schedule 7
for that Company or Local Business (in relation to the ICI Business) and
less than or equal to the figure specified in column 6 of Schedule 7 for
that Company or Local Business (in relation to the ICI Business), then no
payment shall be made by ICI or the Purchaser in respect of the Closing
Working Capital of that Company or Local Business (in relation to the ICI
Business) at the time of such Delayed Closing;
(ii) is below the figure specified in column 4 of Schedule 7 for that Company or
Local Business (in relation to the ICI Business), ICI (for itself or as
agent for the relevant Share Selling Company or Business Vendor) shall pay
at the time of such Delayed Closing to the Purchaser
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(for itself or as agent for the Designated Purchaser) an amount in dollars
equal to the difference by way of an adjustment to the Initial
Consideration payable with respect to the Sale Shares in TGL; or
(iii) is above the figure specified in column 6 of Schedule 7 for that Company
or Local Business (in relation to the ICI Business), the Purchaser (for
itself or as agent for the Designated Purchaser) shall pay at the time of
such Delayed Closing to ICI (for itself or as agent for the relevant Share
Selling Company or Business Vendor) an amount in dollars equal to the
difference by way of an adjustment to the Initial Consideration payable
with respect to the Sale Shares in TGL.
7.6 If the Closing Working Capital for the PO/MTBE Business is within the
Working Capital Range (in relation to the PO/MTBE Business), then no payment
shall be made in respect of such Closing Working Capital in respect of the
PO/MTBE Business. If such Closing Working Capital is below such Working Capital
Range, then HSCC shall pay an amount in dollars equal to the amount of the
difference between such Closing Working Capital and the lower end of such
Working Capital Range and if such Closing Working Capital is above such Working
Capital Range, the Purchaser shall pay an amount in dollars equal to the
difference between such Closing Working Capital and the higher end of such
Working Capital Range to HSCC. Each such payment shall be by way of adjustment
to the Initial Consideration for the PO/MTBE Business and shall be made within
five Business Days of the finalisation of the Closing Statement for the PO/MTBE
Business.
7.7 Any payment under clauses 7.4, 7.5 or 7.6 shall be made together with an
amount equal to interest on such payment at the Interest Rate (accrued daily)
for the period from and including the Closing Adjustments Date to the date of
payment.
7.8 The Purchaser shall deliver to ICI as soon as practicable after Closing
and in any event within sixty (60) days after Closing, a draft Closing Statement
in relation to all of the Companies and Local Businesses (in relation to the ICI
Business) and a Draft Closing Statement in relation to the PO/MTBE Business (the
Draft Closing Statements).
7.9 ICI shall have a period of sixty (60) days (the Review Period) after the
date of delivery to it of the Draft Closing Statements, in conjunction with
ICI's Accountants, to review such Draft Closing Statements and to present to the
Purchaser in writing any objections (stating in reasonable detail, including
specific amounts, the matters in dispute) it may have to such Draft Closing
Statements and the Final Financial Debt, the Final Cash Balance and the
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Closing Working Capital set forth therein. The only grounds upon which ICI shall
be entitled to object to any Draft Closing Statement, Final Financial Debt,
Final Cash Balance or Closing Working Capital are arithmetical errors in the
computation of such amounts or that it has not been prepared in accordance with
the provisions of Schedule 8. Any such objections must be accompanied by a
recalculation of each amount in the Draft Closing Statement to which such
objections relate.
7.10 For the purposes of enabling ICI and ICI's Accountants to present any such
written objections referred to in clause 7.9, the Purchaser shall and shall
procure that each other relevant member of its Group shall, following the
presentation of the Draft Closing Statement, give ICI and ICI's Accountants
reasonable access at all reasonable times (until the Closing Statement has been
agreed or finally determined) to all books and records, and all computer files
relating to the business of Companies and Local Businesses (in relation to the
ICI Business), in their respective possession or control and generally shall
provide ICI and ICI's Accountants with such other information and assistance as
ICI and ICI's Accountants may reasonably request, provided that ICI and ICI's
Accountants shall not be entitled to any such access and information which goes
beyond that which is reasonably necessary to determine whether the Draft Closing
Statement has been prepared in accordance with the provisions of Schedule 8.
7.11 If no such written objections as are referred to in clause 7.9 are
properly presented to the Purchaser by the end of the Review Period, then the
Draft Closing Statement and the Final Financial Debt, the Final Cash Balance and
the Closing Working Capital set forth therein shall, as between ICI and the
Purchaser, be deemed to have been accepted and approved by ICI and the Purchaser
and the Draft Closing Statement shall be final and binding on all of the parties
to this Agreement and shall constitute a Closing Statement for the purposes of
this Agreement. If the Final Financial Debt or Final Cash Balance for any
Company is agreed at any time prior to the agreement or determination of the
Closing Statement in respect of that Company, then it shall constitute the Final
Financial Debt or, as the case may be, the Final Cash Balance for that Company.
7.12 If any such written objections as are referred to in clause 7.9 are
properly presented to the Purchaser by the end of the Review Period then ICI and
the Purchaser shall attempt to resolve the objections in good faith
negotiations. To facilitate the Purchaser's review of any such objections, ICI
shall procure that each other relevant member of ICI's Group shall provide the
Purchaser and the Purchaser's Accountants with such information and explanations
as the Purchaser and the Purchaser's Accountants may reasonably require for the
purpose of the review. If ICI and the Purchaser
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resolve all matters in dispute in relation to the Draft Closing Statement, then
such Draft Closing Statement (as adjusted to reflect the matters so resolved)
shall, as between ICI and the Purchaser, be deemed to have been accepted and
approved by ICI and the Purchaser and such Draft Closing Statement (as adjusted
to reflect the matters so resolved) shall be final and binding on all of the
parties to this Agreement and shall constitute the Closing Statement for the
purposes of this Agreement.
7.13 If there are any such objections which have not been resolved in good
faith negotiations within a period of sixty (60) days after the end of the
Review Period, then the specific matters in dispute shall be referred for
determination to the Independent Firm not later than ten (10) days after the end
of such period. The Independent Firm shall be instructed to notify the
Purchaser and ICI of its determination within thirty (30) days of such referral.
7.14 If the Independent Firm shall for any reason be unable or unwilling to act
or shall then maintain, or have at any time in the preceding five year period
maintained, any material business relationship (whether as auditor or otherwise)
with any member of any party's Group, another independent firm of chartered
accountants shall be appointed to act in its place, by agreement of ICI and the
Purchaser and, in default of such agreement, at the request of either ICI or the
Purchaser, by the President of the Institute of Chartered Accountants in England
and Wales for the time being.
7.15 In making its determination, the Independent Firm shall act as expert and
not as arbitrator and the determination by the Independent Firm and the Draft
Closing Statement, as adjusted to reflect the Independent Firm's determination,
shall, in the absence of manifest error, be final and binding on the parties and
shall be deemed to have been accepted and approved by the parties. The fees and
the costs of the Independent Firm shall be shared by the Vendor and the
Purchaser equally unless otherwise directed by the Independent Firm (which shall
have the authority to make such direction if it deems it equitable).
7.16 ICI shall, and shall procure that each other relevant member of ICI's
Retained Group shall, and the Purchaser shall and shall procure that each
Company and each other relevant member of the Purchaser's Group shall, give the
Independent Firm reasonable access at all reasonable times to all books and
records, and all computer files relating to the business of the relevant Company
or the relevant Local Business, in their respective possession or control and
generally shall provide the Independent Firm with such other information and
assistance as the Independent Firm may reasonably request.
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7.17 If either Vendor makes a payment to the Purchaser as contemplated by part
(i) of paragraph (c) of the definition of Material Adverse Change, then that sum
shall be held in escrow by the recipient on the basis that it is held to the
order of the paying Vendor pending Closing and to be repaid to the paying Vendor
if this Agreement is terminated or terminates, and is held to the order of the
Purchaser from Closing. Any such sum shall be excluded from the Final Cash
Balance of any Company which may receive it. If any loss, damage, cost or
liability is excluded from the calculation of the amount of the reduction in
enterprise value of the ICI Business or the PO/MTBE Business, for the purposes
of determining whether there has been a Material Adverse Change, because the ICI
Business or the PO/MTBE Business, as the case may be, has been compensated for
it by the receipt of insurance proceeds prior to Closing, then those proceeds
shall be excluded from the Final Cash Balance of the relevant Company which
receives such proceeds. If such loss, damage, cost or liability is instead
compensated by the payment of cash by either Vendor to a Company or Business
Vendor prior to Closing in the circumstances contemplated by the definition of
Material Adverse Change (or as otherwise agreed between the parties), but any
member of the Purchaser's Group (including the Companies after Closing) will be
entitled to recover all or any part of the relevant loss pursuant to any
applicable insurance policy, then the relevant member of the Purchaser's Group
shall account to the Vendor which paid the relevant sum for any such insurance
proceeds when received up to the amount paid by the Vendor to the Company or
Business Vendor.
Purchaser Indemnities
8.1 The Purchaser (for itself and as agent of the Designated Purchasers)
undertakes with each Vendor (for itself and as agent for all members of its
Retained Group) to indemnify and keep indemnified that Vendor and all members of
its Retained Group on an after Tax basis from and against any Costs incurred,
made or suffered by the Vendor or any member of its Retained Group to the extent
they arise from:
(a) the employment by the Purchaser's Group of the Employees on or after the
Closing Date and which are attributable to any breach or default by the
Purchaser's Group of its obligations or duties to or in relation to any of
the Employees, excluding any liability arising out of the termination or
dismissal of any Employee by reason of redundancy (to the extent such
liability is an obligation of ICI in accordance with clause 9.3 below) and
also excluding any liability for personal injury and other liability
arising from, in connection with, or as a result of any breach of any
health and safety obligations arising under any applicable statute,
subordinate legislation or other material, federal,
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state and local law (including common law) and which is attributable to
service after Closing, but including any failure by the Purchaser's Group
to offer or maintain terms and conditions of employment and working
conditions which are no less favourable than those which apply to the
Employees up to the Closing Date which is in breach of the provisions of
clause 9.1; and
(b) the Assumed Liabilities.
8.2 Clauses 12.8(e), 12.13 and 13 apply to claims under the indemnity in
clauses 8.1(a), 8.1(b) and 18.13 as if references to "either Vendor" or
"relevant Vendor" were references to the Purchaser, and references to "the
Purchaser" were references to either Vendor or the relevant Vendor (as
appropriate) and references to the "Purchaser's Group" were references to the
relevant Vendor's Group or either Vendor's Group as appropriate.
Employees
9.1 The Purchaser undertakes to each Vendor (for itself and each member of its
Retained Group) that it shall procure that for a period of 4 years from Closing
(the Applicable Period) each Employee shall be employed on terms and conditions
(taking full account of continuity of service) which are (save as agreed with
any Employee, group of Employees or their representatives in accordance with due
process) no less favourable as a whole than those applicable to him as at
Closing. For the purposes of this clause 9.1 only, terms and conditions shall
mean salary and benefits, including severance benefits but shall not include any
success bonus or incentive paid or provided to an Employee in relation to the
sale of the Polyurethanes Business, the Relevant Petrochemicals Business or the
Tioxide Business insofar as such bonus or incentive is in addition to (and not
in substitution for) any other bonus or incentive to which such Employee would
otherwise have been eligible. In this clause 9.1, any obligations in relation
to employees of Controlled Joint Ventures shall only arise in so far as the
Purchaser or any member of the Purchaser's Group is able in light of its powers
of control in relation to the relevant Controlled Joint Venture to comply with
its obligations under this clause 9.1.
9.2 ICI (for itself and as agent for the ICI Business Vendors) shall indemnify
and keep indemnified on an after Tax basis the Purchaser (for itself and as
agent of the Designated Purchasers) from and against any Costs (i) arising from
the employment of the Business Employees before Closing (or, where applicable,
Delayed Closing), and which are attributable to any breach or default by the
Vendor or any Business Vendor prior to Closing (or, where applicable, Delayed
Closing) in respect of any of the Vendor's or
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Business Vendor's obligations under their contracts of employment or duties to
or in relation to any of the Business Employees (save that this indemnity shall
not extend to any liability for personal injury and any other liability arising
from, in connection with, or as a result of any breach of any health and safety
obligations arising under any applicable statute, subordinate legislation or
other material, federal, state and local law (including common law)) and which
the Purchaser may incur or suffer as a result of the Purchaser succeeding to the
Vendor by operation of law in relation to the contracts of employment and/or
(ii) arise from the employment of any employee who is not a Business Employee by
any ICI Business Vendor (save that this indemnity shall not apply to any costs,
claims, charges, expenses, demands, liabilities or penalties reasonably and
properly incurred in connection with the termination of the employment by reason
of redundancy of any employee working in the ICI Business immediately prior to
the termination of his employment where such termination takes place between 31
December 1998 and Closing (or, where applicable, Delayed Closing)). Where the
Purchaser continues to employ such employee following Closing (or, where
applicable, Delayed Closing), this indemnity shall not extend to any ongoing
employment costs arising in respect of such employee.
9.3 If any Employee is given notice of termination of employment by reason of
redundancy at any time during the two year period immediately following Closing,
ICI undertakes with the Purchaser (for itself and as agent for each member of
the Purchaser's Group, including the Companies) to indemnify and keep
indemnified the Purchaser and each member of the Purchaser's Group, including
the Companies, on an after Tax basis from and against any costs, claims,
charges, expenses, demands, liabilities or penalties reasonably and properly
incurred by the Purchaser or any member of the Purchaser's Group or any Company
in connection with such termination (Termination Liabilities) provided that such
indemnity shall be limited to the first 500 redundancy terminations (Redundancy
Numbers) and further limited to a total cost of (Pounds)25 million (Redundancy
Cost).
Any termination liabilities reasonably and properly incurred in the period
between 31 December 1998 and Closing by any member of ICI's Retained Group or
any of the Companies in relation to the redundancy of any employee working in
the ICI Business immediately prior to the termination of his employment, shall
count towards both the Redundancy Numbers and the Redundancy Cost, and ICI's
liability under this clause 9.3 shall be reduced accordingly.
The Purchaser will provide ICI with a statement of the number of Employees
terminated and the relevant Termination Liabilities on a semi-annual basis and
ICI shall pay to the Purchaser (as agent of a Designated Purchaser or
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Company as appropriate) the Termination Liabilities in full within 45 days of
the receipt of such statement.
9.4 ICI (for itself and as agent for each member of ICI's Retained Group)
shall, in addition to the indemnity in clause 9.3, indemnify and keep
indemnified on an after Tax basis the Purchaser (for itself and as agent of the
Designated Purchasers and the Companies) from and against any costs, claims,
charges, expenses, demands, liabilities or penalties arising out of or in
connection with any termination of employment on the grounds of redundancy where
the redundancy arises from either (i) any sale of shares or assets by ICI or any
member of ICI's Group before Closing (other than the transactions contemplated
by this Agreement) or (ii) the temporary or permanent closure by Chlor-Chemicals
of its chlorine and EDC plants at Wilton.
9.5 ICI and HSCC shall use their respective reasonable endeavours to procure
that as at Closing sufficient key management employees shall be employed in the
ICI Business to enable the ICI Business to continue to be managed to at least
the level achieved immediately prior to Closing. For this purpose the parties
have agreed an indicative list of key management employees and the Purchaser,
HSCC and ICI undertake to use reasonable endeavours to agree individual terms
and conditions with each of the key management employees. If, for any reason,
the parties cannot agree terms and conditions with any number of the key
management employees, ICI will use reasonable endeavours to secure the
commitment of other key management employees.
9.6 Any secondee listed (whether by name or otherwise) in the Data Room or in
any of the Disclosure Letters who is on secondment at Closing from ICI or any
member of the ICI Retained Group to any Company or Business Vendor and who works
in the Polyurethanes Business or Relevant Petrochemicals Business (and who is
not an Excluded Employee) shall, for the avoidance of doubt, be treated as an
Employee for the purposes of this Agreement.
9.7 The provisions of Schedule 11 (Pensions) shall apply in relation to
Retirement Benefits Schemes.
9.8 The provisions of Schedule 22 shall apply in relation to national sales
companies.
Warranties and Indemnities
10.1 Subject to clauses 11, 12 and 13, ICI warrants to the Purchaser (on the
basis set out in clause 11) in relation to the ICI Business, the Business
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Vendors of the ICI Business, the Companies, the Sale Shares, the Share Selling
Companies, the Joint Venture Interests, the Warranted Joint Ventures and the
Non-Controlled Joint Ventures and HSCC warrants to the Purchaser in respect of
the PO/MTBE Business and the Business Vendor of that Business, that, in each
case, each of the Warranties is true and accurate as at the date of this
Agreement and that each of the Repeated Warranties will be true and accurate on
the Closing Date as if repeated immediately before Closing by reference to the
facts and circumstances subsisting at the Closing Date. For that purpose, any
reference in the Warranties to the "Business" shall be construed as a reference
to the ICI Business (in the case of the Warranties given by ICI) or the PO/MTBE
Business (in the case of the Warranties given by HSCC), as applicable.
10.2 Each Vendor, on behalf of itself and relevant Business Vendors, undertakes
with the Purchaser (for itself and as trustee for each member of the Purchaser's
Group) to indemnify and keep indemnified on an after Tax basis the Purchaser and
all members of the Purchaser's Group against any Costs incurred, made or
suffered by the Purchaser or any member of the Purchaser's Group to the extent
that they arise from the Excluded Liabilities (other than those Excluded
Liabilities referred to in (e) and (g) of the definition of Excluded
Liabilities) relating to the ICI Business (in the case of ICI) or the PO/MTBE
Business (in the case of HSCC).
10.3 Without prejudice to the rights of the Purchaser or any member of the
Purchaser's Group under any other provisions of this Agreement, ICI undertakes
to indemnify and to keep indemnified on an after Tax basis the Purchaser (for
itself and as trustee for each member of the Purchasers' Group (including, for
the avoidance of doubt, the Companies after Closing)) against all Costs
incurred, made or suffered by the Purchaser or any member of the Purchaser's
Group (including, for the avoidance of doubt, the Companies after Closing) to
the extent they arise from:
(a) any Company having had any interest in any dormant company prior to
Closing or any Company being a dormant company;
(b) any matter or claim to the extent that it relates to any business, asset
or liability (whether primary or secondary, direct or indirect, known or
unknown, fixed, absolute, crystallised or contingent) which is transferred
by a Company to a member of ICI's Retained Group prior to Closing and any
liability reflected in the provisions reflected in the Accounts in respect
of the disposal by members of ICI's Group of the Polyester and Melinex
businesses, ICI's shareholding in ICI Australia plc and the Alkathene
Plant and any liability reflected in the exceptional provisions reflected
in the Accounts of (Pounds)0.5 million in
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respect of the Polyurethanes Business and (Pounds)0.3 million in respect of
the Tioxide Business, in each case as set out in Exhibit J, and any other
exceptional provisions made since the Accounts Date;
(c) any product liability claim in respect of products sold or provided by any
Company or Business Vendor where such product was manufactured prior to
Closing;
(d) any litigation, arbitration, or criminal proceedings (other than any that
relate to any of the transactions contemplated in this Agreement or the Co-
operation Agreement, or to the extent it relates to the subject matter of
paragraphs (a), (b), (c), (e) or (f) of this clause 10.3 or to Schedule 23,
the Environmental Covenant or the Tax Covenant) in which any Company, or
Business Vendor (in relation to the ICI Business) is involved in any
capacity where such proceedings have commenced or are pending prior to
Closing (together with such proceedings for which ICI Americas Inc., ICI
American Holdings Inc. and/or ICI PLC has any liability pursuant to the
Liability and Indemnity Agreement made as of the 28th day of December,
1981, by and among those parties and Rubicon Inc., Rubicon Chemicals Inc.
and Uniroyal Inc., but only to the extent of such liability);
(e) any liability relating to the health and safety at work of any Employee,
former employee or contractor, or for death or personal injury in relation
to any Employee, former employee or contractor, in each case to the extent
that such Costs relate to the period prior to Closing when such Employee,
former employee or contractor was employed or engaged by any Company or any
Business Vendor and are not the subject matter of the Environmental
Covenant;
(f) any vicarious liability for the acts or omissions of any Employee, former
employee or contractor of any Company or Business Vendor where such acts or
omission were prior to Closing whilst such Employee, former employee or
contractor was employed or engaged by any member of the Vendor's Group
(other than to the extent that it is the subject matter of the
Environmental Covenant).
10.4 If the validity, binding nature or enforceability of the Financing
Agreements or this Agreement is challenged in litigation commenced by a
shareholder of ICI or a creditor of a member of ICI's Group (in each case acting
in their capacity as such) or another person before Closing or June 30 1999
(whichever is earlier) and, as a result of such aspects of the litigation as
relate to the validity, binding nature or enforceability of the Financing
Agreements or of this Agreement, a Court orders in a final
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judgment that any of the Sale Shares or Business Assets be re-transferred by the
Purchaser to a member of ICI's Group or such aspects of the litigation result in
damages payable by the Purchaser or its Subsidiaries in excess of (Pounds)20
million, ICI shall itself, or arrange for the relevant member of ICI's Group to,
indemnify the relevant member of the Purchaser's Group (the Indemnitee) by
repaying to the Indemnitee an amount equal to the Final Consideration received
by the relevant member of ICI's Group in respect of the asset in question, less
any amount a member of ICI's Group has already paid the Purchaser or its
Subsidiaries in connection with the transfer of the asset from the Indemnitee to
a member of ICI's Group (the shortfall) or the amount of such damages plus
reasonable legal costs and expenses. ICI shall only be liable under this clause
10.4 to the extent the shortfall exceeds (Pounds)20 million and its liability
shall not exceed amounts outstanding under or pursuant to the Financing
Agreements from time to time. This clause 10.4 shall not apply in relation to
any litigation arising in connection with a Joint Venture Interest or the Co-
operation Agreement or the Olefins Agreements and, for the avoidance of doubt,
in no circumstances shall ICI's Group be obliged to pay to an Indemnitee more
than the Final Consideration attributable in accordance with this Agreement to
the asset in question. This clause 10.4 shall terminate upon repayment or pre-
payment in full of all amounts outstanding under or pursuant to the Financing
Agreements and any refinancing thereof.
Other provisions relating to the Warranties and Indemnities
11.1 The Warranties and the indemnities given by ICI are given by ICI as
principal to the Purchaser for itself and as trustee for each relevant
Designated Purchaser, provided that, as between ICI and any member of its Group,
but without prejudice to ICI's liability as principal to the Purchaser (for
itself and as trustee for each Designated Purchaser), the Warranties and the
indemnities given by ICI under this Agreement are given by ICI for itself and
(i) as agent for the other Share Selling Companies in respect of the Joint
Venture Interests other than those in NPU and Arabian Polyol Company Limited and
(ii) as agent for each other Business Vendor in its Group in relation to the
Local Business carried on by that Business Vendor. ICI's liability to the
Purchaser in respect of any breach of the Warranties or under the indemnities
given by ICI under this Agreement shall be no greater, and no less, than such
liability would have been if such agency relationship between ICI and any member
of its Group had not existed. The Warranties and the indemnities given by ICI
shall only be enforceable by the Purchaser either for itself or as agent for the
relevant Designated Purchaser, as the case may be, against the Vendor.
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11.2 The Purchaser shall not be entitled to claim that any fact, matter or
circumstance causes any of the Warranties to be breached if such fact, matter or
circumstance is a Disclosed Matter.
11.3 Without prejudice to the other provisions of this clause 11 and the
provisions of clauses 12 and 13:
(a) ICI shall not be liable for any Warranty Claim to the extent that any of
the following employees of HSCC's Group had actual knowledge at the date of
this Agreement of the facts, matters, events or circumstances which are the
subject matter of the Claim in question and that such facts, matters,
events or circumstances constituted a breach of Warranty:
P. Huntsman, M. Kern, K. Ninow, D. Stanutz, T. Fisher, K. Esplin, L.
Tullos, R. Healy, R. Stolle, N. MacArthur, W Chapman, K. Kemper, R Monty,
B. Ridd, M. Dixon, J. Huffman, R. Lence, C. Dowd, L. Grossman, L. Skidmore,
D. Marley, C. Trievel, S. Scruggs,
and there shall be no implied requirement that such persons make any
enquiries of any other person, party, body or authority;
(b) HSCC shall not be liable for any Warranty Claim to the extent that any of
the persons set out in Part A of Schedule 10 had actual knowledge at the
date of this Agreement of the facts, matters, events or circumstances which
are the subject matter of the Claim in question and that such facts,
matters, events or circumstances constitute a breach of warranty and there
shall be no implied requirement that such persons make any enquiries of any
other person, party, body or authority.
11.4 Each of the Warranties shall be separate and independent and, save as
expressly provided to the contrary, shall not be limited by reference to or
inference from any other Warranty or any other term of this Agreement or any
Ancillary Agreement.
11.5 In the Warranties, unless the context otherwise indicates, where any
statement is qualified by the expression "to the best of the Vendor's knowledge
and awareness", "so far as the Vendor is aware" or similar expressions, that
statement shall be deemed made on the basis of the actual knowledge, at the date
of this Agreement and at Closing (in the case of the Repeated Warranties), of
the persons listed in Part A of Schedule 10 (or in the case of paragraph 25.1 of
the Warranties of the persons listed in Part B of Schedule 10) in relation to
ICI and of the persons listed in clause 11.3(a)
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above in relation to HSCC and such phrase shall carry no further or other
implication nor impose any requirement on such persons to make enquiries of any
other person, party, body or authority.
11.6 Neither Vendor shall have any liability in respect of any claim under
clause 10.1 in respect of the Repeated Warranties to the extent that such claim
arises (i) as a result of any action taken by that Vendor prior to Closing in
accordance with a written request made by the Purchaser or by the other Vendor
or (ii) as a result of any action omitted to be taken by that Vendor prior to
Closing due to the other Vendor withholding its consent to any such action being
taken pursuant to such other Vendor's rights under clause 5.4 if such other
Vendor either knew or ought reasonably to have known, when withholding such
consent, that doing so was likely to give rise to a breach of the Repeated
Warranties.
Limitations on Claims
12.1 The provisions of this clause 12 (except for clause 12.12 which shall
apply generally in its terms) shall operate to define and limit the liability of
each party in respect of any Claims and to establish the circumstances within
which Claims may be made, except that the provisions of this clause where they
are expressed to apply to Claims shall not apply to any Tax Covenant Claim or a
claim under the Environmental Covenant where it is expressly stated that the
provisions shall not apply to Tax Covenant Claims or claims under the
Environmental Covenant.
12.2 No Designated Purchaser shall make any Claim in any circumstances
whatsoever against either Vendor other than through the agency of the Purchaser
against the Vendor pursuant to the terms of this Agreement, and the Purchaser
undertakes to the Vendor to indemnify each Vendor and each other Selling Company
which is a member of its Group on an after Tax basis against any Claim made
against it or any Selling Company which is a member of its Group contrary to
this clause 12.2.
12.3 The maximum aggregate liability of ICI in respect of all Claims, except
for Claims pursuant to paragraphs (a) and (b) of clause 10.3 or clause 12.17 or
otherwise in respect of a breach of the Warranty contained in paragraph 25.2 of
Schedule 9 or Claims under Schedule 14 which are not subject to the cap in
paragraph 3.2(i) of Schedule 14, shall not exceed (Pounds)650 million and for
Claims under clause 12.17 or otherwise in respect of a breach of the Warranty
contained in paragraph 25.2 of Schedule 9 shall not exceed $275 million. The
maximum aggregate liability of HSCC (i) in respect of all Warranty Claims shall
not exceed $225m and (ii) in respect of claims under
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clause 18.13 shall not exceed $650 million. The maximum aggregate liability of
the Purchaser in respect of all Claims shall not exceed $650 million.
12.4 References to Claims in this clause 12.4 shall not apply to any claim under
the Tax Covenant. Neither Vendor shall have any liability in respect of:
(a) any individual Warranty Claim (other than a Claim pursuant to paragraph 1,
2, 3, 4, 5.3 or 25.1 of the Warranties) unless its liability in respect of
such Claim exceeds (Pounds)100,000;
(b) any individual claim in respect of a breach of the Warranty contained in
paragraph 25.1 of Schedule 9 unless its liability in respect of such claims
exceeds (Pounds)200,000;
(c) any individual claim pursuant to paragraph 1, 2, 3, 4, or 5.3 of the
Warranties or clause 10.3(c), (e) or (f) unless its liability in respect of
such claim exceeds (Pounds)50,000.
Where a series of Claims (other than a claim under the Environmental Covenant)
arise out of the same act, omission, fact or circumstances, they shall be
aggregated for the purposes of determining whether or not the relevant one of
these thresholds has been exceeded.
For the avoidance of doubt:
(a) amounts for which either Vendor has no liability, or by which its liability
is reduced, as a consequence of the operation of this clause 12 or clause
13 shall not be taken into account in determining whether the amount of
such Claim exceeds the threshold specified in this clause 12.4; and
(b) for the purpose of this clause 12.4, where a Claim is caused by more than
one event, circumstance, act or omission which event, circumstance, act or
omission would separately constitute, on the one hand, a breach of a
Warranty or, on the other hand, give rise to a claim under the Tax Covenant
or the Environmental Covenant, each such Claim shall be treated as a
separate claim when calculating whether the threshold referred to in this
clause 12.4 has been exceeded.
12.5(a) ICI shall not have any liability in respect of any Warranty Claim
(other than to the extent it arises under the Repeated Warranties or the
Warranty in paragraph 25.2 of Schedule 9) unless the aggregate amount of
its liability in respect of all Claims under the Warranties
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(other than to the extent they arise under the Repeated Warranties or the
Warranty in paragraph 25.2 of Schedule 9) exceeds (Pounds)10 million in
which case it shall only be liable for the excess.
(b) ICI shall not have any liability in respect of any Warranty Claim to the
extent that it arises under the Repeated Warranties and does not arise
under the Warranties (other than to the extent it arises under the Repeated
Warranty in paragraph 25.2 of Schedule 9) unless the aggregate amount of
its liability in respect of all such Claims exceeds (Pounds)30 million, in
which case it shall only be liable for the excess.
(c) HSCC shall not have any liability in respect of any Warranty Claim unless
the aggregate amount of its liability in respect of all Claims under the
Warranties relating to the PO/MTBE Business exceeds $3.5 million in which
case, it shall only be liable for the excess.
(d) For the avoidance of doubt, amounts for which a Vendor has no liability, or
by which a Vendor's liability is reduced, as a consequence of the operation
of this clause 12 and/or clauses 11 or 13 shall not be capable of being
aggregated as a Claim or part thereof with other Claims for the purposes of
this clause 12.5.
12.6 Neither Vendor shall be liable for any Claim (other than a claim under the
Environmental Covenant) unless the Vendor shall have received from the Purchaser
written notice containing specific reasonable details of the Claim, including
the Purchaser's estimate (on a without prejudice basis) of the amount of such
Claim:
(a) in the case of a Claim in respect of any of the Warranties (other than the
Tax Warranties and the Warranty in paragraph 25.2 of Schedule 9), on or
before the date falling two (2) years after the Closing Date;
(b) in the case of a Tax Covenant Claim, on or before the date which is the
earlier of (i) three (3) calendar months after the seventh anniversary of
the Closing Date and (ii) three (3) calendar months after the expiry of the
applicable limitation period (including any extensions) in the relevant
country for the raising of a Tax assessment in relation to the particular
liability to Tax giving rise to the Tax Covenant Claim provided that in the
case of a Tax Covenant Claim relating to any jurisdiction other than the
UK, sub clause (i) shall not apply;
(c) in the case of a Claim under clause 10.3, on or before the date falling (i)
three (3) calendar months after the expiry of the relevant statutory
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period of limitation for the relevant Claim or, if earlier, (ii) the sixth
anniversary of the Closing Date;
(d) in the case of Claim under clause 12.17 (or otherwise in relation to the
Warranty in paragraph 25.2 of Schedule 9) on or before the date falling
three years after the Closing Date.
Other than in the case of a Tax Covenant Claim (to which paragraph 9 of Schedule
13 shall apply) or a claim under the Environmental Covenant (to which Schedule
14 and/or 14A shall apply) the Purchaser shall give notice to the Vendor of the
relevant facts or matter that may give rise to a Claim as soon as practicable
after it becomes aware of such facts or matter. Failure to give such notice
shall not of itself prevent the Purchaser from bringing the relevant Claim, but
the relevant Vendor shall not be liable to the Purchaser in respect of such
Claim to the extent that the amount of it is increased, or is not reduced, as a
result of such failure.
12.7 Any Claim, other than a Tax Covenant Claim or a claim under the
Environmental Covenant, shall (if it has not been previously satisfied, settled
or withdrawn) be deemed to have been withdrawn (and no new claim may be made in
respect of the facts giving rise to such withdrawn claim) unless legal
proceedings in respect of it have been commenced by both being issued and served
within nine (9) months of the rejection in writing of such Claim by the relevant
Vendor.
12.8 The liability of either Vendor for any Claim in respect of any fact,
matter, event or circumstance shall be reduced or extinguished:
(a) (i) where such fact, matter, event or circumstance relates to bad
debts, to the extent that allowance has been made for such fact,
matter, event or circumstance relating to bad debts in the
Accounts or the Closing Statement;
(ii) where such fact, matter, event or circumstance relates to Stocks,
to the extent that allowance has been made for such fact, matter,
event or circumstance relating to Stocks in the Accounts or the
Closing Statement; or
(iii) in the case of the ICI Business, where such fact, matter, event or
circumstance relates to non-exceptional other provisions as
identified in Exhibit G, to the extent such fact, matter, event or
circumstance relates to the subject matter of such provisions;
(iv) where such fact, matter, event or circumstance relates to
creditors due after more than one year, to the extent that
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allowance has been made for such fact, matter, event or
circumstance relating to creditors due after more than one year in
the Accounts;
(b) to the extent that such Claim arises or, such Claim otherwise having
arisen, is increased as a result of any change made after Closing in any
accounting or taxation policies or practice, or the length of any
Accounting Period of any Company, the Purchaser, the Designated Purchaser
or any other member of the Purchaser's Group other than in order to comply
with Statements of Standard Accounting Practice or generally accepted
accounting principles in the United States or any other relevant
jurisdiction or International Accounting Standards;
(c) to the extent that such Claim arises or, such Claim otherwise having
arisen, is increased as a result of any legislation not in force at the
date hereof or any change of law, regulation, directive, requirement or
administrative practice having the force of law or the practice of any Tax
Authority or any change in rates of tax made after the Closing Date;
(d) to the extent that such Claim would not have arisen but for, or is
increased as a result of, a voluntary act, omission, transaction or
arrangement (other than any voluntary act, omission, transaction or
arrangement which is contemplated by this Agreement or any omission which
is caused by ICI exercising its powers of control or other rights in
relation to the Purchaser or by directors appointed to the Board of the
Purchaser by ICI not voting in favour of any resolution of the Board in
respect of a Reserved Board Matter (as defined in the LLC Agreement) where
the resolution would have been passed but for such directors not voting in
favour of it) carried out after the Closing Date by the Purchaser, any
Designated Purchaser or any Company (other than any such voluntary act,
omission, transaction or arrangement which is carried out or effected by a
Company pursuant to a legally binding commitment created on or before
Closing) or any other member of the Purchaser's Group or their respective
directors, employees or agents where such person had actual knowledge that
such act, omission, transaction or arrangement would or would be likely to
give rise to or increase a Claim and a reasonable alternate course of
action was available which would not be expected to give rise to a claim;
(e) to the extent that the amount of such Claim is recovered under any policy
of insurance;
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(f) if the Purchaser or any Designated Purchaser failed to comply or procure
compliance with the terms of any provision of this Agreement (provided that
such failure to comply is not caused by any directors appointed to the
Board of the Purchaser by ICI not voting in favour of any resolution of
that Board in respect of a Reserved Board Matter (as defined in LLC
Agreement) where the resolution would have been passed but for such
directors not voting in favour of it), to the extent that the Vendor could
have avoided or mitigated the loss arising from the subject matter of the
Claim if the Purchaser or Designated Purchaser had complied with such
provision; or
(g) subject to paragraph 9.10 of the Environmental Covenant, to the extent that
the Claim or breach would not have arisen but for an act, omission,
transaction or arrangement carried out by the relevant Vendor or any member
of the relevant Vendor's Group at the written request or with the written
approval of the Purchaser or any other member of the Purchaser's Group or
any of their respective authorised representatives except when any employee
of the relevant Vendor's Group who either receives such request or seeks
such approval has actual knowledge at the relevant time that the Claim will
arise or increase as a result of the matter in respect of which the
request, consent or approval is made or given and fails to disclose that
fact to the Purchaser,
provided that:
(i) in respect of Tax Covenant Claims, only paragraph (c) applies;
(ii) paragraph (c) does not apply to claims under clause 10.3; and
(iii) paragraphs (a) and (c) do not apply to Environmental Covenant
claims.
12.9 If any Claim shall arise by reason of some liability which at the time
that the Claim is notified to a Vendor is contingent only, that Vendor shall be
under no obligation to make any payment to the Purchaser in respect of such
Claim until such time as such contingent liability ceases to be so contingent.
Clause 12.7 shall be amended in relation to such Claim (other than in relation
to a Tax Covenant Claim or a claim under the Environmental Covenant) so that the
Claim shall not be deemed to be withdrawn unless legal proceedings have not been
commenced within nine months from the later of (i) the date on which the said
liability ceases to be contingent; and (ii) the rejection in writing of such
Claim by the Vendor.
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12.10 Each party's Group (which shall, for the avoidance of doubt, include the
relevant party), taken together, shall not be entitled to recover any Costs more
than once to the extent that this could lead to double-recovery of the same
Costs in relation to the claims under more than one of the Warranties, the Tax
Covenant, the Environmental Covenant and/or indemnities provided by any party or
otherwise under, or in connection with, this Agreement or by any party to the
Co-operation Agreement or any of the Ancillary Agreements. The parties hereby
agree with each other that, to the extent that a benefit or saving obtained by
any member of the Purchaser's Group has been taken into account in reducing any
claim or has given rise to a payment by the Purchaser's Group under this
Agreement, it shall not be so taken into account again or give rise to another
such payment.
12.11 Before making a Claim in respect of any breach of the Warranties (other
than Warranty 25.2) which is capable of remedy, the Purchaser shall allow the
relevant Vendor thirty (30) days after the date on which notice of the relevant
facts or matter that may give rise to a Claim is given in accordance with clause
12.6 in order to allow the relevant Vendor to remedy the breach unless to do so
would prejudice the Purchaser to any significant extent.
12.12 Each party hereby waives and relinquishes any right of set off or
counterclaim, deduction or retention which it might otherwise have in respect of
any Claim other than a Tax Covenant Claim or a claim under the Environmental
Covenant or out of any payments which it may be obliged to make (or procure to
be made) to any other party pursuant to this Agreement.
12.13 The limitations on liability set out in this clause 12 shall not apply to
any liability for any Claim to the extent such Claim is attributable to, or such
Claim is increased as a result of, fraud or deceit on the part of the relevant
Vendor or any of its Related Persons.
12.14 The sole remedy against either Vendor for any breach by it of any of the
Warranties shall be an action for damages (save in the case of the Warranty in
paragraph 25.2 of Schedule 9, where the sole remedy against ICI shall be such
claim as exists under clause 12.17). The Purchaser shall not be entitled to
rescind this Agreement before or after Closing in any circumstances.
12.15 Nothing in this clause 12 or clauses 11 and 13 shall in any way restrict
or limit the general obligation at law of the Purchaser to mitigate any loss or
damage which it may suffer in consequence of any breach by either Vendor of the
terms of this Agreement or any fact, matter, event or circumstance giving rise
to a Warranty Claim.
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12.16 Except for the Warranty set out in paragraph 10 of Schedule 9, the only
Warranties which shall apply in relation to:
(a) the Properties are those set out in paragraph 16 of Schedule 9;
(b) Environmental Matters are those set out in paragraph 9 of Schedule 9;
(c) Intellectual Property Rights are those set out in paragraphs 1.1, 1.2,
1.3, 8, 10, 12, 17, 18(a) and (d), 19, 21 and 22 of Schedule 9;
(d) Computer Systems and agreements relating to Computer Systems are those set
out in paragraphs 1.1, 1.2, 1.3(a) and (b), 5.3, 17, 18(a) and (d), 19, 21
and 22 of Schedule 9; and
(e) Tax matters are those set out in paragraphs 19, 20, 21 and 22 of Schedule
9.
12.17 With respect to the Warranty in paragraph 25.2 of Schedule 9, subject
(save as provided in this clause 12.17) to the other provisions of this
Agreement:
(a) ICI hereby undertakes to indemnify and keep indemnified from and after the
date hereof (regardless of whether Closing occurs) on an after Tax basis
the Indemnified Parties from and against:
(i) any and all Costs made, incurred or suffered by the Indemnified
Parties as a direct or reasonably foreseeable result of any
breach of that Warranty; and
(ii) all reasonable legal and other out-of-pocket costs and expenses
which the Indemnified Parties have reasonably incurred in
connection with a breach of the Warranty in paragraph 25.2 of
Schedule 9 or in connection with any action, suit, proceeding or
claim which, if adversely determined, would result in such a
breach;
(b) ICI's liability under this clause 12.17 shall be reduced to the extent
that the Indemnified Parties shall not use reasonable endeavours to
mitigate their loss. For the avoidance of doubt, account shall be taken in
calculating loss of any value received by the Purchaser's Group on the
sale or transfer by the Purchaser's Group of membership interests in the
Warranted Joint Ventures;
(c) for the purposes of this clause 12.17, clause 12.8(d) shall be taken to
apply to each of the Indemnified Parties;
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(d) in the event of a breach of the Warranty in paragraph 25.2 of Schedule 9,
the remedy shall be under this clause 12.17 and not otherwise.
In addition, ICI undertakes to pay on an after Tax basis to the Indemnified
Parties any shortfall in the recovery under this clause 12.17 which would
otherwise have been available but for the operation of Disclosed Matters, clause
11.3 or equivalent common law principles (including, for the avoidance of doubt,
any such shortfall in recovery arising due to the actual, constructive or
imputed knowledge of any Indemnified Party of a fact or circumstance which could
give rise to a breach of the Warranty in paragraph 25.2 of Schedule 9).
In this clause 12.17, Indemnified Parties means, collectively, (a) the Purchaser
(for itself and as trustee for each member of the Purchaser's Group, including,
for the avoidance of doubt, the Companies after the Closing, and each of its and
their Related Persons); and (b) HSCC (for itself and as trustee for each member
of HSCC's Group and each of its and their Related Persons).
ICI's liability under clause 12.17(a)(i) shall be reduced in accordance with the
following sliding scale:
<TABLE>
<CAPTION>
Year after Closing in which notice of Reduction in ICI's liability
claim is first given
<S> <C>
1 0%
2 10%
3 20%
</TABLE>
12.18 None of the Warranties shall apply to any Protected Matters, Pre-Closing
Soil and Groundwater Contamination, Pre-Closing Health and Safety Issues or
North Tees Soil and Groundwater Contamination each as defined in Schedule 14 to
this Agreement.
Further Limitations on Claims
13.1 Where the Purchaser or any other member of the Purchaser's Group is
entitled or becomes entitled by virtue of an assignment under clause 18.11
(whether by payment, discount, credit, relief or otherwise) to recover from a
third party (including any insurance company or Tax Authority) any sum in
respect of any matter giving rise to a Claim or (irrespective of whether such
matter gives rise to a Claim) giving rise to Texaco Environmental Losses
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(other than a Tax Covenant Claim) or to obtain any relief, saving or benefit
which is in respect of any matter (in each case whether before or after the
relevant Vendor has made payment hereunder), the Purchaser shall (or, as
appropriate, shall procure that the relevant member of the Purchaser's Group
shall):
(a) as soon as reasonably practicable notify the relevant Vendor and provide
such information as the relevant Vendor may reasonably require relating to
such potential recovery from that third party or to obtaining such relief,
saving or benefit and the steps taken or to be taken by the Purchaser or
the relevant member of the Purchaser's Group in connection with it (failure
to make such notification or provide such information shall not prevent the
Purchaser from making the relevant Claim, but the relevant Vendor shall not
be liable to the Purchaser in respect of such Claim to the extent that the
amount of it is increased, or is not reduced, as a result of such failure);
(b) if so required by the relevant Vendor (subject to the Purchaser being fully
indemnified to its reasonable satisfaction by the relevant Vendor against
all reasonable out-of-pocket costs and expenses incurred by the Purchaser
or the relevant member of the Purchaser's Group) take all steps (whether by
way of a claim against its insurers or otherwise including but without
limitation proceedings) as the relevant Vendor may reasonably require to
enforce such recovery or obtain such relief, saving or benefit and comply
with the relevant Vendor's reasonable requests as to the timing of such
steps; and
(c) shall keep the Vendor informed of the progress of any action taken,
and thereafter either:
(i) any Claim (other than a Tax Covenant Claim) against the relevant
Vendor shall be limited (in addition to the limitations on its
liability referred to in clauses 11 and 12 and this clause 13) to
the amount by which the loss or damage suffered by the Purchaser
or any relevant member of the Purchaser's Group as a result of
such breach shall exceed the amount so recovered from the third
party (net of Tax paid by the Purchaser or relevant member of the
Purchaser's Group on such sum and the reasonable costs incurred in
recovering such amount) or the value of the relief, saving or
benefit obtained, calculated by reference to the amount saved
(less the reasonable costs of obtaining such relief, saving or
benefit); or
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(ii) if the relevant Vendor has paid to the Purchaser an amount in
discharge of a Claim (other than a Tax Covenant Claim) and the
Purchaser or any other member of the Purchaser's Group
subsequently recovers (whether by payment, discount, credit,
relief or otherwise) from a third party (including any insurance
company or Tax Authority) a sum which is referable to the matter
giving rise to the Claim or obtains any relief, saving or benefit
which is so referable, the Purchaser shall (or, as appropriate,
shall procure that the relevant Designated Purchaser shall) repay
to the relevant Selling Companies:
(A) an amount equal to the sum recovered from the third party (net
of tax paid by the Purchaser or the Designated Purchaser on
such sum and the reasonable costs incurred in recovering such
sum) or the value of the relief, saving or benefit obtained,
calculated by reference to the amount saved (less the
reasonable costs of obtaining such relief, saving or benefit);
or
(B) if the figure resulting under sub-paragraph (A) above is
greater than the amount paid by the relevant Vendor to the
Purchaser or other members of the Purchaser's Group in respect
of the relevant Claim, such lesser amount as shall have been
so paid by the relevant Vendor.
13.2 Any payment required to be made by the Purchaser, pursuant to clause 13.1
shall be made:
(a) in a case where any member of the Purchaser's Group receives a payment,
within ten (10) Business Days of the receipt thereof; and
(b) in a case where any member of the Purchaser's Group obtains a relief,
saving or benefit, within ten (10) Business Days of the date on which such
relief, saving or benefit gives rise to an increased receipt or reduced
payment by the Purchaser's Group.
13.3 If the Purchaser, or any other member of the Purchaser's Group, becomes
aware of any third party claim, matter or event (a third party claim) which
might reasonably be expected to lead to a Claim other than a Tax Covenant Claim
or a claim under the Environmental Covenant (to which Schedule 14 and/or
Schedule 14A shall apply, as applicable) being made or which might reasonably be
expected to lead to a member of the Purchaser's Group being held liable in
relation to an Excluded Liability, the Purchaser shall (subject to being fully
indemnified by the relevant Vendor against all
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reasonable out of pocket costs and expenses incurred by the Purchaser or any
member of the Purchaser's Group as a result of so acting):
(a) procure that notice thereof is promptly given to the relevant Vendor as
soon as is reasonably practicable;
(b) not make (or, as appropriate, shall procure that no other member of the
Purchaser's Group shall make) any admission of liability, agreement or
compromise with any person, body or authority in relation to any such third
party claim without prior consultation with and the prior agreement of the
relevant Vendor, which agreement shall not be unreasonably withheld or
delayed;
(c) not take any action which reduces the amount recoverable in respect of such
third party claim under any policy of insurance under which any such third
party claim would be covered if such action had not been taken;
(d) take such action as the relevant Vendor may reasonably request to avoid,
dispute, resist, appeal, compromise or defend such third party claim;
(e) ensure, at the request in writing of the relevant Vendor, that the relevant
Vendor is placed in a position to take on or take over the conduct of all
proceedings and/or negotiations of whatsoever nature arising in connection
with the third party claim in question, provided that the Purchaser shall
not be required to commence any legal proceedings where it or the relevant
member of the Purchaser's Group has validly assigned all of its rights in
relation to the relevant Claim other than a Tax Covenant Claim or a claim
under the Environmental Covenant to the Vendor in a manner which entitles
the Vendor to the same benefits in respect of such rights as the Purchaser
or the relevant member of the Purchaser's Group had; and
(f) if the relevant Vendor does not elect to take control of the conduct of
proceedings under clause 13.3(e), the Purchaser shall ensure that the
relevant Vendor is kept fully informed of any actual or proposed
developments (including any meetings) and shall be provided with copies of
all material correspondence and documentation relating to such third party
claim or action, and such other information, assistance and access to
records and personnel as it reasonably requires,
and, without prejudice to any other limitation of liability contained in this
Agreement, if the Purchaser fails to comply with any of the obligations
contained in this clause 13.3, the relevant Vendor shall not be liable in
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respect of any such Claim other than a Tax Covenant Claim or a claim under the
Environmental Covenant to the extent that the relevant Vendor's liability is
increased or, as the case may be, not reduced as a result of the Purchaser's
failure. Notwithstanding the foregoing, the Vendor shall not be entitled to
assume the defence of any claim, action or demand of a third party (but shall
continue to be entitled to exercise the remainder its rights under the above
sub-paragraphs) if such claim, action or demand seeks any relief other than
damages (including any order, injunction or other equitable relief) against the
Purchaser or relevant member of the Purchaser's Group which the Purchaser
reasonably determines cannot be separated from a related claim for damages. If
such claim for other relief can be separated from the claim for damages at any
stage, the Vendor shall be entitled to assume the defence of the claim for
damages from that point on.
13.4 Upon any Claim other than a Tax Covenant Claim or a claim under the
Environmental Covenant being made, or notification from the Purchaser to the
relevant Vendor of any third party claim which might lead to such a Claim other
than a Tax Covenant Claim or a claim under the Environmental Covenant, being
made, the Purchaser shall, and shall co-operate to procure that each other
member of the Purchaser's Group shall:
(a) make available to accountants and other professional advisers appointed by
the relevant Vendor such access to relevant personnel and properties and
to any relevant records and information as the relevant Vendor may
reasonably request in connection with such Claim other than a Tax Covenant
Claim or a claim under the Environmental Covenant or third party claim
provided that neither the Purchaser nor any member of the Purchaser's
Group nor any of their Related Persons shall be required to disclose any
legally privileged information; and
(b) use reasonable endeavours to procure that the auditors (both past and then
current) of the relevant member of the Purchaser's Group make available
their audit working papers in respect of audits of that company's accounts
for any relevant Accounting Period in connection with such Claim, other
than a Tax Covenant Claim or a claim under the Environmental Covenant, or
third party claim, subject to the relevant Vendor entering into a release
in a form satisfactory to such auditors in relation to such working papers
being made available and provided that such auditors shall not be required
to reveal any information which is legally privileged.
This clause 13 shall not apply to the extent that recovery has been obtained
pursuant to the Tax Covenant or a claim under the Environmental Covenant or any
other provision of this Agreement.
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Management of Pre-Closing Tax Affairs and conduct of other Tax affairs
Rights and obligations of ICI
14.1 Subject to and in accordance with the provisions of this clause 14, ICI or
its duly authorised agents shall, in respect of all Accounting Periods ending on
or before the Closing Date, and at its own cost:
(a) prepare and submit the Tax Returns of each of the Companies;
(b) prepare and submit on behalf of the Companies all claims, elections,
surrenders, disclaimers, notices and consents for the purposes of Tax; and
(c) subject to paragraph 9 of the Tax Covenant deal with all matters relating
to Tax which concern or affect any of the Companies, including the conduct
of all negotiations and correspondence and the reaching of all agreements
relating thereto or to any Tax Documents.
14.2 Except with the Purchaser's written consent (not to be unreasonably
withheld or delayed), ICI shall not, and shall procure that its duly authorised
agents do not, prepare or submit any Tax Document (or any similar document
relating to the Tax affairs of ICI or any company under its control) which
comprises or includes a claim, election, surrender, disclaimer, notice or
consent, or withdraw any such item unless the making, giving or withdrawal of it
(as the case may be) either has been taken into account in preparing the
Accounts, or should not have a material adverse effect on the liability to Tax
of any of the Companies in respect of any Accounting Period ending after the
Closing Date.
14.3 Subject to clause 14.7, ICI or its duly authorised agent shall deliver all
Tax Documents which are required to be signed by or on behalf of any Company to
the Purchaser for authorisation, signing and submission to the relevant Tax
Authority. If a Time Limit applies in relation to any Tax Document, ICI will
use reasonable endeavours to ensure that the Purchaser receives the Tax Document
no later than 10 Business Days before the expiry of the Time Limit.
14.4 ICI shall procure that the Purchaser is kept informed of the progress of
all matters relating to the Pre-Closing Tax Affairs and in the event that the
Purchaser considers that the manner in which ICI is proposing to conduct the
Pre-Closing Tax Affairs is likely materially adversely to affect the Purchaser's
future Tax position or that of any Company in the Purchaser's Group the
Purchaser shall be afforded the opportunity to comment within a
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reasonable period of time on any Tax Document prior to its submission to the
relevant Tax Authority and ICI will take the Purchaser's reasonable comments
into account.
Obligations of the Purchaser
14.5 The Purchaser shall procure that:
(a) ICI and its duly authorised agents are afforded such access (including the
taking of copies) to the books, accounts and records of the Companies and
such other assistance as it or they reasonably require to enable ICI to
discharge its obligations under clause 14 and to enable ICI and any member
of the ICI Retained Group to comply with its own Tax obligations or
facilitate the management or settlement of its own Tax affairs;
(b) ICI is promptly sent a copy of any communication from any Tax Authority
insofar as it relates to the Pre-Closing Tax Affairs;
(c) no voluntary action is taken by any Company after Closing by disclaiming
any relief or withdrawing any claim or consent which has or is likely to
have the effect of prejudicing or reducing the availability of any relief
surrendered or to be surrendered by way of group relief, or any relief
otherwise made available, to any member of the Retained Group or which
could in any way materially prejudice the Pre-Closing Tax Affairs other
than such action as is required by law;
(d) there is given to such person or persons as may for the time being be
nominated by ICI authority (including as requested by ICI, powers of
attorney) to conduct Pre-Closing Tax Affairs, and that such authority is
confirmed to any relevant Tax Authority.
14.6 The Purchaser shall (subject to clause 14.7) be obliged to procure that the
Companies shall cause any Tax Document delivered to it under clause 14.3 to be
authorised, signed and submitted to the appropriate Tax Authority without delay
(and in any event within any relevant Time Limit), and without amendment.
Rights of the Purchaser
14.7 The Purchaser shall be under no obligation to procure the authorisation,
signing, or submission to a Tax Authority of any Tax Document delivered to it
under clause 14.3 which it considers in its reasonable opinion to be false,
misleading, incomplete or inaccurate in any respect, but for the avoidance of
doubt shall be under no obligation to make
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any enquiry as to the completeness or accuracy thereof and shall be entitled to
rely entirely on ICI and its agents.
Conduct of other tax affairs
14.8 The Purchaser or its duly authorised agents shall have sole conduct of all
Tax affairs of each of the Companies which are not Pre-Closing Tax Affairs.
14.9 In respect of any Accounting Period commencing prior to the Closing Date
and ending after the Closing Date (the Straddle Period) the Purchaser shall
procure that the Tax Returns of the Companies shall be prepared on a basis which
is consistent with the manner in which the Tax Returns of the Companies were
prepared for all Accounting Periods ending prior to or on the Closing Date.
14.10 The Purchaser shall procure that the Companies provide to ICI in draft
form all Tax Returns relating to the Straddle Period no later than 20 Business
Days before the date on which such Tax Returns are required to be filed with the
appropriate Tax Authority without incurring interest or penalties. The
Purchaser shall further procure that the Companies shall take ICI's reasonable
comments into account before the Tax Returns are submitted to the appropriate
Tax Authority.
14.11 Notwithstanding the provisions of clauses 14.8 to 14.10 (inclusive), the
Purchaser shall not, and shall procure that no Company shall, without the
written consent of ICI, take any action under the provisions of any enactment or
regulation relating to Tax if such action could adversely affect the liability
of ICI under the Tax Covenant or the Tax Warranties.
Retention of Tax Documents
14.12 ICI and the Share Selling Companies will be entitled to retain all Tax
Documents and other records relevant for Tax purposes in relation to the
Companies. ICI will procure that, if appropriate, such records are preserved
for a period of not less than six (6) years from the date of the relevant record
and shall, if appropriate, procure that the Purchaser is given, on the giving of
not less than three (3) business days' notice, reasonable access to those
records (to inspect them or make copies of them) during normal business hours.
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Continuing Arrangements between the retained Group and the Business
Definitions
15.1 In this clause the following additional definitions shall apply:
Agreed Form Interface Agreements means those agreements which are in the agreed
form, being:
(a) the Co-operation Agreement;
(b) the Product Supply Agreement;
(c) the contracts and side letters referred to in sub-clause 15.14(a)(i) and
(ii); and
(d) the Technology Transfer Agreement, PO/MTBE Technology Transfer Agreement,
HSCC Trade Mark Licence and ICI Trade Mark Licence;
Deferred Interface Agreement means (subject to clause 15.4(c)(ii)) any Interface
Agreement which is not an Agreed Form Interface Agreement;
Existing Services means all products, utilities or services which are actually
being supplied or provided at the date of this Agreement:
(a) to any Local Business or Company by any member of ICI's Group (or vice
versa); or
(b) to the PO/MTBE Business by any member of HSCC's Group (or vice versa
(HSCC/PO/MTBE Services);
Expiry Date means:
(a) in the case of an Interface Agreement relating to Major Interface Services,
the date which falls 24 months after Closing (save where a valid
Termination Notice has been served in accordance with sub-clause 15.7 below
or where that date has been extended under sub-clause 15.6 below); and
(b) in the case of an Interface Agreement relating to Minor Interface Services,
the date which falls 12 months after Closing (save where a valid
Termination Notice has been served in accordance with sub-clause 15.7 below
or where that date has been extended under sub-clause 15.6 below);
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Interface Agreements means the agreements containing the terms on which
Interface Services are to be provided and which are to be entered into in
accordance with this clause;
Interface Services means (i) those Existing Services which are, in accordance
with this clause, to continue to be provided after Closing and (ii) those New
Services which are, in accordance with this clause, to be provided after
Closing:
(a) to the Purchaser's Group by any member of ICI's Retained Group (or vice
versa); or
(b) to the Purchaser's Group by any member of HSCC's Retained Group (or vice
versa);
IT Services means those information technology services which are referred to in
sub-clause 15.15 below;
Major Interface Services means any Interface Service the subject matter of which
is the supply or provision of:
(a) any product or utility; or
(b) any service which is material to the continuing operation after Closing of
the business carried on by the Purchaser's Group;
Minor Interface Services means any Interface Service other than a Major
Interface Service;
New Services has the meaning given to it in sub-clause 15.4 below;
Product Supply Agreement means the agreement in the form initialled by the
parties and which is to be entered into between a Subsidiary of ICI and the
Purchaser (or another member of the Purchaser's Group) for the provision of
feedstocks or products by members of the ICI Retained Group;
Property Services means such property services as are referred to in Schedule 17
Part VII;
Same Terms means the price and other terms on which an Existing Service was
being provided or supplied at 31st December, 1998 provided that:
(a) where a price was at 31st December, 1998 not an absolute fixed price but
was or was to be calculated or varied by a price formula or other price
mechanism, that formula or mechanism (rather than the absolute price which
would be determined on 31 December, 1998 by
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application of the price formula or price mechanism on that day) shall
form part of the Same Terms so that, while there shall be no change made
in the price formula or price mechanism itself in the period to 31st
December, 1999, the price payable under the relevant Interface Agreement
shall in that period be subject to variation in accordance with the
application of the price formula or price mechanism;
(b) where a Third Party Element forms part of an Interface Service (and is
not otherwise within paragraph (a) above), to the extent that the cost of
that Third Party Element has changed since 31st December, 1998 or changes
after the date of this Agreement, the impact of that change in the cost
of supplying or providing the Interface Service shall be passed through
to the charge for the relevant Interface Service and the price payable
under the relevant Interface Agreement shall vary accordingly;
(c) for the avoidance of doubt, references in paragraph (b) above to a Third
Party Element shall include circumstances in which a member of the
relevant Group acts as a buying or other agent in obtaining an Interface
Service (or a part thereof) for itself or other members of its Group as
well as for the party to whom the Interface Service is to be provided;
and
(d) any agency, handling or similar fee payable as at 31st December, 1998 to
another member of the same Group for the provision of buying or other
agency services as referred to in paragraph (c) above shall remain fixed
for the period from Closing to 31st December, 1999;
Termination Notice has the meaning given in sub-clause 15.7 below;
Third Party Element means that part or any Existing Service or Interface Service
which is provided by or sourced from (directly or indirectly) a provider or
supplier other than a member of the relevant Vendor's Group; and
Unresolved Interface Agreement means any Deferred Interface Agreement the final
terms of which the parties have not agreed by Closing.
General
15.2.1 Each of ICI and HSCC shall, and shall procure that the members of their
respective Groups shall, at their own expense, comply with the terms of this
clause 15 and, at all times from the date of this Agreement, do all things as
may be required to give effect to this clause and to all other agreements
contemplated by this clause, including, without limitation, the execution of all
deeds and documents, procuring the convening of all meetings, the giving of
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all necessary waivers and consents and the passing of all resolutions and
otherwise exercising all powers and rights available to them.
15.2.2 Notwithstanding the fact that the Product Supply Agreement envisages
only supplies of products or feedstocks by members of ICI's Group to members of
the Purchaser's Group, those provisions in this clause which require Interface
Agreements to be agreed by reference to the Product Supply Agreement shall
apply.
15.2.3 At Closing ICI and HSCC shall procure that ICI Chemicals & Polymers
Limited and the Designated Purchaser of the Property at North Tees Works enter
into an agreement relating to repair of leaks at the Property at North Tees
Works. The body of such agreement shall be in the form approved by ICI and HSCC
prior to the date of this Agreement. The Schedule to such agreement shall be
agreed between ICI and HSCC in accordance with the principles set out in the
attachment to the approved form of such agreement. Any dispute shall be
resolved in accordance with the dispute resolution provisions of this clause.
Interface Agreements
15.3 The parties agree that the Agreed Form Interface Agreements shall
continue (in relation to the Co-operation Agreement and in relation to the
contracts and side letters referred to in sub-clause 15.14(a)(i) and (ii)) or
(in relation to the remaining Agreed Form Interface Agreements) shall be entered
into at Closing, in each case subject to and in accordance with the terms of the
Co-operation Agreement and/or this Agreement where applicable.
15.4 ICI and HSCC agree that:
(a) with effect from Closing, and subject to the remaining provisions of this
clause, all Existing Services shall (except as provided in sub-clause
15.3 and subject to the provisions of this clause which relate
specifically to IT Services, NSC Companies and Property Services)
continue as Interface Services except where the provision of an Interface
Service cannot be provided after Closing by reason of law or applicable
regulations and the parties will use their best endeavours to identify
before Closing those Interface Services which cannot be so provided in
order that replacement arrangements can be put in place with effect from
Closing;
(b) from the date of this Agreement onwards, the parties will, and will
procure that the members of the respective Groups will, subject to the
recipient keeping that information confidential, make available to one
another such personnel, books, records and information as any of them
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reasonably require in order to carry out the provisions of this clause;
and
(c) following signature of this Agreement they shall, and will procure that
the members of their respective Groups shall:
(i) use their best endeavours to identify and agree the nature and
scope of those new arrangements (not being Existing Services) to
be put in place from Closing between any member of their Retained
Groups on the one hand and any member of the Purchaser's Group on
the other hand which are reasonably required by a member of their
respective Groups as a result of the separation of the ICI
Business from ICI's Group or from the separation of the PO/MTBE
Business from the HSCC Group or which is otherwise a result of the
transactions contemplated by this Agreement and which they cannot
reasonably be expected to obtain from another source (New
Services); and
(ii) in good faith negotiate, and use their best endeavours to agree
before Closing, definitive documentation in respect of all
Deferred Interface Agreements. To the extent that terms have
already been agreed (as reflected in the Agreed Form Interface
Agreements), those terms will constitute terms of the Interface
Agreement for those products, utilities or services (as the case
may be) and, to the extent only that terms have not been so agreed
and/or remain to be completed, those terms (but only those terms)
will be subject to the provisions of this clause which relate to
Deferred Interface Agreements.
15.5 In relation to Unresolved Interface Agreements, ICI and HSCC agree that
(subject to sub-clauses 15.6 and 15.7) the following shall apply:
(a) during the six months after Closing in relation to Major Interface
Services and three months after Closing in respect of Minor Interface
Services, ICI and HSCC shall continue to negotiate in good faith, and use
their best endeavours to agree, definitive documentation in respect of all
Unresolved Interface Agreements; and
(b) until agreement if any between the parties, the product, utility or
service shall be supplied between members of the HSCC Group or members of
ICI's Group (as the case may be) on the one hand and members of the
Purchaser's Group on the other hand:
(i) on the terms of the Product Supply Agreement (in relation to all
products) or (in relation to the provision of utilities or
services)
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on the terms of agreements which shall be negotiated in good
faith, with both parties using their best endeavours to agree by
Closing, on the basis that such agreements shall (excluding the
terms particular to each individual product in their Schedules and
elsewhere where they appear) be on substantially the same terms as
the Product Supply Agreement save only:
(A) where those terms cannot rationally be applied in the context
of an agreement for the provision of that utility or service;
or
(B) where additional terms would be normal in the context of a
supply of the utilities or services which are to be the
subject matter of such agreements; and
(C) to incorporate provisions for the liability of the provider
which do not call for replacement supplies but instead contain
reasonable financial caps on the provider's liability; and
(ii) (subject to the terms contained in the applicable agreement
referred to in subparagraph (i)) (x) on the Same Terms in respect
of the period up to and including 31st December, 1999 and (y)
after 31st December, 1999 on the terms set out in paragraph (c)
below;
(c) after 31st December, 1999 the price chargeable for the supply of any
product, utility or service shall cease to be on the Same Terms. If by
30th September, 1999 ICI and HSCC have not agreed the price which shall
apply to the relevant Interface Agreements with immediate effect after
31st December, 1999 for a period of 12 months (or, if shorter, the residue
of the term of the relevant Interface Agreement), then ICI and HSCC shall
continue to negotiate in good faith, and use their best endeavours to
agree, the price on the basis that such price should be an arm's length
open market price having regard to:
(i) the subject matter of the relevant Interface Service; and
(ii) the volume, specification, service levels, quality, duration and
other terms of the relevant Interface Service;
(d) if products, utilities or services are to continue being provided under an
Interface Agreement after 31st December, 2000 or after 31st December, 2001
then if by 30th September in the year preceding each 31st December date
ICI and HSCC have not agreed the price and other
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terms which shall apply to the relevant Interface Agreement with immediate
effect after 31st December, 2000 (or 31st December, 2001 as the case may
be) for a period of 12 months (or, if shorter, the residue of the term of
the relevant Interface Agreement) then ICI and HSCC shall continue to
negotiate in good faith, and use their best endeavours to agree, the price
and those other terms on the basis that such price should be an arm's
length open market price having regard to:
(i) the subject matter of the relevant Interface Service; and
(ii) the volume, specification, service levels, quality, duration and
other terms of the relevant Interface Service.
15.6 Save where a definitive Interface Agreement has been agreed or determined
containing terms to the contrary:
(a) in the case of Major Interface Services the recipient of each product,
utility or service shall use its best endeavours to find an alternative
source of supply for the period after the date falling 24 months from
Closing and if, notwithstanding its best endeavours to find an alternative
source of supply, the recipient of a product, utility or service is unable
to obtain (or is unable to obtain on open market price terms) that
product, utility or service from another source for the period commencing
on the date falling 24 months after Closing, that recipient may (by
written notice served on the provider of that product, utility or service
no earlier than 21 months after Closing and no later than 22 months after
Closing) require an extension to the period of that supply of up to a
further 12 months beyond the date which falls 24 months after Closing
provided that (in the absence of express written agreement) in no
circumstances shall the provider of that product, utility or service be
obliged to continue providing that product, utility or service for more
than 36 months from Closing; and
(b) in the case of Minor Interface Services the provisions of paragraph (a)
shall apply save that:
(i) references therein to 24 months shall be read as references to 12
months;
(ii) references therein to 21 months and 22 months shall be read as
references to 9 and 10 months respectively;
(iii) references therein to 12 months shall be read as references to 6
months; and
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(iv) references therein to 36 months shall be read as references to 18
months.
15.7 Save where a definitive Interface Agreement has been agreed or determined
containing terms to the contrary, each Major Interface Agreement shall continue
for 24 months from Closing (or such longer period as may result from sub-clause
15.6) and each Minor Interface Agreement shall continue for 12 months from
Closing (or such longer period as may result from sub-clause 15.6), unless
terminated earlier in accordance with the remaining provisions of this sub-
clause. Either HSCC or ICI may where it (or a member of its Group) is the
recipient of the product, utility or service in question) at any time after
Closing serve a written notice (a Termination Notice) on the other terminating,
with effect from the date falling twelve months (in the case of Major Interface
Services) and three months (in the case of Minor Interface Services) after
service of such Termination Notice, the supply to it (or to the relevant member
of its Group) of any product, utility or service which is the subject of that
Unresolved Interface Agreement.
15.8 If there is a Disputed Matter (as defined below), the Disputed Matter
shall be referred to the parties' respective senior management for resolution.
If any such matter has not been resolved within 30 days after such referral
either ICI or HSCC may refer the Disputed Matter to such independent expert as
may be nominated by the Chairman for the time being of the Institute of
Arbitrators in the UK, with the Chairman being required to have regard to the
nature of the Disputed Matter when deciding on the qualifications of the
Independent Expert. For the purposes of this sub-clause a Disputed Matter shall
mean any dispute between the parties as to:
(a) what constitutes the Same Terms (if not agreed between the parties by the
date falling six months after Closing in relation to Major Interface
Services or three months after Closing in relation to Minor Interface
Services);
(b) whether an Interface Service is a Major Interface Service or a Minor
Interface Service (if not agreed by Closing);
(c) whether a recipient is unable to obtain (or is unable to obtain on open
market terms) a product, utility or service for the purposes of sub-clause
15.6 (if not agreed by the date falling 23 months after Closing in the
case of a Major Interface Service or 11 months following Closing in the
case of a Minor Interface Service);
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(d) the price to apply to an Interface Agreement for the purposes of sub-
clause 15.5(c) (if not agreed by 31st October, 1999) or for the purposes
of sub-clause 15.5(d) (if not agreed by 31st October, 2000).
(e) the definitive form of any Agreed Form Interface Agreement (if not agreed
between the parties by Closing); or
(f) the Terms applicable generally (meaning those terms other than details
which are specific to a particular utility or service) to Interface
Agreements for the provision of services or utilities (if not agreed by
Closing).
15.9 If the Independent Expert delays or becomes unwilling or incapable of
acting or if for any other reason the Chairman for the time being of the
Institute of Arbitrators thinks fit he may discharge the Independent Expert and,
in the absence of agreement between ICI and HSCC, appoint another in his or her
place (and such replacement shall thereafter become the Independent Expert).
15.10 The Independent Expert shall act as an expert and not as an arbitrator and
his or her decision shall (in the absence of manifest error) be final and
binding on the parties. The Independent Expert shall give ICI and HSCC the
opportunity of making written representations to him or her and he or she shall
make a decision after taking into account such representations and the remaining
provisions of this clause. The parties agree that the Independent Expert shall
be given access to all such personnel, books, records and information as he or
she may reasonably require.
15.11 The fees and expenses of the Independent Expert shall be borne by ICI and
HSCC in equal shares unless the Independent Expert otherwise determines.
15.12 In agreeing and implementing the terms of any Interface Agreement the
parties shall, and shall procure that the members of their respective Groups
shall, act in such a way so that the recipient of any product, service or
utility under an Interface Agreement shall be treated fairly and equitably in
comparison with any other members of the provider's own Group who may receive
the same product, service or utility.
Status of Schedule 5 and New Services
15.13 Without prejudice to the parties' rights in relation to Warranty 23, due
to the time available and the need to preserve confidentiality to protect the
ICI Business and the PO/MTBE Business, it is acknowledged that Schedule 5 has
been prepared by ICI in an attempt to identify the Interface Services it
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believes will be required in relation to the ICI Business and the PO/MTBE
Business. It is acknowledged that it does not contain a complete list of the
Interface Services that will be required. ICI and HSCC agree that following
signature of this Agreement each of them, and the members of their respective
Groups, shall use their best endeavours in good faith to agree by Closing a list
of the Interface Agreements that will be required.
15.14 Notwithstanding any other provision of this Agreement:
(a) the following contracts and/or side letters shall be treated as Agreed
Form Interface Agreements for the purpose of this clause:
(i) the contract dated 3rd July, 1997 between ICI (Paints Division)
and Tioxide Group Limited for the supply of titanium dioxide
(Document Q&A9.3.2) (the Paints Contract) and the first side
letter between the said parties dated 29th March 1999 relating to
the extension of the term of the Paints Contract (the First
Amendment Letter) and the second side letter between the said
parties dated 29th March 1999 relating to additional volumes (the
Second Amendment Letter); and
(ii) the contract dated 22nd March, 1999 between ICI Chemicals &
Polymers Ltd (C&P) and TEL relating to Greatham waste disposal via
C&P's site at Cowpen Bewley, Billingham (Document TEL 3.1/70) (the
Cowpen Bewley Contract);
(b) the preceding provisions of this clause shall not apply to Property
Services (for which the provisions contained in Schedule 17 shall apply
exclusively to the subject matter of Property Services);
(c) the preceding provisions of this clause shall not apply to the provisions
relating to the NSC Companies contained in clause 9 of this Agreement; and
(d) the preceding provisions of this clause shall not apply to IT Services for
which, except as expressly stated in Schedule 20, the provisions of
Schedule 20 shall apply exclusively to the subject matter of IT Services.
15.15 Nothing in this clause 15 shall require any change to any of the terms of
HSCC/PO/MTBE Services if any consent to such change is required from any bank or
other financiers under the terms or covenants (Covenants) in any Huntsman
Petrochemical Corporation financing documents which are in place at the date of
this Agreement and:
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(a) where such Covenants exist HSCC shall (and shall procure that the relevant
members of the HSCC Retained Group shall) promptly inform ICI and shall use
its best endeavours to obtain that third party consent;
(b) if (notwithstanding HSCC having complied with its obligations under
paragraph (a) above) the third party consent is not obtained then HSCC
undertakes to ensure that:
(i) any price increase in relation to HSCC/PO/MTBE Services shall be
fair and reasonable having regard to market prices and conditions
prevailing at that time;
(ii) to the extent that the Covenants do not permit paragraph (i) to
operate, HSCC will use its best endeavours to mitigate the effect
on the Purchaser's Group of any price increases which are not
fair and reasonable; and
(iii) if the price payable by the relevant member of the Purchaser's
Group is greater than that which it could obtain in the market at
the relevant time, HSCC will (so far as it is able and if ICI so
agrees) procure that the contract for such services is terminated
at the next available opportunity in accordance with its terms;
(c) HSCC shall ensure that ICI (or to the extent that confidentiality
restrictions prevent this, another person nominated by ICI to whom such
information can be given) is provided promptly with evidence reasonably
satisfactory to ICI of the requirement for such consent and of HSCC having
complied with its obligations under paragraph (a) above;
(d) nothing in paragraph (b) shall require HSCC to do anything which would
cause the Covenants to be breached.
Joint Venture Interests
16.1 Each Joint Venture Interest shall be transferred subject to and on the
terms of the relevant Joint Venture Agreement.
16.2 Where any consent or agreement of any party to a Joint Venture Agreement
(other than a member of ICI's Group) is required prior to the transfer of any
Joint Venture Interest and such consent or agreement has not been obtained at or
before Closing, the relevant Joint Venture Interest shall not be transferred to
the Purchaser, notwithstanding Closing, until the consent or agreement has been
obtained.
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16.3 Where any party to a Joint Venture Agreement (other than a member of ICI's
Group) is entitled to be offered or to elect to acquire all or any part of a
Joint Venture Interest before that interest may be transferred directly or
indirectly to a member of the Purchaser's Group (and has not waived that right)
then, unless the procedures laid down by the relevant Joint Venture Agreement
have been completed and the relevant offer period or periods have expired at or
prior to Closing, such interest shall not be transferred, notwithstanding
Closing, until the relevant procedures have been completed and the relevant
offer periods have expired.
16.4 ICI agrees to procure that each Share Selling Company which is a party to
a Joint Venture Agreement in relation to a Joint Venture Interest promptly seeks
such consents from, and gives such notices to, the other parties to that
agreement and complies with such other formalities as may be required under that
agreement prior to any transfer of the relevant Joint Venture Interest to a
member of the Purchaser's Group or to permit such transfer without giving any
other person rights to acquire or to offer to acquire the Joint Venture
Interest.
16.5 ICI shall, and shall procure that the relevant Share Selling Companies
shall, use their respective reasonable endeavours to obtain any necessary
consents and (if so requested in writing by the Purchaser in relation to any
particular Joint Venture Interest) the release or waiver of any rights of pre-
emption or other rights which would, if exercised, prevent the relevant Share
Selling Company from transferring any Joint Venture Interest to a member of the
Purchaser's Group. The Purchaser shall, and shall procure that all members of
the Purchaser's Group shall, give such assistance and co-operation as may be
reasonably required by any member of ICI's Group in seeking any such consent,
release or waiver (including, without limitation,
(a) providing any other party to a Joint Venture Agreement with such financial
and other information as it may reasonably require to enable it to decide
whether to grant any such consent or agreement; and
(b) giving any assurance, undertaking or guarantee of any nature which any
other party to a Joint Venture Agreement may reasonably require in respect
of the obligations of the proposed transferee of any Joint Venture
Interest); and
(c) entering into, or procuring that the relevant member of its Group enters
into such deeds of adherence or novation or other equivalent agreements as
may be required pursuant to the terms of the relevant Joint Venture
Agreement in order for the Purchaser or the relevant member of its Group
to become bound by any Joint Venture
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Agreement in place of the relevant Share Selling Company and to facilitate
the transfer of any Joint Venture Interest,
provided that no member of ICI's Group or the Purchaser's Group shall be under
any obligation to make any payment (in money or money's worth) to, or release
any right against, any such party for the purpose of obtaining any such consent,
release or waiver.
16.6 If, under the terms of any Joint Venture Agreement, any Share Selling
Company would be obliged to offer its Joint Venture Interest (or any part
thereof) to any person upon forming any intention or desire to dispose of that
interest or upon entering into any agreement relating to the sale of that
interest or upon giving any notice required under the terms of the Joint Venture
Agreement in question, then the relevant Share Selling Company shall not be
obliged to enter into any agreement, or to give any such notice or to take any
other step which may be required under the terms of the relevant Joint Venture
Agreement in relation to any transfer of that interest, until each of the
Conditions and any relevant conditions in Schedule 15 have been satisfied or
waived and, for the avoidance of doubt, for these purposes only the Vendor shall
not be deemed to act as the agent of the relevant Share Selling Company in
entering into this Agreement.
16.7 If:
(a) any party to a Joint Venture Agreement (other than a member of ICI's
Group) exercises its rights to acquire all or any part of a Joint Venture
Interest; or
(b) any consent or agreement which is required for the transfer of a Joint
Venture Interest has not been obtained from another party to any Joint
Venture Agreement (other than a member of ICI's Group) on or before the
second anniversary of the Closing Date,
then the relevant Joint Venture Interest shall thereupon be excluded from the
sale contemplated by this Agreement and ICI shall promptly (and in any event
within 15 Business Days of such exclusion) pay to the Purchaser a sum equal to
the higher of (i) the value of such Joint Venture Interest as set out in
Schedule 6; or (ii) the Joint Venture Value of that Joint Venture Interest. The
Joint Venture Value of a Joint Venture Interest shall be the sum resulting from
the following calculation:
a % x b
a = the percentage which the relevant Joint Venture Interest represents of the
issued share capital of the company in which it is held; and
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b = the Fair Value of the company in which the relevant Joint Venture Interest
is held, as agreed or determined in accordance with the provisions of
paragraph 7 of Schedule 16 as if such company were a Delayed Company.
Any sum paid by ICI pursuant to this clause 16.7 shall be by way of adjustment
to the consideration paid by the relevant transferee to the relevant Current
Parent (as identified in column 1 of Part IV of Schedule 1) pursuant to Schedule
18 and/or clause 6.2.
16.8 The Purchaser agrees to indemnify each member of ICI's Group on demand on
an after Tax basis (which may be made at any time after the transfer to the
Purchaser's Group of the relevant Joint Venture Interest) in respect of any
liability arising from actions taken by the relevant member of ICI's Group at
the request of the Purchaser (and in accordance with the Purchaser's written
instructions) in relation to any Joint Venture Interest or from liabilities
necessarily incurred by such member of ICI's Group in order to comply with the
terms of the Joint Venture Agreement or as required by law at any time after
Closing and prior to the transfer of such Joint Venture Interest to a member of
the Purchaser's Group, but not in relation to third party claims in respect of
matters contemplated by this clause, and ICI agrees to procure that any
distribution, return of capital or payment received from any Joint Venture
Interest (net of Tax thereon) after Closing is paid or delivered to the
Purchaser, or as it may direct, within five Business Days after the receipt of
the same by any member of the ICI's Group (for the avoidance of doubt:
(a) ICI's obligation to procure any such payment or delivery shall cease in
respect of any Joint Venture Interest immediately that Joint Venture
Interest is excluded from the sale contemplated by this Agreement pursuant
to clause 16.7 above, save that ICI shall be obliged to procure the
payment to the Purchaser (net of Tax) of any such distribution, return of
capital or payment received by any member of ICI's Group from any Joint
Venture Interest after the date of exclusion of that Joint Venture
Interest from the sale if that member's right to receive it accrues on or
prior to the date of such exclusion; and
(b) the Purchaser's obligations to indemnify each member of ICI's Group under
this clause 16.8 shall cease in respect of any Joint Venture Interest
immediately that Joint Venture Interest is excluded from the sale
contemplated by this Agreement pursuant to clause 16.7 above, save that
(i) the Purchaser shall continue to be obliged to indemnify each member of
ICI's Group in respect of any liability which is within the scope of the
Purchaser's indemnity obligations under this clause
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16.8 and accrues prior to the date on which the relevant Joint Venture
Interest is excluded from the sale and (ii) the Purchaser's obligation to
indemnify each member of ICI's Group in respect of any liability arising
from actions taken by the relevant member of ICI's Group at the request of
the Purchaser shall subsist notwithstanding such exclusion).
16.9 The Purchaser shall use its reasonable endeavours to procure that each
member of ICI's Group is released from all of its obligations and liabilities
under each Joint Venture Agreement with effect from the time at which the
relevant Joint Venture Interest is transferred to a member of the Purchaser's
Group and shall perform or procure performance of all such obligations and
indemnify each member of ICI's Group on an after Tax basis in respect of all
such liabilities following such transfer pending such release. At such time,
the Vendor shall procure that the relevant Share Selling Companies assign their
rights under the relevant Joint Venture Agreements, to the extent that it is
necessary to do so, to vest those rights in a member of the Purchaser's Group.
16.10 Pending completion of the acquisition of any Joint Venture Interest by any
member of the Purchaser's Group, the relevant Share Selling Company or Company
shall comply with all reasonable requests of the Purchaser (including reasonable
requests for information) in relation to such Joint Venture Interest to the
extent that it is able to do so in compliance with all applicable laws and
regulations and to the extent that such information is not confidential to the
relevant Share Selling Company or disclosure of such information is not
prohibited by any law, applicable shareholders' agreement, by-laws or other
similar document and (i) the relevant Share Selling Company shall comply in all
material respects with the provisions of the relevant Joint Venture Agreement;
and (ii) the relevant Share Selling Company shall enter into such arrangements
as the Purchaser may reasonably request in order to give to the Purchaser the
economic benefit and all rights of control which arise from the holding of the
Joint Venture Interest and from being a party to the Joint Venture Agreement
(including, without limitation, executing a trust in favour of the Purchaser or
a person nominated by the Purchaser in relation to such Joint Venture Interest
or such Joint Venture Agreement or any benefit arising thereunder).
16.11 If, with the consent of the Purchaser prior to Closing (or the relevant
Delayed Closing Date), any member or members of ICI's Group shall acquire any
further shares in any company in which a Share Selling Company holds a Joint
Venture Interest, then the Purchaser shall be obliged to purchase all the shares
in such company at the same time as that Joint Venture Interest and the price in
respect of such aggregate increased shareholding shall be the
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aggregate of the Initial Consideration for that Joint Venture Interest (as
adjusted pursuant to clause 3) plus the amount paid by the relevant members of
ICI's Group for such additional shares.
16.12 If, under any Joint Venture Agreement relating to a Joint Venture
Interest, any part of the ICI Business which has been fully and effectively
transferred to the Purchaser or any member of the Purchaser's Group is obliged
to provide any technical assistance or other services to the company in which
the relevant Joint Venture Interest is held, then the Purchaser shall provide or
shall procure that such technical assistance or other services are provided to
the relevant company from the Closing Date (or, as applicable, the relevant
Delayed Closing Date).
16.13 On the Delayed Closing Date in respect of any transfer of any Joint
Venture Interest, completion of the sale of the Joint Venture Interest shall
take place in accordance with clause 6 (and the provisions of clause 6 shall
apply to such completion as if the Delayed Closing Date were the Closing Date).
16.14 To the extent that any member of ICI's Group is obliged under this
Agreement to procure that any act is done by a company in which it holds a Joint
Venture Interest, the relevant member of the Vendor's Group shall be obliged to
take such action only to the extent that it is permitted to do so under the
terms of any relevant Joint Venture Agreement.
16.15 Notwithstanding any other provision of this Agreement, where the Purchaser
is obliged under this Agreement to procure that any Controlled Joint Venture or
Non-Controlled Joint Venture does any thing (including where the Purchaser
undertakes to procure that any Company does any thing) or that anything is done
in relation to such Controlled Joint Venture or Non-Controlled Joint Venture,
such undertaking shall be limited to such things as the Purchaser is able to do
by exercising its powers of control over the relevant Controlled Joint Venture
or Non-Controlled Joint Venture taking account of any restrictions in the Joint
Venture Agreement.
Insurance
17.1 Each Vendor (on behalf of itself and each of the Share Selling Companies
and Business Vendors) shall use all reasonable endeavours to procure that the
interests of the Purchaser in the ICI Business and the PO/MTBE Business are,
where necessary to secure the benefit of the cover and if permitted to do so by
the terms of the relevant policy, noted on all policies of insurance maintained
by them in respect thereof from the date of this Agreement until (and including)
the Closing Date. Each Vendor shall
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keep the Purchaser informed in a reasonable and timely manner about the status
of any such policies and the extent to which the interests of the Purchaser have
been noted.
17.2 Subject to clause 17.1, the Purchaser acknowledges and agrees (on behalf of
itself and each member of the Purchaser's Group) that upon Closing all insurance
cover provided in relation to the ICI Business pursuant to policies maintained
by ICI's Group (whether such policies are maintained with third party insurers
or with other members of that Vendor's Group) shall cease and that no further
liability shall arise under such policies provided however that (subject to the
terms of any relevant policy):
(a) the foregoing is without prejudice to any insurance claims which the
Companies or the Business Vendors (in relation to the ICI Business or the
PO/MTBE Business) may have made to insurers prior to Closing (and in
relation to any claim other than third party liability and product
liability claims, which shall be paid directly by the insurer to third
parties, such Companies or Business Vendors shall account to the Purchaser
for any proceeds to the extent that any receivables for such claims are
included in the Closing Working Capital); and
(b) such insurance cover shall continue in respect of matters occurring prior
to Closing in accordance with the terms of the relevant policy provided
that (and the Purchaser agrees that) the deductibles for each claim in
relation to such cover shall be $5 million on property damage and business
interruption, $3 million on North American liability (including products
liability) and zero on the rest of the world liability provided also that
the relevant claim is notified to the relevant insurer within 60 days of
Closing.
The Purchaser agrees to procure that each member of the Purchaser's Group shall
not after Closing bring any claim under such insurance cover in respect of
matters occurring prior to Closing except for claims notified to the relevant
insurer within 60 days of Closing (Notified Claims).
The Purchaser shall procure insurance coverage for claims incurred but not
reported to the relevant insurers prior to Closing, other than Notified Claims.
HSCC undertakes to the Purchaser that if any member of the Purchaser's Group is
subject to an insurance programme to which an entity or entities in HSCC's Group
(outside the Purchaser's Group) are also subject, HSCC shall reinstate the
policies and their limits. If any additional premium becomes payable where any
members of the Purchaser's Group or HSCC's Group exhaust the limits of such
insurance programmes pursuant to such
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reinstatement: (a) HSCC shall bear the additional premium in the proportion
which the aggregate claims of the HSCC Group in the period in which the limits
were exhausted bears to the aggregate claims of the Purchaser's Group and HSCC's
Group in such period; and (b) the Purchaser shall bear the additional premium in
the proportion which the aggregate claims of the Purchaser's Group in the period
in which the limits were exhausted bears to the aggregate claims of the
Purchaser's Group and the HSCC Group in such period.
The Purchaser undertakes to procure that the interests of the Vendor's Group
shall be noted on all relevant insurance policies relating to either or both of
the ICI Business and the PO/MTBE Business.
Post Closing Undertakings
18.1 ICI undertakes to the Purchaser for itself and as trustee (for each member
of the Purchaser's Group) that it will:
(a) use all reasonable endeavours to obtain, as soon as reasonably practicable
after Closing (or, as the case may be, Delayed Closing) and in any event
within one (1) month afterwards, the release of each of the Companies and
of any entity in which a Joint Venture Interest is held from any Intra
Group Guarantees to which it is a party and, pending such release, to
indemnify each such Company or entity on an after Tax basis against all
amounts paid by it to any person pursuant to any such Intra Group Guarantee
in respect of any liability of any member of ICI's Retained Group (and all
Costs incurred in connection with such liability) whether arising before or
after Closing; and
(b) procure the repayment in the ordinary and usual course of business by the
members of its Retained Group of all Intra Group Trading Indebtedness owed
as at Closing.
18.2 The Purchaser undertakes to ICI (for itself and as trustee for each other
member of its Retained Group) that it will:
(a) use all reasonable endeavours to obtain, as soon as is reasonably
practicable after Closing (or, as the case may be, Delayed Closing) and in
any event within one (1) month afterwards, the release of each member of
ICI's Retained Group from any Intra Group Guarantees to which it is a party
and, pending such release, to indemnify the relevant member on an after Tax
basis against all amounts paid by it to any third party pursuant to any
such Intra Group Guarantee in respect of any liability of any of the
Companies or of any entity in which a Joint
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Venture Interest is held (and all Costs incurred in connection with such
liability) whether arising before or after Closing;
(b) procure that:
(i) as soon as reasonably practicable after Closing and, in any event
within 12 months afterwards, the Purchaser's Group shall cease in
any manner whatsoever to use or display the ICI Roundel;
(ii) each member of the Purchaser's Group shall cease all use of the
ICI name and trade mark and shall take all necessary steps to
change its company name to a name not including the ICI name or
any confusingly similar name after the Closing Date in accordance
with the provisions of clause 9 of the ICI Trade Mark Licence;
and
(iii) each member of the Purchaser's Group in any event complies with
the terms of the ICI Trade Mark Licence; and
(c) procure the repayment in the ordinary and usual course of business by the
Companies of all Intra Group Trading Indebtedness (except for Intra Group
Trading Indebtedness owed by Louisiana Pigment Company L.P) owed as at
Closing.
18.3 After Closing (or, as the case may be, the relevant Delayed Closing Date),
each Vendor shall and shall procure that each relevant member of its Retained
Group shall, and the Purchaser shall and shall procure that each relevant member
of the Purchaser's Group shall from time to time, do, execute and deliver, (in
each case at its own cost) at the reasonable request of the other party and in a
form which is reasonably satisfactory to the other party, all such further acts,
deeds, documents, instruments of assignment and transfer as may be necessary to
complete the sale and purchase of the Sale Shares, the Local Businesses and the
Business IPR in accordance with the terms of this Agreement and otherwise to
give effect to the terms of this Agreement and to secure to the parties the full
benefit of the rights, powers and remedies conferred upon the parties in this
Agreement.
18.4 The Purchaser shall, and it shall procure that each member of its Group
shall, provide ICI at ICI's cost excluding any costs of management time spent
with such information and the services of such relevant employees as it
reasonably requests and as is necessary for the purposes of preparing business
accounts in respect of the period up to the Closing Date in accordance with
ICI's reporting requirements and timetable and all other assistance as ICI shall
reasonably require for those purposes.
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18.5 For a period of ten (10) years after Closing, the Purchaser shall and
shall procure that each member of the Purchaser's Group shall give each Vendor,
the Business Vendors and ICI's Accountants reasonable access at all reasonable
times, and provide copies of, all books and records delivered to the Purchaser
on or after Closing relating to the ICI Business or, as the case may be, the
PO/MTBE Business in their respective possession or control as are reasonably
required for the purposes of drawing up the accounts of the Business Vendors and
any other purposes including Tax matters, and the Purchaser shall procure that
none of such books, records or files is destroyed or disposed of without the
prior written consent of the relevant Vendor.
ICI shall, and shall procure that each member of the Group shall, provide the
Purchaser (at the Purchaser's cost, excluding any costs of management time
spent) with such information and the services of such relevant employees as it
reasonably requests and as is necessary for the purposes of preparing business
accounts in respect of the period of two years from the Closing Date in
accordance with the Purchaser's reporting requirements and timetable and all
other assistance as the Purchaser shall reasonably require for those purposes.
18.6 HSCC shall assign to HIC all of its rights under the consolidation
agreement dated 21 March 1997 (the Consolidation Agreement). If HSCC's rights
under the Consolidation Agreement are not assigned to HIC, or if such rights are
assigned but Huntsman Petrochemical Corporation ceases at any time to credit to
HIC an annual amount of $12 million as a consolidation fee credit pursuant to
that agreement, HSCC shall either pay or, at its option, procure that Huntsman
Petrochemical Corporation pays, the sum of $12 million to HIC annually through
15 April 2008.
18.7 Other than a claim under the Environmental Covenant (to which Schedule 14
and/or Schedule 14A shall apply), the Purchaser acknowledges and agrees that it
shall, and shall procure that any member of the Purchaser's Group shall, provide
each Vendor's Group, from time to time (at the cost of such Vendor's Group),
with all cooperation and assistance as may be reasonably requested by the
relevant Vendor or any member of its Group in connection with its Group's
review, investigation or defence of any matter in relation to third party
claims, proceedings or litigation (whether pending or threatened) involving that
Vendor or any member of its Group. The obligations of the Purchaser shall be
subject to the qualification that it shall not be required to render any co-
operation or assistance which in its reasonable opinion would or would be likely
to prejudice the interests of the Purchaser or any member of its Group.
18.8 Notwithstanding any other provision of this Agreement, the Vendor and
other members of the Vendor's Group shall be entitled to retain originals
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or copies of all files, books, personnel, and records relating to litigation
existing at Closing, whether or not currently in their possession.
18.9 If in consequence of a mistake any property rights or liabilities of
either Vendor or any Business Vendor are transferred contrary to the terms of
this Agreement to the Purchaser or a member of the Purchaser's Group then the
Purchaser and, if applicable, the relevant Vendor or Business Vendor shall
execute such documents and take such other steps as may be reasonably requested
by the other party to remedy the mistake.
18.10 ICI acknowledges that certain of the Business IP Licences relating to the
ICI Business provide for licences of the "ICI" and ICI Roundel trade marks and
agrees to grant to the Purchaser such rights in these marks as are necessary for
the purposes of fulfilling the Purchaser's obligations under such licences for
the term of such licences, provided always that the Purchaser agrees to use its
reasonable endeavours within a reasonable period to agree amendments to such
licences such that the "ICI", "ICI Roundel" and ICI Roundel trade marks cease to
be the subject of such licences.
18.11 In the event that the Purchaser or any member of the Purchaser's Group
incurs any Texaco Environmental Losses, HSCC shall, to the extent permitted
under Section 10.4(c) of the Texaco Purchase Agreement, assign to the Purchaser
or such member of the Purchaser's Group all of HSCC's rights under Part 6 of the
Texaco Purchase Agreement in respect of such Texaco Environmental Losses.
18.12 Each of HSCC and the Purchaser or any such member of the Purchaser's
Group agrees to co-operate with the other in connection with the pursuit by
either party of any indemnity from Texaco under Part 6 of the Texaco Purchase
Agreement with respect to any Texaco Environmental Losses or potential or
threatened Texaco Environmental Losses; provided, however, that notwithstanding
the foregoing, nothing contained herein shall require the Purchaser or any such
member of the Purchaser's Group to perform or assume any of HSCC's liabilities
under Section 6.3 of the Texaco Purchase Agreement.
18.13 HSCC has disclosed to ICI that HSCC is a party to a continuing agreement
dated March 21, 1997 with a third party relating to the supply of propylene
oxide (the POS Agreement). For reasons of confidentiality HSCC has not
disclosed the terms and conditions of the POS Agreement (other than clause 25)
to ICI which has not been able to assess the risks and liabilities associated
with the POS Agreement and therefore without prejudice to the right of the
Purchaser or any member of the Purchaser's Group under any other provisions of
this Agreement, HSCC undertakes to indemnify and to
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keep indemnified on an after Tax basis the Purchaser for itself and as agent for
each member of the Purchaser's Group (including, after Closing, the Companies)
against all Costs incurred, made or suffered by the Purchaser or any member of
the Purchaser's Group (including, after Closing, the Companies) to the extent
that such Costs arise from termination of the POS Agreement by this third party
because of any violation of the terms of the POS Agreement, including without
limitation clause 25 thereof, resulting from the assignment of the POS Agreement
to the Purchaser.
18.14 If, at any time after Closing, it is necessary for the Purchaser or any
Designated Purchaser to prove its entitlement to the benefit of a debt the
benefit of which is assigned to it under or pursuant to this Agreement, then at
the request of any party the relevant Vendor and the Purchaser shall execute, or
shall procure that the relevant members of their respective Groups shall
execute, a separate document to provide for the assignment of that debt on terms
consistent with this Agreement.
Domain Names
19.1 ICI shall take all reasonable steps to transfer any domain name
registrations in the name of any member of its Retained Group which Relate to
the ICI Business into the name of the Purchaser or its nominee and agrees that
the Purchaser or its nominee shall take over operation of the relevant web
sites, in each case as soon as practicable after the Closing Date.
19.2 In respect of any domain name transferred pursuant to clause 19.1, the
Purchaser shall as soon as reasonably practicable change the name or cancel the
name as necessary so as to remove any and all references to the "ICI" name.
19.3 HSCC shall take all reasonable steps to transfer any domain name
registrations in the name of any member of its Retained Group which Relate to
the PO/MTBE Business into the name of the Purchaser or its nominee and agrees
that Purchaser or its nominee shall take over operation of the relevant web
sites, in each case as soon as practicable after the Closing Date.
Costs
20.1 Subject to clauses 20.2 and 20.3 and save as otherwise provided in this
Agreement, each party shall pay (on behalf of itself and members of its Group)
any costs and expenses (including without limitation, and save as otherwise
provided in this Agreement, any stamp or other documentary or transaction duties
and any other transfer taxes) incurred by it or by any member of its Group in
connection with the negotiation, preparation,
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completion and implementation of the transactions contemplated by this Agreement
and each of the agreements referred to herein.
20.2 The costs incurred prior to the date of this Agreement in instructing
lawyers in relevant jurisdictions (other than England and Wales, the USA,
Belgium, the Netherlands and France) in connection with the transactions
contemplated by this agreement shall be borne by the Purchaser. If this
Agreement terminates or is terminated (save for the survival of certain
specified clauses including this clause) the following costs and expenses shall
be shared equally between ICI and HSCC:
(a) fees payable to the lenders under the Senior Credit Agreement or the
Senior Subordinated Credit Agreement;
(b) out-of-pocket expenses and legal fees of the lenders under the Senior
Credit Agreement or the Senior Subordinated Credit Agreement as agreed
pursuant to the terms of such agreements;
(c) all obligations derived from currency and interest rate hedging
instruments entered into in the normal course of business as agreed by ICI
and HSCC.
20.3 The costs (excluding, for the avoidance of doubt, any stamp or other
documentary or transaction duties and any other transfer taxes) incurred by any
party in implementing the steps set out in Schedule 4 and 18 shall be borne by
the parties as set out below:
(a) Schedule 4
- --------------------------------------------------------------------------------
Paragraph Party who shall bear costs
- --------------------------------------------------------------------------------
1 HSCC
- --------------------------------------------------------------------------------
2 ICI
- --------------------------------------------------------------------------------
2A Equity Investors
- --------------------------------------------------------------------------------
3 n/a
- --------------------------------------------------------------------------------
4 Each party shall bear its own costs
- --------------------------------------------------------------------------------
5 the Purchaser
- --------------------------------------------------------------------------------
5A & 6A HSCC
- --------------------------------------------------------------------------------
6 the Purchaser
- --------------------------------------------------------------------------------
7-10 (inclusive) the Purchaser
- --------------------------------------------------------------------------------
11-22 (inclusive) Each party shall bear its own costs
- --------------------------------------------------------------------------------
23-49 (inclusive) the Purchaser
- --------------------------------------------------------------------------------
50 ICI
- --------------------------------------------------------------------------------
51 the Purchaser
- --------------------------------------------------------------------------------
52 the Purchaser
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
53 the Purchaser
- --------------------------------------------------------------------------------
54 ICI
- --------------------------------------------------------------------------------
(b) Schedule 18
- --------------------------------------------------------------------------------
Paragraph Party who shall bear costs
- --------------------------------------------------------------------------------
1(a) ICI
- --------------------------------------------------------------------------------
1(b), (c), (d), (e), (ee), (f), (g) the Purchaser
- --------------------------------------------------------------------------------
2(a)-(d) (inclusive) ICI
- --------------------------------------------------------------------------------
2(e) and (f) the Purchaser
- --------------------------------------------------------------------------------
3(a)-(m) ICI
- --------------------------------------------------------------------------------
3(n) the Purchaser
- --------------------------------------------------------------------------------
4 Each party shall bear its own costs
- --------------------------------------------------------------------------------
5 & 6 Each party shall bear its own costs
- --------------------------------------------------------------------------------
7 the Purchaser
- --------------------------------------------------------------------------------
8 Purchaser (save as otherwise expressly
provided in paragraph 8 of Schedule 18)
- --------------------------------------------------------------------------------
9 Purchaser
- --------------------------------------------------------------------------------
10 Purchaser
- --------------------------------------------------------------------------------
11 Purchaser
- --------------------------------------------------------------------------------
12 Purchaser
- --------------------------------------------------------------------------------
13 ICI
- --------------------------------------------------------------------------------
20.4 If either Vendor or any member of its Group incurs any expenditure which
is to be borne by the Purchaser under the terms of this Agreement, then the
parties shall procure that, as soon as reasonably practicable after Closing, the
Purchaser shall reimburse the relevant members of their respective Groups for
the costs and expenses so incurred.
20.5 The Purchaser shall pay all costs and expenses (including, without
limitation, any stamp or other documentary or transaction duties and other
transfer taxes) resulting from the transfer to it of the Business IPR, save for
any incremental costs and expenses which are incurred by the Purchaser or any
other member of the Purchaser's Group as a result of any of the Registered
Rights not having been registered in the name of the correct registered
proprietor or applicant within the relevant Vendor's Retained Group as at
Closing, which incremental costs shall promptly be reimbursed to the Purchaser
by the relevant Vendor.
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Performance by Group Members
21.1 Each party shall procure (in respect of any member of its Group which is
not wholly-owned, only insofar as it is able) that the members of its Group
perform:
(a) all obligations under this Agreement which are expressed to relate to
members of its respective Group; and
(b) all obligations under any agreement entered into by any member of its
Group pursuant to this Agreement (including, without limitation, all of
the Transaction Agreements).
The liability of a party under this clause 21 shall not be discharged or
impaired by any amendment to or variation of this Agreement, any release of or
granting of time or other indulgence to any member of its Group or any third
party or any other act, event or omission which but for this clause would
operate to impair or discharge the liability of such party under this clause 21.
21.2 ICI Polyurethanes (Asia Pacific) Pte Ltd is party to a letter agreement
dated 8 December 1998, a copy of which is contained in the Data Room at
Reference FS6/30/3. The Purchaser undertakes to ICI that it shall be bound by
the terms of the said letter agreement and ICI hereby agrees that it shall
provide the Purchaser with all reasonable assistance in implementing such letter
agreement.
Announcements
22.1 From the date of this Agreement until Closing or termination of this
agreement no formal public announcement or press release in connection with the
signature or subject matter of this Agreement shall (subject to clause 22.2) be
made or issued by or on behalf of any party or any member of its Group upon the
signing of this Agreement or at any time between the date hereof and Closing
(or such other date, if any, upon which this Agreement terminates in accordance
with clause 4) without the prior written approval of the other parties (such
approval not to be unreasonably withheld or delayed).
22.2 If a party has an obligation to make or issue any announcement required by
law or by any stock exchange or by any governmental authority, the relevant
party shall give the other parties every reasonable opportunity to comment on
any announcement or release before it is made or issued (provided that this
shall not have the effect of preventing the party making the announcement or
release from complying with its legal and/or stock exchange obligations).
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22.3 No formal public announcement or press release in relation to the
termination of this Agreement shall be made or issued by or on behalf of any
party or any member of its Group save that ICI may make such announcement as is
required by applicable law and regulations containing the minimum amount of
information necessary to comply with the relevant requirements. HSCC may make
an announcement in relation to such termination provided that it contains only
the issues addressed in ICI's announcement to a level of detail which is
consistent with that in ICI's announcement. ICI and HSCC shall each give the
other every reasonable opportunity to comment on the respective announcement
referred to above (provided that this could not have the effect of preventing
ICI from complying with its obligations under applicable law and regulations).
Restrictions on the vendors
23.1(A) ICI undertakes to the Purchaser that it shall not, and shall procure
that each other member of its Retained Group shall not, for a period of five
years from the date hereof, carry on or be engaged in or control any business
which competes directly or indirectly with the ICI Business and/or the PO/MTBE
Business as conducted immediately prior to Closing in the countries in which
either of the ICI Business or the PO/MTBE Business, respectively, is carried on
at Closing.
23.1(B) If, at any time on or after the expiry of three years after Closing,
there ceases to be any member of ICI's Group holding, directly or indirectly,
any shareholding or other membership interest (other than Class A Shares issued
by a Subsidiary of the Purchaser as referred to in paragraph 1 of Schedule 18)
(membership interest) in the Purchaser or any member of the Purchaser's Group or
any holding company of the Purchaser, the undertaking set out in clause 23.1(A)
above shall terminate and, in replacement therefor, ICI undertakes to the
Purchaser that it shall not, and shall procure that each other member of its
Retained Group shall not, until the expiry of two years after it ceases to hold,
directly or indirectly, such membership interest, carry on or be engaged in or
control any business which competes directly or indirectly with the ICI Business
and/or the PO/MTBE Business as conducted at the time there ceases to be any
member of ICI's Group holding, directly or indirectly, such membership interest,
in the countries in which either of the ICI Business or the PO/MTBE Business,
respectively, is carried on at such time.
23.1(C) Nothing in clause 23.1(A) or (B) shall prevent any member of ICI's Group
from:
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(a) carrying on or being engaged in or economically interested in any business,
(not being part of the ICI Business), which, in the case of clause 23.1(A),
at the time of Closing or, in the case of clause 23.1(B), at the time ICI
ceases to hold, directly or indirectly, a membership interest in the
Purchaser or any member of the Purchaser's Group or any holding company of
the Purchaser, it carries on or is engaged in or economically interested in
or any reasonable extension or development thereof. For the avoidance of
doubt, it is agreed that neither the manufacture nor the sale of
Isocyanates is a reasonable extension or development of any business which
any member of ICI's Group currently carries on or is engaged in or
economically interested in; provided however that, nothing contained in
this clause 23 shall operate to prevent any member of ICI's Group from
continuing to purchase Isocyanates for formulation by ICI's Group into
systems sold by ICI's Group within the fields of coatings, adhesives,
sealants, encapsulants and paper. For the purposes of this clause 23,
Isocyanates means those isocyanates described in subparagraphs (iv) to
(vii) of the definition of "Polyurethanes Business" together with
hexamethylenediisocyanate and isophoronediisocyanate;
(b) carrying on or being engaged in or economically interested in any business
of a like nature to the whole or any part of the Polyurethanes Business,
the Relevant Petrochemicals Business, the Tioxide Business or the PO/MTBE
Business after such time as the Purchaser has ceased and indicated an
intention permanently to cease carrying on or being engaged or economically
interested in a substantial part of the relevant one of such businesses, as
the case may be, provided that this sub-clause (b) shall only apply if the
part of the relevant one of such businesses, as the case may be, to be
continued by the Purchaser is insignificant in the context of the relevant
one of such businesses taken as a whole;
(c) being the holder of shares (conferring not more than 5 per cent. of the
votes which would normally be cast at a general meeting of that company) or
debentures or other securities listed, quoted or dealt in on any securities
or investment exchange or quotation system of a company which is engaged in
any business of a like nature to the whole or any part of the businesses
referred to in clause 23.1(A) or clause 23.1(B);
(d) acquiring by acquisition or merger the whole or any part of a business that
includes activities the carrying on of which would otherwise amount to a
breach of the undertakings contained in clause 23.1(A)
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and clause 23.1(B) if the turnover of such activities does not exceed the
greater of $150 million per annum or 15 per cent. of the aggregate turnover
of the business concerned;
(e) throughout the period during which ICI retains any interest in the Olefins
Manufacturing Business, carrying on the Olefins Manufacturing Business in
accordance with the Olefins Agreements (as defined in the Co-operation
Agreement) and the Co-operation Agreement, provided that, on any disposal
of its interest in the Olefins Manufacturing Business, the undertakings in
clause 23.1(A) and clause 23.1(B) shall, after such disposal, apply in
accordance with the entirety of this clause 23;
(f) continuing to hold interests in businesses to which clause 16 or Schedule
16 apply.
23.2(A) HSCC undertakes to the Purchaser that it shall not, and shall procure
that each other member of its Retained Group shall not, for a period of five
years from the Closing Date or until the date on which ICI ceases to hold,
directly or indirectly, any membership interest in the Purchaser, whichever
shall be the earlier, carry on or be engaged in or control any business which
competes directly or indirectly with the ICI Business and/or the PO/MTBE
Business as conducted immediately prior to Closing in the countries in which
either of the ICI Business or the PO/MTBE Business, respectively, is carried on
at Closing.
23.2(B) Nothing in sub-clause (A) shall prevent any member of the HSCC Group
from:
(a) carrying on or being engaged in or economically interested in any business,
(not being part of the PO/MTBE Business), which at Closing it carries on or
is engaged in or economically interested in or any reasonable extension or
development thereof;
(b) carrying on or being engaged in or economically interested in any business
of a like nature to the whole or any party of the Polyurethanes Business,
the Relevant Petrochemicals Business, the Tioxide Business or the PO/MTBE
Business after such time as the Purchaser ceased and indicated an intention
permanently to cease carrying on or being engaged or economically
interested in a substantial part of the relevant one of such businesses, as
the case may be, provided that this sub-clause (b) shall only apply if the
part of the relevant one of such businesses, as the case may be, to be
continued by the Purchaser is
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insignificant in the context of the relevant one of such businesses taken
as a whole;
(c) being the holder of shares (conferring not more than 5 per cent. of the
votes which would normally be cast at a general meeting of that company) or
debentures or other securities listed, quoted or dealt in on any securities
or investment exchange or quotation system of a company which is engaged in
any business of a like nature to the whole or any part of the businesses
referred to in clause 23.2(A);
(d) acquiring by acquisition or merger the whole or any part of a business that
includes activities the carrying on of which would otherwise amount to a
breach of the undertaking contained in clause 23.2(A) if the turnover of
such activities does not exceed the greater of $150 million per annum or 15
per cent. of the aggregate turnover of the business concerned;
(e) continuing to hold interests in businesses to which clause 16 or Schedule
16 apply.
23.3 Each Vendor undertakes that it shall not, and shall procure that each other
member of its Group shall not for as long as it remains such a member, directly
or indirectly, and for one year thereafter, solicit or entice away from any
member of the Purchaser's Group any Senior Employee or persuade any such Senior
Employee to leave the employment of any member of the Purchaser's Group except
that this shall not prevent any member of either Retained Group from offering
employment to:
(a) any Senior Employee whose employment with the relevant member of the
Purchaser's Group has then ceased or who has given (or received) notice
terminating such employment; and
(b) any Senior Employee who responds to any public recruitment advertisement
placed by or on behalf of that member.
23.4 ICI shall not and shall procure that no member of its Retained Group shall
do or authorise any other person to use any trade mark, trade name or business
name which Relates to the ICI Business as at the Closing Date in a manner which
is likely to cause confusion.
23.5 HSCC shall not and shall procure that no member of its Retained Group
shall do or authorise any other person to use any trade mark, trade name or
business name which Relates to the PO/MTBE Business as at the Closing Date in a
manner which is likely to cause confusion.
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23.6 HSCC shall not and shall procure that no member of its Retained Group
shall use or disclose (or authorise any person to use or disclose) within the
period of 5 years after Closing any of the confidential customer lists, sales,
marketing and promotional literature, business plans and forecasts comprised in
the Business Information to the extent that the same are used exclusively in the
PO/MTBE Business as at Closing.
23.7 ICI undertakes to the Purchaser that it shall not, and shall procure that
no member of its Retained Group shall, use or disclose (or authorise any person
to use or disclose) within the period of 5 years after Closing or, if longer,
until the date which is two years after there ceases to be any member of ICI's
Group holding, directly or indirectly, any shareholding or other membership
interests (other than Class A Shares issued by a Subsidiary of the Purchaser, as
referred to in clause 1 of Schedule 18) in the Purchaser or any member of the
Purchaser's Group or any holding company of the Purchaser, any of the
confidential customer lists, sales, marketing and promotional literature,
business plans and forecasts comprised in the Business Information to the extent
that the same are used exclusively in the ICI Business as carried on at Closing.
23.8 The obligations in clauses 23.6 and 23.7 shall not apply to any
information which: (i) is already part of the public domain; or (ii) after the
Closing Date becomes part of the public domain otherwise than as a result of a
breach of clause 23.6 or 23.7; or (iii) is independently developed by the
relevant party or lawfully acquired by the relevant party from a third party.
23.9 Each undertaking contained in this clause shall be construed as a separate
undertaking and if one or more of the undertakings is held to be against the
public interest or unlawful or in any way an unreasonable restraint of trade,
the remaining undertakings shall continue to bind each Vendor.
Entire Agreement
24.1 This Agreement, the Ancillary Agreements, the Confidentiality Agreements,
the Disclosure Letters and all other contracts, agreements and arrangements to
be entered into pursuant to the terms of this Agreement (together the Relevant
Agreements) together constitute the whole and only agreement between the parties
relating to the sale and purchase of the ICI Business and the PO/MTBE Business
and any prior drafts, agreements, undertakings, representations, warranties and
arrangements of any nature whatsoever, whether or not in writing, relating
thereto are superseded and extinguished.
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24.2 Each party acknowledges and agrees (for itself and on behalf of each other
member of its Group) with each other party (for itself and as agent for each
other member of its Group and for any of its or their respective Related
Persons) that:
(a) it does not rely on and has not been induced to enter into this Agreement
or any other Relevant Agreement the basis of any assurance, representation
or warranty (express or implied) made or given by or on behalf of any
member of either of the other two parties' Groups or any of their
respective Related Persons (save as may be expressly agreed with the
relevant Related Person) other than those expressly set out in this
Agreement or in such other Relevant Agreement or document expressly
referred to herein or, to the extent that it has so relied and/or been so
induced, it has (in the absence of fraud) no rights or remedies in relation
thereto and shall make no claim in relation thereto against such parties;
(b) no member of either of the other two parties' Groups, or any of their
respective Related Persons, owes any duty of care to any member of that
party's Group other than those expressly set out in this Agreement or any
other Relevant Agreement; and
(c) any warranty or other rights which may be implied by law in any
jurisdiction in relation to the sale of the Sale Shares, the Local
Businesses the Business IPR in such jurisdiction shall be excluded or, if
incapable of exclusion, irrevocably waived and it agrees to indemnify each
member of either of the other two parties' Groups and their respective
Related Persons in respect of any Costs arising or incurred as a result of
claims under any such implied warranties and other rights by that party or
any other member of its Group or their respective successors in title (in
the case of the Purchaser, including without limitation any providers of
finance to the Purchaser).
24.3 This clause shall not exclude any liability for, or remedy in respect of,
fraudulent misrepresentation by a party or any of its Related Persons or where
it is otherwise unlawful to do so.
24.4 The parties hereby agree that the provisions of this Agreement shall
prevail over the terms of any local sale agreement in any jurisdiction and that
any terms of any such local sale agreement which are adverse to the position of
any party or member of its Group pursuant to this Agreement shall not be given
effect as between the parties to this Agreement and shall not operate to reduce
or increase in any way the Purchaser's rights or obligations hereunder
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or to reduce or increase either Vendor's rights or obligations hereunder (or the
rights or obligations of any member of their respective Groups).
Variation
25.1 No variation of this Agreement (or of any of the documents referred to in
this Agreement) shall be valid unless it is in writing and signed by or on
behalf of each of the parties to it. The expression "variation" shall include
any variation, supplement, deletion or replacement however effected.
25.2 Any variation prior to Closing which would have a material adverse impact
on the position of the providers of finance under the Financing Agreements (in
relation to their rights and obligations thereunder) shall only be made with the
prior consent of Bankers Trust Company and Goldman Sachs Credit Partners L.P.
Assignment
26.1 No party shall be entitled to assign the benefit of any provision of this
Agreement without the prior written approval of the other party except that:
(a) the Purchaser may, upon giving written notice to each party, assign the
benefit of this Agreement in whole or in part (subject, for the avoidance
of doubt, to all limitations contained herein including, without
limitation, limitations on claims under the Warranties) to one or more
members of the Purchaser's Group (a Permitted Assignee) subject to the
condition that if such Permitted Assignee shall subsequently cease to be a
member of the Purchaser's Group, the Purchaser shall procure that prior to
its ceasing to be a member of the Purchaser's Group the Permitted Assignee
shall assign so much of the benefit of this Agreement as has been assigned
to it to the Purchaser or (upon giving further written notice to the
Vendors) to another member of the Purchaser's Group;
(b) the Purchaser may, upon giving written notice to each party, assign the
benefit of this Agreement in whole or in part to a person to whom it
transfers the ICI Business (or any part thereof) at the direction of the
providers of finance or their representatives pursuant to the Financing
Agreements and any such successor may effect assignments (including the
benefit of this clause) in the same manner;
(c) the Purchaser may, upon giving written notice to each party, assign the
benefit of this Agreement in whole to the providers of finance or their
representative(s) pursuant to the Financing Agreements and any
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such providers of Finance or representatives may effect assignments
(including the benefit of this clause) in the same manner,
PROVIDED THAT:
(1) the assignee (including successors) undertakes in writing to the
Vendors to be bound by and (where applicable) to perform all the
relevant obligations and limitations of the Purchaser under this
Agreement in relation to the benefits assigned;
(2) any such assignment (including to successors) shall for the
avoidance of doubt, be subject to all limitations contained herein,
including, without limitation, limitations on Claims;
(3) if there is an assignment (including to successors) of part of the
benefit of this Agreement, such assignment shall only be effective
if: (A) such assignee(s) and the Purchaser shall have first
appointed a single person (the Agent, who may be the Purchaser or
one of the assignees) to be their agent for the purpose of bringing
claims against the Vendor, and informed the Vendor in writing of
the identity of such Agent; and (B) all claims by the Purchaser or
any of the assignees under this Agreement against the Vendor shall
be made by the Agent;
Any purported assignment in contravention of this clause shall be void.
26.2 If any assignment is made pursuant to clause 26.1 above, the liability of
ICI under this Agreement shall be no greater, and no less, than such liabilities
would have been had such assignment not occurred.
Severability
27. If any provision of this Agreement is held to be invalid or unenforceable,
then such provision shall (so far as it is invalid or unenforceable) be given no
effect and shall be deemed not to be included in this Agreement but without
invalidating any of the remaining provisions of this Agreement.
Counterparts
28. This Agreement may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which is an original but all of
which together constitute one and the same instrument.
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Notices
29.1 Any notice or other communication to be given by one party to another
under, or in connection with, this Agreement shall be in writing and signed by
or on behalf of the party giving it. It shall be served by sending it by fax to
the number set out in clause 29.2, or delivering it by hand to the address set
out in clause 29.2 and in each case marked for the attention of the relevant
party set out in clause 29.2 (or as otherwise notified from time to time in
accordance with the provisions of this clause 29). Any notice so served by hand
to or fax shall be deemed to have been duly given:
(a) in the case of delivery by hand, when delivered;
(b) in the case of fax, when received;
provided that in each case where delivery by hand or by fax occurs after 6pm on
a Business Day or on a day which is not a Business Day, service shall be deemed
to occur at 9am on the next following Business Day.
References to time in this clause are to local time in the country of the
addressee.
29.2 The addresses and fax numbers of the parties for the purpose of clause
29.1 are as follows:
ICI
Address: Imperial Chemical House
Millbank
London SW1P 3JF
United Kingdom
Fax: 0171 798 5834
For the attention of: The Company Secretary
HSCC
Address: 500 Huntsman Way
Salt Lake City
Utah 84108
USA
Fax: 001 801 584 5781
For the attention of: President
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<PAGE>
With a copy to: General Counsel (fax: 001 801 584 5782)
HIC
Address: 500 Huntsman Way
Salt Lake City
Utah 84108
USA
Fax: 001 801 584 5781
For the attention of: President
With a copy to: General Counsel (fax: 001 801 584 5782)
Purchaser
Address: 500 Huntsman Way
Salt Lake City
Utah 84108
USA
Fax: 001 801 584 5782
For the attention of: Chief Executive Officer
With a copy to: General Counsel (fax: 001 801 584 5782)
29.3 A party may notify the other parties to this Agreement of a change to its
name, relevant addressee, address or fax number for the purposes of this clause
29, provided that, such notice shall only be effective on:
(a) the date specified in the notice as the date on which the change is to take
place; or
(b) if no date is specified or the date specified is less than five (5)
Business Days after the date on which notice is given, the date following
five (5) Business Days after notice of any change has been given.
India and Pakistan
30. The parties have agreed that the businesses conducted by ICI India and ICI
Pakistan are not to be transferred to the Purchaser. ICI and HSCC nevertheless
each undertake to use reasonable endeavours to ensure that as soon as reasonably
practicable each of those companies separately enter into a commercial
arrangement with the Purchaser or a member of the Purchaser's Group which would
create a relationship between the Purchaser's Group
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relating to the Polyurethanes Business and that company the economic effect of
which on the Purchaser's Group on the one hand and on ICI India or, as the case
may be, ICI Pakistan on the other hand is substantially the same as the economic
effect which the existing arrangements between the members of ICI's Group and
ICI India or, as the case may be, ICI Pakistan have at the date of this
Agreement.
Governing law, jurisdiction and Service of Process
31.1 This Agreement and the relationship between the parties shall be governed
by, and interpreted in accordance with, English law.
Jurisdiction
31.2 All parties agree that the Courts of England are to have exclusive
jurisdiction to settle any dispute (including claims for set off and
counterclaim) which may arise in connection with the creation, validity, effect,
interpretation or performance of, or the legal relationships established by this
Agreement or otherwise arising in connection with this Agreement and for such
purposes irrevocably submit to the jurisdiction of the English Courts.
Service of process
31.3 Each of HSCC and the Purchaser shall at all times maintain an agent for
service of process and any other documents in proceedings in England. The agent
for each of HSCC and the Purchaser shall be Trusec Limited currently of 35
Basinghall Street London. Any writ, judgment or other notice of legal process
shall be sufficiently served on HSCC or the Purchaser if delivered to its agent
at its address for the time being. If, for any reason the agent for HSCC or the
Purchaser ceases to act as such, HSCC or the Purchaser as the case may be shall
promptly appoint another such agent with an address in England and so advise
ICI. Failing such appointment and notification, ICI shall be entitled to
appoint an agent on behalf of either HSCC or the Purchaser at the expense of
either HSCC or the Purchaser. A copy of any document served on the agent of
HSCC or the Purchaser shall also be sent to HSCC or the Purchaser (as the case
may be) in accordance with the provisions of clause 29.
Exercise of Rights and Remedies
32.1 No delay or omission on the part of any party to this Agreement in
exercising any right, power or remedy provided under this Agreement or any other
documents referred to in it shall impair such right, power or remedy or operate
as a waiver thereof.
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32.2 The single or partial exercise of any right, power or remedy provided
under this Agreement or any document referred to in it shall not preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy except where expressly stated in this Agreement.
Confidentiality
33.1 Subject to clauses 33.2 and 33.3, each of the Confidentiality Agreements
shall remain in full force and effect notwithstanding the execution of this
Agreement, provided that:
(a) ICI or, as the case may be, HSCC shall be entitled to disclose information
to any of its Representatives (as defined in the First Confidentiality
Agreement) in the period between the execution of this Agreement and
Closing to enable them to familiarise themselves with the operation,
management and administration of the PO/MTBE Business or, as the case may
be, the ICI Business in anticipation of Closing subject to such disclosure
being made on the terms of the First Confidentiality Agreement and/or the
Second Confidentiality Agreement;
(b) neither ICI nor HSCC shall be entitled to require the other to procure the
return or destruction of information pursuant to clause 2.3 of the First
Confidentiality Agreement or clause 2.3 or 3.3 of the Second
Confidentiality Agreement save in circumstances where this Agreement has
been terminated in accordance with its terms;
(c) nothing in clause 2.2 of the First Confidentiality Agreement or clause 2.2
or 3.2 of the Second Confidentiality Agreement shall prevent ICI or, as the
case may be, HSCC disclosing information to the extent reasonably necessary
or desirable in order to comply with its respective obligations under
clauses 4.3 and 4.4;
(d) nothing in clause 3 of the First Confidentiality Agreement or clause 2.5 or
3.5 of the Second Confidentiality Agreement shall in any way affect or
prejudice any warranty, representation, covenant, undertaking or assurance
contained in this Agreement or any agreement to be entered into pursuant to
this Agreement; and
(e) the provisions of clauses 4 and 6 of the First Confidentiality Agreement
and clauses 2.6, 2.8, 3.6 and 3.8 of the Second Confidentiality Agreement
shall cease to have effect (but without prejudice to any antecedent breach
thereof) save in circumstances where this Agreement has been terminated in
accordance with its terms.
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33.2 Upon Closing, each of the Confidentiality Agreements shall be terminated
save to the extent that it relates to any business other than the ICI Business
or the PO/MTBE Business (but without prejudice to any antecedent breach
thereof).
33.3 In the event that this Agreement is terminated in accordance with its
terms, each of the Confidentiality Agreements shall remain in full force and
effect and the proviso to clause 33.1 shall cease to have effect.
Aniline Pipe
34. The provisions of Schedule 23 shall apply in relation to the Aniline Pipe
at Wilton.
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<PAGE>
SCHEDULE 1
COMPANY AND SHARE DETAILS
Part I: Share Sales on Closing
Polyurethanes
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Share Selling Company Name of Company Number and Class of Designated Purchaser Jurisdiction
shares owned and to be
sold (if applicable)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ICI PLC ICI Europe Limited 100 Ordinary Shares of Huntsman ICI England
(Pounds)1 each Polyurethanes (UK) Ltd
- ------------------------------------------------------------------------------------------------------------------------
ICI PLC Impkemix (No 46) Ltd 2 Ordinary Shares of Huntsman ICI England
(Pounds)1 each Polyurethanes (UK) Ltd
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Tioxide
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Share Selling Company Name of Company Number and Class of Designated Purchaser Jurisdiction
shares owned and to be
sold (if applicable)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ICI PLC Tioxide Group Ltd 280,999,000 fixed rate HIC England
preference shares of
(Pounds)1 each
100 ordinary shares of
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Page 140
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------
(Pounds)1 each
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Page 141
<PAGE>
Part II: Wholly owned subsidiary undertakings
Part A: Subsidiary Undertakings at the date of this Agreement and on Closing
Polyurethanes
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Current Parent Shareholder[s] Subsidiary Undertakings Jurisdiction of Incorporation of
Subsidiary Undertaking
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ICI Omicron BV ICI Holland BV ICI IOTA BV Netherlands
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Theta BV ICI Polyurethanes (China) ICI Polyurethanes (China) Ltd. China
Holdings BV
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Tioxide
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Current Parent Shareholder[s] Subsidiary Undertakings Jurisdiction of Incorporation of
Subsidiary Undertaking
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd Tioxide Europe NV/SA Belgium
Tioxide Europe SA (France)
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd Tioxide Canada Inc Canada
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd Tioxide Europe Ltd England
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd Tioxide Overseas Holdings Ltd England
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 142
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Current Parent Shareholder[s] Subsidiary Undertakings Jurisdiction of Incorporation of
Subsidiary Undertaking
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ICI PLC Tioxide Group Ltd Tioxide Group Services Ltd England
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd (5 shares Tioxide Europe SA France
are held by Tioxide Group Ltd
directors as nominees for
Tioxide Group Ltd)
Tioxide Europe Ltd
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd Tioxide Europe SRL Italy
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd British Titan Products Republic of South Africa
Southern Africa (Proprietary)
Ltd
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd Tioxide Europe AB Sweden
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Group Ltd Tioxide Europe Titanium Turkey
(500 Ordinary shares are held Pigmentleri Ticaret Ltd Sirketi
by Mustafa Hayri Baratcru as
Nominee for Tioxide Group Ltd)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
Part B: Additional Subsidiary Undertakings on Closing
Polyurethanes
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Current Parent Subsidiary Undertaking Jurisdiction of Incorporation of
Subsidiary Undertaking
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Gruppo ICI Mexico SA DE CV ICI Mex SA DE [C]V Mexico
Atlas DE Mexico SA DE CV
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Omicron BV ICI Holland BV Netherlands
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Theta BV ICI Polyurethanes (China) Netherlands
Holdings BV
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Omicron BV Chemical Blending Holland BV Netherlands
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Theta BV ICI Polyurethanes (Asia Singapore
Pacific) Pte Ltd
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Tioxide
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Current Parent Subsidiary Undertaking Jurisdiction of Incorporation of
Subsidiary Undertaking
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 144
<PAGE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ICI American Holdings Inc. Tioxide Americas Inc. Delaware, USA
- ----------------------------------------------------------------------------------------------------------------------------------
Deutsche ICI GmbH Tioxide Europe GmbH Germany
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Omicron BV Tioxide (Malaysia) Sdn Bhd Malaysia
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Espana SA Tioxide Europe SA Spain
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please note that this list is not exhaustive and does not include newcos being
established pursuant to Schedules 4 and 18
Page 145
<PAGE>
Part III: Controlled Joint Ventures
Tioxide
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Current Parent Name of Company Number and Class of Jurisdiction Immediate ICI
shares owned and to Parent
be sold (if
applicable)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Tioxide Southern Africa - Republic of South British Titan
(Proprietary) Ltd Africa Products Southern
Africa
(Proprietary) Ltd.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 146
<PAGE>
Part IV: Non-Controlled Joint Ventures
Polyurethanes
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Current Parent Name of Company Number and Class of Jurisdiction Immediate Parent
shares owned and to be
sold (if applicable)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ICI PLC Nippon Polyurethane 750,000 Ordinary Shares Japan ICI PLC
Industry Co Ltd of (Yen)500 each
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Omicron BV Steamelec BV (general - Netherlands ICI Holland BV
partner of Eurogen CV)
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Omicron BV Eurogen CV - Netherlands ICI Iota BV
This is a limited
partnership.
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Arabian Polyol Co Ltd 12,800 Ordinary Shares Saudi Arabia ICI PLC
of SAR 100 each
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Americas Inc. Rubicon Inc. 400,000 Common Class B Louisiana, USA ICI Americas Inc.
Shares of USD 1 each
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 147
<PAGE>
Tioxide
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Current Parent Name of Company Number and Class of Jurisdiction Immediate ICI Parent
shares owned and to be
sold (if applicable)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC Pacific Iron Products - Malaysia Tioxide (Malaysia) Sdn Bhd
Sdn Bhd
ICI Omicron BV
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Espana SA Oligo S.A. - Spain Tioxide Europe SA
- ----------------------------------------------------------------------------------------------------------------------------------
ICI American Holdings Louisiana Pigment - Delaware, USA Tioxide Americas Inc.
Inc. Company L.P.
This is a limited
partnership.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 148
<PAGE>
SCHEDULE 2
LOCAL BUSINESSES
BUSINESS ASSETS
Polyurethanes
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Business Vendor Jurisdiction in which assets are Designated Purchaser
located
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC (other than in relation to Business UK Huntsman ICI Polyurethanes (UK) Ltd
IPR and Business Information)
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Americas Inc. USA (and others in respect of The Purchaser
Business IPR)
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC (in relation to Business IPR and Various HIC
Business Information only)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Relevant Petrochemicals
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Business Vendor Jurisdiction in which assets are Designated Purchaser
located
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ICI Chemicals and Polymers Limited UK (and others in respect of Huntsman ICI Petrochemicals (UK) Ltd
Business IPR)
- ----------------------------------------------------------------------------------------------------------------------------------
ICI PLC (in relation to Business IPR only) Various Huntsman ICI Petrochemicals (UK) Ltd
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 149
<PAGE>
Please refer to Schedules 4, 18 and 22 for details of assets otherwise to be
transferred.
Page 150
<PAGE>
SCHEDULE 3
[Agreed deletion]
Page 151
<PAGE>
SCHEDULE 4
CLOSING
PART 1
Closing Steps
The parties to the Agreement agree that this Part 1 of Schedule 4 reflects the
intention of the parties as at the date of this Agreement. It is expressly
agreed that the parties may agree amendments to the provisions of this Part 1 of
Schedule 4 and any consequential amendments required to any other provisions of
this Agreement.
At Closing, the following steps will (unless otherwise stated) occur in the
order listed and in accordance with the terms of this Agreement, except that (i)
the steps in paragraphs 2 and (if applicable) 2A shall occur simultaneously; and
(ii) the steps in paragraphs 4 to 10 will occur simultaneously.
Words and expressions defined in Schedule 18 shall have the same meaning in this
Schedule.
Funding of the Purchaser
1. HSCC will transfer the Business Assets comprised in the PO/MTBE Business
(the PO/MTBE Assets) (valued at $900,000,000) to the Purchaser in exchange for
the issue by the Purchaser to HSCC of such number of membership units of the
Purchaser as shall result in HSCC holding in aggregate 600 membership units of
the Purchaser. At the Purchaser's option, the Purchaser, HSCC and Huntsman
Specialty Chemicals Holdings Corporation may enter into a novation agreement in
the agreed form by which the Purchaser shall, subject to completion of the
subscription described in paragraph 2A below, assume all or some part of the
obligation to pay the outstanding principal and accrued interest under a
promissory note in favour of Huntsman Specialty Chemicals Holdings Corporation
(the Promissory Note).
2. ICI Americas Inc. (IAI) will transfer its Business Assets comprised in the
Polyurethanes Business and its Joint Venture Interest in Rubicon, Inc. (the
Polyurethanes US Assets) (valued at $520,000,000) and $500 to the Purchaser, in
exchange for 300 membership units of the Purchaser.
2A. The subscription by each of BT Capital Investors, L.P. (BTCI) and Chase
Equity Associates, L.P. (CEA) for the number of membership units
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which is four ninths of one hundred membership units, in each case for an
aggregate subscription price of $40,000,074.22, and the subscription by The
Goldman Sachs Group, Inc. (GSG) for the number of membership units which is one
ninth of one hundred units for an aggregate subscription price of $10,000,018.56
(together the Equity Investor Closing), shall take place in accordance with the
terms of the Subscription Agreement (the aggregate of such sums to be subscribed
by BTCI, CEA and GSG, being $90,000,167, being the Investor Subscriptions). If
any or all of BTCI, CEA and GSG (each an Equity Investor) do not subscribe for
the relevant number of membership units at Closing, Closing shall nevertheless
take place, but on the basis that the following amendments are made to the
parties' Closing obligations as set out in this Schedule 4:
(a) under paragraph 1, HSCC will, in addition to receiving such number of
membership units of the Purchaser as shall result in HSCC holding in
aggregate 600 membership units of the Purchaser, receive those membership
units of the Purchaser which would have been subscribed for by the Equity
Investor(s) who have not subscribed for membership units at Closing (the
Relevant Investors);
(b) under paragraph 1, the amount (if any) of outstanding principal and accrued
interest under the Promissory Note which the Purchaser assumes the
obligation to pay shall not exceed the amount in dollars (the Invested Sum)
which is the aggregate of the subscription prices paid by those Equity
Investors who have subscribed for membership units at Closing (for the
avoidance of doubt, the Purchaser shall not assume any obligations under
the Promissory Note if none of the Equity Investors subscribe for
membership units at Closing) and, if the Purchaser has assumed a greater
obligation under paragraph 1 than is permitted by this sub-paragraph (b),
the relevant entities shall enter into a novation agreement pursuant to
which HSCC shall assume such part of the obligation as exceeds the amount
permitted by this sub-paragraph (b);
(c) the cash sum to be transferred by the Purchaser under paragraph 5 shall be
reduced by the amount in dollars (the Shortfall) which is the aggregate of
the subscription prices which the Relevant Investors would have paid under
the Subscription Agreement had they subscribed for membership units at
Closing;
(d) under paragraph 6A, HIC will only discharge the obligations (if any) under
the Promissory Note that it has assumed under sub-paragraph (b) above;
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and the parties shall, prior to its execution, make such modifications to the
agreed form of the LLC Agreement as are necessary to remove any reference to the
rights and participation of the Relevant Investors.
3. Agreed Deletion.
Borrowing and Distribution by the Purchaser
4.(a) The Purchaser will issue Senior Discount Notes (the A Notes) to ICI
Finance plc for an aggregate consideration of $242,700,000 pursuant to an
indenture in substantially the same form as the agreed form Senior
Discount Notes Indenture containing only such revisions as are
contemplated in Section 9.7 thereof and otherwise such other changes as
are necessary to provide for the form of public or private offering and
depository mechanics selected by ICI in connection with the resale by ICI
Finance plc of such A Notes and containing the terms set forth in the
agreed form A Notes Termsheet.
(b) The Purchaser will issue the Subordinated Discount Notes due 2009 (the B
Notes) to ICI Finance plc for an aggregate consideration of $265,300,000
pursuant to an indenture in substantially the same form as the agreed form
Senior Discount Notes Indenture containing only such revisions as are
contemplated in Section 9.7 thereof and otherwise such other changes as
are necessary to provide for flexibility in the form of offering and
depository mechanics to be selected by ICI in connection with the resale
by ICI Finance plc of the Exchange Notes described in the agreed form B
Notes Term Sheet and containing the terms set forth in the agreed form B
Notes Term Sheet.
(c) The Purchaser and ICI Finance plc will execute and deliver (i) the
Registration Rights Agreement (the A Registration Rights Agreement) in the
form of the agreed form Registration Rights Agreement and (ii) the
Registration Rights Agreement (the B Registration Rights Agreement) in the
form of the agreed form Registration Rights Agreement except with such
revisions as contemplated in the agreed form B Notes Term Sheet.
5. The Purchaser will transfer all of its operating assets, consisting of the
PO/MTBE Assets, the Polyurethanes US Assets and $598,001,667, to HIC.
5A. Conditional on the Purchaser, HSCC, HIC and Huntsman Specialty Chemicals
Holdings Corporation having entered into a novation agreement pursuant to
paragraph 1, the Purchaser, HIC and Huntsman Specialty Chemicals Holdings
Corporation shall enter into a novation agreement in the
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agreed form by which HIC shall assume the obligations assumed by the Purchaser
pursuant to paragraph 1.
6. HIC will borrow an aggregate of $1,692,000,000 pursuant to the Senior
Credit Agreement entered into on the same date as this Agreement, and
$800,000,000 either (i) pursuant to the Senior Subordinated Credit Agreement
entered into on the same date as this Agreement; or (ii) from the sale of the
Senior Subordinated Notes to be issued pursuant to the Senior Subordinated
Indenture and sold to the initial purchasers pursuant to a purchase agreement.
6A. HIC will transfer an amount equal to the outstanding principal plus the
aggregate amount of interest accrued and outstanding as at Closing under the
Promissory Note to Huntsman Specialty Chemicals Holdings Corporation in
satisfaction of the obligations (if any) assumed by it under paragraph 5A and
HSCC shall thereupon procure the cancellation of the Promissory Note (or such
part thereof) with immediate effect.
7. HIC will distribute to the Purchaser:
(a) the sum of $520,000,000; plus
(b) the Investor Subscriptions less the aggregate of (i) the Shortfall and (ii)
the sum transferred by HIC pursuant to paragraph 6A (if any).
8. The Purchaser will distribute to HSCC $270,000,000 plus the amount of the
Investor Subscriptions less the aggregate of (i) the Shortfall and (ii) the sum
transferred by HIC pursuant to paragraph 6A (if any).
9. The Purchaser will distribute $250,000,000 to IAI.
10. HIC will transfer $1,473,639,501 to JV Finco.
The Purchases by HIC and Other Matters
11. HIC will transfer $343,989,155 to ICI as adjusted in accordance with the
provisions of clause 3.4 in exchange for the transfer to HIC of beneficial
interest (and procuring the transfer to HIC of the legal interest) in the issued
ordinary shares and the issued Preference Shares of TGL (but not the issued
Class A Shares of TGL).
12. HIC will transfer $200,000,000 to ICI in exchange for the Business IPR and
Business Information relating to the Polyurethanes Business.
13. Agreed deletion.
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14. HIC will transfer $115,474,000 to ICI in exchange for ICI's covenants
contained in clause 23 of this Agreement.
Prime Debt
15. JV Finco will transfer $161,427,181 to UK Holdings in exchange for a
$161,427,181 intercompany note which constitutes a normal commercial loan as
defined in Schedule 18 to the Taxes Act (the UK Holdings/JV Finco Intercompany
Note).
16A. JV Finco will transfer a total of $316,241,055 to Tioxide Americas Inc
(TAI), Tioxide Europe SA (France), Tioxide Europe Srl and ICI Holland BV, in
exchange for the issue of intercompany notes to JV Finco in the following
amounts:
(a) $111,928,656 in the case of TAI;
(b) $82,801,951 in the case of Tioxide Europe SA (France);
(c) $33,208,894 in the case of Tioxide Europe Srl; and
(d) $88,301,554 (non-interest bearing) in the case of ICI Holland BV.
The amounts to be transferred pursuant to this paragraph 16A are subject to
adjustment to mirror the intercompany indebtedness outstanding and to be repaid
pursuant to paragraph 17 below.
16B. UK Holdings will transfer a total of $161,427,181 to Tioxide Europe SA
(Spain) and ICI Holland BV in exchange for the issue of intercompany notes to UK
Holdings in the following amounts:
(a) $18,035,007 in the case of Tioxide Europe SA (Spain); and
(b) $143,392,174 in the case of ICI Holland BV.
The amounts to be transferred pursuant to this paragraph 16B are subject to
adjustment to mirror the intercompany indebtedness outstanding and to be repaid
pursuant to paragraph 17 below.
17. The Purchaser will procure that, on Closing, each of TAI, Tioxide Europe SA
(France), Tioxide Europe Srl, Tioxide Europe SA (Spain) and ICI Holland BV will
repay to ICI on behalf of itself, ICI Finance plc, ICI Omicron BV (Omicron), ICI
American Holdings Inc. (IAHI) and Mortar Investments International Limited (as
the case may be) the following sums, being in each case the estimated amount of
its Prime Debt:
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(a) $111,928,656 in the case of TAI;
(b) $82,801,951 in the case of Tioxide Europe SA (France);
(c) $33,208,894 in the case of Tioxide Europe Srl;
(d) $18,035,007 in the case of Tioxide Europe SA (Spain); and
(e) $231,693,728 in the case of ICI Holland BV.
The Prime Debt amounts shown above are indicative of the estimated inter-company
indebtedness in existence as at Closing. ICI shall use all reasonable
endeavours to procure that the Prime Debt amounts are no less than the figures
set out in this paragraph 17.
18. Dutch Mixer will issue a $88,301,554 intercompany note (the Dutch Mixer/JV
Finco Intercompany Note) to JV Finco in exchange for the $88,301,554 non-
interest bearing intercompany note from ICI Holland BV.
The Holdco Transfers
19. ICI Finance plc will transfer the amount referred to in paragraph 21 to
Huntsman ICI Polyurethanes (UK) Limited in exchange for an intercompany note in
that amount which is capable of being conveyed without UK stamp duty (the UK
Polyurethanes/ICI Finance Note).
20. ICI Finance plc will transfer the amounts referred to in paragraph 22 to
Huntsman ICI Petrochemicals (UK) Limited in exchange for an intercompany note in
that amount which is capable of being conveyed without UK stamp duty (the UK
Petrochemicals/ICI Finance Note).
21. When the step described in paragraph 11 above has occurred, Huntsman ICI
Polyurethanes (UK) Limited will transfer $364,100,000 (as adjusted to reflect
any adjustment made to such figure pursuant to clause 3.4) to ICI in exchange
for the remaining U.K. Business Assets of the Polyurethanes Business and the
Sale Shares in ICI Europe Ltd and Impkemix (No 46) Ltd.
22. When the step described in paragraph 11 above has occurred, Huntsman ICI
Petrochemicals (UK) Limited will transfer $80,000,000 (as adjusted to reflect
any adjustment made to such figure pursuant to clause 3.4) to ICI Chemicals and
Polymers Ltd (C&P) in exchange for the Business Assets (other than those
relating to the Olefins Manufacturing Business) held by C&P and it will also
transfer $200,000,000 to C&P as consideration for the Business Assets relating
to the Olefins Manufacturing Business.
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23. HIC will transfer $150,371,344 to TGL for the issue of $150,371,344 of
Preference Shares of TGL.
24. TGL will transfer $3,071,344 to IAHI in repayment of the TGL/IAHI Temporary
Note.
25. TGL will transfer $147,300,000 to UK Holdings for the issue of $95,745,000
of additional UK Holdings Class 1 ordinary shares and $51,555,000 of additional
UK Holdings Class 2 ordinary shares.
26. JV Finco will transfer $995,971,265 to UK Holdings in exchange for an
increase of $995,971,265 in the UK Holdings /JV Finco Intercompany Note, for a
total of $1,157,398,446 (which shall constitute a normal commercial loan as
defined in Schedule 18 to the Taxes Act).
The Holdco Assignments
27. UK Holdings will transfer $364,100,000 (as may have been adjusted to
reflect any adjustment made pursuant to clause 3.4) to ICI Finance plc in
exchange for the assignment to UK Holdings of the benefit of the UK
Polyurethanes/ICI Finance Note (which note shall for the remainder of this
Schedule be referred to as the Huntsman ICI Polyurethanes (UK) Limited/UK
Holdings Intercompany Note).
28. UK Holdings will transfer $200,000 to Huntsman ICI Polyurethanes (UK)
Limited in exchange for an increase in the Huntsman ICI Polyurethanes (UK)
Limited/UK Holdings Intercompany Note to an aggregate amount of $364,300,000.
29. UK Holdings will transfer $80,000,000 (as may have been adjusted to reflect
any adjustment made pursuant to clause 3.4) as well as $200,000,000 to ICI
Finance plc in exchange for the assignment to UK Holdings of the benefit of the
UK Petrochemicals/ICI Finance Note (which note shall for the remainder of this
Schedule be referred to as the Huntsman ICI Petrochemicals (UK) Limited/UK
Holdings Intercompany Note).
30. Huntsman ICI Polyurethanes (UK) Limited will transfer $200,000 to Huntsman
ICI Polyurethanes Sales Limited in exchange for an intercompany note in that
amount (the Huntsman ICI Polyurethanes (UK) Limited/Huntsman ICI Polyurethanes
Sales Limited Intercompany Note).
31. Huntsman ICI Polyurethanes Sales Limited will transfer a total of $200,000
to PT ICI Indonesia in satisfaction of intercompany indebtedness.
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The Refinancing
32. UK Holdings will transfer $407,006,272 to Huntsman ICI (UK) Limited in
exchange for additional shares in Huntsman ICI (UK) Limited save that, in the
event ICI has elected to procure that the foregoing is funded and performed
prior to Closing pursuant to paragraph 12 of Schedule 18, UK Holdings will
instead pay to ICI Finance plc the sum of [$407,006,272] in satisfaction of the
UK Holdings/ICI Finance $407,006,272 Temporary Note.
33. Huntsman ICI (UK) Limited will transfer $407,006,272 to Dutch Mixer in
exchange for additional Dutch Mixer shares and/or as a capital contribution
unless the foregoing has been funded and performed prior to Closing pursuant to
paragraph 12 of Schedule 18 in which case no action shall be required.
34. Dutch Mixer will transfer $1,043 to Dutch Holdco in exchange for additional
Dutch Holdco shares and/or as a capital contribution.
35. Dutch Mixer will transfer $188,306,272 to Omicron in satisfaction of the
Dutch Mixer/Omicron Temporary Note.
36. Dutch Holdco will transfer $1,043 to Atlas DE Mexico SA DE CV in
satisfaction of intercompany indebtedness.
37. Dutch Mixer will subscribe for additional shares in Huntsman ICI Espana
Limitada for a subscription price of $33,000,000 save that, in the event that
ICI has elected to procure that such subscription is funded prior to Closing
pursuant to paragraph 10(a) of Schedule 18, Dutch Mixer will instead pay to ICI
Finance plc the sum in euros which equates to $33,000,000 (on the basis of the
Euro/Dollar Rate) in satisfaction of the Dutch Mixer/ICI Finance Spanish Second
Temporary Note.
38. UK Holdings will transfer $81,964,993 (as adjusted to reflect any
adjustment made pursuant to clause 3.4) to Huntsman ICI Espana Limitada in
exchange for a $81,964,993 intercompany note secured by all of the assets of
Huntsman ICI Espana Limitada (the Huntsman ICI Espana Limitada/ UK Holdings
Intercompany Note) save that, in the event ICI has elected to procure that such
payment is made prior to Closing pursuant to paragraph 10(b) of Schedule 18, UK
Holdings will instead pay to ICI Finance plc the sum in euros which equates to
$81,964,993 (on the basis of the Euro/Dollar Rate) in satisfaction of the UK
Holdings/ICI Finance Spanish Temporary Note.
39. Huntsman ICI Espana Limitada will, unless it has already paid the
consideration due under paragraph 4(b) of Schedule 18 pursuant to
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paragraph 10(i) of Schedule 18, transfer $114,964,993 to ICI Espana SA in
satisfaction of the Huntsman ICI Espana Limitada/ICI Spain Temporary Note.
40. Dutch Mixer will transfer $65,000,000 to Omicron in satisfaction of the
Dutch Mixer/Omicron Malaysian Temporary Note and Dutch Mixer will transfer a
further $200,000 to Omicron in satisfaction of the Dutch Mixer/Omicron Chemical
Blending Temporary Note.
41. Dutch Mixer will transfer $5,000,000 to Deutsche ICI GmbH in satisfaction
of intercompany indebtedness.
42. Dutch Mixer will transfer $25,998,957 to Grupo ICI Mexico SA DE CV in
satisfaction of intercompany indebtedness.
43. Dutch Mixer will transfer $34,000,000 to ICI in satisfaction of
intercompany indebtedness.
44. Dutch Mixer will transfer $10,700,000 to ICI Theta BV (Theta) in
satisfaction of intercompany indebtedness.
45. Dutch Mixer will transfer $4,500,000 to Huntsman ICI (Italy) Srl in
exchange for additional shares of Huntsman ICI (Italy) Srl save that, in the
event ICI has elected to procure that such subscription is funded prior to
Closing pursuant to paragraph 11(a) of Schedule 18, Dutch Mixer will instead pay
to ICI Finance plc the sum in euros which equates to $4,500,000 (on the basis of
the Euro/Dollar Rate) in satisfaction of the Dutch Mixer/ICI Finance Italian
Temporary Note.
46. UK Holdings will transfer $10,000,000 to Huntsman ICI (Italy) Srl in
exchange for a $10,000,000 intercompany note (the Huntsman ICI (Italy) Srl/UK
Holdings Intercompany Note) save that, in the event ICI has elected to procure
that such payment is made prior to Closing pursuant to paragraph 11(b) of
Schedule 18, UK Holdings will instead pay to ICI Finance plc the sum in Euros
which equates to $10,000,000 (on the basis of the Euro/Dollar Rate) in
satisfaction of the UK Holdings/ICI Finance Italian Temporary Note.
47. Huntsman ICI (Italy) Srl will, unless it has already paid the consideration
due under paragraph 4(l) of Schedule 18 pursuant to paragraph 11(i) of Schedule
18, transfer $14,500,000 to ICI Italia SpA in satisfaction of intercompany
indebtedness.
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48. Dutch Mixer will transfer a total of $40,300,000 to the Other
Polyurethanes Opcos for additional shares of the Other Polyurethanes Opcos, save
that:
(i) in the case of Huntsman ICI (Canada) Corporation, Dutch Mixer will
transfer the relevant sum ($3,600,000) to Huntsman ICI (Canadian
Investments) BV for additional shares in that company and/or as a capital
contribution, and Huntsman ICI (Canadian Investments) BV will transfer the
same amount to Huntsman ICI (Canada) Corporation for additional shares in
that company;
(ii) in the case of Huntsman ICI (Germany) GmbH, Dutch Mixer will transfer the
relevant sum ($5,500,000) by way of a contribution to the capital reserves
of that company; and
(iii) in the event that ICI has elected to procure that any of the subscriptions
for additional shares in any of the Other Polyurethanes Opcos is funded
prior to Closing pursuant to paragraphs 8(a), 8(b), 8(c), 9(a) and/or 9(b)
of Schedule 18, Dutch Mixer will instead pay to ICI Finance plc:
. where the subscription for shares in Huntsman ICI (Brazil) Limitada
has been funded pursuant to paragraph 8(a) of Schedule 18, the sum of
$3,200,000 in satisfaction of the Dutch Mixer/ICI Finance Brazilian
Temporary Note;
. where the subscription for shares in Huntsman ICI Colombia Limitada
has been funded pursuant to paragraph 8(b) of Schedule 18, the sum of
$7,000,000 in satisfaction of the Dutch Mixer/ICI Finance Colombian
Temporary Note;
. where the subscription for shares in Huntsman ICI (Taiwan) Limited has
been funded pursuant to paragraph 8(c) of Schedule 18, the sum of
$8,000,000 in satisfaction of the Dutch Mixer/ICI Finance Taiwan
Temporary Note;
. where the subscription for shares in Huntsman ICI (Belgium) SPRL has
been funded pursuant to paragraph 9(a) of Schedule 18, the sum in
euros which equates to $500,000 (on the basis of the Euro/Dollar Rate)
in satisfaction of the Dutch Mixer/ICI Finance Belgium Temporary Note;
and
. where the subscription for shares in Huntsman ICI Espana Limitada has
been funded pursuant to paragraph 9(b) of Schedule 18, the sum in
euros which equates to $500,000 (on
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the basis of the Euro/Dollar Rate) in satisfaction of the Dutch
Mixer/ICI Finance Spanish First Temporary Note.
49. The Other Polyurethanes Opcos will transfer moneys to various ICI
subsidiaries, in full satisfaction of the Other Polyurethanes Temporary Notes.
Tioxide Share Transfers
50. TGL shall enter into an agreement or agreements with UK Holdings whereby
TGL agrees to sell, and UK Holdings agrees to purchase, with immediate effect
the entire issued share capitals of each of Tioxide Europe Limited, Tioxide
Overseas Holdings Limited and Tioxide Group Services Limited.
51. TGL shall enter into an agreement or agreements with UK Holdings whereby
TGL agrees to sell, and UK Holdings agrees to purchase, with immediate effect
the entire issued share capitals of each of Tioxide Europe SAS (France), Tioxide
Europe NV SA (Belgium), Tioxide Canada Inc (Canada), British Titan Products
Southern Africa (Pty) Limited (South Africa), Tioxide Europe AB (Sweden),
Tioxide Europe Srl (Italy) and Tioxide Europe Titanium Pigmente Ticaret Limited
Sirketi (Turkey).
Distribution by the Purchaser
52. HIC will transfer $10,000,000 to the Purchaser as a distribution.
53. Pursuant to the LLC Agreement, the Purchaser will make the following
transfers as distributions with respect to member interests:
(a) $6,000,000 to HSCC;
(b) $3,000,000 to IAI;
(c) $444,444.44 to BTCI;
(d) $444,444.44 to CEA; and
(e) $111,111.12 to GSG.
Transfer of Membership Units to US Newco
54. IAI will (following the distribution referred to in paragraph 53(b) above)
transfer 300 membership units of the Purchaser to US Newco.
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Agreements
The Ancillary Agreements in the agreed form and the Ancillary Agreements the
form of which has been agreed in accordance with the provisions of clause 15 of
this Agreement and any other agreement which pursuant to the terms of this
Agreement is to be entered into on or before Closing (to the extent that such
agreements have not been entered into) shall be entered into (subject to the
provisions of this Agreement in relation to, inter alia, Delayed Closing).
PART 2
2. Closing Obligations
I General Provisions in relation to the Vendors and the Purchaser
(A) Vendors' obligations
At Closing, each of the Vendors shall:
(a) deliver to the Purchaser a copy of minutes of a duly held meeting of the
directors of each of the Vendors (or a duly constituted committee thereof)
authorising the execution by the relevant Vendor of this Agreement, the LLC
Agreement, the Ancillary Agreements in the agreed form and the Ancillary
Agreements the form of which has been agreed in accordance with the
provisions of clause 15 of this Agreement and any other agreement which
pursuant to the terms of this Agreement is to be entered into on or before
Closing to which the relevant Vendor is a party and, in the case where such
execution is authorised by a committee of the board of directors of the
relevant Vendor, a copy of the minutes of a duly held meeting of the
directors constituting such committee or the relevant extract thereof (in
each case such copy minutes being certified as correct by the secretary of
the relevant Vendor);
(b) deliver to the Purchaser a copy of minutes of a duly held meeting of the
directors of each of the relevant members of each Vendor's Retained Group
(or a duly constituted committee thereof) authorising the execution by the
relevant member of each Vendor's Retained Group of the Ancillary Agreements
in the agreed form and the Ancillary Agreements the form of which has been
agreed in accordance with the provisions of clause 15 of this Agreement and
any other agreement which pursuant to the terms of this Agreement is to be
entered into on or before Closing to which the relevant member of each
Vendor's Retained Group is a party and, in the case where such
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execution is authorised by a committee of the board of directors of the
relevant member of each Vendor's Retained Group, a copy of the minutes of a
duly held meeting of the directors constituting such committee or the
relevant extract thereof (in each case such copy minutes being certified as
correct by the secretary of the relevant member of each Vendor's Retained
Group);
(c) deliver (or procure the delivery of) to the Purchaser, executed
counterparts of the LLC Agreement, the Ancillary Agreements in the agreed
form and the Ancillary Agreements the form of which has been agreed in
accordance with the provisions of clause 15 of this Agreement and any other
agreement which pursuant to the terms of this Agreement is to be entered
into on or before Closing (subject to the provisions of this Agreement)
duly executed by the Vendors and/or the relevant members of each Vendor's
Retained Group;
(d) procure that all Title Deeds relating to the Transferred Properties are
either delivered to the Purchaser or are held to the order of the Purchaser
at the offices of the relevant Selling Company or its solicitors (to the
extent that legal completion occurs in relation to such Transferred
Properties at Closing in accordance with Schedule 17; and
(e) delivery to the Designated Purchaser deeds of assignment in relation to the
Business Goodwill of each Local Business duly executed by the relevant
Business Vendor.
(B) Purchaser's obligations
At Closing, the Purchaser shall:
(a) deliver to each of the Vendors:
(i) a copy of the minutes of a duly held meeting of the directors of
the Purchaser (or a duly constituted committee thereof)
authorising the execution by the Purchaser of this Agreement, the
LLC Agreement, the Ancillary Agreements in the agreed form and the
Ancillary Agreements, the form of which has been agreed in
accordance with the provisions of clause 15 of this Agreement and
any other agreement which pursuant to the terms of this Agreement
is to be entered into on or before Closing to which the Purchaser
is a party and, in the case where such execution is authorised by
a committee of the board of directors of the Purchaser, a copy of
the minutes of a duly held meeting of the directors constituting
such committee or the
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relevant extract thereof (in each case such copy minutes being
certified as correct by the secretary of the Purchaser);
(ii) a copy of the minutes of a duly held meeting of the directors of
each of the relevant members of the Purchaser's Group (or a duly
constituted committee thereof) authorising the execution by the
relevant member of the Purchaser's Group of the LLC Agreement, the
Ancillary Agreements in the agreed form and the Ancillary
Agreements the form of which has been agreed in accordance with
the provisions of clause 15 of this Agreement and any other
agreement which pursuant to the terms of this Agreement is to be
entered into on or before Closing to which the relevant member of
the Purchaser's Group is a party and, in the case where such
execution is authorised by a committee of the board of directors
of the relevant member of the Purchaser's Group, a copy of the
minutes of a duly held meeting of the directors constituting such
committee or the relevant extract thereof (in each case such copy
minutes being certified as correct by the secretary of the
relevant member of the Purchaser's Group);
(iii) a receipt acknowledging delivery of all documents required to be
delivered by the Vendors pursuant to this Schedule 4;
(iv) deliver (or procure the delivery of) to the Vendors of executed
counterparts of the Ancillary Agreements in the agreed form and
the Ancillary Agreements the form of which has been agreed in
accordance with the provisions of clause 15 of this Agreement and
any other agreement which pursuant to the terms of this Agreement
is to be entered into on or before Closing (subject to the
provisions of this Agreement); and
(b) pay the Initial Consideration to ICI in respect of the ICI Business in
accordance with the provisions of clause 3.2.
II General Provisions in relation to completion of the transfer of any
Business Assets
Business Vendors' Obligations
At Closing, or the relevant Delayed Closing Date, as the case may be, the
Vendors shall deliver or shall procure that the relevant Business Vendor shall
deliver to the Purchaser or its nominee all the assets of the ICI Business or
the PO/MTBE Business (as the case may be) which are capable of transfer by
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delivery with the intent that title in such assets shall pass by and upon such
delivery.
Subject to the provisions of Schedule 17 which shall apply in respect of such
transfers and Separation Documents and save to the extent already transferred
pursuant to Schedule 18, at Closing, the relevant Delayed Closing Date, or on
legal completion (referred to in Schedule 17) as the case may be, the Vendors
and the Purchaser shall deliver or shall procure that the relevant Business
Vendor and (as the case may be) the relevant Designated Purchaser shall deliver
to each other or such nominee as each shall nominate, executed transfers,
assignments or other Separation Documents for all of the Properties which are to
be transferred or otherwise dealt with pursuant to Schedule 17, Part VII.
At Closing, the Vendors shall deliver, or shall procure that the relevant
Business Vendor shall deliver to the Purchaser, the relevant executed IPR
Assignments.
III Specific Provisions in relation to the particular Local Businesses
In the following provisions of this paragraph III any reference to Closing shall
be deemed to be a reference to the Closing Date, any relevant pre-Closing Date
or any Delayed Closing Date (as applicable) pursuant to the provisions of this
Schedule 4 and Schedule 18 and in relation to the transfer or other disposition
of any of the Properties (which shall in any event be subject to the provisions
of Schedule 17) a reference to the date of legal completion pursuant to the
provisions of Schedule 17.
At Closing, the Vendors shall or shall procure that, if required by local law in
any of Argentina, Brazil, Canada, Colombia, Germany, Italy, Mexico, Netherlands,
Spain, Taiwan, Thailand and the USA, a notarial deed of transfer of the relevant
Business Assets shall be delivered to the Purchaser or its nominee.
At Closing, the Vendors and the Purchaser shall or shall procure that, if
required by local law in any of Argentina, Belgium, Brazil, Canada, Colombia,
Germany, Italy, Mexico, Netherlands, Spain, Taiwan, Thailand and the USA, a
transfer agreement in relation to relevant Business Assets shall be executed in
the presence of a public notary.
In addition to the obligations referred to above, the Vendors and the Purchaser
(as applicable) shall procure that the following events occur:
Page 166
<PAGE>
Argentina
At Closing the relevant Vendor shall deliver (or shall procure the delivery of)
to the relevant purchaser any required approval of the Inspection of Corporation
to any asset transfer.
Belgium
At Closing, the relevant purchaser shall execute and the relevant Vendor shall
execute (or procure the execution of) a confirmation agreement in the agreed
form.
Brazil
As soon as practicable following Closing:
(a) the relevant purchaser shall register (or procure the registration of) the
minutes of the Shareholders Meeting with the Commercial Registry and the
competent Real Estate Registry; and
(b) the relevant purchaser shall notify (or procure the notification to) the
Central Bank of Brazil of the transfer of investment within 30 days of
Closing.
Canada
After Closing:
(a) the relevant purchaser shall register (or procure the registration of)
transfer deeds for all real or immovable property; and
(b) the relevant Vendor shall notify (or procure the notification of) the
transfer to the appropriate Ministry of Labour jointly with the relevant
purchaser and the relevant purchaser shall assist the relevant Vendor with
the notification.
Colombia
After Closing, the relevant purchaser shall register (or procure the
registration of) the notarial deed of transfer with the local Registrars Office.
Italy
Prior to Closing, the relevant Vendor undertakes to use reasonable endeavours to
provide the purchaser with a copy of the tax certificate issued by the Italian
Tax Authority confirming whether the relevant Vendor has any Tax debts.
Page 167
<PAGE>
After Closing the relevant Vendor and the relevant purchaser shall file (or
procure the filing of) the notarised transfer agreement with the Companies
Register at the applicable Chamber of Commerce.
Mexico
At Closing, the relevant Vendor shall deliver (or procure the delivery of) to
the relevant purchaser any notarised shareholder minutes required.
Spain
At Closing the relevant Vendor shall deliver (or procure the delivery of) to the
relevant purchaser any required approvals of the Spanish Exchange Control
Authorities.
Taiwan/Thailand
At Closing, the relevant Vendor shall cause to be delivered or made available to
the relevant purchaser:
(a) such documents as the relevant purchaser may reasonably require to complete
the sale and purchase of the relevant Business Assets together with all
deeds and documents of title relating thereto;
(b) possession of such of the relevant Business Assets as are tangible.
UK
At Closing, the relevant Vendor shall cause to be delivered or made available to
the relevant purchaser:
(a) such documents as the relevant purchaser may reasonably require to complete
the sale and purchase of the relevant Business Assets together with all
deeds and documents of title relating thereto;
(b) possession of such of the relevant Business Assets as are tangible; and
(c) counterpart originals of deeds of assignment in relation to the assignment
of any trade debtors and trade creditors, duly executed by the relevant
parties.
After legal completion of the transfers and other disposition of the Properties
located in England, the relevant purchaser shall duly and expeditiously at its
own cost deal with all stamping and land registration formalities.
Page 168
<PAGE>
The relevant Vendor shall deliver the Pie Crust Leases duly executed by it and
the Designated Purchaser shall deliver counterpart Pie Crust Leases duly
executed by it.
USA
At Closing, the relevant Vendor shall cause to be delivered or made available to
the relevant purchaser:
(a) such documents as the relevant purchaser may reasonably require to complete
the sale and purchase of the relevant Business Assets together with all
instruments and documents of title relating thereto;
(b) possession of such of the relevant Business Assets as are tangible; and
(c) counterpart originals of bills of sale and instruments of assignment in
relation to the transfer or assignment of any Business Assets which are
intangible, including any trade debtors and trade creditors, duly executed
by the relevant parties.
IV General Provisions in relation to the Companies
In the following provisions of this paragraph IV any reference to Closing shall
be deemed to be a reference to the Closing Date, any relevant pre-Closing Date
or any delayed Closing Date (as applicable) pursuant to the provisions of this
Schedule 4 and Schedule 18.
(A) ICI's Obligations
At Closing, ICI shall (subject to clauses 6.8 and 16) deliver or cause to be
delivered to the Purchaser:
(a) duly executed transfers in respect of the relevant shares duly completed by
or on behalf of all persons required to execute such transfers in favour of
the Purchaser or such nominee of the Purchaser as the Purchaser may
nominate (subject to written notification to ICI not less than 10 Business
Days prior to the Closing Date) together with the certificates for such
shares (or an indemnity in a form reasonably satisfactory to the Purchaser
to be given by ICI for itself and on behalf of relevant members of its
Retained Group in lieu thereof) and any power of attorney under which any
transfer is executed;
(b) the certificate of incorporation (or equivalent) and other constitutional
documents of each of the Companies being transferred hereunder;
Page 169
<PAGE>
(c) such waivers or consents as the Purchaser may require to enable the
Purchaser or its nominees to be registered as holders of the shares; and
(d) resignations of each of the relevant resigning directors of the Companies,
such resignations to be expressed to take effect on the Closing Date.
(B) Purchaser's Obligations
At least 10 Business Days prior to Closing, the Purchaser shall deliver to ICI
the names of all individuals to be elected directors of the Companies being
transferred hereunder.
V Specific Provisions in relation to the Companies
In the following provisions of this paragraph V any reference to Closing shall
be deemed to be a reference to the Closing Date, any relevant pre-Closing Date
or any delayed Closing Date (as applicable) pursuant to the provisions of this
Schedule 4 and Schedule 18.
At Closing, the Vendors shall or shall procure that, if required by local law in
any of Argentina, Brazil, Canada, Colombia, Germany, Italy, Mexico, Netherlands,
Spain, Taiwan, Thailand and the USA, a notarial deed of transfer of the relevant
shares shall be delivered to the Purchaser or its nominee.
At Closing, the Vendors and the Purchaser shall or shall procure that, if
required by local law (or as agreed by the parties) in any of Argentina,
Belgium, Brazil, Canada, Colombia, Germany, Italy, Mexico, Netherlands, Spain,
Taiwan, Thailand and the USA, (or as agreed by the parties) a transfer agreement
in relation to relevant shares shall be executed in the presence of a public
notary.
In addition to the obligations referred to above, the Vendors and the Purchaser
(as applicable) shall procure that the following events shall occur at Closing.
It is agreed by the parties that the provisions marked in square brackets will
not apply at Closing where a Company in the specified jurisdiction does not
transfer pursuant to the provisions of Schedules 4, 18 and 22, but that they
shall apply (i) in respect of the transfer of any company in the specified
jurisdiction prior to Closing under Schedule 18 and (ii) in respect of the
transfer of any Delayed Company in the specified jurisdiction after Closing, in
each case upon the completion of the relevant transfer.
Page 170
<PAGE>
[Argentina
At Closing:
(a) the relevant purchaser shall deliver to the relevant Vendor proof of the
registration of the relevant purchaser at the Argentine Inspection of
Corporations;
(b) the relevant Vendor or its nominee shall notify the Company of the transfer
of its Sale Shares in the Company; and
(c) the Company shall hold a board meeting to note the transfer of the Sale
Shares and to register the transfer in the corporate books and share
certificates.]
[Brazil
At Closing the relevant Vendor shall deliver (or procure the delivery of) to the
relevant purchaser or its nominee a share transfer form and shall procure the
registration of the transfer of the Sale Shares in the relevant corporate books.
Within 30 days of Closing the relevant purchaser shall register the transfer
with the Central Bank of Brazil.]
[Canada
As soon as practicable following Closing:
(a) the relevant purchaser shall register (or procure the registration of) all
deeds required for the transfer of real or immovable property; and
(b) the relevant Vendor shall notify (or procure the notification of) the
transfer to the appropriate Ministry of Labour jointly with the relevant
purchaser and the relevant purchaser shall assist the relevant Vendor with
the notification.]
[Colombia
At Closing:
(a) the relevant Vendor shall execute (or procure the execution of) and the
relevant purchaser shall execute a local sale/purchase agreement;
(b) the relevant Vendor shall execute (or procure the execution of) a power of
attorney appointing a representative to procure a provisional tax
assessment; and
Page 171
<PAGE>
(c) the relevant Vendor shall deliver (or procure the delivery of) to the
relevant purchaser duly endorsed share certificates.
As soon as practicable following Closing:
(a) The relevant purchaser shall procure that the Company registers the share
transfer in the Stock Registry Book;
(b) the relevant Vendor shall procure that a provisional tax assessment is
requested under Colombian law; and
(c) the relevant purchaser shall apply to the Central Bank of Colombia to list
the relevant purchaser as a foreign investor.]
Germany
At Closing:
the relevant Vendor shall deliver (or procure the delivery of) to the
relevant purchaser, notarial deed[s] of transfer in respect of each
relevant entity duly completed by or on behalf of all persons required to
execute such notarial deed of transfer in favour of the relevant purchaser
and any power of attorney under which any notarial deed of transfer is
executed.
[Italy
At Closing:
(a) the relevant Vendor shall deliver (or procure the delivery of) to the
relevant purchaser duly endorsed share certificates; and
(b) the relevant Vendor shall deliver (or procure the delivery of) to the
company of the Company Share Certificate.]
Japan
At Closing:
(a) the relevant Vendor shall deliver (or procure the delivery of) to the
relevant purchaser:
(i) the relevant share certificates; and
(ii) any required approvals of the Board of Directors;
Page 172
<PAGE>
(b) the relevant purchaser shall procure that the shareholders register is
amended to reflect the name of the relevant purchaser.
Malaysia
At Closing, the relevant Vendor shall deliver (or procure the delivery of) to
the relevant purchaser:
(a) the consent from the Malaysian Ministry of International Trade and Industry
and the Bank Negara Malaysia to the transfer of shares in the Company;
(b) the consent from the Bank Negara Malaysia to settlement of the
consideration in $US through accounts located outside Malaysia;
(c) board minutes of the Company approving the transfer; and
(d) the relevant share certificates.
Mexico
At Closing:
(a) the relevant Vendor shall deliver (or procure the delivery of) to the
relevant purchaser a copy of any required notification to the Mexican
National Foreign Investment Registry of the transfer of the Mexican
Companies; and
(b) the relevant Vendor shall:
(i) endorse the share certificates in favour of the transferee; and
(ii) procure that a notation is made in the relevant Stock Registry
Book reflecting the transfer of the shares in the Company.
Netherlands
At Closing, the relevant Vendor shall deliver (or procure the delivery of) to
the relevant purchaser notarial deeds of transfer in respect of all the shares
of the Companies incorporated in the Netherlands being transferred hereunder
duly completed by or on behalf of all persons required to execute such notarial
deeds of transfer in favour of the relevant purchaser together with any power of
attorney under which any notarial deed of transfer is executed.
Page 173
<PAGE>
Saudi Arabia
At Closing the relevant Vendor shall deliver (or procure the delivery of) to the
relevant Purchaser:
(a) a copy of the notification to the Saudi Arabian Commercial Register of the
transfer of the shares in Arabian Polyol Co. Ltd and of the changes in
their boards of directors;
(b) a copy of the local agreement transferring the shares; and
(c) a notarised copy of the shareholders resolution approving the transfer.
Singapore
At Closing, the relevant Vendor shall deliver (or procure the delivery of) to
the relevant purchaser:
(a) board minutes of the company approving the transfer; and
(b) the relevant share certificates.
After Closing the relevant purchaser shall deliver executed share transfer
instrument and property statement to the IRAS for stamp duty assessment.
Spain
At Closing, the relevant Vendor shall deliver (or procure the delivery of) to
the relevant purchaser notarial deed[s] of transfer/1/ in respect of all of the
shares in the relevant Company duly completed by or on behalf of all persons
required to execute such notarial deed of transfer in favour of the relevant
purchaser together with the certificates for such shares in the name of the
relevant transferors and any power of attorney under which any notarial deed of
transfer is executed.
United Kingdom
At Closing (or as soon as reasonably practicable thereafter) the relevant Vendor
shall:
(a) deliver (or procure the delivery of) to the relevant purchaser the
statutory books (which shall be written up to but not including the Closing
Date), the certificate of incorporation (and any certificate of
incorporation on change of name) and common seal (if any) of the
________________________________________________________________________________
/1/ These cannot be executed until receipt of payment is confirmed.
Page 174
<PAGE>
English Companies transferred pursuant to the provisions of this Agreement;
and
(b) procure that board meetings of the relevant Companies transferred pursuant
to the provisions of this Agreement be held at which:
(i) it shall be resolved that the transfer of the issued shares shall
be approved for registration and (subject only to the transfer
being duly stamped) the relevant transferee registered as the
holder of the relevant shares in the Register of Members;
(ii) each of the persons nominated by the relevant purchaser shall be
appointed directors and/or secretary, as the relevant purchaser
shall direct; and
(iii) the resignations of the relevant Resigning Directors shall be
tendered and accepted so as to take effect at Closing,
and the relevant Vendor shall deliver to the relevant purchaser a duly
certified copy of the Minutes of such meetings.
VI Further Assurance
Each of ICI, the Purchaser and HSCC shall, and shall procure that the members of
their respective Group shall, comply with the provisions of this Schedule 4 and
Schedule 18 and at all times from Closing, do all things as may be required to
give effect to the provisions of this Schedule 4, including, without limitation,
the execution of all deeds and documents, procuring the convening of all
meetings, the giving of all necessary waivers and consents and the passing of
all resolutions and otherwise exercising all powers and rights available to
them.
Page 175
<PAGE>
SCHEDULE 5
INTERFACE AGREEMENTS
Page 176
<PAGE>
Relevant Petrochemicals
INTERFACES
Category 1
Agreed Form Term Sheets for schedules to the Product Supply Agreement initialled
on signing
<TABLE>
<CAPTION>
SELLER BUYER SITE TYPE INTERFACE CATEGORY
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ICI Purchaser North Tees Product Naphtha *2 1
- ------------------------------------------------------------------------------------
ICI Purchaser North Tees Product Mixed LPG *2 1
- ------------------------------------------------------------------------------------
Purchaser ICI North Tees Feedstock Naphtha *3 1
Sched 1
- ------------------------------------------------------------------------------------
Purchaser ICI North Tees Feedstock Propane *3 1
Sched 2
- ------------------------------------------------------------------------------------
Purchaser ICI North Tees Feedstock Butane *3 1
Sched 3
- ------------------------------------------------------------------------------------
Purchaser ICI Wilton Feedstock Mixed LPG *3 1
Sched 4
- ------------------------------------------------------------------------------------
Purchaser ICI Teesport Feedstock Mixed C4's *3 1
Sched 5
- ------------------------------------------------------------------------------------
Purchaser ICI Teesport Feedstock Raw Pygas *3 1
Sched 6
- ------------------------------------------------------------------------------------
Purchaser ICI Wilton Feedstock RPGP *3 1
Sched 7
- ------------------------------------------------------------------------------------
</TABLE>
Page 177
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
ICI Purchaser Various Co-Product Propylene *1 1
Sched 2
- ------------------------------------------------------------------------------------
ICI Purchaser Wilton Co-Product Mixed C4's *1 1
Sched 5
- ------------------------------------------------------------------------------------
ICI Purchaser Various Co-Product Others eg. Butadiene 1
*1
Sched 4
- ------------------------------------------------------------------------------------
ICI Purchaser Wilton Co-Product Hydrogen *1 1
From JV06 Sched 3
- ------------------------------------------------------------------------------------
ICI Purchaser Various Co-Product Raw Pygas *1 1
Sched 10
- ------------------------------------------------------------------------------------
ICI Purchaser Wilton Co-Product C5's (HT) *1 1
Sched 8
- ------------------------------------------------------------------------------------
ICI Purchaser North Tees Co-Product DPHG *1 1
Sched 9
- ------------------------------------------------------------------------------------
ICI Purchaser Wilton Co-Product Cracker *1 1
Residue oil
Sched 11
- ------------------------------------------------------------------------------------
ICI Purchaser Wilton Co-Product Ethane *1 1
Sched 12
- ------------------------------------------------------------------------------------
ICI Purchaser Wilton Co-Product Methane *1 1
Sched 14
- ------------------------------------------------------------------------------------
</TABLE>
Page 178
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
ICI Purchaser Teesport Co-Product C5's*1 1
(not HT)
Sched 7
- ----------------------------------------------------------------------------------------------------
ICI Purchaser Various Co-Product Ethylene *1 1
Sched 1
- ----------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Co-Product Propane *1 1
Sched 13
- ----------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Co-Product Raffinate (mixed 1
butenes) *1
Sched 6
- ----------------------------------------------------------------------------------------------------
ICI (purchased Purchaser Wilton Product Raw Pygas *2 1
from Blue) Sched 3
- ----------------------------------------------------------------------------------------------------
</TABLE>
*1 All in E&C Supply Agreement
*2 All in PS Agreement
*3 All in FS Agreement
Page 179
<PAGE>
Relevant Petrochemicals
INTERFACES
Category 2/3
Not Agreed Form
<TABLE>
<CAPTION>
SELLER BUYER SITE TYPE INTERFACE CATEGORY
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Purchaser ICI North Tees Utility Electricity 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Utility Potable Water 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Utility Raw Water (including 2/3
HP fire water)
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Utility Steam 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Utility Compressed Air 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Utility Nitrogen 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Utility Slops & Deballast 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Service Various services 2/3
provided by North
Tees
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Service Effluent Treatment 2/3
- -------------------------------------------------------------------------------------------------------------
</TABLE>
180
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Utility Fuel Gas 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Service Cavity Storage 2/3
Operation and
Maintenance
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI (CLC) North Tees Service Gas storage and 2/3
Brinefields
Operation and
Maintenance
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Service Brine Sales 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Service Jetty Services 2/3
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser North Tees Service Cavity Support 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Service Leak repair 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Service Propylene storage 2
[cavity 74]
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI NTL Service Storage tanks, 2/3
operation and
maintenance
- -------------------------------------------------------------------------------------------------------------
ICI (CLC) Purchaser Holford/Lostock Service Ethylene storage - 2
cavities 213/215@
@ Compression/
Drying Plant,
Lostock
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 181
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Billingham Product Hydrogen 2
(Methanol Plant)
- -------------------------------------------------------------------------------------------------------------
Purchaser PIP (J.V.) North Tees Product Hydrogen 2
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Product Hydrogen 2
(Chlor-Chemicals)
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI Wilton Services (SHE) Flare stack 2
connection/
pressure relief
services via flare
stack B1205
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Service (SHE) Flare stack 2
connection/
pressure relief
services via flare
stacks B450 and
B205
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI/PIP North Tees Service Storage facilities 2
(warehousing) in accordance with
ICI/PIP warehousing
agreement
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Product Catalyst supply - 2
spot basis
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 182
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Product/Service ICI Chlor- 2
Chemicals cavity
sonar scanning
and mapping
services/products
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 183
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser North Tees Service Well dipping 2/3
services provided
by Tracerco for
Brinefields
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI (Vinamul) Warrington Product Ethylene 2/3
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI (Chlor-Chemicals) Runcorn and Product Ethylene 2
Wilton
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Product Ethylene *1 2
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI (Uniquema) Wilton Product Ethylene 2
- -------------------------------------------------------------------------------------------------------------
Purchaser ICI North Tees Service Pump boundary 2
containment system
at North Tees
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Service High Sulphur 2/3
Fuel Oil Pumping
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 184
<PAGE>
Relevant Petrochemicals
TRANSITIONAL ARRANGEMENTS
Category 2/3
Not Agreed Form
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ICI Purchaser North Tees Service Payroll 3
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Service Purchasing/stores 3
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Engineering 2
Services including
engineering
department
services,
procedures, guides
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Process 2
Engineering/library
Licence
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Process Safety guides 2
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Group Engineering 2
Procedures
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Group Engineering 2
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 185
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Guides
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Aspen flowsheeting 2
licences
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Analytical services 2
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Teesside Management 2
Procedures
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Eutech and ICI 2
Technology services
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Distribution services 3
- -------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Waste disposal 3
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Relevant Petrochemicals
PROPERTY INTERFACES
Not Agreed Form
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ICI Purchaser Wilton Accommodation - Licence to occupy 2
to include office Wilton Centre
and admin services
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Page 186
<PAGE>
PO/MTBE
INTERFACES/TRANSITIONAL ARRANGEMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HSCC Purchaser Port Neches, Product HSCC Petrochemical
Texas Corporation toll manufacture
(PO/MTBE) all PG sold by the
PO/MTBE business.
------------------------------------------------------------------------------------------------------------------
Product HSCC Corporation is an
important customer of the
PO/MTBE business for the
products PG (propylene
glycol) and PO (propylene
oracle).
- ------------------------------------------------------------------------------------------------------------------
Product Propylene and glycol are
(raw material) exclusively supplied to the
PO/MTBE business by other
HSCC entities.
- ------------------------------------------------------------------------------------------------------------------
Product The oxygen and steam
(raw material) supplied by Air Liquide to
the Port Neches plant is
legally purchased by HSCC
Corporation and resold to
PO/MTBE.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 187
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Port Neches, Services Utilities The PO/MTBE plant at Port
Texas Neches is totally dependent
on HSCC for:
- supply of raw materials
(see above)
- utilities
- ------------------------------------------------------------------------------------------------------------------
- disposal of by products
- personnel:
- ------------------------------------------------------------------------------------------------------------------
- management and
operation of the plant
[overhead costs?] [caps
on liability of HSCC.]
- sales activities
- technical and product
research and development
- Offtake of products (see
above)
- ------------------------------------------------------------------------------------------------------------------
Product Services HSCC has second
PO/MTBE plant on a
different site; services,
personnel, supplies common
to both plants need to be
allocated to the JV in the
best interest of the JV.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 188
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Port Neches Product Nitrogen supply agreement;
Terms covers both PO/MTBE
(PO/MTBE) plants of HSCC; could also
apply to the Methanol supply
contract (which were not in
the dataroom)
- ------------------------------------------------------------------------------------------------------------------
Services
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Service Operating and Maintenance
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Product Propylene Supply
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Service Management Services
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Product Glycol Supply
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Service Process Development Area
Operations and Technical
Services for Propylene
Oxide/MTBE
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Product Propylene Oxide Purchase
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Product Propylene Glycol Toll
Conversion
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Consolidation Agreement
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Utility Steam, Oxygen and Utilities
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Service Tax Sharing
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Product Purchase of Ethylene Oxide
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 189
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Product PG Supply
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Product Propane Sales to Huntsman
[PO-041]
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Utility Steam [PO-055]
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Service Co-generation [PO-050]
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Port Neches, Pipeline administration
Texas (docks)
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Operation of Joint
Wastewater Treatment Plant
- ------------------------------------------------------------------------------------------------------------------
HSCC Purchaser Service Use of Pipeline Pipe Rack
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 190
<PAGE>
PO/MTBE
PROPERTY ARRANGEMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
HSCC Purchaser Port Neches, Pipeline Lease
Texas (docks)
- --------------------------------------------------------------------------------------------------------
HSCC Purchaser Ownership of Joint
Wastewater Treatment Plant
- --------------------------------------------------------------------------------------------------------
HSCC Purchaser Lease PO/TBA Pilot Plant
Facility
- --------------------------------------------------------------------------------------------------------
HSCC Purchaser License Agreement for
MTBE Bldg. No. 4
- --------------------------------------------------------------------------------------------------------
HSCC Purchaser Sub-lease of GATX Rail
Cars
- --------------------------------------------------------------------------------------------------------
</TABLE>
Page 191
<PAGE>
Polyurethanes
INTERFACES
Category 2/3
Not Agreed Form
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Product Caustic Soda (20%) 2
((Pounds)145K pa)
- ------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Product Sulphuric Acid 2
((Pounds)20K pa)
- ------------------------------------------------------------------------------------------------------------------------------
ICI (Aromatics) Purchaser North-East Services Benzene Pipeline important 2
- ------------------------------------------------------------------------------------------------------------------------------
Purchaser ICI (Acrylics) Rozenburg Services Engineering Maintenance and Site 3
Infrastructure; Purchasing for [possible
Engineering Maintenance and Site interface]
Infrastructure including external
services but not raw materials,
packaging or logistics. Possible
transitional service.
- ------------------------------------------------------------------------------------------------------------------------------
ICI (Eutech) Purchaser Various Services Process Engineering Licence 3
- ------------------------------------------------------------------------------------------------------------------------------
ICI (Argentina) Purchaser St. Lorenzo Service Tolling Agreement re blending 2
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 192
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Argentina operation
- ------------------------------------------------------------------------------------------------------------------------------
Purchaser ICI (Quest) Rozenburg Utilities Water 2
- ------------------------------------------------------------------------------------------------------------------------------
Purchaser ICI (Quest) Rozenburg Utilities Electricity 2
- ------------------------------------------------------------------------------------------------------------------------------
Purchaser ICI (Quest) Rozenburg Utilities Effluent 2
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 193
<PAGE>
Polyurethanes
TRANSITIONAL ARRANGEMENTS
Category 2/3
Not Agreed Form
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ICI (ICI Technology) Purchaser Various Services Project Management & 3
Engineering Consultancy,
Manufacturing Technology,
R&T Management
- ------------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Services R&T (unlikely to continue) 3
- ------------------------------------------------------------------------------------------------------------------------------------
Purchaser ICI Various Services R&T (unlikely to continue) 3
- ------------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Sao Paulo, Services Use of Paints laboratory 3
Brazil
- ------------------------------------------------------------------------------------------------------------------------------------
ICI (Eutech) Purchaser Wilton (and Services Project Management and 3
others?) Engineering including
Purchasing - current position
but presumably not intended
to continue post-Completion
- ------------------------------------------------------------------------------------------------------------------------------------
ICI (P&L) Purchaser Worldwide Services Management of shipping 3
contracts and expert advice
for transportation and [possible
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 194
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
distribution worldwide interface]
- ------------------------------------------------------------------------------------------------------------------------------------
Purchaser (Ternate) ICI Milan Services HQ/Accounts Services 3
- ------------------------------------------------------------------------------------------------------------------------------------
Purchaser (Singapore) ICI Malaysia Services Cost Sharing 3
- ------------------------------------------------------------------------------------------------------------------------------------
ICI (Symphony) and Purchaser and Various Products "Symphony" - products are 3
Purchaser ICI purchased under ICI global
contracts and in certain
circumstances Polyurethanes is
lead buyer:-
-Ethylene Oxide
-UV additives
-Adipic Acid
-BDO
-drums
-Propylene Glycol
-PO
This is current position but
presumably not intended to
continue post-Completion
- ------------------------------------------------------------------------------------------------------------------------------------
ICI (Uniquema) Purchaser Wilton (?) Services Overhauls and Maintenance 3
(terminates July 99)
- ------------------------------------------------------------------------------------------------------------------------------------
ICI (US) Purchaser ICI Services Corporate SHE -current 3
Wilmington position but presumably not
intended to continue post-
Completion
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 195
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Belgium Services Cash Pooling Services (Cash 3
Management) and Intra
Group Bank (for loans etc),
Tax Treasury and internal
audit services - current
position but presumably not
intended to continue post-
Completion
- ------------------------------------------------------------------------------------------------------------------------------------
Purchaser (ICI ICI (Acrylics/ Everberg Services Everberg site services 3
Holland) Uniquema)
- ------------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Services Occupational health 3
- ------------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Wilton Services Mail and Printing 3
- ------------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Services ICI Coordination Centre NV 3
Finance Services - expected
to cease on Completion
- ------------------------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Services SHE 3
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 196
<PAGE>
Tioxide
INTERFACES
Category 1
Agreed Form Term Sheets - initialled on signing
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
HSCC ICI (ACMA Greatham to Product Titanium tetrachloride 1
Ltd) East site
- -----------------------------------------------------------------------------------------
</TABLE>
Tioxide
INTERFACES
Category 2/3
Not Agreed Form
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
ICI Purchaser East site, Utility (electricity metered) 3
Billingham
- ------------------------------------------------------------------------------------------------------
ICI Purchaser East site, Utility Steam/water (via 3rd 3
Billingham party)
- ------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service ICI Technology 2
- ------------------------------------------------------------------------------------------------------
</TABLE>
Page 197
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service ICI Eutech 2
- ------------------------------------------------------------------------------------------------------
ICI Purchaser Grimbsy, Calais, Service ICI Eutech Raman 2
Huelva, Analyser
Umbogintwini
- ------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service ICI Medical Services 2
- ------------------------------------------------------------------------------------------------------
ICI Purchaser North East Product Sulphur 2
- ------------------------------------------------------------------------------------------------------
ICI Purchaser North East Products Chlorine liquid 2
- ------------------------------------------------------------------------------------------------------
ICI Purchaser North East Products Caustic soda 2
- ------------------------------------------------------------------------------------------------------
Purchaser ICI Billingham Products Sulphuric acid 2
(Acrylics)
- ------------------------------------------------------------------------------------------------------
Purchaser ICI North East Products Sodium Hypochlorite 2
- ------------------------------------------------------------------------------------------------------
ICI (Eutech) Purchaser Various Service Process Engineering 3
Licence
- ------------------------------------------------------------------------------------------------------
</TABLE>
Tioxide
TRANSITIONAL ARRANGEMENTS
Category 2/3
Not Agreed Form
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 198
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service EPP advice 3
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Product stewardship - 3
(Girona Centre) emergency tel no re
copperas transport
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser East site, Utilities TEL pay for security and 3
Billingham refuse costs to Synetix
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service AMEX (Travel) 3
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service AMEX (Corporate card) Terminate on
NB: ICI Contract completion
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Engineering standards 3
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Billingham Service ICI waste disposal 3
service
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Internal audit 3
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Treasury/tax/corporate 3
finance
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various ICI Loan LPC loan/EB/Midland/ Paid off on
Agreement Montague/Lloyds completion?
- ----------------------------------------------------------------------------------------------------------------------
Purchaser ICI Greatham Service Pilot plant services for 3
ACMA Ltd
- ----------------------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service ICI learning 3
Inappropriate
to continue?
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 199
<PAGE>
Tioxide
TRANSITIONAL PROPERTY ARRANGEMENTS
Property - Not Agreed Form
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SELLER BUYER SITE TYPE INTERFACE CATEGORY
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Purchaser ICI East site/ Property ACMA Ltd require 2 year 3
Billingham lease, determinable on 3
months notice by ACMA Ltd
- -------------------------------------------------------------------------------------------------------
ICI Purchaser East site/ Property TEL informal access route 3
Billingham over ICI land
- -------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service Security advisory service 3
- -------------------------------------------------------------------------------------------------------
ICI Purchaser Various Service ICI SHE standards guidance 3
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
Page 200
<PAGE>
SCHEDULE 6
ALLOCATION OF CONSIDERATION
PART I. SALE SHARES AND LOCAL BUSINESSES TO BE TRANSFERRED AT CLOSING
$
Tioxide Group Ltd (shares) 343,989,155
ICI Europe Ltd (shares) 44,000,000
ICI PLC (Polyurethanes Business intellectual property) 200,000,000
ICI PLC (Polyurethanes Business Assets) 320,000,000
ICI Americas Inc. (Polyurethanes Business Assets plus 520,000,000
shares in Rubicon Inc.)
ICI Chemicals and Polymers Ltd (Relevant Petrochemicals 80,000,000
Business except for the Olefins Manufacturing Business)
Impkemix (No. 46) Ltd (shares) 100,000
ICI Chemicals and Polymers Ltd (Olefins Manufacturing 200,000,000
Business)
PART II. ALLOCATIONS FOR OTHER TRANSFERS
COMPANIES/JOINT VENTURES $
Tioxide Business
Tioxide Americas Inc. (shares) 3,071,344
Tioxide Americas Inc. (note) 111,928,656
Tioxide Europe SA - Spain (shares) 114,964,993
Tioxide Europe SA - Spain (note) 18,035,007
Tioxide Europe GmbH (shares) 5,000,000
Tioxide (Malaysia) Sdn Bhd (shares) 65,000,000
Tioxide Group Ltd (notes) 116,010,845
Polyurethanes Business
ICI Holland BV (shares) 188,306,272
ICI Holland BV (note) 231,693,728
Nippon Polyurethane Industry Co Ltd (shares) 31,000,000
Arabian Polyol Co Ltd (shares) 3,000,000
Chemical Blending Holland BV (shares) 200,000
Systems Houses
- --------------
ICI Mex SA DE DV (shares) 26,000,000
<PAGE>
ICI PU (China) Holdings BV (shares) 10,000,000
Selling Operations
- ------------------
PT ICI Indonesia (assets) 200,000
ICI PU (Asia Pacific) Pte Ltd (shares) 700,000
BUSINESSES
Systems Houses
- --------------
ICI Argentina S.a.i.c. 7,000,000
ICI Colombia SA 7,000,000
Deutsche ICI GmbH 5,500,000
ICI Italia Spa 14,500,000
ICI Taiwan Ltd 8,000,000
ICI 1996 (Thailand) Ltd 5,000,000
Selling Operations
- ------------------
ICI Belgium NV/SA 500,000
ICI Brasil Quimica Ltda 3,200,000
ICI Canada Inc 3,600,000
ICI Espana SA 500,000
PART III. NON-COMPETE COVENANT
ICI PLC 115,474,000
TOTAL 2,803,474,000
-------------
Page 202
<PAGE>
SCHEDULE 7
WORKING CAPITAL
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Local Business/Company Jurisdiction ICI Reporting Lower End of Net Working Upper End of
Source Code Working Capital Capital at Working Capital
Range 30 June 1998 Range
(Pounds)'m (Pounds)'m (Pounds)'m
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Polyurethanes
Companies
ICI Europe Ltd England 6114 7.3 7.7 8.0
PT ICI Indonesia Indonesia 7240 -0.1 -0.1 -0.1
ICI Mex SA de CV Mexico 7187 2.2 2.3 2.4
ICI Holland BV Netherlands 6033/ 6047 -33.0 -34.7 -35.9
(including Chemical
Blending Holland BV)
ICI Polyurethanes China 7182 1.2 1.3 1.3
(China) Ltd
ICI Polyurethanes (Asia Singapore 7235 -0.3 -0.3 -0.3
Pacific) Pte Ltd
ICI PU (China) Holdings Netherlands 6241 0.0 0.0 0.0
BV
ICI Iota BV Netherlands 6325 0.0 0.0 0.0
Impkemix (No 46) Ltd England 3566 0.0 0.0 0.0
Local Businesses/2/
ICI PLC England 1055 98.1 103.3 106.8
ICI Canada Inc. Canada 5366 0.3 0.3 0.3
ICI Americas Inc. U.S.A 5656 34.0 35.8 37.0
(including Rubicon Inc)
Deutsche ICI GmbH Germany 6005 0.1 0.1 0.1
ICI Espana SA Spain 6036 0.0 0.0 0.0
ICI Italia Spa Italy 6038 0.6 0.6 0.6
ICI Belgium NV/ SA Belgium 6053 -0.3 -0.3 -0.3
ICI Argentina Saic Argentina 7188 1.4 1.5 1.6
ICI Brasil Quimica Ltda Brasil 7196 1.1 1.2 1.2
ICI Taiwan Ltd Taiwan 7366 0.3 0.3 0.3
ICI 1996 (Thailand) Ltd Thailand 7318 0.6 0.6 0.6
Intra-business - 1132 -0.6 -0.6 -0.6
elimination of profit
on stock
- -----------------------------------------------------------------------------------------------------------------------
Polyurethanes Business 113.1 119.0 123.0
Total
- -----------------------------------------------------------------------------------------------------------------------
Tioxide
Companies
Tioxide Americas Inc. U.S.A. 5606 12.6 13.2 13.7
Tioxide Europe GmbH Germany 6235 -0.2 -0.3 -0.3
Tioxide (Malaysia) Sdn Malaysia 7356 5.7 6.1 6.3
Bhd
Tioxide Europe SA Spain 6001 12.6 13.3 13.8
Tioxide Group Ltd England 3000 39.2 41.2 42.6
(including Tioxide
Europe Ltd)
- -----------------------------------------------------------------------------------------------------------------------
/2/ Identified by member of ICI's Group which conducts this business at the
date of this Agreement.
Page 203
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Local Business/Company Jurisdiction ICI Reporting Lower End of Net Working Upper End of
Source Code Working Capital Capital at Working Capital
Range 30 June 1998 Range
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tioxide Canada Inc. Canada 5000 6.1 6.4 6.7
- -----------------------------------------------------------------------------------------------------------------------
Tioxide Europe SA France 6230 24.1 25.4 26.2
(including Tioxide
- -----------------------------------------------------------------------------------------------------------------------
Europe NV/ SA)
Tioxide Europe Srl Italy 6000 27.5 29.0 29.9
- -----------------------------------------------------------------------------------------------------------------------
Tioxide Europe AB Sweden 6234 -0.4 -0.5 -0.5
Tioxide Europe Titanium Turkey 6530 0.0 0.0 0.0
Pigmentleri Ticaret
Ltd Sirketi
Tioxide Southern Africa Rep. South Africa 7000 3.9 4.1 4.2
(Proprietary) Ltd (60%
share) (including
British Titan Products
Southern Africa
(Proprietary) Ltd)
Louisiana Pigment U.S.A. 5654 8.7 9.2 9.5
Company L.P. (50%
share)
Business adjustment (UK - 1067 -0.8 -0.9 -0.9
related)
Intra-business - 1115 -4.4 -4.6 -4.8
elimination of profit
on stock
- -----------------------------------------------------------------------------------------------------------------------
Tioxide Business Total 134.6 141.7 146.5
- -----------------------------------------------------------------------------------------------------------------------
Relevant Petrochemicals
Local Business/3/
ICI Chemicals and - 31.3 32.9 34.1
Polymers Ltd
- -----------------------------------------------------------------------------------------------------------------------
TOTAL WORKING CAPITAL 279.0 293.7 303.6
BALANCES
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
For the purposes of clause 7 of this Agreement, all of the figures
expressed in sterling in this Schedule 7 shall be converted into dollars at
the rate of (Pounds)1/$1.6177.
/3/ Identified by the member of ICI's Group which conducts this business as
at the date of this Agreement.
Page 204
<PAGE>
SCHEDULE 8
CLOSING STATEMENT
IN RESPECT OF FINAL FINANCIAL DEBT, FINAL CASH BALANCES AND CLOSING WORKING
CAPITAL
1. The Closing Statement shall be prepared and agreed in accordance with the
provisions of this Schedule.
2. The Closing Statement shall:
(a) be based on the books and records of the relevant Companies and the
Business Vendors;
(b) in relation to any Local Business exclude all Taxes and all Tax assets or
rights to repayments of Tax, and in relation to any Company exclude all Tax
Liabilities other than VAT, payroll taxes or amounts in respect thereof and
all Tax assets or rights to repayments of Tax other than such Tax assets or
rights to repayments of Tax relating to VAT or payroll taxes or amounts in
respect thereof;
(c) include a statement of the Closing Working Capital for each Company and
each Local Business:
(i) comprising the following line items in the Accounts:
In respect of the ICI Business:
(aa) stocks;
(bb) debtors, excluding loans receivable from other members of
ICI's Retained Group;
(cc) creditors due within one year, excluding deferred tax,
pension liabilities, short-term borrowings and current
instalments of loans; and
In respect of the PO/MTBE Business:
(vv) inventories;
(ww) accounts receivable;
(xx) other current assets;
(yy) accounts payable; and
Page 205
<PAGE>
(zz) accrued liabilities excluding accrued interest on long-term
debt and miscellaneous accruals in respect of unamortised
original acquisition costs;
but (in relation to the Companies) excluding Final Financial Debt and Final
Cash Balances and (in relation to the Local Businesses) excluding Excluded
Assets and Excluded Liabilities;
(ii) as at 00.01 am (applicable local time) on the Closing Adjustments
Date;
(iii) being reported in sterling (in the case of the ICI Business) or in
dollars (in the case of the PO/MTBE Business);
(d) subject to sub-paragraphs (b) and (c) and paragraphs 3 to 8, be prepared on
the same basis and in accordance with the same principles, policies,
procedures, methods and practices of accounting as were applied for the
purposes of the Accounts and on the basis that the application of
principles, policies, procedures, methods and practices of accounting will
be consistent with such exercise as applied in relation to the Accounts,
Provided that there shall be no requirement to perpetuate an error made in
preparing the Accounts and, for the avoidance of doubt, this paragraph (d)
shall not prevent changes in circumstances that have taken place between
the Accounts Date and the end of the Review Period (as defined in clause 7)
from being taken into account in the preparation of the Closing Statement);
(e) subject to sub-paragraphs (b), (c) and (d) and paragraphs 3 to 8, be
prepared in accordance with principles, policies, procedures, methods and
practices of accounting generally accepted in the United Kingdom (in the
case of the ICI Business) or the United States (in the case of the PO/MTBE
Business);
(f) include, in relation to each Company, a statement of the Final Financial
Debt (including separate identification of the Final Intra Group Debt) and
the Final Cash Balance (including separate identification of the Final
Intra Group Cash Balance) for that Company;
(g) include (in relation to each of the Polyurethanes Business and the Tioxide
Business) the sum representing the total intra-business elimination of
profit on stock calculated on the same basis as such sum was calculated for
the purposes of the Accounts.
Sub-paragraphs (d) and (e) of paragraph 2 are intended to be applied as a
hierarchy, with paragraph (d) being applied first and with paragraph (e) being
applied only where ambiguity remains following application of the previous
paragraph.
Page 206
<PAGE>
3. The Closing Statement shall be prepared on the basis that it relates to the
Companies and the Local Businesses as going concerns and exclude any effects of
the change of control or ownership of any of them contemplated by this Agreement
or any other effect of this Agreement.
4. All balances relevant for the calculation of the Final Intra Group Debt and
the Final Intra Group Cash Balance in the Closing Statement shall be reconciled
to the extent practicable between the records of the payer and those of the
payee; in the event of any discrepancy the records of the payee shall, unless
otherwise agreed, prevail.
5. In determining the Closing Working Capital for any Company or Local
Business, no account shall be taken of any event which occurs after the end of
the Review Period (as defined in clause 7), but account may be taken of events
occurring before this date.
6. For the purposes of the Closing Statement, the valuation of stocks (other
than engineering spares) of any Company or Local Business shall be based on a
physical stock-take conducted on the Closing Date, which both Vendors and their
respective Accountants will be entitled to attend.
7. The Closing Working Capital for the Local Business of ICI Americas Inc.
will, for the avoidance of doubt, include, the working capital of Rubicon, Inc.
on a basis consistent with the basis on which such working capital was included
in the Accounts.
8. Payments due to be made by Companies to members of ICI's Retained Group for
the surrender of ACT or losses are to be reflected in the Closing Statement
under Creditors.
Page 207
<PAGE>
SCHEDULE 9
WARRANTIES
For the purposes of the Warranties:
(a) Share Selling Company shall mean:
(i) as at the date of this Agreement, those companies identified as
"Shareholders" in column 2 of Part A of Part II of Schedule 1 and
as "Current Parent" in column 1 of Part B of Part II of Schedule
1 or in column 1 of Part IV of Schedule 1;
(ii) as at Closing, those companies identified as Share Selling
Companies in column 1 of Part I of Schedule 1;
(b) Sale Shares shall mean:
(i) as at the date of this Agreement, the entire issued share capital
of the "Subsidiary Undertakings" listed in column 3 of Part A of
Part II of Schedule 1, column 2 of Part B of Part II of Schedule
1 or the "Number and Class of shares owned and to be sold" as
shown in column 3 of Part IV of Schedule 1;
(ii) as at Closing, the entire issued share capital of the company
listed in column 2 of Part 1 of Schedule 1.
General
Capacity and conduct of business
1.1 Each of the Vendors and each Share Selling Company and Business Vendor and
any other party to any Transaction Agreement (other than the Purchaser or any
other member of the Purchaser's Group) is duly incorporated and validly existing
under the laws of the jurisdiction in which it is incorporated and has (or will
have at the time such agreements are entered into and performed) the necessary
corporate power and corporate authority to enter into and to perform those of
the Transaction Agreements to which it is a party.
1.2 Those of the Transaction Agreements to which they are party constitute
valid and binding obligations of the Vendor and each Share Selling Company,
Business Vendor and any other party to any Transaction Agreement (other than the
Purchaser or any other member of the Purchaser's Group).
1.3 The execution, delivery and compliance with the terms of those of the
Transaction Agreements to which they are party by the Vendor, the Share Selling
Page 208
<PAGE>
Companies, the Business Vendors and any other party to any Transaction Agreement
(other than the Purchaser or any other member of the Purchaser's Group) will:
(a) not constitute a breach of any Material Contract or entitle any person to
terminate or avoid any such contract, where such breach, termination or
avoidance (or such breaches, terminations or avoidances collectively) will
cause a material adverse effect on the relevant Business;
(b) be in compliance with the memorandum and articles of association, bye-laws
or other equivalent constitutional documents of the Vendor and of each
Share Selling Company and Business Vendor;
(c) not contravene any order, judgement, decree, law or regulation by which the
Vendor or any Company, Share Selling Company or Business Vendor (in respect
of any Local Business only) is bound where any such contravention(s),
individually or collectively, will cause a material adverse effect on the
relevant Business; and
(d) not require any consent from any party to any Material Contract which is
not a member of the Vendor's Group.
The Companies
2.1 The information relating to the Companies and Subsidiaries contained in
Schedule 1 and Exhibit G is true and accurate in all respects.
2.2 Compliance has been made with all legal requirements in connection with the
formation of each of the Companies and all issues and grants of shares,
debentures or other securities of any of them, in each case other than de
minimis or technical requirements.
Ownership of Shares
3.1 Each Share Selling Company is the sole legal and beneficial owner of the
Sale Shares set out next to its name in Schedule 1.
3.2 Each Share Selling Company is entitled to sell and procure the transfer of
the full legal and beneficial ownership in the Sale Shares set out next to its
name in Schedule 1 free from any encumbrance, equity or third party right of any
nature.
3.3 The Sale Shares are fully paid up or credited as fully paid up and, in the
case of the companies listed in Parts I and II of Schedule 1, represent the
whole of the issued share capital of the relevant company and, in the case of
companies listed in Parts III and IV of Schedule 1, the entire issued Share
capital of each such company is as set out in Exhibit G and the relevant Sale
Shares represent all of the share capital of those companies held by any member
of the Vendor's Group.
Page 209
<PAGE>
3.4 No agreement or contract has been entered into which requires or may
require any Company to allot or issue any share or loan capital and no Company
has allotted or issued any securities which are convertible into share or loan
capital.
3.5 There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance or equity on, over or affecting any of the
Sale Shares and there is no agreement or commitment to give or create any of the
foregoing and there are no rights of pre-emption or restrictions on transfer in
relation to the Sale Shares.
Subsidiaries
4.1 Except as set out in Parts II, III and IV of Schedule 1, no Company is the
holder or beneficial owner of (nor has agreed to acquire) any class of any
shares or loan capital or other securities of any other corporation.
4.2 Except in relation to the Joint Venture Interests, no Company and, in
relation to the Business, no Business Vendor is or has agreed to become a member
of any partnership, unincorporated association, joint venture or consortium
(other than recognised trade associations).
Assets and Insurance
5.1 Except for the Excluded Assets and those assets that are leased, each
Company and each Business Vendor has full legal and beneficial title to the
fixed and current assets of the Business reflected in the Accounts (save for
fixed and current assets worth less than $100,000, as defined for the purposes
of the Accounts, and save for fixed and current assets disposed of by the
Company or Business Vendor in the ordinary course of its business since the
Accounts Date) and to all fixed and current assets acquired by that Company or
Business Vendor since the Accounts Date (save for fixed assets and current
assets worth less than $100,000, as defined for the purposes of the Accounts and
save for any such fixed or current assets disposed of by the Company or Business
Vendor in the ordinary course of business). Except for the Excluded Assets and
those assets that are leased, the fixed and current assets individually worth
less than $100,000 to which the Companies and Business Vendors do not have full
legal and beneficial title have an aggregate value of $6,000,000 or less. A
Company or a Business Vendor either has in its possession, or is entitled
(subject to any Permitted Encumbrance) to take possession of, each of the assets
of the Business capable of possession other than those which are leased.
5.2 None of the assets of any Company or, in respect of the Business, of any
Business Vendor, is subject to any encumbrance (including without limitation any
debenture, mortgage, charge, lien, deposit by way of security, bill of sale,
option or right of pre-emption) other than any Permitted Encumbrances and there
is no agreement or commitment to give or create any.
Page 210
<PAGE>
5.3 Save for Intellectual Property Rights (which for the avoidance of doubt
are dealt with in paragraph 17 below), the Business Assets together with the
property rights, assets and facilities owned by the Companies comprise all the
property rights, assets and facilities now used exclusively or primarily in the
Business, and such properties, rights, assets and facilities together with those
to be provided under the arrangements which are the subject matter of clause 15
and/or Schedules 17, 20 or 22 comprise all the assets which are necessary as at
Closing for the carrying on of the Business at Closing in the manner in which it
is presently conducted.
5.4 So far as the Vendor is aware, all key items of Plant and Equipment are in
reasonable working order (subject to fair wear and tear, having regard to their
age and use, taken as a whole) so as to be capable of operating on a comparable
basis as they have been operated by the Business during the last 12 months.
5.5 Save for fluctuations and variations in Stock due to normal business
factors including, without limitation, production schedules and market demand
(including seasonal factors affecting the same) and save for, in the case of
Tioxide, excess Stock arising out of the settlement arrangements between QIT and
TGL following the arbitration proceedings disclosed in the Disclosure Letter,
the Stock taken as a whole comprises broadly the same mix of types and grades of
products as are required for the trading requirements of the Business and the
Stock has been maintained at levels which in the ordinary course of business
have been appropriate to meet the current level of sales in the Business.
5.6 The statutory books (including registers and minute books) of each Company
have been properly kept and contain in all material respects bona fide and
accurate records of all matters customarily or required to be dealt with
therein.
5.7 The Data Room contains details of the current insurance arrangements
applicable to each Company and the Business. All premiums in relation to those
arrangements have been duly paid and, so far as the Vendor is aware all such
policies are in full force and effect and are not void or voidable. There is no
claim for an amount in excess of $150,000 outstanding under any such arrangement
and, so far as the Vendor is aware, no event has occurred which is likely to
give rise to any claim for an amount in excess of $150,000.
Compliance with law
6. No Company or, in respect of the Business, any Business Vendor is in
contravention of any law, statute, order or regulation of any relevant
jurisdiction (other than any anti-trust or similar legislation), where such
contravention when taken together with contraventions arising out of the same or
related acts, omissions, facts or circumstances will cause a material adverse
effect on the relevant Business.
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Licences and consents
7.1 The Companies and, in respect of the Business, the Business Vendors
together have all governmental authorisations, licences, consents, permissions,
approvals and qualifications (being qualifications which the Company or Business
Vendor concerned is required to have for such purpose by applicable law)
necessary to carry on the Business in all material respects in the manner in
which such Business is now carried on and such authorisations, licences,
consents, permissions, approvals or qualifications as are so necessary are in
full force and effect and, so far as the Vendor is aware, there are no
circumstances which are likely to cause any such authorisation, licence,
consent, permission or approval not to be renewed or revoked, where its
revocation or non-renewal (or such revocations or non-renewals collectively)
will cause a material adverse effect on the relevant Business.
7.2 All the authorisations, licences and consents referred to in paragraph 7.1
are valid and subsisting and have been complied with in all material respects.
Litigation, insolvency and product liability
8.1 No Company and, in respect of the Business, no Business Vendor is engaged
in any litigation, arbitration, administrative or criminal proceedings likely to
involve that Company or Business Vendor paying any sum in excess of $150,000 or
which otherwise will, individually or collectively, cause a material adverse
effect on the relevant Business and, so far as the Vendor is aware, there are no
such proceedings pending or threatened in writing.
8.2 There are no orders, decrees, judgments or agreements with any Court or
governmental authority or agency to which any Company or Business Vendor or the
Vendor is a party or by which any Company, Business Vendor or the Vendor is
bound and which will, individually or collectively, cause a material adverse
effect on the relevant Business.
8.3 No member of the Vendor's Group is engaged in any litigation or
arbitration proceedings which are likely, individually or collectively, to have
a material effect on the capacity of the Vendor or any Share Selling Company or
Business Vendor to perform its obligations under this Agreement and, so far as
the Vendor is aware, no such legal or arbitration proceedings have been
threatened in writing.
8.4 No administrator, receiver or administrative receiver or any other
equivalent officer has been appointed in respect of any Company or Business
Vendor or in respect of any part of the assets or undertakings of any such
company.
8.5 No petition has been presented, no order has been made, no resolution has
been passed and no meeting has been convened for the winding-up of any Company
or Business Vendor or for an administration order or the equivalent in the
relevant
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jurisdiction of incorporation to be made in relation to any Company or Business
Vendor.
8.6 No Company or Business Vendor is unable to pay its debts as they fall due.
8.7 No distress, distraint, charging order, garnishee order, execution or
other equivalent process in the jurisdiction of incorporation has been levied
or, so far as the Vendor is aware, applied for in respect of the whole or any
material part of the property, assets and/or undertaking of any Company or
Business Vendor and remains outstanding.
Environmental matters
9. For the purposes of the warranties in this paragraph 9, where applicable
the definitions in Schedule 14 and/or Schedule 14A (as applicable) shall apply.
9.1 So far as the Vendor is aware, during the period of three years expiring
on the date of this Agreement, each Company or, in respect of its Local
Business, each Business Vendor has complied with all material Environmental
Permits and Environmental Laws except where failure to comply would not have a
material adverse effect on the relevant Business.
9.2 All material Environmental Permits have been obtained and are in full
force and effect and, so far as the Vendor is aware, no circumstances exist
which are likely to result in (a) the variation, limitation or revocation of any
such Environmental Permit; or (b) any such Environmental Permit not being
extended, renewed or granted (provided that the transactions provided for in
this Agreement do not constitute a "circumstance" for the purpose of this
Agreement) except where such circumstances, or the matters referred to in (a) or
(b) would not have a material adverse effect on the relevant Business.
9.3 No Company or, in respect of its Local Business, no Business Vendor is
involved in any litigation, proceedings or claim by any relevant authority or
other person under Environmental Laws or in relation to Environmental Matters
and, so far as the Vendor is aware, none is threatened except, in each case,
where such actual or threatened litigation, proceedings or claim would not have
a material adverse effect on the relevant Business.
9.4 So far as the Vendor is aware, there are no audits or other assessments,
reviews, or reports in its possession or the release of which is in its control
relating to Environmental Matters which have not been disclosed to the Purchaser
the contents of which would reveal facts or circumstances likely to give rise to
a material adverse effect on the relevant Business.
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Accounts
10. In respect of the ICI Business, the Accounts were, save as specified
therein, prepared in all material respects in accordance with accounting
principles generally accepted in the United Kingdom. On that basis, and subject
as described in the Accounts, such Accounts present fairly, in all material
respects, in accordance with the basis of preparation set out in Note 1 to the
Accounts, the aggregate financial position of the ICI Business as at the
Accounts Date and the aggregate results of its operations for the year ended on
the Accounts Date. Without prejudice to the generality of the foregoing, there
are no material fixed assets and investments included in the Accounts which are
not part of the ICI Business. In respect of the PO/MTBE Business, the Accounts
were prepared in all material respects in accordance with accounting principles
generally accepted in the United States. On that basis, subject as described in
such Accounts, such Accounts present fairly, in all material respects, the
financial position of the PO/MTBE Business at the Accounts Date and the results
of its operations for the year ended on the Accounts Date. Without prejudice to
the generality of the foregoing, there are no material fixed assets and
investments included in the Accounts which are not part of the PO/MTBE Business.
Grants
11. No Company has received any grant, subsidy, payment or allowance from any
governmental authority, body or agency (whether supranational, national,
regional or local) (but always excluding any relating to Taxation) during the
last six years of $500,000 or more (or $2,000,000 or more in aggregate for all
Companies) which would be repayable as a result of the sale of the Sale Shares
and Local Businesses under this Agreement.
Anti Competitive Arrangements
12.1 So far as the Vendor is aware, the Vendor is not and has not been in the
last three years, and no Company or Business Vendor is or has been in the last
three years, a party to any agreement, arrangement, concerted practice or course
of conduct which infringes any anti-trust or similar legislation in any
jurisdiction in which the Company or Business Vendor carries on the Business,
where the consequences of such infringement(s), individually or collectively,
will cause a material adverse effect on the relevant Business.
12.2 The Vendor has not and no Company or Business Vendor (in relation to its
Local Business) has received in the last three years any process, notice or
written communication from any local, national or supranational authority having
jurisdiction in competition matters in relation to any aspect of the Business or
any agreement, arrangement, concerted practice or course of conduct to which
they are alleged to be a party in relation to the Business the nature or subject
matter of which is, individually or collectively, likely to cause a material
adverse effect on the
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relevant Business. So far as the Vendor is aware, no such process, notice or
communication is likely to be received.
Material Contracts and Guarantees
13.1 No Company or Business Vendor, in relation to its Local Business, is party
to any Material Contract.
13.2 Other than in the ordinary course of business, no Business Contract, or
contract to which any Company is a party (or the benefit of which is held in
trust for or has been assigned to any of the Companies), restricts the freedom
to carry on the whole or any part of the Business in any part of the world where
the consequences of such restriction when taken together with any related
restrictions applying to the Business, will cause a material adverse effect on
the relevant Business.
13.3 No Company or, in respect of the Business, any Business Vendor has
received written notice of any breach of, or default under, any Material
Contract and, so far as the Vendor is aware, no other party to a Material
Contract is in breach of, or in default under, any Material Contract, the
consequence of which in each case (when taken together with any similar or
related breach or default) will cause a material adverse effect on the relevant
Business.
13.4 No Company and no Business Vendor (in relation to the Business) is a party
to or has any liability (present or future) under any guarantee by it of the
obligations of any third party which is not a Company or a member of the
Retained Group, being a guarantee under which it has a liability of more than
(Pounds)500,000 or, other than in the ordinary course of business, any letter of
credit, hire purchase, credit sale, conditional sale agreement, leasing or
hiring agreement.
13.5 Neither in the financial period ending on the Accounts Date nor in the
period since the Accounts Date has any person (together with other persons
connected with him so far as the Vendor is aware) purchased from or sold to each
of the Polyurethanes, Relevant Petrochemicals, PO/MTBE or Tioxide Business more
than 5 per cent. of the aggregate amount of all sales or purchases made by each
such Business during such period.
13.6 In respect of the PO/MTBE Business, the POS Agreement (as defined in
clause 18.13) is a Material Contract which is expected to continue to be
profitable for the foreseeable future and its terms and conditions will not be
changed as a result of its assignment to the Purchaser. No consent is required
from the counterparty for the assignment of the POS Agreement to the Purchaser
and others.
13.7 Each Material Contract is valid and enforceable in accordance with its
terms.
Employees
14.1 For the purposes of this section:
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(a) Site means any one of the Companies' or Business Vendors' sites at
which there are more than 30 Employees together with all manufacturing
facilities (including systems houses and finishing plants); and
(b) Warranted Employees means Employees or Business Employees who are
employed at a Site and all Senior Employees.
14.2 Particulars of the material terms of employment applicable to the
Warranted Employees (other than senior management team members) of the Companies
or Business Vendors (other than those terms and conditions imposed by any
national collective agreements, industry-wide collective agreements or by any
applicable national law or custom and practice) are disclosed in the Data Room.
Particulars of the material terms of employment applicable to the senior
management team members will be provided to the Purchaser not later than 10
business days after the date of this Agreement.
14.3 Other than national collective agreements and industry-wide collective
agreements, the collective agreements (details of which will be provided to the
Purchaser prior to Closing) and union recognition agreements disclosed in the
Data Room are all the material current written or other material agreements
between each Company or Business Vendor and trade unions or representative
bodies relating to the Warranted Employees or any of them.
14.4 There is and has been within the last 12 months no material industrial
action involving the Warranted Employees in relation to the Companies or the
Business Vendors.
14.5 So far as the Vendor is aware, no Senior Employee employed by a Company or
Business Vendor has given or been given notice of termination of his employment
by the Company or Business Vendor.
14.6 No more than 15 Employees at any one Site have within the last 12 months
been given notice of termination of their employment by the Company or Business
Vendor.
14.7 Particulars of any individual loan other than travel advances made in the
ordinary course of business, relocation packaging or advances in accordance with
the terms of any employee benefit plan made by any Company or Business Vendor to
a Warranted Employee which is in excess of $100,000 and which shall remain
outstanding at Closing, together with particulars of any individual sum owed by
a Company or Business Vendor to any Warranted Employee (other than in relation
to remuneration and other contractual or customary benefits) which is in excess
of $100,000, are set out in the Data Room.
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14.8 An up to date list of all Employees employed by a Company or Business
Vendor and seconded to the Vendor from any Company or any Business Vendor or
from the Vendor to any Company or any Business Vendor is disclosed in the Data
Room.
14.9 The Data Room contains lists of all Employees at each Site as at the date
that such list was compiled and the number of Employees on each such list has
not changed by more than 2% since the date that such list was compiled
(excluding changes due to resignations and terminations for cause). To the
extent contained in each list, information relating to salary, date of birth (or
age) and date of commencement of continuous employment (or length of service)
with a Company or Business Vendor is accurate in all material respects. To the
extent that the Data Room contains additional information in relation to all
Senior Employees, including name and job title, it is accurate in all material
respects. The Data Room also contains approximate numbers of Employees of each
Company or Business Vendor who are employed at locations which are not Sites.
14.10 Since the Accounts Date no change has been made in the emoluments or
other terms of engagement to any group of 20 or more Employees except for
increases made in accordance with normal industry and company practice, and no
such change and, except as aforesaid, no negotiation or request for such change
is due or expected within 6 months from the date of this agreement.
14.11 A list containing each consultancy agreement of an equivalent annual
value of US$150,000 between any individual and a Company or Business Vendor
(where relevant to the Business or any part of it) with an annual cost to the
Business of $150,000 or more is disclosed in the Data Room.
Pensions
15.1 In this paragraph 15:
Pension Schemes means the following arrangements for the provision of Retirement
Benefits to and in respect of Employees employed by a Company or Business
Vendor:
Polyurethanes
. ICI Pension Fund (including the ICI Supplementary Pension Fund)
. ICI International Pension Plan
. Avalon Pension Scheme
. Deutsche ICI Pension Plan
. ICI Holland Pension Scheme
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. ICI Holland Pre-pension Scheme
. Supplementary Pre-pension Plan
. PET/Melinar VUT Scheme
. ICI Pension Fund VZW
. The Plan de Prevision de ICI Espana SA
. East Europe Regional Pension Plan (insured under an Insurance Policy with
Cigna)
. ICI China Ltd Retirement Benefit Scheme
. ICI Singapore Group Retirement Scheme
. ICI Malaysia Retirement Benefits Scheme
. ICI Taiwan Polyurethanes Employment Retirement Scheme
. ICI Thailand Provident Fund
. PT ICI Indonesia Pension Plan
. ICI Japan Ltd Pension Plan
. ICI Americas Pension Plan (will not cover Polyurethanes employees after 31
March 1999)
. Polyurethanes Pension Plan (spin-off from ICI Americas Pension Fund)
. ICI Excess Benefit Plan
. Executive Pension Plan
. Executive Retirement Plan for Key Employees of ICI's Group
. Retiree Medical and Dental Coverage under the ICI Americas Health and
Dental Care Plan
. Executive Supplemental Benefits Plan
. Executive Split Dollar Insurance Plan
. Executive Supplemental Death Benefit Arrangement
. Bonus Conversion Plan of ICI American Holdings Inc.
. Unfunded Pension Arrangements of Robert Reen and Ron Wyatt
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. Trust for the Unfunded Deferred Compensation Plan of ICI American Holdings,
Inc.
. The Trust Deed for the Defined Benefit Plans of ICI American Holdings Inc.,
dated May 1993.
. The Trust Deed for Certain Defined Contribution Plans of ICI American
Holdings, Inc., dated May 1993.
. The Trust Deed for the Unfunded Deferred Compensation Plans of ICI American
Holdings Ltd Inc., dated June 1993.
. ICI Canada Pension Plan
. ICI Canada Senior Managers Pension Plan
Relevant Petrochemicals
. ICI Pension Fund (including the ICI Supplementary Pension Fund)
. ICI International Pension Plan
Tioxide
. Tioxide Pension Fund
. Tioxide Offshore Pension Fund
. The Progefond - fondo pensione
. The FONCHIM Associazone fonde Pensione Complemetare a Capitalizzazione per
i Lavoratori dell'Industra Chimica e Farmaceucitica e del Settorie Affini
. Plan de Prevision Social
. Convenio Colectivo de Centro
. AECI Pension Fund
. Tioxide Southern Africa Provident Fund
. Tioxide Southern Africa Pension Fund
. Tioxide Malaysia and Group Companies Expatriate Retirement Fund
. Tioxide Malaysia Retirement Fund
. Tioxide America Inc. (TAI) Retirement Plan
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. TAI Savings Plan
. TAI Supplemental Employees Retirement Plan
. Tioxide Canada Inc. (TCI) Staff Employees' Pension Plan
. TCI Hourly Employees Pension Plan
. TCI Supplemental Employees Retirement Plan
Retirement Benefits means any benefits payable in respect of retirement, death,
invalidity or long service, including:
(a) pensions, lump sums and gratuities provided on retirement or death; and
(b) post-retirement dental or medical benefits;
Transferring Pension Schemes means those of the Pension Schemes which will
transfer to the Purchaser by operation of law on the Closing Date.
15.2 The Pension Schemes are the only arrangements (other than those under any
public law, statute or regulation) under which any Company or Business Vendor
provides or is liable to provide any Retirement Benefits in respect of any
Employee employed by a Company or Business Vendor or former employee of a
Company.
15.3 The Data Room contains:
(a) all material documents containing the provisions currently governing the
Pension Schemes;
(b) the latest actuarial valuation of each Transferring Pension Scheme.
(c) the latest audited accounts of each Pension Scheme where such accounts
exist.
15.4 Each Pension Scheme has been approved by the appropriate taxation, social
security and supervisory authorities in the relevant country or state.
15.5 Except in relation to contributions due to any Pension Scheme in respect
of the last month, all amounts due to be paid by the Companies or Business
Vendor to the Pension Schemes have been paid and those which fall due for
Closing will have been paid by that date.
15.6 So far as the Vendor is aware, the Companies and Business Vendor[s] and
the trustees, managers and administrators of the Pension Schemes have complied
in all material respects at all material times with their respective obligations
under the Pension Schemes and all applicable laws and regulations in respect of
the Pension Schemes in relation to the Employees employed by a Company or
Business Vendor.
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15.7 There is no liability to make any payment to any occupational pension
scheme established in the United Kingdom (UK Plan) in respect of any Employee
under Section 75 of the Pensions Act 1995.
15.8 The appropriate Company or Business Vendor in respect of each UK Plan
which is contracted-out holds or is named in and will until Closing continue to
hold or be named in an appropriate contracting-out certificate (within the
meaning of the Pension Schemes Act 1993) in respect of those of the Employees
who are members of any UK Plan. All age-related payments which are due and
payable to any UK Plan in respect of any Employee or former employee of any
Company or Business Vendor under the Occupational Pension Schemes (Contracting-
out) Regulations 1996 (the Contracting Out Regulations) have been received and
properly allocated in respect of such Employee or former employee and no age-
related payments have been received in breach of the Occupational Pension
Schemes (Age-related Payment) Regulations 1997 or Regulation 37 of the
Contracting-out Regulations.
15.9 There are not in respect of any of the Transferring Pension Schemes, or
the benefits under any of the Pension Schemes in respect of any of the
Employees, any material actions, suits or claims pending or threatened.
15.10 No surplus payment within the meaning of the Pension Scheme Surpluses
(Administration) Regulations 1987 has been or will be before Closing be made out
of any UK Plan. No such payment is proposed to be made out of any such UK Plan
to any employer participating in such UK Plan.
15.11 The representations and warranties in 15.2 through 15.10 shall not apply
to any Pension Scheme that is a U.S. Benefit Plan. Anything fairly disclosed in
the Data Room or the Disclosure Letter is an exception to the representations
and warranties applicable to the US Benefit Plans. For the avoidance of doubt,
no representations or warranties are being made with respect to the US Benefit
Plans of Louisiana Pigment Company or Rubicon Inc.
15.11.1 For purposes of the representation and warranties applicable to US
Benefit Plans, the following definitions shall apply
Assumed US Benefit Plans means the US Benefit Plan of a Company and the US
Benefit Plan of a Business Vendor transferred
to the Purchaser by means of this Agreement.
Code means Internal Revenue Code of 1986, as amended.
ERISA means the Employee Retirement Income Security Act of
1974, as amended.
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ERISA Affiliate means any person with respect to whom the Vendor,
Business Vendor or Company is treated as
"single employer" under section 4001(b) of
ERISA on the date hereof.
Title IV Plan means a US Benefit Plan subject to Title IV of
ERISA.
PBGC means the Pension Benefit Guaranty Corporation
US Benefit Plan means (i) each employee pension benefit plan, as
defined in section 3(2) of ERISA that is
subject to ERISA; and
(ii) each material employee welfare benefit
plan, as defined in section 3(1) of ERISA
that is subject to ERISA;
that in each case, is sponsored, maintained or
contributed to or required to be contributed
to by a Vendor, Business Vendor, Company or
ERISA Affiliate for the benefit of the US
Employees. For the avoidance of doubt, any
plan excluded from ERISA by means of section
4(b)(4) is not a US Benefit Plan.
US Employee means an Employee of a Company or Business Vendor
incorporated in the United States.
15.11.2 The Disclosure Letter contains a true and complete list of each US
Benefit Plan.
15.11.3 With respect to each US Benefit Plan (other than the Polyurethanes
Pension Plan), Vendor has delivered or made available to Purchaser through the
Data Room, the Disclosure Letter or otherwise, true and complete copies of:
(i) the most recent plan document and amendments thereto;
(ii) any trust or other funding medium document; and
(iii) the most recently disseminated summary plan description and/or
summary of material modification.
15.11.4 With respect to each Assumed US Benefit Plan (other than the
Polyurethanes Pension Plan), Vendor has delivered or made available to Purchaser
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through the Data Room, the Disclosure Letter or otherwise, true and complete
copies of:
(i) the most recently filed Form 5500, required by ERISA or the
Code, to include any required accountant's report;
(ii) the most recently prepared actuarial valuation required by ERISA
or the Code; and
(iii) the most recent determination letter received from the Internal
Revenue Service (the IRS) with respect to each such plan
intended to qualify under Code section 401(a).
15.11.5 With respect to the Polyurethanes Pension Plan, Vendor has delivered or
made available to Purchaser through the Data Room, the Disclosure Letter or
otherwise, true and complete copies of:
(i) the 1997 Form 5500 of the ICI Americas Pension Plan;
(ii) the January 1, 1998 actuarial valuation of the ICI Americas
Pension Plan; and
(iii) the most recent IRS determination letter of the ICI Americas
Pension Plan.
15.11.6 With respect to any Assumed US Benefit Plan that is a Title IV Plan, no
liability under Title IV of ERISA has been incurred by the Company or the
applicable Business Vendor that has not been satisfied in full, other than
liability for PBGC premiums provided that any failure to pay such premium does
not constitute a breach of 15.11.12.
15.11.7 With respect to the Title IV Plans (other than the Assumed US Benefit
Plans), neither the Vendor nor any of its ERISA Affiliates have failed to comply
with Title IV of ERISA in such a manner that would reasonably be expected to
impose liability on Purchaser under Title IV of ERISA). Insofar as the
representation made in this 15.11.7 applies to sections 4064, 4069 or 4204 of
Title IV of ERISA, it is made with respect to any employee pension benefit plan
(other than an Assumed US Benefit Plan) subject to Title IV of ERISA to which
the Relevant Companies, the Vendor, the Business Vendor, or any ERISA Affiliate
made, or were required to make, contributions during the five (5) year period
ending on the last day of the most recent plan year ended prior to the Closing
Date.
15.11.8 With respect to any Title IV Plan that is an Assumed US Benefit Plan:
(i) there is no accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or
not waived, on
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the last day of the most recent plan year ending prior to the
date hereof;
(ii) as of the Closing Date no proceedings have been initiated by the
PBGC to terminate such Title IV Plan; and
(iii) all contributions required to be made prior to the date hereof
have been made or are reflected in the Accounts.
15.11.9 With respect to each Assumed US Benefit Plan that is a Title IV Plan,
the present value of accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan, did not exceed, as of
its latest valuation date, the then current value of the assets of such plan
allocable to such accrued benefits.
15.11.10 No Assumed US Benefit Plan is a multiemployer pension plan within the
meaning of section 3(37) of ERISA or a plan described in section 4063(a) of
ERISA. Neither Vendor nor its ERISA Affiliates have suffered prior to Closing a
"complete withdrawal" or a "partial withdrawal" as such terms are respectively
defined in sections 4203 and 4205 of ERISA, that could reasonably be expected to
impose a liability on Purchaser or a Company.
15.11.11 No fiduciary of an Assumed US Benefit Plan has committed a breach of
fiduciary duty that could reasonably be expected to impose a liability upon
Purchaser or a Company under ERISA for breach of fiduciary duty. Prior to
Closing no party in interest has engaged in a prohibited transaction with
respect to an Assumed US Benefit Plan that could reasonably be expected to
impose a liability upon Purchaser or a Company for a tax, penalty or fine under
ERISA section 4975 or ERISA section 502(i). No tax, fine or penalty is pending
or to Vendor's knowledge, threatened with respect to an Assumed US Benefit Plan
under Code section 4976 or 4980B.
15.11.12 Each Assumed US Benefit Plan has been operated and administered in all
material respects in accordance with its terms and ERISA, the Code and other
applicable law.
15.11.13 Each Assumed US Benefit Plan (other than the Polyurethanes Pension
Plan) intended to be "qualified" within the meaning of (S) 401(a) of the Code
has received a favourable IRS determination letter with respect to such
qualification. As of the date hereof the remedial amendment period for the
Polyurethanes Pension Plan has not expired.
15.11.14 No US Benefit Plan provides to US Employees medical, surgical,
hospitalisation, death or similar benefits (whether or not insured) for periods
extending beyond their retirement or other termination of service, other than
(i)
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coverage mandated by applicable law, (ii) death benefits under any "pension
plan," or (iii) benefits the full cost of which (based on COBRA rates for
medical benefits) is borne by the US Employee or his or her dependants or
beneficiaries.
15.11.15 There are no pending, or to the best of the Vendor's knowledge,
threatened claims by or on behalf of any Assumed US Benefit Plan by any US
Employees or beneficiary or alternate payee thereof covered under any such
Assumed US Benefit Plan (other than routine claims for benefits) against Vendor,
the Relevant Companies or the Business Vendor. With respect to a U.S. Benefit
Plan (other than an Assumed Benefit Plan) no claims are pending or to Vendors
knowledge threatened (other than routine claims for benefits) which would
reasonably be expected to impose a material liability on the Purchaser or a
Company after the Closing.
15.11.16 The consummation or announcement of any transaction contemplated by
this Agreement will not (either alone or in conjunction with additional or
further acts in events) result in any (A) additional material payments (whether
of severance pay or otherwise) becoming due from a Company, Vendor or Business
Vendor, or the Purchaser to any officer, Employee, former employee, retiree,
partner, director or former director thereof or to the trustee under any "rabbi
trust" or similar arrangement or to any dependent beneficiary or alternate payee
thereof or, (B) material benefits under any Assumed US Benefit Plan being
established or becoming accelerated, vested or payable. For the avoidance of
doubt there is no breach of this 15.11.16 with respect to any payments made or
benefits provided that would have been made or provided if the consummation or
announcement had not occurred.
Properties
16.1 The Properties and the Excluded Properties constitute the only land or
buildings owned, leased, used or occupied by the relevant Companies or (as the
case may be) used or occupied for the purposes of the ICI Business and/or the
PO/MTBE Business as at the date of this Agreement.
16.2:
(A) A Company or a Business Vendor (as the case may be) is or will at Closing
be legally and (where appropriate) beneficially entitled to each of the
Properties and has or will at Closing have good title to the estate or
interest denoted in respect of each Property in Part I of Schedule 17
subject to Permitted Encumbrances.
(B) A Company or a Business Vendor (as the case may be) has in its possession
or under its control all material deeds and documents or (where
appropriate) certified, examined, notarised or similar copies relating to
[the title the interest] of the relevant Company or (as the case may be)
Business Vendor to the Properties.
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(C) Each of the Properties is free from any leases, underleases, tenancies or
licences in favour of third parties which have a material adverse effect
on the relevant Business.
16.3:
(A) Except for Permitted Encumbrances there are no mortgages or charges, legal
or equitable, fixed or floating, affecting any of the Properties and there
is no agreement or binding commitment on the part of the relevant Company
or Business Vendor to give or create any;
(B) There are no agreements for sale, estate contracts, enforceable options or
rights of pre-emption affecting any of the Properties which if exercised
would have a material adverse affect on the relevant Business.
(C) The Properties are not subject to any covenants, restrictions or other
encumbrances which have a material adverse effect on the relevant Business
and there is no outstanding written notice of a breach of any covenants,
restrictions or other encumbrances which will have a material adverse
effect on the relevant Business.
16.4 The existing principal use of each Property at the date of this Agreement
is in all material respects a permitted or lawful use under applicable planning
legislation or is otherwise immune from enforcement action thereunder and there
is no outstanding written notice of a material breach of applicable planning
legislation which will have a material adverse affect on the relevant Business.
16.5 No relevant Company or (as the case may be) Business Vendor has received
any written notice of a subsisting material breach of any statutes, orders or
regulations (other than environmental statutes, orders or regulations) relating
to any of the Properties from any competent or statutory authority which will
have a material adverse effect on the relevant Business.
16.6 There are no material outstanding and current disputes, actions, claims,
demands or complaints in respect of any Properties which have a material adverse
effect on the relevant Business.
16.7 No relevant Company or (as the case may be) Business Vendor has received
any subsisting written notice alleging absence of any material rights, easements
and services which are necessary for the use of the Properties for their actual
use at the date on which this warranty is given and none is anticipated by the
relevant Company or (as the case may be) Business Vendor.
16.8 In relation to each of the Properties which is leasehold there are no
material arrears of rent or other sums payable under the lease under which such
Property is held and no Business Vendor or (as the case may be) relevant Company
has received
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a subsisting written notice of a material breach of any covenants and conditions
contained in such lease.
16.9 No Relevant Company has received a subsisting written notice of a material
breach of any covenants and conditions contained in any material leases,
tenancies, licences or agreements to which the Properties are subject.
16.10 No relevant Company has within the 5 years preceding the date of this
Agreement entered into (as an original contracting party or a guarantor thereof)
a lease, licence or other similar interest in land and buildings (other than in
respect of the Properties and the Excluded Properties) in respect of which it
has (actual or contingent) liability other than in respect of Environmental
Matters.
16.11 Reference to the Properties in warranties 16.2 to 16.9 (inclusive) shall
be deemed to exclude any Properties which are or will at Closing be owned leased
occupied or used by a Non-Controlled Joint Venture. The provisions of paragraph
25 of this Schedule shall apply in respect of the application of warranties 16.2
to 16.10 (inclusive) to the Properties owned leased occupied or used at Closing
by a Warranted Joint Venture.
16.12 Reference in warranty 16.1 to land and buildings used or occupied for the
purposes of the ICI Business shall be deemed to exclude any used or occupied by
any Non-Controlled Joint Venture.
Intellectual Property & Information Technology
17.1 In this clause 17:
material means:
(a) in relation to Intellectual Property Rights, Intellectual Property Rights
or related agreements the absence of which would have a significant
adverse impact on the conduct of the Business;
(b) in relation to Computer Systems, Computer Systems or related agreements
the absence of which would have a materially detrimental effect on the
conduct of the Business and does not include a Computer System which can
be replaced (for example, by the purchase of a new software package or new
hardware):
(i) at a cost in respect of that Computer System being replaced not
exceeding (Pounds)25,000 (including out-of-pocket expenses and
the cost of internal management time); and
(ii) without the need for any material disruption to the relevant
Business and without the need for material development or
configuration; and
<PAGE>
Business means the ICI Business (in the case of ICI) and the PO/MTBE Business
(in the case of HSCC). For the avoidance of doubt, "significant adverse impact"
shall mean a lesser effect than material adverse effect on the relevant Business
as defined in this Agreement.
17.2 Brief details of all Registered Rights are set out in the IP Annex. The
relevant Company or Business Vendor as set forth opposite the Registered Rights
in question in the IP Annex is the sole registered proprietor of, or applicant
in respect of, such Registered Rights unless otherwise indicated therein.
17.2A All renewal fees required for the maintenance of the Registered Rights
have been paid or instructions given for payment to be made in the ordinary
course of business and no Registered Rights have been abandoned or allowed to
lapse except in the ordinary course of business.
17.3 The Group IPR, the Business IPR, Business Information and Group
Information are owned both legally and beneficially by the relevant Company or
Business Vendor free from all liens, charges, encumbrances and other security
interests and are not subject to any assignment or agreement to assign by any
relevant Company or Business Vendor (other than to the Purchaser).
17.4 Neither the Selling Companies nor any Company have received written
notification within the 12 months prior to the date of this Agreement that any
of the rights comprised in the Group IPR or the Business IPR are the subject of
any opposition or revocation proceedings (or other similar or equivalent
proceedings in any other jurisdiction) and no Company or Business Vendor is
currently a party to such proceedings in relation to any Intellectual Property
Rights owned by any third party (insofar as such proceedings relate to the
Business).
17.5 Brief details of all material agreements entered into by any Company or
Business Vendor in relation to any Business IPR, Business Information, Group IPR
or Group Information or in relation to any Intellectual Property Rights or
Information which, or the rights in which, are owned by any third party and
which Relate to the Business are set out in the IP Annex and, in the case of all
of such agreements as are written, true copies are disclosed in the Data Room.
17.6 No Company or Business Vendor or, so far as the Vendor is aware, any
other party thereto is in material breach of any agreement required to be
disclosed pursuant to paragraph 17.5.
17.7 So far as the Vendor is aware, the carrying on of the Business does not
infringe or make unauthorised use of any Intellectual Property Rights or
confidential Information of any third party and no written communications have
been received within the 24 months preceding the date of this Agreement by any
relevant Company or Business Vendor from any third party asserting the same.
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17.8 So far as the Vendor is aware, no third party is infringing or making
unauthorised use of the Group IPR, the Business IPR, the Business Information or
the Group Information.
17.9 Each member of the Purchaser's Group will immediately following Closing
either solely legally and beneficially own or (subject to the need to obtain
third party consents pursuant to clause 6.14 of this Agreement) have a valid
licence to use all Intellectual Property Rights necessary to carry on the
Business in the manner carried on prior to Closing.
17.10 There are no current claims or, so far as the Vendor is aware, any
threatened claims by any current or former employee of the relevant Business for
compensation pursuant to section 40 Patents Act 1977 (or any similar or
equivalent provision in any other jurisdiction) and no claim has been made for
such compensation which has resulted in any award of compensation which remains
unpaid as at the date of this Agreement.
17.11 Details of all material written agreements to which a Company or a
Business Vendor is a party relating to the use, development, maintenance,
support and disaster recovery of material Computer Systems are disclosed in the
Data Room.
17.12 No member of the Retained Group nor any Company is in material dispute
with any supplier of material Computer Systems or related services in connection
with the Business which could have a materially detrimental effect on the
Business.
17.13 No member of the Retained Group nor any Company nor, so far as the
Vendors are aware, any other party thereto is in material breach of any
agreement required to be disclosed pursuant to paragraph 17.11 which could have
a materially detrimental effect on the Business.
17.14 For the purposes of this paragraph 17.14, a Computer System is Year 2000
Compliant if neither its performance nor functionality is or will be affected by
dates prior to, during or after the year 2000 and in particular (but without
limitation):
(a) no value for current date causes or will cause any interruption in
operation;
(b) date-based functionality behaves and will behave consistently for dates
prior to, during and after the year 2000;
(c) in all interfaces and data storage, the century in any date is and will
be specified either explicitly or by unambiguous algorithms or
inferencing rules; and
(d) the year 2000 is and will be recognised as a leap year,
and Year 2000 Compliance shall be construed accordingly.
<PAGE>
17.14.1 As part of the Retained Group's Year 2000 Project, the Business has
developed and established a written plan concerning the Year 2000
Compliance of the material Computer Systems (the Year 2000 Plan). The
Business has developed its Year 2000 Plan with reasonable skill and
care, to address the particular circumstances of, and the risks to the
Business and to identify the material Computer Systems critical to the
Business (in this paragraph 17.14 the Critical Computer Systems).
17.14.2 To date, the Business has implemented its Year 2000 Plan with reasonable
skill and care including:
17.14.2.1 identifying those Critical Computer Systems that may be Year
2000 non-Compliant;
17.14.2.2 carrying out appropriate testing of such Critical Computer
Systems as are referred to in paragraph 17.14.2.1. above, to
determine whether such Computer Systems are Year 2000
Compliant;
17.14.2.3 reasonably determining the appropriate method of remediation
to the Business in respect of such Critical Computer Systems
as are referred to in paragraph 17.14.2.1 above and which the
Business reasonably determines as a result of any testing
under paragraph 17.14.2.2 above, require remediation and has
used or is using reasonable endeavours to complete such
remediation prior to 31 August 1999;
17.14.2.4 if the Business reasonably determined under paragraph
17.14.2.3 above that any Critical Computer Systems require
remediation to be undertaken by or on behalf of the Business,
then the Business has undertaken or is undertaking such acts
of remediation to date with reasonable skill and care or has
procured a third party to undertake such remediation on its
behalf;
17.14.2.5 has used reasonable endeavours or is using reasonable
endeavours to obtain confirmation from the third party
suppliers of such Critical Computer Systems as are referred to
in paragraph 17.14.2.1 above that such Critical Computer
Systems are Year 2000 Compliant or (where such confirmation
has not been forthcoming) has used or is using reasonable
endeavours to obtain assurances from such third party
suppliers regarding appropriate remediation of such Critical
Computer Systems prior to 30 June 1999; and
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17.14.2.6 has used reasonable endeavours to obtain confirmation about
the impact that Year 2000 non-Compliance may have upon third
party critical utilities providers and material sole-source
suppliers to the Business (each a Critical Supplier for the
remainder of this paragraph 17.14).
17.14.3 Details of the Business's Year 2000 Plan together with an up-to-date
report of the status of its implementation and an estimate of the
Business's planned external costs to complete its Year 2000 Plan are
disclosed in the Data Room.
17.14.4 Details of those Critical Computer Systems referred to in paragraph
17.14.2.1 above which either:
17.14.4.1 having exercised its reasonable skill and care, the Business
has identified as being Year 2000 non-Compliant; or
17.14.4.2 as a result of using its reasonable endeavours to obtain
confirmation from third party suppliers of the Year 2000
Compliance of such Critical Computer Systems under paragraph
17.14.2.5 above, the Business has been informed by such
third party suppliers that such Critical Computer Systems
are not Year 2000 Compliant
are contained in the Data Room.
17.14.5 As a result of using its reasonable endeavours to obtain information
about the impact of Year 2000 non-Compliance from Critical Suppliers to
the Business under paragraph 17.14.2.6 above, the Business has not been
informed by any Critical Supplier that such Critical Supplier will not
be able to continue to supply the Business without interruption as a
result of the internal Year 2000 non-Compliance of that Critical
Supplier.
17.14.6 To Closing the Business will employ reasonable adequate resources in
its continuing implementation of its Year 2000 Plan.
17.14.7 To Closing the Vendor will continue to implement its Year 2000
programme and procure that the other members of the Retained Group
shall continue to implement their respective Year 2000 plans with
reasonable skill and care.
17.15 Details of any domain name registered by any Company or any member of
the Retained Group in connection with the Business are disclosed in the
Disclosure Letter.
17.16 So far as Steve Roberts in respect of the Relevant Petrochemicals
Business, Ian Machin in respect of the Tioxide Business, Paul Hulme in respect
of the
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Polyurethanes Business and Mark Beard in respect of the PO/MTBE Business are
aware at the date of this Agreement and without any additional investigation or
enquiry by them, there are no material defects in the material Computer Systems
which if the Relevant Petrochemicals Business, the Tioxide Business, the
Polyurethanes Business or the PO/MTBE Business (as the case may be) is carried
on in all material respects in the manner in which it is carried on at the date
of this Agreement, would have a material adverse effect on the relevant
Business.
Events since the Accounts Date
18. Since the Accounts Date and except for the purpose of giving effect to the
transactions contemplated by this Agreement, the ICI Business or the PO/MTBE
Business (as the case may be):
(a) has been conducted in all material respects in the ordinary course
consistent with its past practices;
(b) there has been no material adverse change in the financial position of the
ICI Business or the PO/MTBE Business (as the case may be);
(c) no asset of a value in excess of (Pounds)5 million has (and assets with an
aggregate value in excess of (Pounds)20 million have not) been disposed
of, or been agreed to be disposed of, on capital account and no contract
involving expenditure by it on capital account in excess of (Pounds)5
million has been entered into, and no contracts which collectively involve
expenditure on capital account in excess of (Pounds)20 million has been
entered into by any Company or any Business Vendor in relation to the
Business, in each of the above cases, otherwise than in the ordinary
course of business;
(d) no debts or other receivables of any Company or any Business Vendor in
relation to the ICI Business or the PO/MTBE Business (as the case may be)
have been factored or sold or agreed to be sold;
(e) no resolution of any Company in general meeting has been passed; and
(f) no change in the accounting reference period of any Company has been made.
Taxation
19.1(a) Each Company has duly made all proper returns required to be made for
any Tax purpose and has supplied or caused to be supplied all notices and
other information required by law to be supplied to any Tax Authority.
(b) There is no dispute or disagreement (not including routine queries
relating to the Tax returns of a Company) outstanding at the date of this
Agreement with any Tax Authority regarding the proper method of computing
the profits of
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the Company (or any part of it) for Tax purposes or the proper treatment
for VAT purposes of any supplies of goods or services made (or treated as
made) by the Company or in respect of any other Tax matter and there are
no circumstances of which the Share Selling Companies are aware which make
it likely that any such dispute or disagreement will commence.
(c) The amount of Tax chargeable on any Company in respect of any accounting
period ending on or within 6 years before the Accounts Date has not to any
material extent depended on any concession, agreement, dispensation or
other formal or informal arrangement with any Tax Authority in
circumstances where either:
(i) the availability of any such arrangement will be prejudiced as a
result of the change of control of the Company resulting from this
Agreement; or
(ii) the Company has not acted in accordance with the terms of the
arrangement in question.
Duties etc.
19.2 All customs duties and VAT payable to any Tax Authority upon the
importation of any of the Company's assets and all excise duties payable to any
Tax Authority in respect of any of these assets have (to the extent that they
are due and payable) been paid in full, and no asset is liable to confiscation
or forfeiture by virtue of non-payment or underpayment of any Tax or duty.
Stamp Duty and Stamp Duty Reserve Tax
19.3 All documents which are in the possession or control of the Company and
which are subject to stamp duty or similar duty or charges and which establish
or are necessary to establish the title of any Company to any material asset or
by virtue of which any Company has any right have been duly stamped and all
stamp duty or similar duty or charges properly paid thereon. Since the last
Accounts Date no Company has incurred any liability to stamp duty reserve tax or
any other similar duty or Tax.
Contracts
19.4 No contracts to which a Company is a party involve any future liabilities
of a revenue nature which when incurred will not be deductible in computing
profits for the purposes of corporation tax (or any corresponding Tax on profits
in any relevant jurisdiction) otherwise than as a result of any future changes
in the law or as a result of any voluntary act after Closing.
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Distributions and payments
19.5 Each Company has deducted and (insofar as they are due and payable)
properly accounted to the appropriate Tax Authority for all amounts which it has
been obliged to deduct in respect of or on account of Tax.
Employee benefits
19.6(a) All amounts payable to any Tax Authority or other appropriate authority
in respect of any employee (including any Tax deductible from any amounts
paid to an employee, and any national insurance, social fund or similar
contributions required to be made in respect of employees) due and payable
by any Company up to the date hereof have been duly paid and each Company
has made all such deductions and retentions as should have been made under
applicable laws or regulations.
(b) The Disclosure Letter contains details of all share incentive schemes,
profit sharing schemes and profit related pay schemes established by any
Company.
Close companies
19.7 No Company is, or has within the last 6 years been, a close company as
defined in section 414 of the Taxes Act.
Group transactions
19.8 No Company has in the last 6 years acquired any asset (other than trading
stock) from any company which at the time of the acquisition was a member of the
same group of companies in circumstances such that section 171 of the Taxation
of Chargeable Gains Act 1992 was applicable.
VAT
19.9 Each Company:
(a) has complied in all material respects with all VAT legislation, has made,
given, obtained and kept full, complete, correct and up-to-date returns,
records, invoices and other documents appropriate or required for those
purposes and is not liable to any abnormal or non-routine payment of VAT,
or any forfeiture or penalty, or to the operation of any penal provision
in relation to VAT;
(b) has not been required by the Commissioners of Customs and Excise or other
relevant Tax Authority to give security under paragraph 4 Schedule 11 of
the Value Added Tax Act 1994 or any other VAT legislation as a condition
of making supplies for the purposes of VAT;
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(c) is not and has not been treated as a member of a group for the purposes of
VAT legislation and has not applied for such treatment, and no transaction
has been effected in consequence of which a Company is or may be held
liable for any VAT arising from supplies made by another company;
(d) has not and nor has any relevant associate made any election under any VAT
legislation in respect of any land in, over or in respect of which the
Company has any interest, right or licence to occupy.
19.10 [Agreed deletion]
Residence and offshore interests
19.11 Each Company is and has at all times been resident for Tax purposes in
its place of incorporation and is not and has not been treated as resident in
any other jurisdiction for any Tax purpose (including any double taxation
arrangement).
Additional U.S. Tax Warranties
20. Except as set forth in the Disclosure Letter:
(a) there are no liens for Taxes upon the assets or properties of ICI's US
Business or upon ICI's US Assets or upon the PO/MTBE Business (as
appropriate) except for statutory liens for Taxes not yet due and payable
or Taxes being contested in good faith in appropriate proceedings;
(b) no US federal, state, local or non-US audits, claims, assessments,
examinations, investigations, actions, suits or other administrative
proceedings or court proceedings (Audit) exist or have been initiated with
regard to any Taxes or Tax Returns in respect of ICI's US Business and
ICI's US Assets or upon the PO/MTBE Business (as appropriate), and none of
ICI or any of its Subsidiaries or HSCC or its Subsidiaries (as
appropriate) has received any written notice that such an Audit is
pending, proposed, or threatened with respect to any Taxes due in respect
of ICI's US Business and ICI's US Assets or upon the PO/MTBE Business (as
appropriate) or any Tax Return filed by or with respect to ICI or any of
its Subsidiaries or HSCC or its Subsidiaries (as appropriate);
(c) none of ICI or any of its Subsidiaries or HSCC or its Subsidiaries (as
appropriate) has requested or received an adverse ruling from any Tax
Authority in respect of ICI's US Business or ICI's US Assets or in respect
of the PO/MTBE Business (as appropriate), or signed a closing or other
agreement with any Tax Authority, in respect of ICI's US Business or ICI's
US Assets or in respect of the PO/MTBE Business (as appropriate), which
could have an adverse effect on ICI's US Business or ICI's US Assets or
upon the PO/MTBE Business (as appropriate) after the Closing Date;
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(d) none of ICI's US Business or ICI's US Assets or the PO/MTBE Business (as
appropriate) is subject to any obligation under any Tax sharing agreement,
Tax indemnification agreement or similar contract or arrangement. None of
ICI or any of its Subsidiaries or HSCC or its Subsidiaries (as
appropriate) is aware of any potential liability or obligation in respect
of ICI's US Business or ICI's US Assets or in respect of the PO/MTBE
Business (as appropriate), to any person as a result of, or pursuant to,
any such agreement, contract or arrangement;
(e) no claim has been made in writing, or to the knowledge of ICI or any of
its Subsidiaries or HSCC or its Subsidiaries (as appropriate) within the
past 2 years, by a Tax Authority in a jurisdiction where ICI or any of its
Subsidiaries or HSCC or its Subsidiaries (as appropriate) does not file
Tax Returns in respect of ICI's US Business or ICI's US Assets or in
respect of the PO/MTBE Business (as appropriate), to the effect that ICI
or any of its Subsidiaries or HSCC or its Subsidiaries (as appropriate) is
or may be subject to Tax in respect of ICI's US Business or ICI's US
Assets or in respect of the PO/MTBE Business (as appropriate);
(f) no transferor of any of ICI's US Assets or of the PO/MTBE Business (as
appropriate) is a non-US person within the meaning of Section 1445 of the
Code.
Dutch Tax Warranties
21.1 All Companies that are incorporated in the Netherlands form part of a
fiscal unity as meant in Article 15 of the Netherlands Corporate Income Tax Act,
1969 (Wet op de vennootschapsbelasting 1969) or as meant in Article 7(4) of the
Netherlands Value Added Tax Act, 1968 (Wet op de amzetbelasting 1968). The
Companies that form part of the fiscal unity comprise ICI Holland BV, Chemical
Blending Holland BV, ICI Iota BV, ICI Polyurethanes (China) Holding BV with the
parent company being ICI Theta BV.
21.2 Within the fiscal unity of which the Companies have formed part until the
Closing Date no transactions as meant in the so-called "16 standard condition of
Resolution of September 30, 1991 no DB91-230 (as amended)" have taken place.
21.3 As of the Closing Date there are no tax liabilities for which the
Companies can be held liable pursuant to Article 39 of the Tax Collection Act.
Tax Events since The Accounts Date
22.1 Since the Accounts Date:
(A) no Company has declared, made or paid any distribution;
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(B) no accounting period by reference to which Income, Profits or Gains are
measured or determined of any Company has ended;
(C) there has been no disposal of any asset (including trading stock) or
supply of any service or business facility of any kind (including a loan
of money or the letting, hiring or licensing of any property whether
tangible or intangible) for a consideration in excess of (Pounds)10
million in circumstances where the consideration actually received or
receivable for such disposal or supply was less than the consideration
which is deemed to have been received for Tax purposes;
(D) no Company has been a party to any transaction for which any Tax clearance
provided for by statute could have been obtained but was refused;
(E) no Company has paid or become liable to pay any interest or penalty in
connection with any Tax, has otherwise paid any Tax after its due date for
payment or owes any Tax the due date for payment of which has passed.
22.2 Each Company has or has reasonable access to sufficient records relating
to past events, including any elections made, to calculate the Tax liability or
relief which would arise on any disposal or on the realisation of any asset
owned at the Accounts Date by that Company or acquired by that Company since
that date but before Closing.
22.3 No Company has received any notice from any Tax Authority which required
or will require such member to withhold Tax from any payment made since the
Accounts Date or which will be made after the date of this Agreement.
Other Interests of Vendor's Group
23. Save in relation to the arrangements which are the subject matter of
clause 15 and/or Schedules 17, 20 or 22 there is no agreement or contract to
which any Company or any Business Vendor (in relation to any Local Business) is
a party and to which any member of the Vendor's Group (as constituted following
Closing) is a party or in which any such member is otherwise interested in any
way whatsoever which shall continue beyond the Closing Date and which is not on
arm's length commercial terms.
Borrowings
24. The Disclosure Letter sets out for each Company details of all outstanding
loan capital and all borrowings and indebtedness of that company owed to a
Financial Institution which it had not repaid or satisfied as at 31 March, 1999
which are of a long term nature (long term for this purpose meaning that their
maturity date is more than one year after that date).
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Joint Ventures
25.1 So far as the Vendor is aware, paragraphs 1 (other than paragraph 1.3(a)),
2, 3, 4, 5, 6, 7, 8, 10, 11, 17 and 18 (with references therein to the Companies
being replaced by references to the Warranted Joint Ventures are true and
accurate, or (other than in relation to paragraph 3.3, in the case of LPC, or
paragraph 3.1, in the case of Rubicon) to the extent that the matters referred
to therein are not true and accurate, they will not cause a material adverse
effect on the Tioxide Business in relation to Louisiana Pigment Company L.C. or
on the Polyurethanes Business in relation to Rubicon, Inc.
25.2 Paragraph 1.3(a) (in relation to Warranted Joint Ventures and with the
deletion of "will cause a material adverse effect on the relevant business") is
true and correct.
25.3 Other than in relation to Warranted Joint Ventures:
(a) Each of the Share Selling Companies specified in Part IV of Schedule 1 is
the sole legal and beneficial owner of the Joint Venture Interests set
alongside its name in column 3 of such Part IV of Schedule 1 free from any
encumbrance, equity or third party rights, other than (and subject to) the
terms of the Joint Venture Agreements and the constitution of the Non-
Controlled Joint Ventures.
(b) So far as the Vendor is aware, no Share Selling Company is in breach of,
or default under, any Joint Venture Agreement, the consequence of which
will cause a material adverse effect on the relevant Business.
(c) There are no outstanding (or anticipated during the next 183 days) cash
calls, capital calls or other material liabilities affecting the Share
Selling Companies in relation to their shareholdings in any Non-Controlled
Joint Ventures.
US Embargoes
26.1 So far as the Vendor is aware each Company and Business Vendor which is a
US subsidiary of ICI or other form of US entity has been in compliance in all
material respects for at least the last three years with applicable US laws
regarding (1) export licensing, and (2) embargoes or similar restrictions
relating to Iran, Iraq, Libya, Sudan, Cuba and North Korea save to the extent,
if any, that any such non-Compliance would not have a material adverse effect on
the relevant Business.
26.2 So far as the Vendor is aware no Relevant Company or Business Vendor
derives 20 per cent. or more, or in the case of Cuba and North Korea, any of its
profits from sales of goods, services and/or technology to countries, or to
nationals or "Specially Designated nationals" of countries, individually or
collectively, that
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are subject to commercial embargoes or similar restrictions by the United States
in respect of Iran, Iraq, Libya, Sudan, Cuba and North Korea.
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SCHEDULE 10
LIST OF INDIVIDUALS - VENDOR'S AWARENESS
PART A:
Patrick Thomas, Chief Executive Officer
Martin Casey, Planning Director
David Payne, Business Director EAME
Gordon Ross, President Polyurethanes Americas
Tony Hankins, Business Director APAC
Arun Watts, Technical Director
John O'Neill, HR & Operations Director
Graham Thompson, International Business Controller
David Carter, Chief Financial Officer
David Anderson, HR
John Dawson, Pensions
Martin Bell, Environment (for non-US only)
Sam Malovhr, Environment (for US only)
Bob Walker, Business Development Manager
Peter Cornes, Hydrocarbons Director
Duncan Emerson, Finance Manager
Guido Steinbach, Commercial Manager
David Flett, Technical Manager
Dave Wilkins, Manufacturing Manager
Richard Westlake, Business Manager
Rob Cooper, Commercial Manager
Hugh Brown, Pensions
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Phil Roberts, Environment
Doug Coombs, Chief Executive Officer
David Croft, Chief Financial Officer
Brian Thomas, Planning & YK2 Manager
John Russell, Commercial & Technical Director
Steve Ward, Regional Director, Europe, Middle East and Africa
John Collingwood, Regional Director, Americas
Mahomed Maiter, General Manager, Materials
Rob Louw, Group Supply Manager
David Porter, Environment
Ian Machin, Information Technology
David Allen, HR Tioxide
Peter Gill, Estates Manager
Arie Plaisier, Business SHE Manager
Michael Herlihy
Andy Ransom
Dr Henk Lans - only SHE and only Rozenburg
John Billington, Site Manager Umbogintwini
Rojano Saad, General Manager, Telkk Kalag
A G Spall - CFO.
Wayne Damacal, Site Manager Greatham
Colin Deas, Site Manager- Grimsby
Eric Barents, Rozenburg
Dominique Vannents, Site Manager - Calais
Luigi Cutrane, Site Manager - Scarlino
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Gerardo Rojas, Site Manager - Huelva
Rob Margetts
Peter Shaw
David Gee
Michael Maughan - Tioxide only
Rick Carter - Relevant Petrochemicals only
Peter Whittle - Tioxide only
Mike Smith
Paul Hulme
Charles Miller Smith
John Nevard
Max White, HR Relevant Petrochemicals
Michael Gardner, CCO Relevant Petrochemicals
Steve Roberts, IT Relevant Petrochemicals
Rachel Draper
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PART B
Gordon L Ross, President Polyurethanes Americas
Steve Hostetter, Americas Director Finance & IT
William Hutchinson, Vice President Law
James McCarty, Director, Business Resource Group Americas
John Collingwood, President and CEO Tioxide Americas
Rene Lachance, VP Finance and Admin Tioxide Americas
Guy Gauthier, VP Operations Tioxide Americas
John Gush, Director of Marketing and Supply Chain Tioxide Americas
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SCHEDULE 11
PENSIONS
Part 1: Global Pensions Provisions
PART A: GENERAL PENSIONS PRINCIPLES
Interpretation
1.1 In this Schedule the following expressions shall have the following
meanings unless otherwise provided in any other Part of this Schedule:
Actuarial Method and Assumptions has the meaning given to that expression in
paragraph 6.3 of the Valuation Principles;
General Principles means the provisions of Part 1A of this Schedule;
Interim Period Adjustment has the meaning given to that expression in paragraph
5 of the General Principles;
Local Interest Rate means the rate determined by the Vendor as equivalent to the
cost to the Vendor of borrowing in the currency in question for the period in
question and agreed by the Purchaser or the cost to the Purchaser as agreed by
the Vendor (as the case may be) and, in default of agreement, as may be
determined under paragraph 8;
Local Timing Adjustment means:
(a) in the case of a Retirement Benefit Scheme to which Part 2, 3 or 4 of this
Schedule relates the adjustment or interest rate (if any) specified in the
relevant Part (Relevant Part)
(b) if (a) does not apply, in the case of a Retirement Benefit Scheme where a
timing adjustment in respect of the period from the Closing Date until the
date of payment of assets, based on a portfolio or notional portfolio of
investments, is made to a transfer amount calculated as at the Closing Date
transferred to a Purchaser's Scheme, the inverse of the timing adjustment
in the case concerned, provided that the timing adjustment:
(i) is identified in the Relevant Part; or
(ii) is otherwise agreed in writing by the Vendor and the Purchaser;
(c) if (a) or (b) do not apply, the Local Interest Rate;
Market Adjustment Factor means:
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(a) in respect of a Retirement Benefit Scheme identified in the Relevant Part
as being one to which a market value adjustment is to apply, the market
adjustment factor stated in that Relevant Part or, if none is stated, a
market adjustment factor agreed by the Vendor and the Purchaser (or, in
default of agreement, determined in accordance with paragraph 8) which is
consistent with the Actuarial Method and Assumptions used under the
Valuation Principles for valuing liabilities in respect of the Retirement
Benefit Scheme to which the defined benefit Retirement Benefit Rights in
question relate;
(b) if (a) does not apply, one;
Pensions Principles means Parts 1A and 1B of this Schedule;
Purchaser's Actuary means such actuary or firm of actuaries as the Purchaser may
determine for the purposes of these Pension Principles;
Purchaser's Scheme means any scheme, plan, fund or arrangement of any member of
the Purchaser's Group relating to the provision of Retirement Benefit Rights;
Regular Pension Cost has the meaning given to that expression in paragraph 6.4;
Retirement Benefit Rights means any pension, lump sum, gratuity, or a like
benefit other than benefits provided under 401K plans in the USA provided or to
be provided on retirement or on death in respect of an employee's employment.
Post-retirement medical or dental benefits are deemed to be Retirement Benefit
Rights but benefits provided under an arrangement the sole purpose of which is
to provide benefits on injury or death by accident occurring while an Employee
are not Retirement Benefit Rights;
Retirement Benefit Scheme means each scheme, plan, fund or arrangement (other
than 401K plans in the USA) of any member of the Vendor's Group for the
provision of Retirement Benefit Rights to or in respect of Employees (or former
employees of any of the Relevant Companies) and, for the avoidance of doubt,
includes any such scheme, plan, fund or arrangement which has not been disclosed
in the Data Room. Retirement Benefit Scheme shall in addition include, for the
purposes of Parts 1B and 1C of this Schedule 11 only, each scheme, plan, fund or
arrangement (other than 401K plans in the USA) in which the Employees or former
employees of a company in which there is a Joint Venture Interest participate;
Transferring Employee means an Employee with Retirement Benefit Rights;
Valuation Principles means the provisions set out in Part 1B of this Schedule;
Vendor's Actuary means such actuary or firm of actuaries as the Vendor may
determine for the purposes of these Pension Principles;
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1.2 Unless the context requires otherwise, references to paragraphs are to
paragraphs of the same part of these Pension Principles.
1.3 These Pension Principles shall apply separately to each Relevant Part.
Retirement Benefit Rights to be provided by the Purchaser
2.1 In relation to each Transferring Employee, the Purchaser will continue to
provide or procure to be provided:
(a) equivalent Retirement Benefit Rights in respect of service prior to
Closing, and
(b) equivalent Retirement Benefit Rights in respect of service for the period
of four years on and after the Closing Date,
to the Retirement Benefit Rights of that Transferring Employee immediately
before the Closing Date. The obligation under (a) shall not apply to Retirement
Benefit Rights of a Transferring Employee which remain to be provided by a
member of the Vendor's Group.
2.2 For the purpose of paragraph 2.1:
(a) equivalent means equivalent in value and will be determined, in the case of
defined benefit Retirement Benefit Rights, using the Valuation Principles,
and
(b) the Purchaser will prior to Closing or, if later, the end of any
participation period (as appropriate) consult with the Vendor with regard
to the provisions of equivalent Retirement Benefit Rights.
Accrued Retirement Benefit Rights to transfer to the Purchaser
3.1 The Vendor and the Purchaser shall co-operate fully with each other in the
transfer mechanics with the aim of ensuring that, subject to legal requirements
and paragraph 3.3, the Retirement Benefit Rights of all Transferring Employees
transfer to the Purchaser's Group.
3.2 Where following Closing or, where applicable, the Delayed Closing Date, no
active members of a Retirement Benefit Scheme will be retained as employees of a
member of the Vendor's Group , the transaction shall be structured, subject to
the agreement of the Purchaser and legal requirements, so as to transfer that
Retirement Benefit Scheme to the Purchaser's Group.
3.3 The mechanics of achieving paragraphs 2, 3.1 and 3.2 will be determined by
the applicable laws of the jurisdiction in question and the legal provisions
conferring and governing the Retirement Benefit Rights.
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3.4 Where any transfer of Retirement Benefit Rights or assets in respect of
those Retirement Benefit Rights requires the approval or consent of any
regulatory body or any third party (including the Transferring Employees), the
Vendor and the Purchaser shall use their respective reasonable endeavours to
obtain such approvals and consents.
References to Transferring Employees to include former employees in certain
circumstances
4. Where the Purchaser's Group assumes, or the Purchaser's Scheme assumes,
responsibility not only for the accrued Retirement Benefit Rights for
Transferring Employees but also for accrued Retirement Benefit Rights of former
employees and those whose Retirement Benefit Rights arise or have arisen on
death, references to Transferring Employees in these Pension Principles shall be
construed as including references to former employees and those whose benefits
arise on death of employees or former employees.
Transfer Payment from Funded Retirement Benefit Scheme
5.1 Subject to paragraph 5.2, in relation to the transfer of Retirement Benefit
Rights provided under a funded Retirement Benefit Scheme:
(a) the Vendor shall use its reasonable endeavours to procure that, subject to
paragraph 3.3, a transfer of assets equal to the aggregate of:
(i) the value of those Retirement Benefit Rights calculated in
accordance with the Valuation Principles (Unadjusted Transfer
Amount), adjusted for the period from and including the Closing
Date to the date of transfer by the Local Timing Adjustment
(Transfer Amount), and
(ii) the Interim Period Adjustment (if any) applicable to those
Retirement Benefit Rights,
is made from that Retirement Benefit Scheme to a Purchaser's Scheme;
(b) the Purchaser shall use its reasonable endeavours to procure, subject to
paragraph 3.3, that the Purchaser's Scheme has all necessary powers,
approvals and consents to accept that transfer, and accepts that transfer;
and
(c) subject to paragraph 3.3, the Vendor and the Purchaser shall use reasonable
endeavours to procure that the transfer takes place promptly after the
valuation required for the purposes of the Valuation Principles has been
completed. The date of transfer shall be agreed by the Vendor and the
Purchaser (or, in default of agreement, determined under paragraph 8).
5.2 Where on the Closing Date or, where applicable, the Delayed Closing Date a
Retirement Benefit Scheme transfers to the Purchaser's Group (whether by
operation
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of law or pursuant to paragraph 3.2) and, accordingly, the Retirement Benefit
Rights of the Transferring Employees transfer to the Purchaser's Group then
paragraph 5.1 does not apply in respect of the Retirement Benefit Rights
provided under that Retirement Benefit Scheme.
5.3 Where, in accordance with paragraph 5.1, a transfer of assets is being made
from a Retirement Benefit Scheme in relation to any Transferring Employee, and
paragraph 6 applies to that Retirement Benefit Scheme, the Interim Period
Adjustment referred to in paragraph 5.1 will be an amount equal to:
(a) those payments in respect of that Transferring Employee which have been
paid under paragraph 6 and which relate to the period from the day after
the Closing Date to the date on which the pensionable service of the
Transferring Employee ceases to accrue in that Retirement Benefit Scheme,
less
(b) a reasonable adjustment to reflect the cost of insuring or self-insuring
any risk benefits after the Closing Date and a reasonable deduction in
respect of administration expenses after the Closing Date, in each case, as
specified in the Relevant Part or if none is specified, as agreed between
the Vendor and Purchaser (or in default of agreement, as determined under
paragraph 8),
such net contributions being adjusted in accordance with the Local Timing
Adjustment from and including the respective actual date of payment of the same
to and excluding the date of actual payment under paragraph 5.1.
Funded Retirement Benefit Scheme: Interim Participation
6.1 The member of the Purchaser's Group (the Participating Employer) which
employs a Transferring Employee immediately after Closing or where the
appropriate Delayed Closing Date may participate in a funded Retirement Benefit
Scheme to which paragraph 5.1 applies in respect of that Transferring Employee
if:
(a) the Vendor and the Purchaser agree in writing and to the extent permitted
by law and the relevant Retirement Benefit Scheme, or
(b) such participation is required by law,
for a period agreed between them in writing (or such lesser period as may be
required by law or the relevant Retirement Benefit Scheme) and on such terms as
the Vendor may reasonably require. The remainder of this paragraph 6 shall
apply if any period of participation is agreed.
6.2 The Purchaser undertakes to procure that the Participating Employer shall
cease to participate in the applicable Retirement Benefit Scheme on or before
the end of the period agreed under paragraph 6.1.
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6.3 Unless the Vendor and the Purchaser otherwise agree there shall be paid to
the Retirement Benefit Scheme contributions equal to the Regular Pension Cost of
the Transferring Employees of that member of the Purchaser's Group in respect of
the period from and including the day after the Closing Date to and including
the date pensionable service in the Retirement Benefit Scheme ends.
6.4 The Regular Pension Cost is the regular cost of the Retirement Benefit
Rights accruing from time to time determined by reference to the Valuation
Principles before any reduction to take account of any surplus and before any
increase to take account of any deficit. For the avoidance of doubt, such
regular cost shall include an amount in respect of the insurance or self
insurance of risk benefits and administration expenses.
6.5 The contributions in respect of the Regular Pension Cost shall be payable
on the same dates as they would otherwise normally have been paid but for the
sale (and but for any surplus).
6.6 In respect of any contributions which are paid after the due date, an
amount calculated as if it were interest on those contributions at the Local
Interest Rate for the period from and including the due date to and excluding
the date of actual payment shall be payable.
6.7 The Purchaser shall procure that with effect from the Closing Date the
Participating Employer shall pay promptly the amounts under paragraphs 6.3 to
6.5 to the Retirement Benefit Scheme in question in respect of periods after the
Closing Date together with any amount calculated as if it were interest which
may be payable in accordance with paragraph 6.6.
Voluntary Fund
7.1 In this paragraph 7 the expression Voluntary Fund means a fund comprising
those voluntary contributions, or the investment or moneys representing them and
any income derived from them, in respect of which the entitlements of the
members who have paid them are not related to earnings (however defined) but are
based on the respective parts of such Voluntary Fund which are attributable to
them.
7.2 Notwithstanding the other provisions of these Pension Principles, if within
any Retirement Benefit Scheme there is a Voluntary Fund, the Voluntary Fund and
the benefits payable from it and the contributions payable to it and any
transfer payment made from it shall be disregarded for all the other provisions
of the Valuation Principles.
7.3 Where the Retirement Benefit Rights of Transferring Employees are provided
under a Retirement Benefit Scheme which does not transfer to the Purchaser's
Group on or after the Closing Date, the Vendor shall use its reasonable
endeavours to procure that the part of the Voluntary Fund attributable to the
Transferring
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Employees in question in accordance with the provisions of the Retirement
Benefit Scheme is transferred to the Purchaser's Scheme at the same time as the
transfer amount in respect of the Retirement Benefit Rights of those
Transferring Employees in the Retirement Benefit Scheme is transferred to the
Purchaser's Scheme.
Disputes
8.1 Any dispute between the Vendor and the Purchaser or between the Vendor's
Actuary and the Purchaser's Actuary concerning the determination or valuation or
agreement of any matter to be specifically determined, valued or agreed under
these Pension Principles shall, in the absence of agreement between them within
three months from when the dispute first arose, be referred to an independent
actuary agreed by the Vendor and the Purchaser or, failing such agreement,
appointed by the President for the time being of the Institute of Actuaries in
England at the request of the party first applying.
8.2 Such independent actuary shall act as an expert and not as an arbitrator.
His decision shall be final and binding on the parties and his expenses shall be
borne between the Vendor of the one part and the Purchaser of the other part as
the independent actuary may direct.
No third party rights
9. Nothing contained in these Pension Principles confers or is intended to
confer any rights or remedies upon any person other than the parties to this
Agreement.
Purchaser not to cause increase in transfers of assets
10. The Purchaser undertakes to the Vendor to take no action and to give no
assistance whether directly or indirectly to any person in any manner which
would or might result in a Retirement Benefit Scheme from which a transfer of
assets is made to a Purchaser's Scheme having to pay a larger amount to the
Purchaser's Scheme than the amount which is such that the assets transferred in
respect of those Retirement Benefit Rights which transfer to the Purchaser's
Scheme are equal in value as at the Closing Date, adjusted in accordance with
the remaining provisions of these Pension Principles. The Purchaser agrees that
this undertaking extends to the Purchaser and the members of the Purchaser's
Group and applies both before and after the time when the pensionable service of
the Transferring Employees concerned ceases to accrue in that Retirement Benefit
Scheme.
Vendor and Purchaser to undertake not to increase the regular pension cost or
pension liabilities
11.1 The Vendor undertakes to the Purchaser that, except to the extent required
by law, insofar as it is within its power or under its control, it will procure
that no change will be made to the Retirement Benefit Rights of any Transferring
Employee
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in respect of the period from the date of signing of this Agreement to the
Closing Date (or, where paragraph 6 applies, the date on which that Transferring
Employee's pensionable service ends in the Retirement Benefit Scheme of which he
is a member, if later) without the consent of the Purchaser (such consent not to
be unreasonably withheld or delayed). Where a change is required by law the
Vendor shall, insofar as it is within its power or under its control, notify the
Purchaser of that change prior to its implementation and, if the Purchaser so
requests, consult with the Purchaser if there is an alternative to the proposed
change.
11.2 If the Vendor is in breach of the undertaking in paragraph 11.1, the cost
to the Purchaser shall be agreed between the Vendor and the Purchaser by
applying the Valuation Principles with necessary changes (and, in default of
agreement, paragraph 8 shall apply).
11.3 With effect from Closing Date, the Purchaser undertakes that, except to
the extent required by law, insofar as it is within its power or under its
control, neither the Purchaser nor any member of the Purchaser's Group nor any
company acquired by any member of the Purchaser's Group from any member of the
Vendor's Group will, without the consent of the Vendor (such consent not to be
unreasonably withheld or delayed), take any action or exercise or permit the
exercise of any right, power or discretion which would have the consequence of
increasing the cost to a member of the Vendor's Group or to any Retirement
Benefit Scheme in respect of the Retirement Benefit Rights of any Employee (or
former employee or any one claiming through or by reference to any Employee or
former employee) whether as a result of creating new liabilities or increasing
existing liabilities in a Retirement Benefit Scheme or otherwise, save that the
remuneration of Transferring Employees may be increased by the percentage
assumed for salary increases under the Valuation Principles or such greater
percentage as may be agreed by the Vendor and the Purchaser. Where a change is
required by law the Purchaser shall, insofar as it is within its power or under
its control, notify the Vendor of that change prior to its implementation and,
if the Vendor so requests, consult with the Vendor if there is an alternative to
the proposed change.
11.4 If the Purchaser is in breach of the undertaking in paragraph 11.3, the
cost to any member of the Vendor's Group or to any Retirement Benefit Scheme
shall be agreed between the Vendor and the Purchaser by applying the Valuation
Principles with necessary changes (and, in default of agreement, paragraph 8
shall apply).
Reverse Transfers
12.1 Where a funded Retirement Benefit Scheme transfers to the Purchaser's
Group but there are employees to be retained in the Vendor's Group who are
members of that Retirement Benefit Scheme (Retained Employees), these Pension
Principles (with such necessary changes as may be agreed between the Vendor and
the Purchaser or, in default of agreement, as determined under paragraph 8)
shall
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apply in relation to the transfer of the Retirement Benefit Rights of the
Retained Employees back to a Retirement Benefit Scheme, or to any other plan of
any member of the Vendor's Group (the Receiving Scheme).
12.2 For the avoidance of doubt the provisions of:
(a) paragraph 6 will apply with the necessary changes to any period of
continued participation requested by a member of the Vendor's Group in the
transferred Retirement Benefit Scheme in respect of any Retained Employee;
and
(b) paragraph 5 shall, in particular, apply in respect of any transfer of
funded Retirement Benefit Rights of Retained Employees so that the value
(calculated as at the Closing Date in accordance with the Valuation
Principles) of those Retirement Benefit Rights shall be transferred to the
Receiving Scheme with appropriate adjustments being calculated, with any
necessary changes, in accordance with paragraph 5(a) in respect of the
period from the Closing Date.
Position where Retirement Benefit Rights are split
13.1 Where the Retirement Benefit Rights of a Transferring Employee are in part
transferred to a Purchaser's Scheme or a member of the Purchaser's Group and in
part retained by a member of the Vendor's Group or a Retirement Benefit Scheme
which does not transfer to the Purchaser's Group, these Pension Provisions shall
apply separately to the Retirement Benefit Rights which transfer and to the
Retirement Benefit Rights which do not transfer. This is to the intent that it
is only the Retirement Benefit Rights which transfer to which paragraph 5.1 is
applicable and to which the Valuation Principles apply.
13.2 Where paragraph 13.1 applies, the remaining provisions of these Pension
Provisions shall be modified accordingly.
Expatriate Arrangements
14.1 The Purchaser and the Vendor agree that, where the Retirement Benefit
Rights of a Transferring Employee working in a jurisdiction other than his home
jurisdiction include a Home Country Guarantee, any transfer of assets from the
Home Retirement Benefit Scheme will, unless it is not permitted by local law or
by the relevant regulatory authority and subject to paragraphs 3.3 and 3.4, and
to the extent necessary include a transfer of assets in respect of any
additional benefit required to meet the Home Country Guarantee.
14.2 The Purchaser and the Vendor agree that, if a transfer in accordance with
paragraph 14.1 is not permitted by local law or by the relevant regulatory
authority, they will use all reasonable endeavours to reach agreement on an
alternative method of transferring the whole of the Transferring Employee's
Retirement Benefit Rights
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in accordance with these Pension Principles with such changes as may be
necessary to give effect to that agreement.
14.3 For the purposes of this paragraph 14:
Home Country Guarantee means a promise that the Transferring Employee will
receive the better of:
(a) Retirement Benefit Rights calculated as if the Transferring Employee had
always worked in his home jurisdiction; and
(b) actual Retirement Benefit Rights in respect of his periods of membership of
Retirement Benefit Schemes;
Home Retirement Benefit Scheme means the Retirement Benefit Scheme in the
Transferring Employee's home jurisdiction from which the Home Country Guarantee
is intended to be provided.
Industry-wide Retirement Benefit Schemes
15.1 Nothing in these Pension Principles or Part 1C shall apply to any
Industry-wide Scheme in which any member of the Vendor's Group participates in
respect of Transferring Employees.
15.2 For the purposes of this paragraph 15:
Industry-wide Scheme means any multi-employer scheme, plan, fund or arrangement
for the provision of Retirement Benefit Rights in which employers which are not
Subsidiaries of the same holding undertaking (unassociated employers) may
participate (other than a scheme, plan, fund or arrangement in which
unassociated employers may participate only for a limited period following a
financial transaction).
Purchaser's general covenant
16.1 For the purposes of this paragraph 16:
Relevant Claim means a claim brought by a Relevant Person which relates to
Retirement Benefit Rights which are attributable to any period of employment
prior to the Closing Date (or, if later, the date pensionable service in a
Retirement Benefit Scheme ends), and which have transferred to the Purchaser's
Group, save that no claim in respect of Retirement Benefit Rights shall
constitute a Relevant Claim on the grounds that a Relevant Person was denied
access to a Retirement Benefit Scheme prior to the Closing Date or where the
claim arises out of any default of the Vendor prior to the Closing Date in
circumstances where and in relation to a Retirement Benefit Scheme which does
not transfer to the Purchaser's Group.
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Relevant Person means any person:
(a) who is a Transferring Employee (or any person whose benefits arise on the
death of such a Transferring Employee or, where paragraph 4 of the General
Principles applies, former employees and those whose benefits arise on the
death of employees or former employees), and
(b) whose Retirement Benefit Rights in respect of any period of service prior
to Closing Date, or, if later, the date pensionable service in a
Retirement Benefit Scheme ends, transfer from a funded Retirement Benefit
Scheme to a Purchaser's Scheme.
Liability means any liability, loss, damage, cost, claim or reasonable expense
arising out of or in connection with any Relevant Claim.
16.2 The Purchaser covenants with the Vendor to pay to the Vendor forthwith
upon demand an amount equal to any Liability which is incurred or sustained by
the Vendor or a Retirement Benefit Scheme arising out of or in connection with
any Relevant Claim brought by a Relevant Person.
16.3 Insofar as any Liability relates to the value of any Retirement Benefit
Rights, the amount of such Liability shall be calculated using such reasonable
actuarial method and assumptions as may be agreed between the Vendor and
Purchaser or, in default of agreement, as may be determined in accordance with
paragraph 8.
16.4 Where any Liability is determined in a currency other than dollars it
shall be converted into dollars at the date of payment by the Purchaser in
accordance with clause 1.4 of this Agreement.
16.5 The time value of the amount payable under paragraph 16.2 shall be
maintained by increasing it by an amount calculated as if it were interest at
the Local Interest Rate on the amount under paragraph 16.2 for the period from
the date as at which the amount of the Liability has been quantified to the date
of payment of the amount in question to the Vendor.
16.6 Where the Vendor becomes aware of any claim or proceeding or any threat
thereof (Proceedings) the Vendor shall give notice to the Purchaser as soon as
reasonably practicable together with all information in the Vendor's possession
and which is, in its reasonable opinion, relevant to the Proceedings.
16.7 The Vendor shall not respond in any way (save as reasonably directed or
allowed by the Purchaser or by way of acknowledgement) to the Proceedings and in
particular (without prejudice to the generality of this condition) make any
admission of any kind. This is subject to the Purchaser giving the appropriate
direction within a reasonable time (and in any event in good time for the Vendor
to meet any applicable time limits).
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16.8 The Purchaser shall be allowed the sole conduct of any matter to which the
indemnity under paragraph 16.2 relates (including all communication and
negotiation with the person or persons concerned in the Proceedings or their
representatives), having due regard to any continuing relationship the Vendor
may have with the said person or persons. The Vendor shall render to the
Purchaser all such assistance in relation thereto as the Purchaser reasonably
requires and as lies within the Vendor's power to provide (provided the
Purchaser reimburses the Vendor the costs and expenses of doing so).
16.9 The Purchaser shall, in the conduct of any matter to which this indemnity
relates, keep the Vendor fully informed and act in a prompt and proper manner.
16.10 The Vendor may take such action as is necessary to prevent it losing the
right to defend any claim if the Purchaser, having received notification under
paragraph 16.6, has not provided the Vendor with evidence of the Purchaser
having taken action necessary to defend or settle the claim or confirmation that
such action is being duly taken.
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PART B: VALUATION PRINCIPLES
Transferring Retirement Benefit Rights to be valued
1. The provision of this Part B shall apply only:
(a) for the purpose of valuing Retirement Benefit Rights and assets where there
is a transfer of such rights provided under a funded Retirement Benefits
Scheme; and
(b) if the Purchaser makes an election under paragraph 10.1 of Part C.
2. Unless the Vendor and the Purchaser otherwise agree, the valuations
required for the purpose of paragraph 1 will be undertaken by the Vendor's
Actuary and agreed by the Purchaser's Actuary or, in default of agreement,
determined in accordance with paragraph 8 of the General Principles.
3. The Vendor and the Purchaser shall each:
(a) use all reasonable endeavours to procure that any information which may
reasonably be required by the Vendor's Actuary or the Purchaser's Actuary
for the purpose of undertaking and agreeing such valuation shall, to the
extent that it is within the power or control of the Vendor or the
Purchaser, as the case may be, be supplied to such actuary and that any
such information so supplied shall be true, complete and accurate in all
material respects, and
(b) use all reasonable endeavours to procure that its actuary acts promptly and
that such valuations are completed promptly.
Valuation basis
4. The following provisions of these Valuation Principles will be applied for
the purposes of valuing Retirement Benefit Rights and assets.
Defined contribution Retirement Benefit Rights
5.1 Subject to paragraph 5.2, in relation to defined contribution Retirement
Benefit Rights, the value of those Retirement Benefit Rights shall be calculated
on the basis that those rights are fully vested.
5.2 Where an Employee is able to elect for a return of moneys to him in respect
of funded defined contribution Retirement Benefit Rights, paragraph 5.1 does not
apply to any Employee in relation to those Retirement Benefit Rights where he
elects for a return of moneys.
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Defined benefit Retirement Benefit Rights
6.1 In relation to defined benefit Retirement Benefit Rights, the Transfer
Value equals the value of the defined benefit Retirement Benefit Rights
calculated on the basis of the Actuarial Method and Assumptions.
6.2 For the purpose of paragraph 6.1, the valuation of all funded defined
benefit Retirement Benefit Rights and the value of all assets referred to in
paragraph 6.1 will be determined as at the Closing Date. No value shall be
attributed to such rights in respect of post-Closing Date service or to
contributions in respect of post-Closing Date service.
6.3 For the purpose of paragraph 6.1, the Actuarial Method and Assumptions for
valuing defined benefit Retirement Benefit Rights will be:
(a) those specified in the Actuary's Letter specified in the Relevant Part in
respect of the particular Retirement Benefit Scheme;
(b) to the extent that (a) does not apply, subject to paragraph 6.4, the same
as those most recently disclosed to the Purchaser prior to 27 March 1999 in
relation to the Retirement Benefit Scheme to which the Retirement Benefit
Rights relate;
(c) to the extent that (a) and (b) do not apply, subject to paragraph 6.4, the
same as those used in the most recent actuarial valuation of the Retirement
Benefit Scheme published on or before the date of this Agreement to which
the Retirement Benefit Rights relate or disclosed in draft form in the Data
Room and, in the case of a funded plan, also used for actually funding
those benefits;
(d) to the extent that (a), (b) and (c) do not apply, subject to paragraph 6.4,
the same as those used to determine the pension costs in relation to those
Retirement Benefit Rights for the purposes of the Accounts;
(e) to the extent that (a), (b), (c) and (d) do not apply, subject to paragraph
6.4 such reasonable actuarial method and assumptions as may be agreed
between the Vendor and the Purchaser or, in default of agreement, as
determined under paragraph 8 of the General Principles.
6.4 As regards any established practice referred to in paragraph 2.2 of the
General Principles, where explicit allowance is made for such established
practice in the Relevant Part or in relation to the Retirement Benefit Rights in
question, that allowance (and no further or other allowance) shall be made in
determining the value of those Retirement Benefit Rights. Where no explicit
allowance is made, then no allowance shall be made in determining their value.
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6.5 References to defined benefit Retirement Benefit Rights in these
Valuation Principles include unfunded defined contribution Retirement Benefit
Rights and post-retirement medical and dental benefits which are Retirement
Benefit Rights.
Valuation of assets
7.1(a) Subject to (b) below and paragraph 7.2, for the purpose of paragraph 6.1
the value of assets shall be taken as the market value of those assets
multiplied by the Market Adjustment Factor.
(b) Insurance policies shall be valued in accordance with the method
specified in paragraph 6.3, or if there is no method specified, by such
method as may be agreed between the Vendor and the Purchaser or in
default of agreement, determined under paragraph 8 of the General
Principles.
7.2 Where there is a transfer of assets from a Retirement Benefit Scheme to a
Purchaser's Scheme, before applying paragraph 7.1, the value in local currency
of the assets transferred, subject to paragraph 7.3, as at the date of transfer
will be adjusted in respect of the period from date of transfer to the Closing
Date by reference to the Local Timing Adjustment to give the value of those
assets as at the Closing Date.
7.3 Where the assets transferred include an amount in respect of the Regular
Pension Cost, that amount shall, to the extent it has been paid as required
under paragraph 6 of the General Principles, be deducted for the purpose of
paragraph 7.3.
General
8. If the valuation method referred to in paragraph 6.3 would otherwise
value the accrual of Retirement Benefit Rights by reference to service after the
Closing Date, it shall instead be based on service up to the Closing Date and
any contributions in respect of post-Closing Date service shall be disregarded.
9. The preceding provisions of these Valuation Principles are subject, where
applicable, to paragraph 13 of the General Principles.
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PART C: NETTING
Interpretation
1.1 In this Part of this Schedule, the following expressions shall have the
following meanings:
Excess means the Gross Excess multiplied by the Tax Adjustment Factor;
Gross Excess has the meaning given to that expression in paragraph 3.1 or 4.1,
as appropriate;
Gross Shortfall has the meaning given to that expression in paragraph 3.2 or
4.3, as appropriate;
Shortfall means the Gross Shortfall multiplied by the Tax Adjustment Factor;
Tax Adjustment Factor means 0.65;
1.2 Except where the context requires otherwise references to paragraphs are to
paragraphs of this Part of this Schedule.
Calculation of a shortfall and excess
2.1 This paragraph 2 shall apply separately in relation to the Retirement
Benefit Rights of Transferring Employees under each Retirement Benefit Scheme.
2.2 For the purpose of determining any values under paragraphs 3.1, 3.2, 4.1,
4.2, or 4.3, the provisions of paragraphs 5 to 9 of the Valuation Principles and
paragraph 5 will apply.
Retirement Benefit Scheme transfers to the Purchaser's Group and Joint Venture
Interests
3.1 In relation to the defined benefit Retirement Benefit Rights of
Transferring Employees of a company or business where a Retirement Benefit
Scheme transfers to the Purchaser's Group or in relation to a Retirement Benefit
Scheme containing Retirement Benefit Rights of Transferring Employees of a
company in which there is a Joint Venture Interest, where:
(a) the aggregate of:
(i) the value as determined in accordance with paragraph 7 of the
Valuation Principles as at the Closing Date of the assets of that
Retirement Benefit Scheme, plus
(ii) (subject to paragraph 10.7) the amount of any provision, as
adjusted in accordance with paragraph 5, in respect of those
defined benefit
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Retirement Benefit Rights under that Retirement Benefit Scheme made
in the Accounts,
exceeds
(b) the aggregate of:
(i) the value of those defined benefit Retirement Benefit Rights as
determined in accordance with the Valuation Principles, plus
(ii) the amount of any prepayment, as adjusted on a basis consistent
with paragraph 5, in respect of those defined benefit Retirement
Benefit Rights under that Retirement Benefit Scheme in the
Accounts,
(iii) to the extent not already included in (i) or (ii) above, the
amount (if any) determined under paragraph 12.2 of the General
Principles,
the amount by which (a) exceeds (b) is referred to as the Gross Excess.
3.2 Where the aggregate of paragraph 3.1(a) is less than the aggregate of
paragraph 3.1(b), the amount by which paragraph 3.1(a) is less than paragraph
3.1(b) is referred to as the Gross Shortfall.
3.3. In calculating the Gross Excess or Gross Shortfall in relation to a
Retirement Benefit Scheme in which a company in which there is a Joint Venture
Interest participates:
(a) the Retirement Benefit Rights, assets, provisions and prepayments relating
to employees who are not Employees or former employees of a company in
which there is a Joint Venture Interest shall be disregarded; and
(b) only the appropriate JV Percentage of the Gross Shortfall or Gross Excess
shall apply for the purposes of paragraph 10.
Retirement Benefit Scheme does not transfer to the Purchaser's Group
4.1 In relation to the defined benefit Retirement Benefit Rights of
Transferring Employees of a company or business where a Retirement Benefit
Scheme does not transfer to the Purchaser's Group, where:
(a) the aggregate of:
(i) the value as determined in paragraph 7 of the Valuation
Principles and paragraph 4.2 as at the Closing Date of the assets
transferred to a Purchaser's Scheme in respect of those defined
benefit Retirement Benefit Rights, plus
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(ii) (subject to paragraph 10.7) the amount of any provision, as
adjusted in accordance with paragraph 5, in respect of those
defined benefit Retirement Benefit Rights under that Retirement
Benefit Scheme made in the Accounts,
exceeds
(b) the aggregate of:
(i) the value of those defined benefit Retirement Benefit Rights as
determined in accordance with the Valuation Principles, plus
(ii) the amount of any prepayment, as adjusted on a basis consistent
with paragraph 5, in respect of those defined benefit Retirement
Benefit Rights under that Retirement Benefit Scheme in the
Accounts,
(iii) to the extent not already included in (i) or (ii) above, the
amount (if any) determined under paragraph 12.2 of the General
Principles,
the amount by which (a) exceeds (b) is referred to as the Gross Excess.
4.2 The value of the assets for the purposes of paragraph 4.1(a)(i) shall be
adjusted in accordance with the following principle:
the value in local currency of the assets transferred as at the date of
transfer will be adjusted by reference to the Local Timing Adjustment to
give its value as at the Closing Date.
4.3 Where the aggregate of paragraph 4.1(a) is less than the aggregate of
paragraph 4.1(b), the amount by which paragraph 4.1(a) is less than paragraph
4.1(b) is referred to as the Gross Shortfall.
Adjustment of Accounts provisions and prepayments
5. A provision or prepayment made in the Accounts must be adjusted in respect
of the period from the Accounts Date to the Closing Date by reference to:
(a) the rate of interest specified in the Relevant Part for the relevant
Retirement Benefit Scheme,
(b) if (a) does not apply, the rate of interest determined under paragraph
6.3(b) of the Valuation Principles, or
(c) if (a) and (b) do not apply, the Local Interest Rate.
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General
6. Where a Shortfall or Excess has been determined in a currency other than
dollars, it shall be translated into dollars as at the Closing Date in
accordance with clause 1.4 of this Agreement.
7. Where:
(a) a transfer of assets is being made from a Retirement Benefit Scheme to a
Purchaser's Scheme, and that transfer of assets is made by instalments, or
(b) assets are being transferred from a Retirement Benefit Scheme to a
Retirement Benefit Scheme which transfers to the Purchaser's Group and such
transfer has not been completed by the Closing Date,
the preceding provisions of this paragraph 2 shall be applied with such changes
as the parties may agree to be fair to preserve the time value of the
transferred assets as at the Closing Date or, in default of agreement, as may be
determined under paragraph 8 of the General Principles.
8. The preceding provisions of paragraphs 2 to 7 are subject, where
applicable, to paragraph 13 of the General Principles.
9. References to a provision or prepayment in the Accounts in paragraphs 2 to
8 shall not include a provision or prepayment arising due to a contribution to a
funded Retirement Benefit Scheme being paid after or before the due date for
payment of that contribution.
Global Netting Arrangements
10.1 If the Purchaser elects by the giving of written notice to the Vendor
within three (3) months after the receipt of such relevant information as the
Purchase may reasonably request, the provisions of this paragraph will apply.
10.2 Paragraphs 2 to 9 of this Part shall apply in relation to each of the
Retirement Benefit Schemes.
10.3 An account shall then be taken of the Shortfalls and Excesses arising
under paragraph 2 to 9 in respect of the Retirement Benefit Schemes as at such
date as may be agreed between the Vendor and the Purchaser, or in default of
agreement, as at the last day of the calendar month following the calendar month
in which the last of such Excesses or Shortfalls (whichever is the later) has
been determined in relation to the Retirement Benefit Schemes (the Calculation
Date).
10.4 To preserve the time value of each such Shortfall and each such Excess in
respect of the period from the Closing Date to the Calculation Date, there shall
be added to each such Shortfall and each such Excess an amount calculated as if
it were
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interest at the Interest Rate (accrued daily) in respect of the period from and
including the Closing Date to but excluding the Calculation Date.
10.5 Where the aggregate Shortfalls are greater than the aggregate Excesses a
sum equal to the net difference between the Shortfalls and the Excesses shall be
paid promptly by the Vendor to the Purchaser with an additional amount
calculated as if it were interest on the net difference at the Interest Rate
(accrued daily) in respect of the period from and including the Calculation Date
to and excluding the date of actual payment.
10.6 The payment under paragraph 10.5 shall constitute an adjustment to the
Final Consideration.
10.7 The aggregate of the all the provisions which shall be taken into account
in accordance with paragraphs 3.1(a)(ii) and 4.1(a)(ii) shall be limited to a
maximum of (Pounds)26,000,000.
Position where Retirement Benefit Rights are split
11.1 For the purposes of paragraphs 2 to 9, where the Retirement Benefit Rights
of a Transferring Employee are in part transferred to a Purchaser's Scheme or a
member of the Purchaser's Group and in part retained by a member of the Vendor's
Group or a Retirement Benefit Scheme which does not transfer to the Purchaser's
Group, a deduction will be made from the entire Retirement Benefit Rights of the
Transferring Employee in respect of those which do not transfer.
11.2 The deduction in respect of those which do not transfer will be calculated
on the basis set out in the Valuation Principles.
Purchaser's covenant in respect of breach of obligation not to increase costs
12.1 If the Purchaser is in breach of the undertaking in paragraph 11.3 of the
General Principles, the Purchaser shall pay promptly to the Vendor or otherwise
as the Vendor may direct any amount determined under paragraph 11.4 of the
General Principles, together with an amount calculated as if it were interest by
applying the Local Timing Adjustment from the date as at which the amount under
paragraph 11.4 of the General Principles has been calculated to the date of
payment of that amount.
12.2 The amount under paragraph 12.1 shall be calculated in the currency in
which the cost would ordinarily be paid and shall be converted into dollars
(unless otherwise calculated in dollars) on the date of actual payment in
accordance with clause 1.4 of this Agreement.
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Part 2: United Kingdom
The Pension Principles shall apply to all Retirement Benefit Schemes established
in the United Kingdom but in the case of the Vendor's Scheme the Pension
Principles shall apply subject to the modifications in this Part 2.
1. Interpretation
In this Part 2 of Schedule 11 the following further expressions shall have the
following meanings:
Actuary's Letter means the letter from the Vendor's Actuary to the Purchaser's
Actuary dated 30 March 1999, relating to the Vendor's Scheme established in the
United Kingdom a copy of which is annexed in the Annex to this Part 2 of
Schedule 11 .
Consenting Member means a person:
(a) who is an Employee and a Member at Closing;
(b) who begins to accrue retirement benefits as stated in paragraph 2 under the
Purchaser's Scheme as of Closing and who continues to accrue those benefits
at the Due Payment Date; and
(c) in respect of whom the Vendor's Scheme receives within one month of the
distribution of election forms to Members, a signed election that a
transfer payment be made from the Vendor's Scheme to the Purchaser's Scheme
and who does not withdraw his election.
Due Payment Date means a date notified by the Vendor to the Purchaser which is
not later than one month after all the Transfer Conditions have been satisfied
provided they then remain satisfied.
Exempt Approved Scheme has the same meaning as in section 592 of the Income and
Corporation Taxes Act 1988 and Exempt Approved is construed accordingly.
Member means, at any time or during any period specified in this schedule, an
active member of the Vendor's Scheme (including a member who is temporarily
absent under the Rules on maternity leave).
Purchaser's Scheme means the occupational pension scheme or schemes described in
paragraph 2 and, where the context requires, includes its or their trustees.
Rules means, in relation to the Vendor's Scheme, the trust deeds, rules and
other documents governing the Vendor's Scheme as identified in the Disclosure
Letter.
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Transfer Conditions means all of the following:
(a) The Board of the Inland Revenue has given written approval to the transfer
of assets from the Vendor's Scheme and to the Purchaser's Scheme in respect
of the Consenting Members and any condition to which that approval is
subject is satisfied.
(b) The Purchaser has complied with its obligations under paragraph 2.
(c) The Vendor's Scheme has received the written elections that a transfer
payment be made from the Vendor's Scheme to the Purchaser's Scheme
completed and signed by the Consenting Members.
(d) The calculation referred to in paragraph 3.5 has become final and binding
as mentioned in that paragraph.
Vendor's Scheme means the retirement benefit scheme established by deed dated 22
July 1927 and governed by a deed dated 5 March 1996 (as amended) known as the
ICI Pension Fund. Where the context requires, the Vendors Scheme includes its
trustees.
2. Purchaser's Scheme
2.1 In complying with its obligations under paragraph 2 of the General
Principles the Purchaser shall procure that as from Closing the Purchaser's
Scheme:
(a) is an Exempt Approved Scheme at Closing (or is designed so as to be capable
of being Exempt Approved with effect from Closing) and at the Due Payment
Date is a scheme to which the Vendor's Scheme can by law, and in accordance
with Inland Revenue practice relating to Exempt Approved Schemes, make a
transfer payment in respect of the Consenting Members' entire rights under
the Vendor's Scheme (including rights to guaranteed minimum pensions);
(b) is contracted-out by virtue of section 9(2B) of the Pension Schemes Act
1993 with effect from Closing;
(c) contains the same terms and provides a benefit structure which are the same
as those in the Rules; and
(d) shall on receipt of the transfer payment envisaged by paragraph 4, grant to
each Consenting Member benefits (in the form of additional service credits
equal to his pensionable service in or credited in the Vendor's Scheme)
calculated in accordance with the rules of the Purchaser's Scheme.
2.2 The Purchaser will before Closing offer to each person who is an Employee
and a Member or eligible to be a Member at Closing, in relation to employment
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from and after Closing, membership of the Purchaser's Scheme on the terms in
paragraph 2.1(c). The Purchaser will also offer to each such person the ability
to transfer past service rights from the Vendor's Scheme to the Purchaser's
Scheme on terms complying with paragraph 2.1(d).
2.3 The Purchaser shall assume full responsibility for the provision of pension
and death benefits for or in respect of each person who is an Employee and a
Member at Closing in respect of service from Closing and shall ensure that it or
the Purchaser's Scheme or the trustees of the Purchaser's Scheme (as
appropriate):-
(a) shall with effect from Closing (and until such time as the Purchaser
receives formal confirmation from each such person that he does not wish to
accept membership of the Purchaser's Scheme) arrange for each such person
to be covered for lump sum death in service benefit of an amount equal to
four year's salary;
(b) shall forthwith upon the written request of Vendor reimburse Vendor in
respect of the cost (as agreed between Vendor's Actuary and the Purchaser's
Actuary) of augmenting the deferred pension entitlement under the Vendor's
Scheme of any such person who dies after Closing but before he has made a
decision to transfer his accrued rights under the Vendor's Scheme to the
Purchaser's Scheme so that the amount of the widow's or widower's and any
dependants' pensions which are payable in those circumstances from the
Vendor Scheme shall be increased to the level of the pensions which would
have been payable had that person died in the service of Vendor.
2.4 The Purchaser will offer arrangements for additional voluntary
contributions of a similar type to those available under the Vendor's Scheme at
Closing. The Purchaser will procure that the Purchaser's Scheme will provide
under those arrangements, in respect of any Consenting Member's AVCs transferred
to the Purchaser's Scheme, benefits which are at least equal in value at the
date of transfer to the value so transferred.
2.5 The Purchaser shall consult with the Vendor regarding the contents of
notice which are to be issued to employees and contains the options available to
them in respect of pensions.
3. Calculation of Transfer Amount
This paragraph shall apply as regards the calculations of the Unadjusted
Transfer Amount and the Transfer Amount referred to in paragraph 5.1(a) of Part
1B of this Schedule.
3.1 The Vendor will procure that the Vendor's Actuary will calculate the
Transfer Amount within 6 weeks of receipt by the Vendor's Actuary of all
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information reasonably requested of the Purchaser to enable the calculations to
be completed.
3.2 The Unadjusted Transfer Amount shall be calculated in accordance with the
Actuary's Letter, that calculation will assume that article 119 does not apply
to guaranteed minimum pensions.
3.3 In calculating the Transfer Amount any benefits under the Vendor's Scheme
which are attributable to AVCs paid by the Consenting Members and in respect of
which the Consenting Members are not entitled to benefits based on their final
pensionable earnings, and the AVCs themselves, are disregarded.
3.4 As soon as reasonably practicable (within 14 days) after the Vendor's
Actuary has calculated the unadjusted Transfer Amount the Vendor (or the
Vendor's Actuary) will notify the Purchaser (or the Purchaser's Actuary) in
writing of the result of that calculation and to supply to him the particulars
of the calculation and sufficient data on which it is based to enable the
Purchaser's Actuary to check that the calculation is mathematically correct and
in accordance with this Schedule. The Vendor's Actuary will provide such
further particulars or data which the Purchaser's Actuary reasonably requests
within 21 days of receipt of the result of the calculation from the Vendor's
Actuary. The Purchaser's Actuary has one month from the date on which those
particulars and data have been supplied to him to raise any objection in writing
that the calculation is incorrect or not in accordance with this Schedule.
3.5 The calculation referred to above is final and binding on the Vendor and
the Purchaser on the later of (i) if the Purchaser's Actuary raises no objection
within the terms of paragraph 3.4 above, the expiry of the period mentioned
above in which he may raise any objection, and (ii) if the Purchaser's Actuary
raises an objection within the terms of paragraph 3.4 above, the date of a
subsequent written agreement between the Vendor's Actuary and the Purchaser's
Actuary that the calculation (or revised calculation) is mathematically correct
or not in accordance with this Schedule.
4. Transfer of Transfer Amount
4.1 In complying with the obligations contained in paragraph 5.1(b) and (c) of
the General Principles the following provisions shall apply.
4.2 The obligation of the Vendor under paragraph 5.1 of the General Principal
shall only apply after the Transfer Conditions have been satisfied and for the
purposes of paragraph 5.1(c) the date of transfer shall be the Due Payment Date.
4.3 The Vendor and the Purchaser will use all reasonable endeavours to secure
agreement between the Vendor's Scheme and the Purchaser's Scheme respectively as
to the particular equities to be transferred representing the Transfer Amount.
If agreement is not reached by the Due Payment Date, the transfer will be in the
form
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of equities of the Vendor's Scheme selected by the Vendor's Scheme and agreed by
the Purchaser's Scheme as being a representative sample of the equities held by
the Vendor's Scheme. Any equities to be transferred will be valued at the mid-
market price at the close of business on the London Stock Exchange on the day
before the date of transfer.
4.4 The Purchaser will seek promptly from the Board of the Inland Revenue
approval to the transfer of assets from the Vendor's Scheme to the Purchaser's
Scheme in respect of the Consenting Members and, at the Vendor's request, will
supply promptly to the Vendor the documents and information which the Vendor
reasonably requires to enable the Vendor's Scheme to obtain a corresponding
approval.
5. Shortfall payments
5.1 In the event that the amount actually transferred on the Due Payment Date
from the Vendor's Scheme to the Purchaser's Scheme is less than the Transfer
Amount (the Shortfall), the Vendor shall subject to the proviso below forthwith
following a written demand from the Purchaser, pay within 7 days to the
Purchaser (for onward transmission to the Purchaser's Scheme) by way of
adjustment to the consideration hereunder, a cash sum equal to 100 per cent. of
the Shortfall together with interest from and including the date upon which the
aforesaid transfer to the Purchaser's Scheme is made, to but excluding the date
upon which payment is made in full in accordance with this paragraph, at the
Interest Rate compounded monthly, provided that this paragraph shall not apply
if the reason for the Transfer Amount (or part thereof) not having been
transferred to the Purchaser's Scheme in accordance with paragraph 4 above is
the failure of the Purchaser's Scheme to accept the Transfer Amount (or part
thereof) or failure by the Purchaser to comply with the Transfer Conditions.
5.2 If, after the payment of the Shortfall under paragraph 5.1, any member of
the Purchaser's Group achieves a reduction in liabilities to corporation tax as
a result of being able to treat a payment of an amount equal to the Shortfall as
deductible for corporation tax purposes, then the Purchaser shall pay to the
Vendor within 7 days after the relevant member of the Purchaser's Group achieves
such a reduction, a sum equal to that corporation tax saving.
6.1 If the aggregate of the amounts paid to the Purchaser's Scheme by the
Vendor's Scheme in respect of the Consenting Employees (excluding the AVC Fund),
as adjusted, is an amount which exceeds the Transfer Amount at the Due Payment
Date (the amount of such difference being referred to in this paragraph as the
Excess), then the Purchaser shall, by way of an adjustment to the consideration
paid under this Agreement pay to the Vendor within 14 days of the Due Payment
Date a sum in cash equal to the Excess together with interest thereon at the
Interest
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Rate in respect of the period from the Due Payment Date to the date of final
payment under this paragraph.
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ANNEX TO PART 2: UK ACTUARY'S LETTER
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Part 3: USA
The Pension Principles shall apply to the Retirement Benefit Schemes providing
Retirement Benefit Rights of Polyurethanes Employees subject to the
modifications contained in this Part 3 of this Schedule 11.
1. Interpretation
In this Schedule the following expressions shall have the following meanings:
Actuarial Annex means Annex 1 to this Part containing the Actuarial Methods and
Assumptions to be used for purposes of applying the Pension Principles (to
include the Valuation Principles) with respect to the Retirement Benefit Schemes
providing Retirement Benefit Rights to the Transferring Polyurethanes Employees.
APBO means the Financial Accounting Standards Board Statement 106 accumulated
post retirement benefit obligation.
Code means the Internal Revenue Code of 1986, as amended.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
Polyurethanes Employees means the Business Employees of the Polyurethanes
business of ICI Americas Inc. and the former employees identified in Annex 2 to
this Part 3. For the avoidance of doubt Polyurethanes Employees do not include
the Employees of Rubicon Inc or any other joint venture.
Polyurethanes Nonqualified DB Plan means the unfunded employee pension benefit
plan, as defined in Section 3(2) of ERISA, established by Vendor for
Polyurethane Employees to include the following:
(i) Polyurethanes Excess Benefit Plan which will assume the liability of
Polyurethanes Employees under the ICI Excess Benefit Plan prior to
Closing;
(ii) Polyurethanes Employee Pension Plan which will assume the liability of
the Polyurethanes Employees under the Employee Pension Plan prior to
Closing;
(iii) Polyurethanes Executive Supplemental Benefits Plan which will assume the
liability of the Polyurethanes Employees under the ICI Executive
Supplemental Benefits Plan prior to Closing;
(iv) Unfunded pension of Robert Reen; and
(v) Unfunded pension of Ron Wyatt.
In addition, the term Polyurethanes Nonqualified DB Plan includes the unfunded
arrangements of, Gordon Ross, to include, without limitation, the Supplemental
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Death Benefit Arrangement, Supplemental Disability Arrangement and the Split
Dollar Insurance Plan.
Polyurethanes UDC Plan means a plan identical to the Executive Retirement Plan
for Key Employees of ICI's Group established by Vendor prior to Closing for the
Polyurethanes Employees.
Polyurethanes UDC Trust means the grantor trust established by Vendor prior to
Closing to hold the assets of the Polyurethanes UDC Plan.
Purchaser DB Trust means a trust exempt from federal income taxation under Code
sections 401(a) and 501(a) which was established or maintained by Purchaser to
hold the assets of the Vendor DB Plan.
Purchaser DC Plan means a defined contribution plan established or maintained by
Purchaser which is qualified under Code section 401(a) and contains a qualified
cash or deferred arrangement meeting the requirements of Code section 401(k).
Purchaser PRB Plan means the plan established or maintained by the Purchaser to
provide post retirement medical, dental and other welfare benefits to the
Transferring Employees equivalent to those provided to Transferring
Polyurethanes Employees under Vendor's PRB Plan.
Vendor means for purposes of this Part 3 A. ICI Americas Inc
Vendor's Group means any member of ICI's Group to include their officers,
directors, employees, agents, successors and assigns.
Vendor DB Trust means the Trust for Defined Benefit Plans of ICI American
Holdings Inc.
Vendor DB Plan means the Polyurethanes Pension Plan.
Vendor DC Plan means the ICI Deferred Compensation Plan.
Vendor PRB Plan means the retiree medical and dental coverage provide under the
ICI Americas Health and Dental Care Plan.
2. Tax Qualified Defined Benefit Plans
A. Transfer of Liability and Plan Sponsorship
In complying with its obligations under paragraphs 2 and 3 of the General
Principles, the Purchaser, effective the Closing Date, shall take all
appropriate action to become the plan sponsor of the Vendor DB Plan so that the
liability for providing Retirement Benefit Rights to the Polyurethanes Employees
under the Vendor DB Plan transfers to the Purchaser. Effective the Closing Date
the Vendor
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shall take all appropriate action so that neither the Vendor nor any member of
Vendor's Group is acting as a plan sponsor, plan administrator, named fiduciary,
or other fiduciary with respect to the Vendor DB Plan.
B. Transfer of Pension Trust Assets
On or before Closing, the Purchaser shall establish the Purchaser DB Trust.
With respect to the Vendor DB Plan, the Vendor shall cause to be transferred
from the Vendor DB Trust to the Purchaser DB Trust by the end of the calendar
month following the calendar month in which the Closing Date occurs an amount
equal to the fair market value of the assets of the Vendor DB Plan determined by
the trustee of the Vendor DB Trust as of the valuation date of the Vendor DB
Trust coincident with or next following the Closing Date along with interest
from but not including said valuation date through the date of transfer at a
rate equal to Closing Date rate for thirty day U.S. Treasury Bills. The
Purchaser covenants that the Purchaser DB Trust will be qualified under Code
section 401(a) and exempt from taxation under Code section 501(a) when the
assets of the Vendor DB Plan are transferred to the Purchaser DB Trust from the
Vendor DB Trust.
3. Post Retirement Welfare Benefits
A. In complying with its obligations under paragraphs 2 and 3 of the General
Principles, the Purchaser shall establish effective as of the Closing Date the
Purchaser PRB Plan which shall provide eligibility and coverage for retiree
medical and dental benefits that is comparable to the Vendor's PRB Plan on the
Closing Date and otherwise equivalent in value for the period prescribed by the
General Principles.
B. Effective the Closing Date, the Purchaser assumes all liabilities and
obligations of the Vendor and the Vendor's Group relating to the provision of
retiree medical and dental benefits to the Polyurethanes Employees and their
dependents (to include a person who is granted benefits under a medical support
court order by reason of his or her relationship to a Polyurethanes Employee).
Notwithstanding the preceding sentence, neither the Purchaser nor the Purchaser
PRB Plan will be liable for any claims of Polyurethanes Employees or their
dependents for reimbursement of expenses for medical or dental services or
procedures covered under the terms of the Vendor PRB Plan which were performed
prior to the Closing Date but billed on or after the Closing Date.
C. The Purchaser shall give full past service credit to the Polyurethanes
Employees for their pre-closing service to the same extent such service was
credited by the Vendor's PRB Plan.
Page 273
<PAGE>
4. Nonqualified DB Plans
Effective the Closing, the Purchaser shall become the sponsor of the
Polyurethanes Nonqualified DB Plans and assume all liabilities and obligations
of the Vendor and Vendor's Group with respect thereto.
5. Defined Contribution Plans
A. 401(k) Plan
(i) The Purchaser shall establish on or before the Closing Date the Purchaser
DC Plan and extend coverage to the Polyurethanes Employees on the Closing
Date.
(ii) The Vendor shall cause the trustee of the Vendor DC Plan to transfer
assets equal to the account balances that are to be transferred,
including outstanding loan balances, of the Polyurethane Employees (to
include any alternate payee of a Polyurethanes Employee) under the Vendor
DC Plan to the trustee designated by the Purchaser under the trust
agreement forming a part of the Purchaser DC Plan. Such account balances
will have been credited with appropriate earnings or losses attributable
to the period from the Closing Date to a valuation date of the Purchaser
DC Plan's trust preceding the date of transfer, reduced by any necessary
benefit or withdrawal payments to or in respect of the Polyurethanes
Employees occurring during the period from the Closing Date to the date
of transfer. The transfer of assets from the Vendor DC Plan to the
Purchaser DC Plan shall be made solely in cash and notes evidencing plan
loans to Transferring Employees. The valuation date used to calculate the
transfer amount shall not be more than 30 business days prior to the date
of transfer. The Purchaser covenants that the Purchaser DC Plan will be
qualified under Code section 401(a) and that is attendant trust will be
exempt from taxation under Code section 501(a) on the date(s) the account
balances of any Polyurethanes Employees are transferred from the Vendor
DC Plan to the Purchaser DC Plan. No loans or withdrawals requested by
Polyurethanes Employee on or after the Closing Date will be permitted or
processed by the Vendor DC Plan.
(iii) In consideration for the transfer of assets from the Vendor DC Plan to
the Purchaser DC Plan, the Purchaser shall, effective as of the date of
transfer, assume all of the obligations of the Vendor in respect of the
account balances accumulated by the Polyurethanes Employees under the
Vendor DC Plan (exclusive of any portion of such account balances which
are paid or otherwise withdrawn prior to the date of transfer).
(iv) In the event that the Vendor DC Plan fails the actual deferral percentage
test of Code section 401(k) or the actual contribution percentage test of
Code section 401(m) for the plan year in which Closing occurs, so as to
require an
Page 274
<PAGE>
excess or excess aggregate distribution, as the case may be, from the
account balance of a Polyurethanes Employee whose account balance was
transferred to the Purchaser DC Plan, the Purchaser shall cause the
Purchaser DC Plan to make such distribution.
B. UDC Plan
Effective the Closing, the Purchaser shall become the sponsor of the UDC Plan
and shall assume all obligations and liabilities of Vendor and Vendor's Group
with respect thereto. The Vendor shall cause ownership of the Polyurethanes UDC
Trust to transfer to Purchaser so that the Purchaser shall become the grantor of
said trust. Effective the transfer of ownership of the Polyurethanes UDC Trust
to the Purchaser, the Purchaser shall assume all liabilities and obligations of
the Vendor and Vendor's Group with respect thereto.
C. For the avoidance of doubt, the Vendor DC Plan, the Purchaser DC Plan,
Polyurethanes UDC Plan, are not Retirement Benefit Schemes
6. Valuation Principle
A. For purposes of applying the Valuation Principles, the value of the
Retirement Benefit Rights under the Vendor DB Plan and the Vendor
Nonqualified DB Plans shall be determined using the Actuarial Methods and
Assumptions set out in Part I of the Actuarial Annex.
B. For purpose of applying the Valuation Principles, the value of Retirement
Benefit Rights under the Vendor PRB Plan will be the APBO determined as
of the Closing Date using the Actuarial Methods and Assumption set out in
Part II of the Actuarial Annex.
Page 275
<PAGE>
ANNEX I TO PART 3 OF THE PENSIONS SCHEDULE
U.S. ACTUARIAL ANNEX
PART I
I. PENSION ASSUMPTIONS & METHODS
1. Discount Rate Ten percent (10%)
2. Salary Increases Five percent (5%)
3. Mortality For healthy lives: 1983 Group Annuity
Mortality Table for males and females
For disabled lives:
Sample rates (per 100) of recovery or mortality from disability:
----------------------------------------
Age All Disableds
----------------------------------------
25 2.60
----------------------------------------
35 2.60
----------------------------------------
45 2.70
----------------------------------------
55 4.90
----------------------------------------
65 7.30
----------------------------------------
75 10.60
----------------------------------------
85 23.60
----------------------------------------
4. Termination Rates varying by age normally used by
Watson Wyatt for the ICI Americas
Pension Plan
----------------------------------
Sample rates (per 100):
----------------------------------
Age Males All
Females
----------------------------------
20 12.50 17.50
----------------------------------
25 10.0 11.5
----------------------------------
Page 276
<PAGE>
----------------------------------
30 7.5 8.0
----------------------------------
35 4.0 5.0
----------------------------------
40 3.0 2.5
----------------------------------
45 2.0 2.0
----------------------------------
50 1.0 1.5
----------------------------------
55 0.5 1.0
----------------------------------
60+ 0 0
----------------------------------
--------------------------------
5. Disability Rates varying by age
normally used by Watson
Wyatt for the ICI Americas
Pension Plan
--------------------------------
Age Salaried All
Male Females
--------------------------------
25 0.12 0.18
--------------------------------
30 0.12 0.18
--------------------------------
35 0.13 0.19
--------------------------------
40 0.15 0.22
--------------------------------
45 0.20 0.30
--------------------------------
50 0.36 0.54
--------------------------------
55 0.68 1.02
--------------------------------
60 1.38 2.07
--------------------------------
--------------------------------
6. Retirement Age Rates varying by age:
--------------------------------
Age Rate Per 100
--------------------------------
50 4
--------------------------------
51 2
--------------------------------
52 2
--------------------------------
53 2
--------------------------------
54 2
--------------------------------
55 4
--------------------------------
56 4
--------------------------------
Page 277
<PAGE>
--------------------------------
57 4
--------------------------------
58 4
--------------------------------
59 4
--------------------------------
60 10
--------------------------------
61 15
--------------------------------
62 40
--------------------------------
63 30
--------------------------------
64 30
--------------------------------
65 50
--------------------------------
66 50
--------------------------------
67 100
--------------------------------
7. Form of Payment Minimum Lump Sum Benefit With
Residual Single Life Annuity using
the conversion rate used by Watson
Wyatt and Co for the 1/1/98
valuation of the ICI Americas
Pension Plan.
8. Proportion of Married 80% of participants are assumed to
Participants be married with wives assumed to be
three years younger than husbands.
Actual data for retirees.
9. Maximum Benefit Code (S)415 limit for 1999 for the
normal form of benefit, payable at
Social Security Retirement Age,
reduced/(increased) as appropriate
for earlier/(later) ages.
10. Maximum Pensionable $160,000
11. Limit on Compensation and Fixed at 1999 level
Benefits
12. Social Security Wage Base Four percent (4%)
13. Cost-of-Living Increase for Three percent (3%)
Page 278
<PAGE>
PIA offered calculation under
14. Future plan amendments Not assumed (to include ad hoc cost
of living amendments to retiree
benefits)
15. Layoff Benefits Not valued
16. Data Compensation, adjusted hire date,
birth date and similar data
submitted to Watson Wyatt for the
January 1, 1998, valuation of the
ICI Americas Pension Plan will be
the primary source of data for
calculations.
17. Date of Calculation Liability is to be calculated with
respect to the service accrued under
the Polyurethanes Pension Plan at
the Closing Date.
18. Actuarial Cost Method Projected Unit Credit
19. Other Methods and Assumptions Such other methods, practices and
assumptions that Watson Wyatt and Co
used in the January 1, 1998 funding
actuarial valuation of the ICI
American Pension.
Page 279
<PAGE>
PART II
II. APBO ASSUMPTIONS
1. Discount Rate 7% per year
2. Mortality: 1983 Group Annuity Mortality Table
for males and females
3. Termination: Annual Rate of Withdrawal (Per 100)
Age Male Female
20 12.50 17.50
25 10.00 11.50
30 7.50 8.00
35 4.00 5.00
40 3.00 2.50
45 2.00 2.50
50 1.00 1.50
55 0.50 1.00
60 0.00 0.00
4. Medical Cost Trend Rate:
Year Rate
1998 9.0%
1999 8.5%
2000 8.0%
2001 7.5%
2002 7.0%
2003 6.5%
2004 6.0%
2005 5.5%
2006 5.0%
2007 + 4.5%
Page 280
<PAGE>
5. Dental Cost Trend Rates
Year Rate
1998 6.4%
1999 6.2%
2000 6.0%
2001 5.8%
2002 5.6%
2003 5.4%
2004 5.2%
2005 5.0%
2006 4.8%
2007 + 4.5%
6. Per Capita Claims Medical: Prior to eligibility for medicare:
$3,539 After eligibility for
medicare: $535
7. Per Capita Claims Dental: Pre age 65: $373
Post age 65: $211
8. Retirement: Rates varying by age:
Age Rate Per 100
50 4
51 2
52 2
53 2
54 2
55 4
56 4
57 4
58 4
59 4
Page 281
<PAGE>
60 10
61 15
62 40
63 30
64 30
65 50
66 50
67 100
9. Spouse coverage: 70% for current actives; actual data
for election current retirees
10. Spouses ages: Wives 3 years younger than husbands
11. Participation rates: At retirement: 95% for medical and
dental. Retirees who reach 65: 25%
opt out for reimbursement plan.
12. Actuarial Cost Method Projected unit credit
13. Other Methods and Assumptions: Such other methods, practices, and
assumptions used by Watson Wyatt in
the calculations of the FAS 106 APBO
of the ICI American health and
Dental Care Plan.
Page 282
<PAGE>
ANNEX II TO PART 3 OF PENSIONS SCHEDULE
1. Terminated Vested Transferring Polyurethanes Employees; [To be completed by
Closing]
2. Retired Polyurethanes Employees. [To be completed by Closing].
Page 283
<PAGE>
Part 4: Belgium
The Pension Principles shall apply to all Retirement Benefit Schemes established
in Belgium subject to the modifications in this Part 4.
PART A :GENERAL PENSION PRINCIPLES
1. Interpretation
In this Part 4 of Schedule 11 the following expressions shall have the following
meanings:
Employee means any employee of the Transferred Business, who is bound under the
terms of an employment contract with a company in the Vendor's Group as well as
any directors active in the Transferred Business, provided they continue to work
in the Transferred Business with effect on the Closing Date for the Purchaser's
Group and on the condition that they are active participants in the Retirement
Benefit Schemes on the Closing Date.
Retirement Benefit Rights means any pension, lump sum, gratuity, or a like
benefit provided or to be provided on retirement, on early retirement,
invalidity or on death in respect of an Employee's employment
Retirement Benefit Schemes means each scheme, plan, fund, arrangement or
contractual undertaking of any member of the Vendor's Group for the provision of
Retirement Benefit Rights to or in respect of one or more Employees or one or
more former employees of any of the Companies and, for the avoidance of doubt,
includes any such scheme, plan, fund or arrangement which has not been disclosed
in the Data Room;
2. Paragraph 2.1 of the Pension Principles shall not apply but in relation to
each Transferring Employee, the Purchaser will continue to provide or
procure to be provided :
(i) same Retirement Benefit Rights in respect of service prior to Closing,
and
(ii) equivalent Retirement Benefit Rights in respect of service for the
period of four years on and after the Closing date, to the Retirement
Benefit Rights of the Transferring Employee, unless the Retirement
Benefit Scheme is based on a collective bargaining agreement, in which
event the Purchaser will continue to provide or procure to be provided
the same Retirement Benefit Rights in respect of service after the
Closing until the expiry or cessation of the applicable collective
bargaining agreement(s).
Page 284
<PAGE>
3. Paragraph 2.2 of the Pensions Principles shall not apply but for the
purposes of paragraph 2.1 "equivalent" means equivalent in value and will
be determined, in the case of defined benefit Retirement Benefit Rights,
using the Valuations Principles.
4. Paragraph 4 of the Pensions Principles shall not apply.
5. Paragraph 5.1 (a) (i) of the Pension Principles shall be modified as
follows:
" (i) the value of those Retirement Benefit Rights calculated in accordance
with the Valuation Principles, adjusted for the period from and including
the Closing Date to the date of transfer by the Local Timing Adjustment,
and increased by that part of the surplus relating to the Transferring
Employees whose Retirement Benefit Rights will be or have been transferred,
and which are available in the Vendor's Retirement Benefit Scheme as
calculated in accordance with the Valuation Principles, and
(ii)..."
6. Paragraph 6.1(a) of the Pensions Principles shall be modified as follows:
"(a) the Vendor and the purchaser agree in writing and to the extent
permitted by law, the relevant Retirement Benefit Scheme and the
bylaws of the relevant retirement benefit institutions/vehicles"
7. Paragraph 12 of the Pensions Principles shall not apply.
8. Paragraph 14.1 of the Pensions Principles shall be modified as follows:
"The Purchaser and the Vendor agree that, where the Retirement Benefit
Rights of a Transferring Employee working in a jurisdiction other than his
home jurisdiction include a Home Country Guarantee and/or are based on one
or more Retirement Benefit Schemes, it is intended that the transfer of
assets from one or more relevant Retirement Benefit Schemes, including the
Home Retirement Benefit Scheme will, subject to paragraphs 3.3 and 3.4.
include a transfer of assets in respect of the Home Country Guarantee and,
where applicable and agreed, a transfer of assets from one or more relevant
Retirement Benefit Schemes."
Page 285
<PAGE>
PART B: VALUATION PRINCIPLES
9. Paragraph 6.3 (a) of the Pension Principles shall be modified as follows:
" (a) those specified in the Annex I (Actuary Assumptions and Methodology)
and Annex II (Actuary Assumptions, Methodology and Transfer Value for
Surplus Funding) attached to the present Part 4 in respect of the
particular Retirement Benefit Scheme;
Page 286
<PAGE>
ANNEX I TO PART 4: BELGIUM
Actuarial Assumptions and Methodology - Transferred Members in Active Service
Cost method
The pension liabilities are equal to the Projected Benefit Obligation (PBO)
using a Unit Credit valuation method in application of FAS-87. Valuation date
is equal to Closing date.
Economic assumptions
Discount rate 7.00 %
Salary increases 4.00 % + LION salary scale (see annex A)
Social security increases 3.00 %
Pension increase rate 3.00 %
Demographic assumptions
Mortality MR (males) / FR (females) without age
adjustment. However, in application of
the pension rules, for the conversion of
lump sums into pensions, the mortality
table to be used is MR for males and
females.
Withdrawal Age-related scale with as representative
values (see annex B for full age-related
scale):
Retirement Age 60
Disability None
Proportion married 100%
Number of children 2 children of age 11
Age spouse Females are two years younger than males
Page 287
<PAGE>
Some general remarks on the assumptions
Retirement
It is assumed that 50% of the retirees convert their lump sum at age 60 entirely
into a lifetime pension and 50% of the retirees convert 2/3 of their lump sum at
age 60 into a lifetime pension. It is assumed that all retirees that convert
their lump sum (partly) into a pension opt for a reversibility of 0%. Those
pensions are assumed to increase annually at the above-mentioned pension
increase rate of 3.0%.
Withdrawal
It is assumed that in case of withdrawal, the employee leaves the deferred
entitlement with the ICI pension fund, i.e. the rights are not transferred nor
cashed in. Between date of withdrawal and age 60, the deferred entitlement will
be indexed. It is assumed that at age 60 50% of the retirees convert their
lump sum at age 60 entirely into a lifetime pension and 50% of the retirees
convert 2/3 of their lump sum at age 60 into a lifetime pension.
The death coverage to the spouse between date of leaving and age 60 will be
included in the present value calculations.
Death in service
Survivor capital
It is assumed that there is a survivor capital to all employees of which 100%
convert their survivor capital entirely into a lifetime pension. The lifetime
survivor pension will be indexed at 3.0%.
Orphan pension
Orphan pensions are assumed to be paid until age 25.
Death lump sum
Other remarks
(1) The PBO for each individual is at least equal to the present value of the
vested benefits under the Colla legislation.
(2) The PBO amount for each individual includes the PBO for the death in
service benefits.
Page 288
<PAGE>
(3) In addition to the PBO mentioned above, the accrued insurance reserves
under the group insurance contract with De Vaderlandsche will be
transferred, subject to obtaining the consent of the employees concerned.
Enclosures
. Annex A to Annex I :
Salary scale for white-collar employees
. Annex B to Annex I :
Age related withdrawal
Decrements scale
Page 289
<PAGE>
Annex A to Annex I
Salary Scale for White-Collar Employees
leeftijd Man Vrouw IPP
- ----------------------------------------------------
20 0.3 0.462 0.07
21 0.334 0.5 0.105
22 0.367 0.538 0.14
23 0.4 0.572 0.172
24 0.433 0.606 0.205
25 0.467 0.64 0.237
26 0.5 0.674 0.27
27 0.533 0.708 0.302
28 0.56 0.733 0.333
29 0.587 0.757 0.363
30 0.613 0.782 0.394
31 0.64 0.806 0.424
32 0.667 0.831 0.455
33 0.69 0.849 0.499
34 0.713 0.868 0.543
35 0.737 0.886 0.586
36 0.76 0.905 0.63
37 0.783 0.923 0.674
38 0.8 0.932 0.676
39 0.817 0.941 0.705
40 0.833 0.951 0.733
41 0.85 0.96 0.762
42 0.867 0.969 0.791
43 0.884 0.975 0.819
44 0.9 0.981 0.847
45 0.917 0.988 0.874
46 0.933 0.994 0.902
47 0.95 1 0.93
48 0.96 1 0.944
49 0.97 1 0.958
50 0.98 1 0.972
51 0.99 1 0.986
52 1 1 1
53 1 1 1
54 1 1 1
55 1 1 1
56 1 1 1
57 1 1 1
58 1 1 1
59 1 1 1
60 1 1 1
61 1 1 1
62 1 1 1
63 1 1 1
64 1 1 1
65 1 1 1
Remark: IPP means International Pension Plan.
Page 290
<PAGE>
Annex B to Annex I
Age related withdrawal decrements scale
The table below states for each given age the assumed number of people leaving
service per hundred : for example 6% of the 20 year olds.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Age Decrement Age Decrement Age Decrement
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
20 0.06 35 0.022 50 0.003
21 0.057 36 0.020 51 0.0024
22 0.054 37 0.018 52 0.002
23 0.051 38 0.017 53 0.001
24 0.048 39 0.015 54 0.0005
25 0.045 40 0.014 55 0
26 0.042 41 0.013 56 0
27 0.040 42 0.012 57 0
28 0.037 43 0.011 58 0
29 0.034 44 0.009 59 0
30 0.032 45 0.008 60 0
31 0.03 46 0.007 61 0
32 0.028 47 0.006 62 0
33 0.026 48 0.005 63 0
34 0.024 49 0.004 64 0
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Page 291
<PAGE>
ANNEX II TO PART 4: BELGIUM
Actuarial Assumptions and Methodology - Transfer Value for Surplus Funding -
(Members in active service only)
Overfunding
Overfunding is the situation were the total Market Value of Assets (MVA) of the
LION Belgium Pension Fund as at the Closing Date is higher than the Projected
Benefit Obligation (PBO) calculated with the above-mentioned actuarial
assumptions on the total population of members in the LION Belgium Pension Fund.
Transfer value for Surplus Funding
When there is Overfunding as at the Closing Date, the Transfer Value for Surplus
Funding will be a proportional part of the Overfunding. The Transfer Value for
Surplus Funding will be determined as at completion date as follows:
Overfunding x (PBO Transferred Members / PBO All Members)
With Overfunding = MVA - PBO All Members
PBO All Members is the total liability as at Closing Date for all members of the
LION Belgium Pension Fund, determined using the assumptions and methodology
described in annex I, excluding the reserves accrued with De Vaderlandsche.
PBO Transferred Members is the total liability as at Closing Date for all
Transferred Members (in active service), determined using the assumptions and
methodology described in annex I, excluding the reserves accrued with De
Vaderlandsche.
MVA is the market value of assets as at Closing Date of the LION Belgium Pension
Fund, excluding the reserves accrued with De Vaderlandsche.
Page 292
<PAGE>
SCHEDULE 12
EXCLUDED ASSETS
I. General
(a) Any assets of ICI's Group other than (i) the Business Assets of the
Business Vendors; and (ii) the assets of the Companies (insofar as they are
not excluded pursuant to the terms of this Agreement); and (b) the assets
set out in the remaining paragraphs of this Schedule 12.
II. Assets to be removed prior to Closing
Any shares or assets which are to be transferred by a Company to any member of
ICI's Retained Group prior to Closing in accordance with paragraph 3 of Schedule
18, including, without limitation:
(a) assets of ICI Europe Ltd other than assets of the Polyurethanes Business
conducted by ICI Europe Ltd;
(b) assets of ICI Mex SA DE CV other than assets of the Polyurethanes Business
conducted by ICI Mex SA DE CV;
(c) assets of ICI Holland BV other than assets of the Polyurethanes Business
conducted by ICI Holland BV;
(d) shares in, the business of and any assets of Australian Titanium Products
Proprietary Ltd;
(e) shares in, the business of and any assets of BTP Tioxide Ltd;
(f) shares in, the business of and any assets of TIL Ltd;
(g) shares in, the business of and any assets of Technical and Analytical
Services Ltd;
(h) shares in, the business of and any assets of Tioxide Investment Holdings
Ltd;
(i) shares in, the business of and any assets of Tioxide Overseas Investments
Ltd; and
(j) the outstanding preferred shares in Tioxide Canada Inc.
Page 293
<PAGE>
III. Non transferring assets
Without prejudice to the provisions of Schedule 22 the following assets shall
not transfer:
(a) shares in, the business of and any assets of the Boripol Joint Venture,
Yugoslavia;
(b) shares in, the business of and any assets of ICI India Ltd;
(c) shares in, the business of and any assets of ICI Pakistan Ltd;
(d) shares in, the business of and any assets of AO ICI, Russia;
(e) shares in, the business of and any assets of ICI International Ltd;
(f) shares in, the business of and any assets of ICI Polska Sp.zo.o;
(g) shares in, the business of and any assets of ICI Slovakia sro;
(h) shares in, the business of and any assets of ICI Cz sro;
(i) shares in, the business of and any assets of ICI Hungary Kft;
(j) shares in, the business of and any assets of ICI Korea Ltd;
(k) shares in, the business of and any assets of ICI Japan Ltd;
(l) shares in, the business of and any assets of ICI (Malaysia) Holdings Sdn
Bhd;
(m) shares in, the business of and any assets of ICI China Ltd;
(n) shares in, the business of and any assets of ICI France SA;
(o) shares in, the business of and any assets of ICI Norden;
(p) shares in, the business of and any assets of ICI Co-ordination Centre
excluding the Business Employees;
(r) shares in, the business of and any assets of ICI (Singapore) Private Ltd;
and
(s) shares in, the business of and any assets of ICI Bahia S.A.
For the avoidance of doubt, if any of the above companies holds Stock at Closing
which it does not beneficially own and which it holds in the capacity of agent
for a Company or Business Vendor or in connection with a service it provides to
a Company or Business Vendor, then that Stock is not an Excluded Asset.
Page 294
<PAGE>
IV. Specific assets
A. General
Excluded Properties
Excluded Employees
ICI Retained Software
Page 295
<PAGE>
B. Polyurethanes
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Business Vendor Excluded Asset
- --------------------------------------------------------------------------------------------
<S> <C>
ICI PLC Disused plant and site at Hillhouse, UK
- --------------------------------------------------------------------------------------------
ICI Americas Inc. Any assets located at Wilmington, USA other than Business
Information, Business IPR, Business IP Licences and Business IT
Licences
- --------------------------------------------------------------------------------------------
</TABLE>
Assets excluded from Transfer of the Relevant Petrochemicals Business
NB: The following list of excluded assets in this Schedule is not necessarily
complete.
1. NORTH TEES WORKS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Assets Comments
- --------------------------------------------------------------------------------------------
<S> <C>
Ethylene Liquefaction Unit number 4 This shall transfer to BPCL.
- --------------------------------------------------------------------------------------------
</TABLE>
2. TRANS-PENNINE ETHYLENE PIPELINE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Assets Comments
- -------------------------------------------------------------------------------------------
<S> <C>
Hillhouse section and LDS/metering at Hillhouse
- -------------------------------------------------------------------------------------------
Ethylene Cavities at Holford (2) (H213, H215) See Key Principles.
- -------------------------------------------------------------------------------------------
</TABLE>
3. WILHELMSHAVEN
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Assets Comments
- -------------------------------------------------------------------------------------------
<S> <C>
Ethylene storage tanks and all associated equipment Assets owned by ICI Wilhelmshaven
on site (and on the jetty owned by the State) for GmbH who provide service to ICI
import of ethylene and delivery of EVC plant Olefins. ICI Olefins currently
pays costs thereof.
- -------------------------------------------------------------------------------------------
</TABLE>
ASSETS AT NORTH TEES EXCLUDED FROM TRANSFER OF RELEVANT PETROCHEMICAL BUSINESS
NB: The following list of excluded assets in this Schedule is not necessarily
complete.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
EXCLUDED
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
REFERENCE DUTY INFORMATION COMMENTS
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 296
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
PIP refinery
- -----------------------------------------------------------------------------------------------------
PIP Road/rail loading
- -----------------------------------------------------------------------------------------------------
Ammonia storage
- -----------------------------------------------------------------------------------------------------
Ammonia loading facilities are Contracts will be required to
owned by Terra. allow use by others.
- -----------------------------------------------------------------------------------------------------
Contracts will be required to
allow use by others.
- -----------------------------------------------------------------------------------------------------
Jetty 4 with loading facilities See Services Schedule relating to
is owned by PIP. Jetty services (HICI to ICI (PIP))
- -----------------------------------------------------------------------------------------------------
P-157F Sour Crude Oil
- -----------------------------------------------------------------------------------------------------
P-158F Sour Crude Oil
- -----------------------------------------------------------------------------------------------------
P-159F Sour Crude Oil
- -----------------------------------------------------------------------------------------------------
N-3100F Sweet Crude Oil
- -----------------------------------------------------------------------------------------------------
2101FA Sweet Crude Oil
- -----------------------------------------------------------------------------------------------------
2101FB Sweet Crude Oil
- -----------------------------------------------------------------------------------------------------
P-154F LSAR
- -----------------------------------------------------------------------------------------------------
P-155F LSAR
- -----------------------------------------------------------------------------------------------------
P-160F LSAR
- -----------------------------------------------------------------------------------------------------
P-167F LSAR
- -----------------------------------------------------------------------------------------------------
P-168F LSAR
- -----------------------------------------------------------------------------------------------------
P-150F Derv
- -----------------------------------------------------------------------------------------------------
P-153F Derv
- -----------------------------------------------------------------------------------------------------
P-161F Derv
- -----------------------------------------------------------------------------------------------------
P-162F Derv
- -----------------------------------------------------------------------------------------------------
2102FA Gasoil
- -----------------------------------------------------------------------------------------------------
2102FB Gasoil
- -----------------------------------------------------------------------------------------------------
2101FC Unmarked Kerosene
- -----------------------------------------------------------------------------------------------------
2103FA Marked Kerosene
- -----------------------------------------------------------------------------------------------------
2103FB Marked Kerosene
- -----------------------------------------------------------------------------------------------------
2012FA LDD
- -----------------------------------------------------------------------------------------------------
2012FB LDD
- -----------------------------------------------------------------------------------------------------
175F Naphtha . PIP run down
- -----------------------------------------------------------------------------------------------------
176F Naphtha . PIP run down
- -----------------------------------------------------------------------------------------------------
ROAD & RAIL TERMINAL
- -----------------------------------------------------------------------------------------------------
P-850F Marked Kerosene
- -----------------------------------------------------------------------------------------------------
P-851F Marked Kerosene
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 297
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
P-852F Marked Kerosene
- -----------------------------------------------------------------------------------------------------
P-853F Middle Dist.
- -----------------------------------------------------------------------------------------------------
P-854F Middle Dist.
- -----------------------------------------------------------------------------------------------------
P-855F Middle Dist.
- -----------------------------------------------------------------------------------------------------
P-856F Middle Dist.
- -----------------------------------------------------------------------------------------------------
P-857F Middle Dist.
- -----------------------------------------------------------------------------------------------------
P-858F Dirty Slops
- -----------------------------------------------------------------------------------------------------
P-859F Fire Water
- -----------------------------------------------------------------------------------------------------
P-862F Derv
- -----------------------------------------------------------------------------------------------------
P-863F Derv
- -----------------------------------------------------------------------------------------------------
All tubing and surface Contract required with PIP
equipment on cav 47
- -----------------------------------------------------------------------------------------------------
All tubing and surface Contract required with PIP
equipment on cav 48.
- -----------------------------------------------------------------------------------------------------
All tubing and surface Contract required with PIP
equipment on cav 49.
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
53 Leased to British Gas Contract required for access &
operation.
- -----------------------------------------------------------------------------------------------------
89 Leased to British Gas Contract required for access &
operation.
- -----------------------------------------------------------------------------------------------------
90 Leased to British Gas Contract required for access &
operation.
- -----------------------------------------------------------------------------------------------------
132 Leased to British Gas Contract required for access &
operation.
- -----------------------------------------------------------------------------------------------------
All water abstraction and brine Contract required for access &
winning equipment including operation by others, or for HICI
associated buildings. to operate on other's behalf.
Requires contract for water supply
and brine disposal.
- -----------------------------------------------------------------------------------------------------
That part of the reservoirs Will require contract.
owned by PIP
- -----------------------------------------------------------------------------------------------------
Brine main from reservoirs 1 & Owned by PIP. Will need contract
2 to cavities for use.
- -----------------------------------------------------------------------------------------------------
3 LSAR
- -----------------------------------------------------------------------------------------------------
4 LSAR
- -----------------------------------------------------------------------------------------------------
All pipelines listed on the System 36 is owned by Chlor Chem:
attached table maintenance contract required.
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 298
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------
<S> <C>
All pipeline supports in link The HSFO system used by Aromatics
corridors owned by ETOL includes plant within PIP's land
which is owned and operated by
PIP. A separate agreement will be
needed. One of the site main
drains runs beneath PIP land.
- -----------------------------------------------------------------------------------------------------
Railway to road/rail loading
- -----------------------------------------------------------------------------------------------------
</TABLE>
The Flowmetering Workshop which is owned by SGS (adjacent to the Paraxylene
plant) and all material items of obsolete or decommissioned assets or plant (to
include, without limitation, Olefins 5 and Butadiene 2) shall be excluded.
Page 299
<PAGE>
EXCLUDED LINKLINES
NB: The following list of excluded assets in this Schedule is not necessarily
complete.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Syst Conveyed Owning Plant/Area - Site - Plant/Area - Site - GEP SRP Budget RME RME's
em Product Business Start of System Start of End of System End of Operating Owner nominee
No. System System Mgr
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36 Brine Chlor Brine reservoirs North Bain Works Wilton Chatha C Chatha C Chatha Tyrie J Cruickshank
Chem Tees S S C S C I D
- -----------------------------------------------------------------------------------------------------------------------------------
63 Crude Oil PIP Phillips Seal Crude Storage North Tideswell Walgate M J H J C Cruickshank
Petroleum Seal Sands Tanks Tees S J A Smith Tyrie I D
Sands
- -----------------------------------------------------------------------------------------------------------------------------------
64 Brine PIP Brine Reservoir Brinefiel Brinefields Cavities Chatha C Chatha C M J H J C Cruickshank
ds (Cavities) S S Smith Tyrie I D
- -----------------------------------------------------------------------------------------------------------------------------------
65 Contaminat PIP Brine Reservoir Brinefiel Brinefields Cavities Chatha C Chatha C M J H J C Cruickshank
ed Brine ds (Cavities) S S Smith Tyrie I D
- -----------------------------------------------------------------------------------------------------------------------------------
72 Derv PIP COU Site Tank North Road/Rail Tank Road/Rail Tideswell Walgate M J H J C Cruickshank
Farm Tees Farm S J A Smith Tyrie I D
- -----------------------------------------------------------------------------------------------------------------------------------
73 Gas Oil PIP COU Site Tank North Road/Rail Tank Road/Rail Tideswell Walgate M J H J C Cruickshank
Farm Tees Farm S J A Smith Tyrie I D
- -----------------------------------------------------------------------------------------------------------------------------------
74 Kerosene PIP No 2 Pump Bay North Road Rail Road/Rail Tideswell Walgate M J H J C Cruickshank
Tees Filling S J A Smith Tyrie I D
- -----------------------------------------------------------------------------------------------------------------------------------
75 Crude Oil PIP COU Site Tank North Brinefields Cavities Tideswell Walgate M J H J C Cruickshank
Farm Tees Cavities S J A Smith Tyrie I D
- -----------------------------------------------------------------------------------------------------------------------------------
87 Redundant PIP Crude Unit, North Cavity 56 Cavities Tideswell Walgate M J H J C Cruickshank
(was Crude Spine Road Tees Brinefields S J A Smith Tyrie I D
Oil)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 300
<PAGE>
EXCLUDED NORTH TEES VEINLINES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
System Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP Budget RME RME's
No. Product Business Start of End of Operating Owner nominee
System System Mgr
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SD952 170 psig PIP Tideswell S Walgate A M J H Tyrie J C Smith D J
Steam J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
SD958 PIP Treated PIP Tideswell S Walgate A M J H Tyrie J C Smith D J
Water J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
SD972 150 psig PIP Tideswell S Walgate A M J H Tyrie J C Smith D J
Steam J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V874 Kerosene PIP 82 Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V875 Kerosene PIP 00083,84 Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V876 Kerosene PIP 85 Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V878 Crude Oil PIP Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V879 Crude Oil PIP 00108,10 Tideswell S Walgate A M J H J C Tyrie Smith D J
9,111 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V880 Crude Oil PIP Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V881 Crude Oil PIP 00129,130 Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V882 Crude Oil PIP 00123,124 Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 301
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
System Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP Budget RME RME's
No. Product Business Start of End of Operating Owner nominee
System System Mgr
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
V883 Crude Oil PIP 00198,19 Tideswell S Walgate A M J H J C Tyrie Smith D J
9,200 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V897 Naphtha PIP 57 Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V898 Naphtha PIP 00058.59. Tideswell S Walgate A M J H J C Tyrie Smith D J
60 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V899 Crude Oil PIP Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V900 Crude Oil PIP Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V901 Fuel Oil PIP 00157,15 Tideswell S Walgate A M J H J C Tyrie Smith D J
8,159 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V902 Fuel Oil PIP Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V903 Fuel Oil PIP 00161,16 Tideswell S Walgate A M J H J C Tyrie Smith D J
2 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V904 Fuel Oil PIP 00163,16 Tideswell S Walgate A M J H J C Tyrie Smith D J
4,165,166 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V907 Fuel Oil PIP 00183,18 Tideswell S Walgate A M J H J C Tyrie Smith D J
4 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V908 Fuel Oil PIP Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V910 Fuel Oil PIP 00173,17 Tideswell S Walgate A M J H J C Tyrie Smith D J
4,175,176 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 302
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
System Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP Budget RME RME's
No. Product Business Start of End of Operating Owner nominee
System System Mgr
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
V911 Gas Oil PIP 00001,2,3, Tideswell S Walgate A M J H J C Tyrie Smith D J
4,5,6,7,8, J Smith
9,10,0020
6,207,208
,209,0014
4
- -----------------------------------------------------------------------------------------------------------------------------------
V912 Gas Oil PIP 00150,15 Tideswell S Walgate A M J H J C Tyrie Smith D J
1,152 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V913 Gas Oil PIP 00177,17 Tideswell S Walgate A M J H J C Tyrie Smith D J
8,179 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V914 Gas Oil PIP 215 Tideswell S Walgate A M J H J C Tyrie Smith D J
J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
V925 Crude Oil PIP 00141,14 Tideswell S Walgate A M J H J C Tyrie Smith D J
2 J Smith
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 303
<PAGE>
SCHEDULE 13
TAX COVENANT
Interpretation
1.1. Persons shall be treated as connected for the purposes of this Schedule if
they are connected within the meaning of section 839 of the Taxes Act.
1.2 The headings in this Schedule shall not affect its interpretation.
1.3 The provisions of paragraphs 3, 4, 9 and 11 of this Schedule shall apply
to all claims made by the Purchaser under the Tax Warranties contained in
paragraphs 19 to 22 (inclusive) of Schedule 9 as they apply to all claims made
under this Schedule.
Covenant to Pay
2.1 ICI hereby covenants for itself and otherwise as agent for the Share
Selling Companies with the Purchaser to pay to the Purchaser for itself where it
is the Designated Purchaser and otherwise as agent for the Designated Purchaser,
by way (to the extent that it is possible to do so) of adjustment to the Final
Consideration for the sale of the Sale Shares, an amount equal to any Tax
Liability arising in respect of, by reference to or in consequence of:
(a) any Income, Profits or Gains earned, accrued or received on or before
Closing or in respect of a period ending on or before Closing;
(b) any Event which occurred on or before Closing or was deemed to occur on or
before Closing for the purposes of any Tax; and
(c) ICI's US Business and ICI's US Assets, (to the extent that it is not
covered by (a) or (b) above) for any taxable year or period that ends on or
before the Closing Date and with respect to a Straddle Period, the portion
of such Straddle Period deemed to end on and including the Closing Date;
but excluding any Tax Liability, other than the Tax Liability described in
paragraphs 2.2(b) and (c) below, arising in TGL in respect of the transfer of
subsidiaries of TGL in respect of the transfer of subsidiaries of TGL out of TGL
to UK Holdings as described in paragraphs 50 and 51 of Part 1 of Schedule 4;
together with any costs and expenses referred to in paragraph 5 and so that, in
the case of any Tax Liability arising in respect of a Controlled Joint Venture,
the Purchaser shall be paid that proportion of the Tax Liability and
Page 304
<PAGE>
related costs and expenses of that Controlled Joint Venture as corresponds to
the JV Percentage and in relation to the Purchaser's costs and expenses those
costs and expenses referred to in paragraph 5.
2.2 ICI hereby covenants for itself and otherwise as agent for the Share
Selling Companies with the Purchaser to pay to the Purchaser for itself where it
is the Designated Purchaser and otherwise as agent for the Designated Purchaser,
by way (to the extent that it is possible to do so) of adjustment to the Final
Consideration for the sale of the Sale Shares, an amount equal to:
(a) any stamp duty payable on the transfer of the Sale Shares of TGL to HIC as
described in paragraph 11 of Part 1 of Schedule 4;
(b) any stamp duty arising in respect of the transfer of the Subsidiaries of
TGL out of TGL as described in paragraph 50 of Part 1 of Schedule 4; and
(c) 50 per cent. of the liability to corporation tax on chargeable gains
arising in TGL in respect of the transfer of the Subsidiaries of TGL out of
TGL as described in paragraph 50 of Part 1 of Schedule 4,
together with any costs and expenses referred to in paragraph 5.
2.3 For the purposes of paragraph 2.1(c) above, where it is necessary to
apportion any Tax Liability relating to any Straddle Period, such liability
shall be apportioned between the period deemed to end at the close of the
Closing Date and the period deemed to begin at the beginning of the day
following the Closing Date on the basis of an interim closing of the books,
except that (i) exemptions allowances or deductions that are calculated on a
time basis, such as the deductions for depreciation, shall be apportioned on a
time basis and (ii) Taxes (such as real property Taxes) imposed on a periodic
basis shall be allocated on a daily basis.
2.4 For the purposes of this Schedule, other than paragraph 2.1(c), any relief
or Tax Liability arising in respect of an accounting period falling partly
before and partly after the Closing Date shall be apportioned on a time basis,
unless some other basis is more reasonable
Exclusions
3. The covenant contained in paragraph 2 shall not cover any Tax Liability to
the extent that:
(a) provision or reserve in respect of that Tax Liability has been made or
appears in the Closing Statement; or
Page 305
<PAGE>
(b) the Tax Liability was paid or discharged before the Closing Date; or
(c) the Tax Liability arises in respect of Income, Profits or Gains actually
earned or received by or actually accrued to any Company before Closing but
which were not reflected in the Closing Statement; or
(d) the Tax Liability arises as a result of any change in rates of Tax made
after Closing with retrospective effect or of any change in law, regulation
or directive applicable in the corresponding country of residence of each
Company or the country where a branch is established, or the practice of
any Tax Authority in the corresponding country of residence of each
Company or the country where a branch is established, occurring after the
Closing Date with retrospective effect; or
(e) the Tax Liability would not have arisen but for a voluntary transaction,
action or omission carried out or effected by any of the Purchaser, the
Company or any other person connected with any of them other than ICI and
members of ICI's Group, at any time after the Closing Date, except that
this exclusion shall not apply where any such transaction, action or
omission:
(i) is carried out or effected by the Company concerned pursuant to a
legally binding commitment created on or before the Closing Date;
or
(ii) is carried out or effected by the Purchaser or the Company
concerned in the ordinary course of business of the Company as
carried on at the Closing Date; or
(f) the Tax Liability arises as a result of a change after the Closing Date in
any accounting policy or the length of any Accounting Period of the Company
other than a change required by law or in order to comply with generally
accepted accounting practice of the country in which the Company is
incorporated or resident for Tax purposes; or
(g) the Tax Liability comprises interest or penalties arising by virtue of an
underpayment of Tax prior to the Closing Date, insofar as such underpayment
would not have been an underpayment but for any Event or Events occurring
after the Closing Date; or
(h) such Tax Liability arises as a result of the Company failing to submit the
returns and computations required to be made by it or not submitting such
returns and computations within the appropriate Time Limits or submitting
such returns and computations otherwise than on
Page 306
<PAGE>
a proper basis, in each case after the Closing Date and otherwise than as a
result of any default or failure of ICI in carrying out, or in failing to
carry out, ICI's obligations under clause 14 of the Agreement; or
(i) the Tax Liability is increased as a result of the failure of the Purchaser
to comply with its obligations contained in paragraph 9 hereof or clauses
14.5 and 14.6 of the Agreement; or
(j) any relief other than a Purchaser's Relief is available, or is for no
consideration made available by ICI, to the Company to set against or
otherwise mitigate the Tax Liability (including but not limited to any such
relief available under any of sections 393, 393A, 402 to 413, or section
240 of the Taxes Act or section 102 of the Finance Act 1989); or
(k) the Tax Liability would not have arisen but for:
(i) the making of a voluntary claim, election, surrender or
disclaimer, or the giving of a notice or consent under the
provisions of any enactment or regulation relating to Tax, in
each case after the Closing Date and by the Purchaser, the
Company or any person connected with any of them other than ICI
and members of ICI's Group and otherwise than at the direction of
ICI pursuant to clause 14 of the Agreement; or
(ii) the failure or omission on the part of the Company otherwise than
at the direction of ICI pursuant to clause 14 of the Agreement to
make any valid claim, election, surrender or disclaimer, or to
give any such notice or consent as ICI may require in respect of
periods or matters for which ICI has conduct under clause 14 of
the Agreement; or
(l) recovery is made in respect of the Tax Liability pursuant to any Warranty;
or
(m) the Tax Liability would not have arisen but for the winding up of, or the
cessation of any trade or business by the Company after the Closing Date,
or any change in the nature or conduct of such trade or business after the
Closing Date; or
(n) the Tax Liability arises in any company which becomes a Company as a result
of the transactions contemplated by Schedule 18 in respect of any
transactions or steps implemented in accordance with the restructuring
steps set out in Schedules 4 and 18 of the Agreement or the different or
substituting steps that may be agreed upon between the
Page 307
<PAGE>
parties where so provided in Schedule 4 or 18 (as the case may be) provided
that this exclusion shall not apply to any Tax arising as a result of (or
which would not have arisen but for) the implementation or carrying out of
any of the steps referred to in paragraph 3 of Schedule 18 and provided
further, that this exclusion shall not apply to a Tax Liability falling
within paragraph 2.2; or
(o) the Tax Liability is increased as a result of the wilful or negligent delay
or default of any Company after the Closing Date.
3.2 None of the Share Selling Companies as principal or ICI as agent shall have
a liability to the Purchaser for itself where it is the Designated Purchaser and
otherwise as agent for the Designated Purchaser under any part of this Agreement
in respect of any non-availability, inability to use, or loss or restriction of
any relief (failure of relief) where such failure of relief does not give rise
to a Tax Liability to which paragraph 2 applies.
Overprovisions
4.1 ICI may require the auditors for the time being of the Company to certify,
at its request and expense, the existence and amount of any overprovision for
Tax in the Closing Statement (excluding any provision for deferred Tax but
including receipts for group relief and advance corporation tax surrenders) (an
Overprovision) and the Purchaser shall provide, or procure that the Company
provides, any information or assistance required for the purpose of production
by the auditors of a certificate to that effect.
4.2 Subject to paragraph 4.4 below:
(a) any Overprovision shall first be set against any payment then due from ICI
(whether for itself or as an agent for the Share Selling Companies) under
any Tax Covenant Claim;
(b) to the extent there is an excess, a refund shall be made to ICI (as agent
for the Share Selling Companies) of any previous payment or payments made
by ICI (whether for itself or as an agent for the Share Selling Companies)
under any Tax Covenant Claim (and not previously refunded pursuant to
another provisions of this Agreement or this Schedule) up to the amount of
the excess; and
(c) to the extent that the excess referred to in sub-paragraph (b) is not
exhausted under that sub-paragraph, the remainder of that excess shall be
carried forward and set against any future payment or payments which become
due from ICI (whether for itself or as an agent for the Share Selling
Companies) under any Tax Covenant Claim.
Page 308
<PAGE>
4.3 Either ICI or the Purchaser may, at its expense, require any certificate
produced in accordance with paragraph 4.1 above to be reviewed by the auditors
for the time being of the Company in the event that there are relevant
circumstances or facts of which it was not aware, and which were not taken into
account, at the time when such certificate was produced, and to certify whether
the certificate remains correct or whether it should be amended.
4.4 If following a request under paragraph 4.1 the certificate is amended, the
revised amount of Overprovision shall be substituted for the purposes of
paragraph 4.2, and any adjusting payment that is required shall be made
forthwith.
Costs and Expenses
5. The covenant contained in this Schedule shall extend to all reasonable
costs and expenses properly incurred by the Purchaser or the Company in
connection with a valid claim made under this Schedule, or in satisfying or
settling any Tax Liability in accordance with paragraph 9.
Double Recovery
6. The Purchaser shall not be entitled to recover any amount pursuant to this
Schedule in respect of any claim to the extent that the Purchaser, any
Designated Purchaser or any Company has already recovered any amount in respect
of such claim under the Warranties or pursuant to any other agreement with ICI
or any company connected with ICI, or to the extent that recovery has already
been made under this Schedule in respect of the same subject matter. No Tax
relief, saving or benefit is to be taken into account more than once in reducing
a Purchaser's claim or in increasing or giving rise to a payment by the
Purchaser to the Vendor under this Agreement.
Tax Refunds
7.1 The Purchaser shall promptly notify ICI of any right to repayment or actual
repayment of Tax to which any Company is or becomes entitled or receives in
respect of an Event occurring or period (or part period) prior to the Closing
Date (including any repayment attributable to the surrender of group relief or
advance corporation tax in respect of a period ending on or before the Closing
Date whenever such surrender is effected) (a tax refund), where or to the extent
that such right or repayment was not a Purchaser's relief and is not a payment
or relief to which paragraph 11 or 12 below applies.
Page 309
<PAGE>
7.2 Any tax refund actually obtained (less any reasonable costs of obtaining it
but including any interest or repayment supplement net of Tax thereon) shall be
dealt with as follows:
(a) the amount of the tax refund shall be set against any payment then due from
ICI (whether for itself or as an agent for the Share Selling Companies)
under any Tax Covenant Claim; and
(b) to the extent that there is an excess, a payment shall promptly be made to
ICI (as agent for the Share Selling Companies) equal to the aggregate of
any previous payment or payments previously made by ICI (whether for itself
or as an agent for the Share Selling Companies) under any Tax Covenant
Claim (and not previously refunded pursuant to another provision of the
Agreement or this Schedule) up to the amount of the excess (any remaining
excess being carried forward to offset any further payment that may become
due from ICI (whether for itself or as an agent for the Share Selling
Companies) under any Tax Covenant Claim.
7.3 Notwithstanding anything to the contrary stated in this paragraph 7 or in
the Agreement, the Purchaser shall pay or cause to be paid to ICI by way of
adjustment to the Initial Consideration payable with respect to the Sale Shares
in TGL the refund of Tax which is due to TAI and which is attributable to
periods (or portions thereof) ending on or before the Closing Date (and which is
in an amount of approximately $8.0 million). The provisions of paragraph 7.2(a)
shall apply to this refund but, to the extent that there is an excess (after
setting the refund against payments due from ICI under the Tax Covenant), a
payment shall promptly be made to ICI of the excess.
Secondary Liabilities
8.1 The Purchaser hereby covenants for itself where it is the Designated
Purchaser or as agent for the Designated Purchaser with ICI for itself or as
agent for the Share Selling Companies to pay to ICI, by way of adjustment to the
Final Consideration for the sale of the Sale Shares, an amount equal to:
(a) any Tax for which ICI or any other member of the Retained Share Selling
Company Group falling within section 767A(2) of the Taxes Act becomes
liable by virtue of the operation of section 767A and 767B of the Taxes Act
in circumstances where the taxpayer company (as referred to in section
767A(1)) is any Company;
(b) any Tax for which ICI or any other member of the Retained Share Selling
Company Group falling within section 767AA(4) of the Taxes
Page 310
<PAGE>
Act becomes liable by virtue of the operation of section 767AA of the Taxes
Act in circumstances where the transferred company (as referred to in
section 767AA(1)(a)) is any Company; and
(c) any other Tax for which ICI or any other member of the Retained Share
Selling Company Group becomes liable as a result of a failure by the
Company, or any person connected with or associated in any way with the
Company after the Closing Date, to discharge it.
8.2 The covenant contained in paragraph 8.1 shall:
(a) extend to any costs reasonably incurred by ICI, or any member of the
Retained Share Selling Company Group in connection with such Tax or a claim
under paragraph 8.1;
(b) not apply to Tax to the extent that the Purchaser could claim payment in
respect of it under paragraph 2, except to the extent a payment has been
made pursuant to paragraph 2 and the Tax to which it relates was not paid
by the Company; and
(c) not apply to Tax which has been recovered under section 767B(2) of the
Taxes Act or any other relevant statutory provision (and ICI shall procure
that no such recovery is sought to the extent that payment is made
hereunder).
8.3 Paragraphs 9.1, 9.2 and 10 (conduct of disputes and due date for payment)
shall apply to the covenant contained in paragraph 8.1 as they apply to the
covenants contained in paragraph 2, replacing references to ICI by the Purchaser
(and vice versa) and making any other necessary modifications.
Notification of claims and conduct of disputes
9.1 If the Purchaser or any Company becomes aware of any Tax Claim which could
give rise solely to a Tax Covenant Claim, the Purchaser shall give notice to ICI
of that Tax Claim (including reasonably sufficient details of such Tax Claim,
the due date for any payment and the time limits for any appeal, and so far as
practicable the amount of the claim under this Schedule in respect thereof) as
soon as possible (and in any event not more than 10 days after the Purchaser or
the Company concerned becomes aware of such claim) and shall take (or procure
that the Company concerned shall take) such action as ICI may reasonably request
to avoid, dispute, resist, appeal, compromise or defend the Tax Claim and any
adjudication in respect thereof. ICI shall have the right (if it wishes) to
control any proceedings taken in connection with such action, and shall in any
event be kept fully informed of any actual or proposed developments (including
any meetings) and shall be
Page 311
<PAGE>
provided with copies of all correspondence and documentation relating to such
Tax Claim or action, and such other information, assistance and access to
records and personnel as it reasonably requires provided that the Purchaser
shall not be obliged to procure that the Company concerned takes any action
under this clause which involves contesting any Tax assessment before any court
or other appellate body (excluding the authority or body demanding the Tax in
question) unless ICI furnishes the Company concerned with the written opinion of
leading Tax counsel to the effect that an appeal against the Tax assessment in
question will, on a balance of probabilities, be won.
9.2 ICI shall reimburse to the Purchaser and the Company concerned the
reasonable costs and expenses properly incurred in connection with any such
action or proceedings as are referred to in paragraph 9.1 including but not
limited to the cost of the guarantees that the Companies or the Purchaser should
have to file before the relevant Tax Authority in the event that a suspension of
the Tax Claim is requested.
9.3 Subject to paragraph 9.4, the Purchaser shall procure that no Tax Claim,
action or issue in respect of which ICI could be required to make a payment
under this Schedule is settled or otherwise compromised without ICI's prior
written consent, such consent not to be unreasonably withheld, and the Purchaser
shall, and shall procure that the Company and its advisers shall, not submit any
correspondence or return or send any other document to any Tax Authority where
the Purchaser or any such person is aware or could reasonably be expected to be
aware that the effect of submitting such correspondence or return or sending
such document would or could be to put such Tax Authority on notice of any
matter which could give rise to, or could increase, a claim under this Schedule,
without first affording ICI a reasonable opportunity to comment thereon and
without taking account of such comments so far as it is reasonable to do so.
9.4 If ICI does not request the Purchaser to take any appropriate action
within 15 days of notice to ICI, the Purchaser shall be free to satisfy or
settle the relevant Tax Liability on such terms as it may reasonably think fit.
Due date of payment and interest
10.1 Subject to paragraph 5 and 10.2 ICI shall pay to the Purchaser any amount
payable under this Schedule on or before the date which is the later of the date
ten Business Days after demand is made therefor by the Purchaser and five
Business Days before the first date on which the Tax in question becomes
recoverable by the Tax Authority demanding the same,
Provided that
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(a) if the date on which the Tax can be recovered is deferred following
application to the relevant Tax Authority, the date for payment by ICI
shall be five Business Days before such later date when the amount of Tax
is finally and conclusively determined (and for this purpose, an amount of
Tax shall be deemed to be finally determined when, in respect of such
amount, an agreement under section 54 of the Taxes Management Act 1970 or
any legislative provision corresponding to that section is made or a
decision of a court or tribunal is given from which either no appeal lies
or in respect of which no appeal is made within the prescribed time
limit); and
(b) if a payment or payments to the relevant Tax Authority prior to the date
otherwise specified by this paragraph would avoid or minimise interest or
penalties, ICI may at its option pay the whole or part of the amount due
to the Purchaser on an earlier date or dates, and the Purchaser shall
procure that to the extent that it has received such amount the Tax in
question (or the appropriate part of it) is promptly paid to the relevant
Tax Authority.
ICI may, with the Purchaser's consent, not to be unreasonably withheld or
delayed, make a direct payment in respect of the Tax Liability in question to
the relevant Tax Authority (including through use of certificates of tax deposit
or the equivalent) and ICI's liability to the Purchaser shall be treated as
reduced or eliminated accordingly.
10.2 Where a claim under this Schedule relates to the use or set off of a
Purchaser's Relief, ICI shall pay to the Purchaser the amount due under this
Schedule in respect thereof on the later of the date which is five Business Days
before the first date on which Tax which would have been payable but for such
use or set off would have become recoverable by the Tax Authority demanding the
same, and ten Business Days after demand is made therefor by the Purchaser, such
demand to be accompanied by a copy of a certificate from the auditors of the
Purchaser or the Company concerned (obtained or procured to be obtained by and
at the expense of the Purchaser) that ICI has a liability of a stated amount in
respect of such claim and that Tax has, or will on a specified date, become
payable as aforesaid, and by reasonably sufficient evidence of such use or set
off and of such Tax Liability.
10.3 Any sum not paid by ICI on the due date for payment specified in paragraph
10.1 or 10.2 shall bear interest (which shall accrue from day to day after as
well as before any judgment for the same) at the Interest Rate from the due date
to and including the day of actual payment of such sum, provided that such
interest shall not accrue to the extent that ICI's liability under paragraph 2
or paragraph 5 extends to interest or penalties arising after
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the due date. Any interest due under this paragraph shall be paid forthwith on
the demand of the Purchaser.
Recovery from third parties
11.1 If any payment is made by ICI under this Schedule or the Tax Warranties in
respect of a Tax Liability and the Purchaser or the Company (or any person
connected with any of them other than any member of ICI's Retained Group) either
receives, or is entitled or may be entitled either immediately or at some future
date to recover or obtain, from any person (other than the Purchaser, the
Company or any such connected person) a payment or relief in respect of the Tax
Liability in question, then:
(a) the Purchaser shall notify ICI of that fact as soon as possible and if so
required by ICI shall take (or shall procure that the Company or other
person concerned shall take) at ICI's expense such action as ICI may
reasonably request to enforce such recovery or to obtain such payment or
relief (keeping ICI fully informed of the progress of any action taken and
providing it with copies of all relevant correspondence and
documentation); and
(b) if the Purchaser, the Company or other person concerned receives or
obtains a payment or relief in respect of the Tax Liability in question,
the Purchaser shall pay to ICI the amount received or the amount that the
Purchaser, the Company or other person concerned saves by virtue of the
payment or the relief (less any reasonable costs of recovering or
obtaining such payment or relief and any Tax suffered thereon) (the
Benefit) to the extent that the amount of the Benefit does not exceed the
aggregate payments previously made by ICI in respect of any Tax Covenant
Claims which have not previously been refunded pursuant to another
provision of this Agreement or this Schedule and except where any amount
so saved would otherwise have given rise to a claim under this Schedule
(in which event no such claim shall be made). Any amount of the Benefit
not so paid to ICI shall to the extent that it has not previously been
refunded pursuant to another provision of this Agreement or this Schedule
be carried forward and set off against any future Tax Covenant Claims. For
the avoidance of doubt, nothing in this paragraph shall require the
Purchaser to pay a Benefit to ICI if such Benefit has already reduced a
Claim.
11.2 Any payment required to be made by the Purchaser pursuant to paragraph
11.1 shall be made:
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(a) in a case where the Purchaser, the Company or other person concerned
receives a payment, within five Business Days of the receipt thereof; and
(b) in a case where the Purchaser, the Company or other person concerned
obtains a relief, within five Business Days of the date on which Tax would
have become recoverable by the appropriate Tax Authority but for the use
of such relief.
11.3 Any sum not paid by the Purchaser on the due date of payment specified in
paragraph 11.2 shall bear interest (which shall accrue from day to day after as
well as before any judgment for the same) at the Interest Rate from the due date
to and including the day of actual payment of such sum. Such interest shall be
paid on the demand of ICI.
Surrenders between the Retained Share selling company Group and the Company
12.1 Subject to the following provisions of this paragraph 12, and without
prejudice to the generality of clause 14 of the Agreement, the Purchaser shall
procure that each Company resident in the United Kingdom for Tax purposes shall,
in respect of any Accounting Period for United Kingdom corporation tax purposes
ended on or before the Closing Date (which for the purposes of this paragraph 12
shall include any overlapping period pursuant to section 403A of the Taxes Act),
make, give or enter into such claims, elections, surrenders, notices or consents
(whether unconditional or conditional, whether or not forming part of any other
return or Tax Document, whether provisional or final, and including amendments
to or withdrawals of earlier claims, elections, surrenders, notices or consents)
as ICI shall direct in writing in connection with the surrender (in accordance
with Chapter IV of Part X of the Taxes Act or section 240 of that Act, as
appropriate) of:
(a) losses or other amounts eligible for group relief (within the meaning of
that Chapter); and/or
(b) the benefit of any amount of advance corporation tax,
by or to any member of the Retained Share Selling Company Group to or by (as the
case may be) any of the Companies. Where surrenders are made by any of the
Companies to any member of the Retained Share Selling Company Group, then ICI
shall procure that a payment shall be made by the member of the Retained Share
Selling Company Group to the Company making the surrender in an amount equal to
the amount of Tax that the member of the Retained Share Selling Company Group
actually saves (ignoring for this purpose the availability of any credit for
advance corporation tax) as a result
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of the surrender. Payment shall be made to the Company making the surrender on
the date on which the Tax which the member of the Retained Share Selling Company
Group would have had to pay were it not for the surrender, would have been due.
No payment shall be made in respect of any such surrender to any of the
Companies by any member of the Retained Share Selling Company Group except to
the extent set out in the following provisions of this paragraph 12.
12.2 If, in respect of any Accounting Period of the Company ended on or before
Closing the Company has paid corporation tax (otherwise than in circumstances
where a claim has been or could be made under paragraph 2 of this Schedule in
respect thereof), and a surrender effected pursuant to paragraph 12.1 has the
effect of causing a repayment of some or all of that corporation tax (with or
without any repayment supplement within the meaning of section 825 of the Taxes
Act or interest under section 826 of that Act) the Purchaser shall procure that,
in respect of any such surrender as is made to the relevant Company pursuant to
paragraph 12.1, a payment for group relief (within the meaning of section 402(6)
of the Taxes Act) or a payment within section 240(8) of the Taxes Act (as the
case may be) shall be made to the member of the Retained Share Selling Company
Group making the surrender.
12.3 The amount of any such payment as is referred to in paragraph 12.2 shall
be equal to the amount of corporation tax so repaid (together with any repayment
supplement or interest net of Tax thereon).
12.4 Any payment under paragraph 12.3 shall be made on the date two Business
Days after the date on which such repayment is received, or would be received
but for some event or action within paragraph 12.5 and interest shall be charged
on any amount not paid on the due date as provided in paragraph 11.3.
12.5 In ascertaining the amount of any payment under paragraph 12.3, and the
time of such payment, no account shall be taken of any event or action occurring
after the Closing Date (including any loss arising in a period commencing after
the Closing Date or in respect of the portion of any Straddle Period commencing
after the Closing Date) which has or could have the effect of deferring,
reducing or eliminating any repayment to the Company (or the receipt of any
repayment supplement or interest), and in such a case paragraph 12.2 shall apply
as if such event or action had not occurred.
12.6 Where in respect of a relevant accounting period (within the meaning of
section 102 of the Finance Act 1989) ended on or before the Closing Date
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section 102(4) applies in relation to a surrendering company in the Retained
Share Selling Company Group and a recipient company which is a Company, then to
the extent that an amount corresponding to Tax which the recipient company is
deemed to have paid by virtue of section 102(4)(a) has previously been paid by
the recipient company (otherwise than in circumstances where a claim has been or
could be made under paragraph 2 of this Schedule in respect thereof) (the amount
saved), the Purchaser shall procure that a payment for a transferred tax refund
(within the meaning of section 102(7)) shall be made to the relevant member of
the Retained Share Selling Company Group of an amount equal to the amount saved.
12.7 Any payment for a transferred tax refund pursuant to paragraph 12.6 above
shall be made on the later of the day following the day on which the amount
saved is repaid by the Inland Revenue (or if such date is not a Business Day the
next following Business Day) and five Business Days after demand is made
therefor by the relevant member of the Retained Share Selling Company Group and
interest shall be charged on any amount not paid on the due date as provided in
paragraph 11.3.
12.8 If a payment is made under paragraph 12.2 or 12.6 and the surrender to
which it relates is subsequently determined to have been invalid or ineffective
to any extent or excessive, then the payment so made (or so much of it as
relates to such part of the surrender found to be invalid or ineffective or
excessive) shall be refunded as soon as practicable thereafter, together with
interest from the date of payment until the date of the refund at the Interest
Rate.
Illegality
13. If at any time any provision of this Schedule is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
neither the legality, validity or enforceability of the remaining provisions
hereof nor the legality, validity or enforceability of such provision under the
law of any other jurisdiction shall in any way be affected or impaired thereby.
Assignment
14. The provisions of clause 26 of the Agreement shall apply to this Schedule
as well.
Withholding and Grossing up
15.1 All the sums payable by ICI under this Schedule shall be paid free and
clear of all deductions or withholdings unless the deduction or withholding is
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required by law, in which event (and except in respect of interest) ICI shall
pay such additional amount as shall be required to ensure that the net amount
received by the Purchaser (for itself or as agent for the relevant Designated
Purchaser) under this Schedule shall equal the full amount which would have been
received by it had no such deduction or withholding been required to be made.
15.1 If a payment under this Agreement for breach of a Warranty or a payment
under this Schedule is subject to Tax in the hands of the Purchaser or a
Designated Purchaser (except in the case of interest payable under this
Agreement) ICI for itself (where it is the Share Selling Company) and otherwise
as agent for the Selling Company shall within 7 days of notice in writing being
served on it by the Purchaser pay to the Purchaser (for itself as agent for the
relevant Designated Purchaser) such amount as will ensure that the net amount
received in respect of any payment due from ICI under this Agreement after the
payment of such Tax (and after taking account of any reliefs available to the
Purchaser or the Company in respect of the matter giving rise to the payment) is
the same as it would have been were the payment not so subject to Tax in the
hands of the Purchaser or the Designated Purchaser and were the Purchaser or the
Company not so entitled to any relief in respect of the matter giving rise to
the payment.
15.3 To the extent that the Purchaser or the Designated Purchaser subsequently
receives any Tax credit, allowance, repayment or relief (the Purchaser or the
Designated Purchaser having used all reasonable endeavours to obtain such Tax
credit, allowance, repayment or relief) as a result of ICI paying to the
Purchaser an amount under paragraphs 15.1, or 15.2 the Purchaser (for itself or
as agent for the relevant Designated Purchaser) shall, as and when the Purchaser
or Designated Purchaser obtains the Tax repayment or a reduction in its actual
Tax payments as a result of such Tax credit, allowance or relief pay to ICI for
itself (where it is the Share Selling Company) and otherwise as agent of the
Selling Company so much of that Tax repayment or Tax saving which the Purchaser
or the Designated Purchaser has received as does not exceed the sum payable
under paragraph 15.1 or 15.2 provided that nothing in this paragraph 15 shall
require the Purchaser or any member of the Purchaser's Group to disclose any of
its confidential Tax affairs.
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SCHEDULE 14
ENVIRONMENTAL INDEMNITIES
PART A
Interpretation
1.1 In this Schedule 14:
Criteria means:
(i) the nature of the legal obligation which has been or which may be breached
or the legal liability which has or may have arisen or may arise;
(ii) the legal powers and remedies available to the Governmental Authority or
third party to bring Environmental Proceedings (including any limitations
on those powers);
(iii) the likelihood of Environmental Proceedings being commenced and
successfully completed by a Governmental Authority or third party acting
under Environmental Law in the jurisdiction in question having regard to
applicable enforcement practice therein;
(iv) the likelihood of a notice, order or requirement to carry out Remedial
Action falling on any Protected Person, JV Business, ICI and/or any member
of ICI's Group as the case may be;
(v) in relation to soil or groundwater contamination, the nature and extent of
the impact or risk of impact to the Environment; and
(vi) the costs and benefits of carrying out the proposed Remedial Action (where
applicable) (including the consequences of not carrying out the proposed
Remedial Action at that time);
Closed Site Liabilities means any Losses arising from soil or groundwater
contamination only under Future Environmental Law in respect of any property
owned, or occupied by any of the Companies or the Tioxide Business, the Relevant
Petrochemicals Business or the Polyurethanes Business at Closing at which
business operations, industrial processes or other uses carried on at any time
prior to Closing have as at Closing permanently ceased including for the
avoidance of doubt, Burnie (Closed Sites);
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Conduct Party means the party having the conduct of Environmental Proceedings,
Remedial Action and any other matter the subject of a notice given pursuant to
paragraph 9.1 only;
Disclosed Pre-Closing Compliance Issues means Pre-Closing Compliance Issues
fairly disclosed in the Data Rooms or otherwise disclosed by and in accordance
with the Disclosure Letters in either case pursuant to this Agreement (provided
that, for the purposes of this definition, any such disclosure against any
particular warranty shall be deemed to be disclosure for the purposes of
determining whether a Pre-Closing Compliance Issue is a Disclosed Pre-Closing
Compliance Issue).
Disposal to Off-Site Landfills means the presence of Hazardous Materials or
Waste prior to Closing in, at or under and (if present prior to Closing) at any
time before or thereafter, migrating, escaping, leaking or emanating from:
(i) any off-site facility or property which prior to Closing but not thereafter
was used in whole or in part as a landfill site for the disposal of
Hazardous Materials or Waste from any Relevant Property or Relevant Shared
Property or any other site at any time occupied, owned or used by the
Relevant Petrochemicals Business, the Tioxide Business or the Polyurethanes
Business (including such businesses as they may have been carried on at any
time prior to Closing and any predecessor of any such business) (Closed
Off-Site Landfills); and
(ii) any off-site facility or property which prior to Closing and thereafter was
used in whole or in part as a landfill site for the disposal of Hazardous
Materials or Waste from any Relevant Property or Relevant Shared Property
or any other site at any time occupied, owned or used by the Relevant
Petrochemicals Business, the Tioxide Business or the Polyurethanes Business
(including such businesses as they may have been carried on at any time
prior to Closing and any predecessor of any such business) provided that
this sub-paragraph (ii) applies in relation to such use prior to Closing
only (On-going Disposal Sites);
Emergency means in respect of Pre-Closing Soil or Groundwater Contamination
only, a fire, explosion, act of God or flood or other sudden and catastrophic
event where such an event would result in significant Environmental Losses or
would significantly increase Environmental Losses;
Environment means all or any of the following media, namely air (excluding media
within buildings or other natural or man made structures above or below ground),
water or land and any living organisms or systems supported by those media;
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Environmental Law means any applicable statutes, subordinate legislation and
other national, federal, state and local laws (including common law and any
contractual obligations), rules, regulations, orders, ordinances, judgments or
injunctions and codes of practice, guidance notes and judicial and
administrative interpretation of each of the foregoing each as is valid and
enforceable on the relevant Protected Person or JV Business at Closing in the
relevant jurisdiction (or, in relation to contractual obligations or
liabilities, after Closing as a direct consequence of the completion of the
transactions provided for in this Agreement) and the New Contaminated Land Power
each as relate to Pre-Closing Environmental Conditions. For the avoidance of
doubt, any enactment or statutory provision being an Environmental Law is as it
may have been, or may from time to time be, amended, modified, consolidated or
re-enacted (with or without modification) and includes all instruments or orders
made under such enactment, but only insofar as such amendment, consolidation or
re-enactment of such legislation does not increase the liability of ICI under
this Schedule 14;
Environmental Losses means all fines, penalties, damages, losses, liabilities,
costs and expenses (including reasonable professional and consultants' fees)
(Losses) incurred under or to the extent necessary to comply with Environmental
Proceedings or a settlement or agreement as referred to in paragraph 4.2(ii) or
an emergency as provided for in paragraph 10(ii) (but excluding indirect,
consequential or incidental Losses (including any loss of anticipated profits or
revenue and costs attributable to the loss of use or business interruption or
disruption (Indirect Losses) provided that Losses shall not be Indirect Losses
merely because they arise or are imposed under contract law);
Environmental Permit means any Permit under Environmental Law;
Environmental Proceedings means any criminal, civil, judicial, regulatory or
administrative proceeding, suit or claim of any Governmental Authority or third
party or Final notice, order or requirement of any Governmental Authority or
third party in each case under Environmental Law (or Future Environmental Law in
the case of Protected Matters, North Tees Soil or Groundwater Contamination and
the Post-Closing Counter-Indemnity only);
Final means, in relation to a notice, order or requirement that it is binding
and is either not capable of appeal, review or challenge, or there is no
reasonable prospect of a successful appeal, review or challenge;
Former Sites means any property not owned, occupied or used in connection with
any of the Companies or the Polyurethanes Business, Tioxide Business or Relevant
Petrochemicals Business at Closing, but formerly so owned,
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occupied or used (including in connection with such businesses as they may have
been carried on at any time prior to Closing and any predecessor of any such
business);
Former Sites Liabilities means any Losses under Future Environmental Law arising
from the occupation, ownership or use by any of the Companies and/or any of the
Relevant Petrochemicals Business, Tioxide Business or the Polyurethanes Business
(including in connection with such businesses as they may have been carried on
at any time prior to Closing and any predecessor of any such business) of any
Former Sites;
Future Environmental Law means all applicable statutes, subordinate legislation
and other national, federal, state and local laws (including the common law and
any contractual obligations), rules, regulations, orders, ordinances, judgments
or injunctions and codes of practice, guidance notes and judicial and
administrative interpretation of each of the foregoing each as is valid and
enforceable on the relevant Protected Person, ICI and/or any member of ICI's
Group as the case may be from time to time and each as relate to Protected
Matters, North Tees Soil and Groundwater Contamination or the Post-Closing
Counter-Indemnity;
Governmental Authority means any governmental agency, regulatory body, court of
law or tribunal with jurisdiction under Environmental Law or, in the case of
Protected Matters, North Tees Soil and Groundwater Contamination or the Post-
Closing Counter-Indemnity only and in relation to paragraphs 8.1(ii) and 11(a),
Future Environmental Law;
Hazardous Materials means a substance which alone or in combination with other
things is or are capable of causing significant harm or damage to property or to
man or to the Environment or which are specified to be hazardous under
Environmental Law or Future Environmental Law, as applicable in the relevant
jurisdiction;
High Likelihood has the meaning given in paragraph 8.1(iv);
Investigative Works means inspections, investigations, assessments, audits,
sampling or monitoring;
JV Business means any company or business in respect of which a Protected Person
is subject to the terms of a Joint Venture Agreement;
JV Environmental Losses means (i) only that proportion of Environmental Losses
in respect of which the relevant Protected Person is under a contractual
obligation to pay to any JV Business in respect of that Protected Person's Joint
Venture Interest and (ii) Environmental Losses for which the
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relevant Protected Person is directly liable under Environmental Law or Future
Environmental Law (as applicable);
Leak Repair Programme means the programme identified in Schedule 1 to the agreed
form leak repair services agreement between ICI and the Purchaser for the
carrying out of certain drainage and pipe repairs in respect of the North Tees
Site (the Leak Repair Services Agreement);
New Contaminated Land Powers means the powers introduced by Section 57 and
paragraphs 161 and 162 of Schedule 22 of the Environment Act 1995 and the Draft
Statutory Guidance on Contaminated Land (dated October 1998) (the Draft
Guidance) or the first set of guidance and regulations adopted under those
powers but only to the extent that the latter are enacted in a form no more
onerous to ICI in relation to the matters to which this Schedule 14 applies than
as set out in the Draft Guidance;
North Tees Site means the property edged in red on Agreed Plan 3, Agreed Plan 6
and Agreed Plan OM2;
North Tees Soil or Groundwater Contamination means in relation only to soil or
groundwater contamination at or from the North Tees Site any soil or groundwater
contamination existing at or migrating, leaching or escaping (a) at or prior to
Closing (b) arising after Closing from any structure or item to which the Leak
Repair Programme applies, on or before completion of the Leak Repair Programme
in relation to that structure or item (by certification or as otherwise provided
for in the Leak Repair Services Agreement) as the case may be or, if sooner, the
third anniversary of Closing; including any subsequent migration, leaking or
escape of any such contamination, other than any soil or groundwater
contamination attributable in whole or in part to, arising from or increased by
the negligent acts or omissions after Closing of the relevant Protected Person
(its employees, contractors, agents, sub-tenants or licensees) or third parties
(except, in the case of third parties only, to the extent such acts or omissions
occur off site and are attributable to Pre-Closing Soil or Groundwater
Contamination the presence of which was caused by any acts or omissions of ICI
or a member of ICI's Group and not (for the avoidance of doubt) any third party
("Off Site Third Party Negligence")) or any spillages after Closing by the
relevant Protected Person (its employees, contractors, agents, sub-tenants or
licensees) or third parties (except Off Site Third Party Negligence);
Off Site Third Party Negligence has the meaning given in the definition of North
Tees Soil or Groundwater Contamination;
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Permit means any authorisation, licence, permission, consent or approval issued
by a Governmental Authority acting lawfully;
Post-Closing Counter Indemnity means the indemnity contained in paragraph 14
below;
Post-Closing Environmental Conditions means:
(a) any soil or groundwater contamination first in, at, on or under any
Relevant Property or Relevant Shared Property (not being North Tees Soil or
Groundwater Contamination) after Closing; or
(b) the exposure of employees, contractors, agents or licensees to any
Hazardous Materials first in existence at, on, over or under any Relevant
Property or Relevant Shared Property after Closing; or
(c) any post-Closing breach of or non-compliance with Future Environmental Law
or Environmental Permits except to the extent resulting from Pre-Closing
Environmental Conditions,
which is in any case increased, exacerbated, enhanced, caused or permitted as a
result of circumstances occurring after Closing as the result of any act or
omission of the relevant Protected Person or JV Business (its employees,
contractors, agents, sub-tenants or licensees of the same); or
(d) any post-Closing migrating, leaching or escaping of any Pre-Closing Soil or
Groundwater Contamination to the extent attributable in whole or in part
to, arising from or increased by the negligent acts or omissions or any
spillages after Closing of or by the relevant Protected Person or JV
Business (its employees, contractors, agents, sub-tenants or licensees) or
third parties (except Off Site Third Party Negligence) or the carrying out
or failure to carry out routine maintenance by the relevant Protected
Person or JV Business (its employees, contractors, agents, sub-tenants or
licensees) or third parties (except Off Site Third Party Negligence);
Pre-Closing Environmental Conditions means the following:
(i) in relation to the Relevant Properties or Relevant Shared Properties soil
or groundwater contamination existing at or migrating, leaching or escaping
from any such Relevant Property or Relevant Shared Property at or prior to
Closing including any subsequent migration leaking or escape of any such
pre-Closing contamination (Pre-Closing Soil or Groundwater Contamination);
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(ii) any pre-Closing breach of or non-compliance with Environmental Law or
Environmental Permits (excluding, for the avoidance of doubt, any Pre-
Closing Soil or Groundwater Contamination or Pre-Closing Health and Safety
Issues) by any of the Companies or the JV Businesses or, in relation to
the Tioxide Business, the Polyurethanes Business or the Relevant
Petrochemicals Business, by ICI or any other member of ICI's Group within
the period of three years prior to Closing (except Disclosed Pre-Closing
Compliance Issues) (Pre-Closing Compliance Issues);
(iii) the exposure of employees, contractors, agents or licensees to any
Hazardous Materials prior to Closing as the result of their work for the
Tioxide Business, the Relevant Petrochemicals Business or the
Polyurethanes Business or their presence on any property at any time used,
occupied or owned in connection with any of those businesses including in
connection with such businesses as they may have been carried on at any
time prior to Closing and any predecessor of any such business (Pre-
Closing Health and Safety Issues);
excluding in each case any Post-Closing Environmental Conditions;
Plant Closure Sites means those sites listed in Part B of this Schedule 14;
Protected Matters means the following:
(i) the matters referred to in Part C of this Schedule 14;
(ii) Former Sites Liabilities;
(iii) Closed Sites Liabilities;
(iv) Disposal to Off-Site Landfills;
or any of them;
Protected Person means the Companies and any member of the Purchaser's Group
from time to time excluding, for the avoidance of doubt, any JV Business;
Reasonable and Prudent Operator means a person exercising that degree of skill,
diligence, prudence and foresight which would reasonably and ordinarily be
expected from a skilled and experienced operator in substantial compliance with
all applicable laws engaged in the same type of undertaking in the same locality
and under the same or similar circumstances and conditions, and any reference to
the standard of a Reasonable and Prudent
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Operator herein shall be a reference to such degree of skill, diligence,
prudence and foresight as aforesaid;
Relevant Property means Properties listed in Part D(i) of this Schedule 14;
Relevant Shared Property means those Shared Properties listed in Part D (ii) of
this Schedule 14;
Remedial Action means works for preventing, removing, remedying, cleaning-up,
containing or ameliorating soil or groundwater contamination including
Investigative Works and in relation to any Pre-Closing Compliance Issue means
works to remedy or recover from such non-compliance (a) which works are required
by a Governmental Authority acting lawfully under Environmental Law to have been
carried out at or prior to Closing only or, (b) which non-compliances were prior
to Closing an existing breach of Environmental Law;
Significant Environmental Impact means any Pre-Closing Soil or Groundwater
Contamination only (i) which represents a significant existing impact on the
Environment; or (ii) in respect of which there is a very high probability that
it will give rise to a significant impact on the Environment and in either case
would be likely to result in a Governmental Authority acting lawfully under
Environmental Law issuing or making a notice, order or requirement for Remedial
Action to be taken in respect of the same matter;
Tracy Site means the Tioxide Business site at 1690 and 1694 Marie-Victorin
Boulevard, Tracy, Quebec, Canada;
Umbogintwini Site means the Tioxide business site at 33, Umlazi Native Location,
No. 4676, Umbogintwini, South Africa;
Waste means any waste including anything which is abandoned, unwanted or
surplus:
(i) including any such thing which is capable of any beneficial use or of being
recovered or recycled or has any value (Re-use Material); but
(ii) excluding any Re-use Material which has, in fact been put to beneficial use
or recovered or recycled.
Indemnities
2.1 Subject to the limitations set out in paragraphs 3 to 16 insofar as
applicable below ICI for itself and otherwise as agent for the Share Selling
Companies shall indemnify, defend and hold the Purchaser harmless for itself
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(and as agent for and for the benefit of the Protected Persons) on an after Tax
basis from and against:
(A) Protected Matters
all Environmental Losses incurred, suffered or sustained by any Protected Person
at any time after Closing in respect of Protected Matters;
(B) Pre-Closing Environmental Conditions
all Environmental Losses incurred, suffered or sustained by any Protected Person
at any time after Closing in respect of Pre-Closing Environmental Conditions;
(C) North Tees Soil or Groundwater Contamination
all Environmental Losses incurred, suffered or sustained by any Protected Person
at any time after Closing in respect of North Tees Soil or Groundwater
Contamination.
Limitations on liability
3.1 The limitations on liability set out in Clauses 11.1, 12.2 , 12.8(b) (as if
in each case the reference therein to Designated Purchaser was to Protected
Person) 12.8(e), 12.8(g), 12.10, 12.13, 13.1 and 13.2 of the Agreement inclusive
shall apply to any claim made in respect of paragraph 2.1 above.
3.2 Subject always to the limitations in paragraph 3.3 below, the maximum
aggregate liability of ICI in respect of claims made under paragraph 2.1(B)
(Pre-Closing Environmental Conditions) above after paragraph 3.4 has been
applied shall not in any event exceed:
(i) an amount equal to (Pounds)312,500,000 which cap is included in the overall
cap in Clause 12.3 of this Agreement; and
(ii) the following percentage of Environmental Losses in relation to claims made
in the identified year:
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<TABLE>
<CAPTION>
- ------------------------------------------------
Relevant Year ICI's Share
- ------------------------------------------------
<S> <C>
Each year on or after 100%
Closing up to the tenth
anniversary of Closing
Date
- ------------------------------------------------
Year commencing on the 67%
tenth anniversary of
Closing Date
- ------------------------------------------------
Year commencing on the 33%
eleventh anniversary of
Closing Date
- ------------------------------------------------
On or after the twelfth 0%
anniversary of Closing
Date
- ------------------------------------------------
</TABLE>
such annual percentage in each case being applied in respect of all
claimable Environmental Losses in respect of each valid claim made in the
relevant year.
3.3 The maximum aggregate liability of ICI in respect of any Environmental
Losses in respect of any JV Business shall not exceed the relevant JV
Environmental Losses.
3.4 ICI shall have no liability unless and until:
(i) in the case of any individual claim under paragraph 2.1(B) (Pre-Closing
Environmental Conditions) or 2.1(A) (Protected Matters) in relation to the
Tracy Site and the Umbogintwini Site the Environmental Losses arising from
such claim exceed (Pounds)100,000 in which event ICI shall only be liable
for the excess of the Environmental Losses over and above (Pounds)100,000;
(ii) in the case of any claims under paragraph 2.1(B) (Pre-Closing Environmental
Conditions), the aggregate of all Environmental Losses in respect of all
valid claims made in a Relevant Year (in accordance with the table in
paragraph 3.2(ii)) and, for the purpose of this sub-paragraph only,
disregarding sub-paragraph 3.4(i) exceeds (Pounds)3,000,000 in which event
ICI shall only be liable in relation to those claims for the excess of the
relevant Environmental Losses over and above (Pounds)3,000,000.
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3.5 For the avoidance of doubt:
(i) any amount for which ICI has no liability under paragraph 3.1 or by which
ICI's liability is reduced as a consequence of the operation of paragraphs
3.6 to 15 below shall not be capable of constituting a claim or increasing
the amount thereof for the purpose of this paragraph 3;
(ii) for the purpose of this paragraph 3 where a claim is caused by more than
one event, circumstance, act or omission (not being one sequence or set
(where the members of the set are substantially similar in nature to each
other and have a common cause) of like events, acts or omissions at a
single site) which event, circumstance, act or omission would separately
give rise to a right to claim under paragraph 2.1 each such claim shall be
treated as a separate claim when calculating whether the thresholds in
paragraph 3.4 have been exceeded.
3.6 ICI shall not be liable for any claim under paragraph 2.1(A) (Protected
Matters), (B) (Pre-Closing Environmental Conditions) or (C) (North Tees Soil or
Groundwater Contamination) unless the Purchaser shall have given ICI written
notice containing (so far as reasonably available) specific details of the
claim, including the Purchaser's estimate (on a without prejudice basis and so
far as it can reasonably be made at the date of the notice) of the amount of
such claim. The Purchaser shall not be disentitled from claiming under this
Schedule 14 as a result of any reasonable delay in providing such notice or
reasonable failure to provide information in such notice, where such delay or
failure has not prejudiced ICI.
3.7 Subject to paragraph 3.8, ICI shall not be liable unless:
(i) in the case of Pre-Closing Soil or Groundwater Contamination and Pre-
Closing Health and Safety Issues such written notice has been given before
the twelfth anniversary of Closing;
(ii) in the case of Pre-Closing Compliance Issues such written notice has been
given before the third anniversary of Closing.
3.8 The liability of ICI in respect of such claim under paragraph 2.1(A)
(Protected Matters) 2.1(B) (Pre-Closing Environmental Conditions) and (C) (North
Tees Soil or Groundwater Contamination) under this Schedule 14 shall absolutely
determine (if such claim has not been satisfied, settled, or withdrawn) if,
after the relevant Final notice, order or requirement referred to in paragraph
4.1 exists, legal proceedings in respect of such claim shall not have been
commenced by the Purchaser against ICI within 12 months of the service of notice
by ICI requiring commencement of proceedings (a Claim Commencement Notice) and
for this purpose proceedings shall not be deemed
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to have been commenced unless they shall have been properly issued and validly
served upon ICI.
Trigger conditions
4.1 Subject to paragraphs 4.2 and 4.3 below, the Purchaser shall not be
entitled to make a claim under paragraph 2.1(A) (Protected Matters), (B) (Pre-
Closing Environmental Conditions) or (C) (North Tees Soil and Groundwater
Contamination) unless and to the extent that:
(i) in the case of any Protected Matters or North Tees Soil or Groundwater
Contamination, Environmental Proceedings have been commenced or issued
under Future Environmental Law by a Governmental Authority or any other
person in respect of the same subject matter and such Environmental
Proceedings would (even if contested) result in a notice, order or
requirement which is Final;
(ii) in the case of any Pre-Closing Soil or Groundwater Contamination or any
Pre-Closing Health and Safety Issue, Environmental Proceedings have been
commenced or issued under Environmental Law by a Governmental Authority or
any other person in respect of the same subject matter and such
Environmental Proceedings would (even if contested) result in a notice,
order or requirement which is Final;
(iii) in the case of any Pre-Closing Compliance Issues the subject matter of the
claim constitutes an actual breach of or non-compliance with Environmental
Law and any Environmental Proceedings have been commenced or issued under
Environmental Law by a Governmental Authority or any other person in
respect of the same subject matter and such Environmental Proceedings
would (even if contested) result in a notice, order or requirement which
is Final;
4.2 Sub-paragraphs 4.1(i) to (iii) (as applicable) shall be deemed to have
been satisfied if:
(i) notice has been given to ICI as required under paragraphs 3.6 and
9.1;
(ii) Environmental Proceedings would have been commenced or issued,
and would (even if contested) have resulted in a notice, order or
requirement which is Final, but for a settlement or agreement
reached with the relevant Governmental Authority or other person
in accordance with paragraphs 7 and 9, to the extent such
settlement or agreement results in Environmental
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Losses no greater than would have been the case were any such Final
notice, order or requirement to have been imposed.
4.3 Where ICI has assumed conduct under paragraph 9 and sub-paragraph
4.2(ii) is satisfied in relation to the relevant matter at any subsequent time,
any right of the Purchaser to claim under this Schedule 14 shall not be
adversely affected or reduced as a result of any unreasonable delay or failure
by ICI thereafter in reaching the relevant settlement or agreement, the
assessment of reasonableness to take account of the effect of any such delay or
failure both on the terms of any settlement or agreement which may be reached
and on the Purchaser's claim under this Schedule 14.
4.4 The requirements of paragraph 4.1 are deemed to be satisfied by an
Emergency unless the final determination by an expert under paragraph 13 is that
the matter which is the subject of the claim is not an Emergency.
Post-completion conduct
5. ICI shall not be liable under paragraph 2.1(A) (Protected Matters), (B)
(Pre-Closing Environmental Conditions) or (C) (North Tees Soil or Groundwater
Contamination) in respect of any matter to the extent that such claim would not
have arisen but for, results from or is increased by:
(i) the cessation after Closing (or, in the case of Plant Closure Sites
only, after the third anniversary of Closing) of any operations at any
of the Relevant Properties or Relevant Shared Properties; or
(ii) any new or different mode or form of industrial process outside the
current production methods of the business as at Closing (Changed
Industrial Process) at any Relevant Property or Relevant Shared Property
after Closing except to the extent that a valid claim under this
Schedule 14 could have arisen irrespective of the Changed Industrial
Process, had the existence of the relevant matter been known; or
(iii) demolition or de-commissioning of plant and equipment by or on behalf of
a Protected Person or JV Business; or
(iv) any development, extension, expansion, construction or intensification
or any change of use (Development), except to the extent that (a) such
Development amounts (in aggregate from Closing) to no more than 20 per
cent of the built footprint at any Relevant Property or Relevant Shared
Property after Closing (Permitted Development) or (b) if the information
revealed by the Development had become known through some other means,
(not involving any Development) it would have given rise to a valid
claim under this Schedule 14 provided that, in
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relation to any Development which could affect, disturb or reveal Pre-
Closing Soil or Groundwater Contamination:
(a) the Purchaser shall give prior written notice to ICI;
(b) the Purchaser shall consult in good faith with ICI and shall take
account of any reasonable requests of ICI made in relation to the
process of obtaining permission for and carrying out the
Development; and
(c) the Protected Person or JV Business (its employees, contractors,
agents, sub-tenants and licensees) shall in relation to such
Development act at all times non-negligently and in accordance
with the standards of a Reasonable and Prudent Operator; or
(v) any Remedial Action required by any Governmental Authority under or as a
condition of any Permit issued by or informal or formal agreement with a
Authority in connection with Development except to the
extent that if the information revealed by the Development had become
known through some other means, (not involving any Development) it would
have given rise to a valid claim under this Schedule 14; or
(vi) any Remedial Action required by a Governmental Authority at any Relevant
Property or Relevant Shared Property under or as a condition of any
Permit or informal or formal agreement issued by or made with a
Governmental Authority in connection with any Development after Closing
at any property other than any Relevant Property or Relevant Shared
Property; or
(vii) subject to paragraph 16, any sale or change of occupier or grant of any
right of interest in relation to all or part of any Relevant Property or
Relevant Shared Property after Closing ;or
(viii) any voluntary modification, renewal, termination, surrender or variation
by a Protected Person or JV Business (its employees, contractors,
agents, sub-tenants and licensees) after Closing of any lease or other
agreement or arrangement under which any Designated Purchaser occupies
or uses all or any part of any Relevant Property or Relevant Shared
Property; or
(ix) ownership or occupation by any Protected Person or JV Business (in the
case of the Companies or JV Business, after Closing) of any adjacent or
affected property (except for the Relevant Properties or Relevant Shared
Properties); or
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(x) any direct or indirect interest of any Protected Person or JV Business
(in the case of the Companies or JV Business, not existing at Closing)
in any present or former owner of any adjacent or affected property
(except for the Relevant Properties or the Relevant Shared Properties);
or
(xi) the instigation or initiation by any Protected Person or JV Business of
any Environmental Proceedings, actions or claims by a Governmental
Authority, without prejudice in all cases (a) to any permitted act or
right of a Protected Person or JV Business under this Schedule 14; (b)
to a Protected Person or JV Business acting as a Reasonable and Prudent
Operator balancing the potential Environmental Losses which may be
sustained as a result of its conduct against the potential benefits of
such conduct (such balance to be assessed on the hypothetical assumption
that any such Environmental Losses would not be recoverable under this
Schedule 14 or otherwise);
(xii) the deliberate taking by a Protected Person or JV Business of any action
or step which is calculated or designed to give rise to Environmental
Proceedings in order to trigger a claim under this Schedule 14; or
(xiii) any intrusive Investigative Works by a Protected Person or JV Business
(its employees, contractors, sub-tenants and licensees) which either:
(a) do not satisfy the requirements of paragraph 11; or
(b) do not fall within (a) and are undertaken otherwise than for the
purpose of Development as referred to in paragraph 5(iv) or,
though carried out for that purpose, are not carried out in
accordance with paragraph 5(iv); or
(xiv) any admission of liability (in whole or part) or settlement of any claim
by any Protected Person or JV Business other than in accordance with
paragraph 9; or
(xv) any contractual obligation entered into, varied, amended or otherwise
modified after Closing other than pursuant to this Agreement so as to
establish or increase the Environmental Losses of any Protected Person
or JV Business.
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Specific exclusions
6.1 The Purchaser shall not be entitled to claim for any Environmental Losses
under paragraph 2.1(A) (Protected Matters), (B) (Pre-Closing Environmental
Conditions) or (C) (North Tees Soil or Groundwater Contamination) to the extent
that the relevant claim would not have arisen but for, results from or is
increased by matters which relate to:
(a) except in relation to soil or groundwater contamination, the carrying out
of or the failure to carry out works which are routine or recurring as a
result of the normal and lawful operation of the business of the
Protected Person or JV Business in a negligent manner or other than in
accordance with the standards of a Reasonable and Prudent Operator;
(b) use and recovery of packaging or packaging waste;
(c) town and country planning (in the United Kingdom) or comparable land use
planning or zoning systems in other jurisdictions except to the extent
relating to Hazardous Materials or Waste;
(d) any tax, duty or levy imposed or calculated in relation to claims under
paragraph 2.1(B);
(e) to the extent that any allowance, provision or reserve made for such
fact, matter, event, circumstance or Tax Liability in the Accounts or the
Closing Statements or the Tax Liability which has been noted in or was
taken into account in the preparation of the Accounts or the Closing
Statements, or to the extent that payment or discharge of the relevant
matter has been taken into account therein.
6.2 In respect of any claim under paragraph 2.1(B) (Pre-Closing Environmental
Conditions) and except in relation to paragraphs 8.1(ii) and 11(a), ICI shall
not be liable to the extent that the relevant claim would not have arisen but
for, results from or is increased by Future Environmental Laws, provided that
ICI shall not be entitled to exclude, avoid or reduce its liability under this
Schedule 14 as a result of Future Environmental Laws which are no more onerous
than Environmental Laws and references to Environmental Laws shall be
interpreted accordingly.
6.3 Any reference to liability under Environmental Laws or Future
Environmental Laws (as applicable) shall be deemed to include any contractual
obligation by which a Protected Person is responsible for or to contribute to
that liability, to the extent such obligation is in force and binding on the
relevant Protected Person at or prior to Closing or as the direct result of the
transactions provided for in this Agreement.
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Mitigation
7.1 The Purchaser and any relevant Protected Person or JV Business shall
mitigate any Environmental Losses under this Schedule 14 including, without
limitation, using all reasonable endeavours to (i) avoid Off Site Third Party
Negligence and (ii) pursue claims against third parties (including insurers) who
may have some liability to the Purchaser in respect of Off Site Third Party
Negligence.
7.2 The Purchaser shall not be entitled to claim under paragraph 2.1(A)
(Protected Matters), (B) (Pre-Closing Environmental Conditions) or (C) (North
Tees Soil and Groundwater Contamination) in respect of Environmental Losses
incurred in obtaining professional services in relation to the subject matter,
conduct or validity of the claim during the period prior to making that claim in
accordance with paragraph 3.6 above.
Disclosure to governmental authorities
8.1 Subject to paragraph 8.2 and 9 neither the Purchaser nor any member of
the Purchaser's Group or JV Business shall disclose any information in relation
to any matter which could reasonably be expected to be the subject of a claim
under paragraph 2.1 to any Governmental Authority without the prior written
consent of ICI except following prior written notice to and consultation with
ICI in relation to sub-paragraphs (ii), (iii) and (iv) below:
(i) in an Emergency where, because of the circumstances it is impracticable
to obtain the prior written consent of ICI; or
(ii) as required by law;
(iii) following the final determination by the expert under paragraph 13 (or
earlier agreement between the parties) that there is a Significant
Environmental Impact; or
(iv) in relation to Pre-Closing Compliance Issues but only insofar as these
are issues of discharges to controlled waters or sewers or emissions to
air following the final determination by the expert under paragraph 13
(or earlier agreement between the parties) that there is a high
likelihood that a Governmental Authority would require the relevant
Protected Person or JV Business to carry out Remedial Action at a cost in
excess of (Pounds)100,000 (excluding for these purposes the cost of
Investigative Works (High Likelihood).
8.2 The notice referred to in paragraph 8.1 shall contain specific reasonable
details of the matter proposed to be disclosed, the identity of the
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Governmental Authority and individual officers to whom the disclosure is to be
made and the proposed manner and timetable for disclosure (including any
documents or presentations or drafts of the same). ICI shall be given 30 days
(or such lesser period which allows compliance with the relevant law where
paragraph 8.1(ii) applies) in which to review and comment on the proposals for
disclosure and the Purchaser shall have regard to and incorporate the reasonable
requests of ICI in relation to the proposed disclosure.
8.3 In the event that ICI withholds its consent to a disclosure in
circumstances where the Purchaser notifies ICI in writing that it is of the
opinion that there is a Significant Environmental Impact or High Likelihood (as
applicable) then the provisions of paragraph 13.1 shall apply.
8.4 In the event that such disclosure is made, the provisions of paragraph
9.4 and 9.6 below shall apply mutatis mutandis.
Claims procedure
9.1 Upon the Purchaser becoming aware of a matter which could reasonably be
expected to give rise to a claim for Environmental Losses under this Schedule 14
the Purchaser shall as soon as reasonably practicable thereafter notify ICI by
written notice. Without limiting the obligation of the Purchaser to comply with
this paragraph 9.1, the purpose of such notice shall be to alert ICI to the
existence of the relevant matter in order that ICI may decide to exercise its
rights in relation to conduct and such notice shall (if the Purchaser wishes to
proceed with a claim under this Schedule 14) be accompanied by or followed by a
notice under clause 3.6.
9.2 ICI shall have the right to conduct Environmental Proceedings and
Remedial Action in respect of any matter which could reasonably be expected to
become a claim under paragraph 2.1(A) (Protected Matters) or (C) (North Tees
Soil or Groundwater Contamination), unless ICI (i) notifies the Purchaser in
writing within a reasonable time thereafter, that it declines the right to
conduct under this paragraph; or (ii) is in breach of paragraph 9.10 in
circumstances which would result in any material Environmental Losses being
incurred by the relevant Protected Person which are not covered by a valid claim
under this Schedule 14 and/or would materially adversely affect the value of the
Relevant Property or Relevant Shared Property or the goodwill or good name of
such Protected Person , in which event the Purchaser shall have conduct. For the
avoidance of doubt the provisions of paragraph 9.6 shall not apply to such
conduct by ICI of Environmental Proceedings or Remedial Action under this
paragraph.
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9.3 Subject to paragraph 9.10 below ICI shall have the right at any time to
assume by written notice to the Purchaser conduct of all or any part of any
Environmental Proceedings or the carrying out of any Remedial Action relating to
or affecting any Pre-Closing Environmental Conditions provided that if ICI has
assumed any such conduct and ICI is in breach of paragraph 9.10 in the
circumstances described in paragraph 9.2 above the Purchaser shall be entitled
to have conduct.
9.4 The Purchaser shall promptly provide ICI with such reports, documents,
correspondence, information, assistance and facilities relating to any
Environmental Proceedings or Remedial Action or other matter for which written
notice has been given under paragraph 3.6 or 9.1 as ICI may reasonably require
the Purchaser to provide (including if required by ICI reasonable access to any
Relevant Property or Relevant Shared Property or so far as practicable adjacent
or affected property) except that nothing in this paragraph shall require any
waiver of legal privilege or breach of any duty of confidentiality excluding any
duty of confidentiality between the Purchaser (or the relevant Protected Person)
and any consultant in respect of or relating to Environmental Proceedings or
Remedial Action or other matter the subject of written notice under paragraph
9.1. Each party shall use its reasonable endeavours to avoid assuming any duty
of confidentiality which would impede the efficient operation of this paragraph
9.
9.5 The Conduct Party shall be entitled to avoid, dispute, deny, defend,
resist, appeal, compromise or contest any Environmental Proceedings, or any
matter the subject of the relevant written notice (including, without
limitation, making counterclaims or other claims against third parties in its
own name) and to have the conduct of any Environmental Proceedings, and any
related Remedial Action or appeals or other matter the subject of the relevant
written notice but no admission of liability shall be made by or on behalf of
the Conduct Party and the Environmental Proceedings or other matter the subject
of written notice under paragraph 9.1 shall not be compromised, disposed of or
settled without, in each case, the consent of the other party (such consent not
to be unreasonably withheld or delayed and provided that such consent shall not
be withheld where the relevant settlement or agreement satisfies the criteria in
paragraph 4.2(ii) (including as to quantum of Environmental Losses) and has been
reached in accordance with this paragraph 9).
9.6 The Conduct Party (where the Purchaser is the Conduct Party) shall use
its reasonable endeavours to ensure that:
(i) the other party shall be informed promptly of any information which comes
to the knowledge of the Conduct Party other than information which the
Conduct Party reasonably considers to be immaterial to the
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Environmental Proceedings or any other matter the subject of the relevant
written notice;
(ii) the other party shall be allowed a reasonable opportunity to review and
to comment upon any material reports documents and correspondence to be
prepared and provided by the Conduct Party to the other parties to, or to
any Governmental Authority hearing, administering or involved in such
Environmental Proceedings or matter the subject of the relevant written
notice and the Conduct Party shall have regard to the views of the other
party on such reports, documents or correspondence;
(iii) the other party shall be provided with advance notice of and be allowed
to attend and participate in any material site visit meeting or
negotiation involving the Conduct Party (or any subsidiary of the Conduct
Party) and any other parties to, or the Governmental Authority hearing,
administering or involved in, any Environmental Proceeding or matter the
subject of the relevant written notice under paragraph 9.1 and if it so
requests and undertakes to pay for the reasonable cost of taking and
providing such notes the other party shall be provided promptly with
reasonably full and accurate but not verbatim notes of such visit
meetings negotiations which it does not attend and participate in;
(iv) if the other party so requests, copies of all material correspondence and
documents passing between the Conduct Party and other parties to the
Environmental Proceedings or matter the subject of the relevant written
notice under paragraph 9.1 or provided by the Conduct Party to the
Governmental Authority hearing, administering or involved in the
Environmental Proceedings or matter the subject of the relevant written
notice under paragraph 9.1 shall be provided promptly to the other party;
(v) subject to the other party undertaking to pay the reasonable cost thereof
detailed written reports shall be provided to the other party regarding
the status and progress of any Environmental Proceedings or any other
matter the subject of the relevant written notice under paragraph 9.1 as
frequently and in such form and detail as the other party shall
reasonably require;
(vi) the other party shall be provided with reasonable notice of any proposal
by the Conduct Party or any third party (to the extent the Conduct Party
is aware of such proposal) to undertake Remedial
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Action Provided that this obligation shall not apply in case of an
Emergency;
(vii) any Remedial Action carried out by the Conduct Party or any contractor or
subcontractor of the Conduct Party shall be carried out using all
reasonable skill and care;
(viii) the other party shall be allowed to send such representatives as the
other party may reasonably require to attend and inspect the carrying out
of Remedial Action whilst they are being carried out Provided that such
representatives shall not interfere with the proper undertaking of the
Remedial Action or the operation of the relevant business or the
activities of any third party;
(ix) where an environmental expert is to be appointed the Conduct Party shall
consult with the other party and have regard to the other party's views
on whom to appoint, the scope of the appointment and the terms and
conditions of appointment.
9.7 Each party shall comply with the reasonable requests of the other for
arrangements or procedures to maintain confidentiality or legal privilege in
relation to any matters arising out of or relating to any Environmental
Proceedings, Remedial Action or other matter the subject of written notice under
paragraph 9.1.
9.8 The other party shall give the Conduct Party or its agents or contractors
access to personnel, premises, chattels, documents and records as the Conduct
Party may reasonably request and allow without limitation entry to premises to
make such examination and investigations as the Conduct Party may consider
necessary, the taking of samples, measurements, photographs and recordings of
soil, air, water or substances and combinations of substances at any Relevant
Property or Relevant Shared Property, with the full co-operation of the other
party, the interviewing of any person the Conduct Party has reasonable cause to
believe to be able to give relevant information and the production of extracts,
papers and records in relation to any matter which is or is likely to be the
subject of a claim under paragraph 2.1.
9.9 The other party shall in a timely fashion:
(i) provide the Conduct Party with such information as it may reasonably
require to enable it to assist in the conduct of Environmental
Proceedings;
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(ii) consult in good faith with the Conduct Party in relation to Environmental
Proceedings; and
(iii) provide the Conduct Party with such material information as comes to the
knowledge of the other party and which relates to the Environmental
Proceedings.
9.10 Where ICI has conduct of all or any part of Environmental Proceedings
pursuant to paragraph 9.2 above, or assumes conduct of all or any part of
Environmental Proceedings pursuant to paragraph 9.3 above, ICI shall (subject to
appropriate arrangements to maintain confidentiality and privilege):
(i) provide reasonably frequent and reasonably detailed reports to
the other party regarding the progress of Environmental
Proceedings or Remedial Action;
(ii) allow the other party a reasonable opportunity to review and
comment in advance on proposals for Remedial Action;
(iii) develop in consultation with the other party, proposals for
Remedial Action, having regard to ICI's obligation at sub-
paragraph (vi) below;
(iv) have regard to and incorporate the reasonable requests of the
other party in relation to such Environmental Proceedings or
Remedial Action (unless any such request of the other party would
in excess of the cost of complying with (v) and (vi) increase the
amount of Purchaser's claim or the cost of the Remedial Action in
excess of the cost of complying with (v) and (vi) in which case
the Purchaser shall be liable to ICI for any such increase in
relation to such request which is accepted by ICI);
(v) carry out Remedial Action in a proper and workmanlike manner and
proceed with the same in a timely manner and with due diligence;
(vi) so far as reasonably practicable avoid or minimise interruption
or disruption to the business carried on at any of the Relevant
Properties or Relevant Shared Properties;
(vii) if so requested by the Purchaser (a) carry out any intrusive
Investigative Works where and to the extent that the criteria in
paragraph 11 are satisfied; and (b) make any disclosure where
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and to the extent that the criteria in paragraph 8 are satisfied.
Any right of the Purchaser to claim under this Schedule 14 which
would have arisen had the Purchaser retained conduct and carried
out such work or made such disclosure shall not be adversely
affected or reduced as a result of any unreasonable delay in
complying with any such request (the assessment of reasonableness
to take account of all relevant matters including the effect of
any such delay on the Purchaser's claim under this Schedule 14,
or the claim which the Purchaser would have had, but for such
delay having regard to when the Purchaser might reasonably have
been expected to have carried out such work or made such
disclosure had the Purchaser retained conduct.
9.11 In relation to JV Environmental Losses, all obligations and rights in
this paragraph 9 are subject to the extent and exercise of such rights as the
relevant Protected Person may have in relation to the operation of the relevant
JV Business.
Standard of works
10. The Purchaser shall not be entitled to claim under paragraph 2.1 in
respect of the cost of carrying out Remedial Action except for the reasonable
costs of such Remedial Action which are the minimum necessary:
(i) to comply with the Final notice, order or requirement of a Governmental
Authority acting under Environmental Law or (in relation to Protected
Matters or North Tees Soil or Groundwater Contamination) Future
Environmental Law or a settlement or agreement under paragraph 4.2; or
(ii) to address the Emergency (which for the avoidance of doubt excludes
anything other than such works as are necessary at the time of the
Emergency to (a) remove the direct cause of and (b) control the immediate
effects of the Emergency).
Investigative works
11. The Purchaser shall not be entitled to claim under paragraph 2.1 for any
Investigative Works in relation to any Protected Matters, Pre-Closing
Environmental Conditions or North Tees Soil or Groundwater Contamination except
where and to the extent that such Investigative Works:
(a) are specifically and lawfully ordered or required by the relevant
Governmental Authority under law; or
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(b) are carried out in accordance with paragraph 7 and 9 in relation to a
matter where:
(i) a notice has been served under paragraph 3.6;
(ii) ICI has not assumed conduct under paragraph 9;
(iii) on the basis of the available information (prior to the relevant
Investigative Works) there are reasonable grounds to believe that
Significant Environmental Impact or High Likelihood may exist.
Statements
12. In the event of any circumstances arising which do or could reasonably be
expected to give rise to a claim for Environmental Losses neither the Purchaser,
Protected Persons or JV Businesses nor ICI or any member of ICI's Group shall
make any public statements (including, for the avoidance of doubt, any statement
to any Governmental Authority, unless required by law or in an Emergency)
regarding such circumstances without first discussing with the other party and
reaching written agreement on the text of any such public statement before it is
made, such agreement not to be unreasonably withheld or delayed by either party
and without prejudice to paragraph 8.1.
Disputes
13.1 If any dispute arises between ICI and the Purchaser as to:
(i) whether or not an Emergency arose; or
(ii) whether or not High Likelihood exists; or
(iii) whether or not a Significant Environmental Impact has occurred,
the matter shall be referred for final determination in accordance with the
Criteria, at the request of either of ICI or the Purchaser to an independent
environmental consultant having experience relevant to the matter in dispute as
agreed between ICI and the Purchaser or in default of any such agreement within
seven days of such request by ICI or the Purchaser, nominated in accordance with
the criteria set out below at the request of either ICI or the Purchaser by or
on behalf of the Chief Executive of the Environmental Auditors Registration
Association or their equivalent in the relevant jurisdiction or, if he or she is
unable to make a nomination within 28 days of the request made to him or her, by
the President for the time being of the Chartered Institute of Arbitrators.
Such independent environmental
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consultant shall act as an expert and not as an arbitrator and his fees and
expenses shall be borne as he shall direct.
13.2 The criteria referred to and to be applied in the nomination of the
independent environmental consultant shall be that he shall not have less than
10 years experience relevant to the matter in issue and he shall be a member of
a company or firm which has been established for at least three years preceding
the date of the nomination.
13.3 The said environmental consultant shall be offered the appointment within
seven business days of the parties reaching agreement on the appointment or upon
nomination by the Chief Executive of the Environmental Auditors Registration
Association or President of the Chartered Institute of Arbitrators as the case
may be, he can only be dismissed by the mutual agreement of ICI and the
Purchaser. The said environmental consultant shall present his written
determination within four weeks of his appointment or nomination or such longer
period as ICI and the Purchaser may mutually agree.
13.4 The terms of appointment of the environmental consultant will include a
provision that neither ICI nor the Purchaser will engage the environmental
consultant or any consultancy firm with which he is associated after his
nomination in relation to the relevant matter without the written consent of the
other party.
13.5 The decision of the said environmental consultant in relation to the
matters referred to in Clause 13.13 shall in the absence of manifest error be
final and binding on the parties hereto.
Post-Closing Counter Indemnity
14.1 The Purchaser, for itself and as agent for the Designated Purchasers
shall indemnify, defend and hold ICI for itself and for the Share Selling
Companies harmless on an after Tax basis (Post-Closing Counter Indemnity) from
and against:
(i) Environmental Losses incurred, suffered or sustained by ICI after Closing
in respect of Post-Closing Environmental Conditions; and
(ii) the Purchaser's percentage share of Environmental Losses (not being ICI's
share) as calculated under paragraph 3.2(ii) above.
14.2 The Post-Closing Counter Indemnity in paragraph 14.1 shall be subject to
the provisions of Part E and, for the avoidance of doubt, shall not include
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or be subject to the provisions contained in paragraphs 2, 3.1, 3.2 (i), 3.3 to
3.8 and 4 to 13 inclusive of this Part A of this Schedule 14.
Payment
15. Any sums for which either party is liable under this Schedule 14 shall be
due and payable 30 days from the day following service of a proper invoice in
accordance with this Agreement.
Further Protected Persons
16.1 In this paragraph 16.1:-
Asset Transaction means the sale or other disposal of all or any part of the
Tioxide Business, the Relevant Petrochemicals Business or the Polyurethanes
Business after Closing or the sale or other disposal of all or any part of any
Relevant Property or Relevant Shared Property after Closing;
Further Protected Person means:
(i) in the context of an Asset Transaction, the new owner of the Tioxide
Business, the Relevant Petrochemicals Business the Polyurethanes Business
or the relevant part of such business or of any Relevant Property or
Relevant Shared Property or part of it following the Asset Transaction;
and
(ii) in the context of a Share Transaction, the entity which was the subject
of the Share Transaction and also the person who has acquired the
relevant shares interest in such entity;
in either case not being a member of the HSCC Group;
Share Transaction means the sale or disposal of all or a controlling interest in
the shares in any entity forming part of the Tioxide Business, the Relevant
Petrochemicals Business or the Polyurethanes Business after Closing;
Transaction means an Asset Transaction or a Share Transaction, as applicable.
16.2 The Vendor agrees that, in the event of a Transaction, the Purchaser
shall be entitled in its sole discretion to claim under this Schedule 14 in
respect of Environmental Losses of Further Protected Persons, as if such Further
Protected Persons were Protected Persons, provided that this 16.2 shall cease to
apply in relation to any Further Protected Person upon the occurrence of any
subsequent Transaction, to the extent such subsequent Transaction relates to a
Further Protected Person or to any Relevant Property
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or Relevant Shared Property or part of it which was subject to the first
Transaction.
16.3 It is a condition of any claim by the Purchaser in relation to
Environmental Losses of a Further Protected Person that the Purchaser shall
comply with and shall procure that each Further Protected Person shall comply
with and in all respects be bound by paragraphs 3 to 15 of this Schedule 14.
16.4 For the avoidance of doubt, no Further Protected Person shall acquire any
right against the Vendor by virtue of this paragraph 16 and this paragraph 16
shall not extend or increase the Vendor's liabilities under this Schedule 14.
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PART B
Plant Closure Sites
North Tees Site
Tracy
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PART C
Protected Matters
- -------------------------------------------------------------------------------
Property Issues
- -------------------------------------------------------------------------------
1. Rozenburg Remedial Actions in relation to
Pre-Closing Soil or Groundwater
Contamination at leasehold reserved
property on Britannia Harbour
- -------------------------------------------------------------------------------
2. Umbogintwini The pre-Closing soil or groundwater
contamination (irrespective of whether
it is Pre-Closing Soil or Groundwater
Contamination) associated with the
slimes dams treatment areas and other
pre-Closing activities on or affecting
the site including the unlicensed
waste dump and on-site coal
gasification plant
- -------------------------------------------------------------------------------
3. Grimsby Remedial Actions in relation to
Pre-Closing Soil or Groundwater
Contamination at the West Field Site
shown for identification purposes only
edged black on agreed plan 7
- -------------------------------------------------------------------------------
4. Tracy Remedial Actions in relation to
Pre-Closing Soil or Groundwater
Contamination
- -------------------------------------------------------------------------------
5. Greatham Any fine, penalty or damages or other
liabilities which are paid to a
regulatory authority or third party
resulting from the acid leak on 17
February 1999 into Greenabella Marsh,
not including the cost of Remedial
Actions.
- -------------------------------------------------------------------------------
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PART D
Part I: Relevant Properties
- --------------------------------------------------------------------------------
Property Address
- --------------------------------------------------------------------------------
POLYURETHANES BUSINESS
- --------------------------------------------------------------------------------
Polyurethanes Shepton facility Hitchin Lane Shepton Mallett Somerset England
- --------------------------------------------------------------------------------
Betriebsstatte der Deutsche ICI Land Au 30 94469 Deggendorf Germany
- --------------------------------------------------------------------------------
Polyurethanes Ternate facility Ternate Italy
- --------------------------------------------------------------------------------
286 Mantua Grove Road West Deptford New Jersey 08066 USA
- --------------------------------------------------------------------------------
6555 15 Mile Road Sterling Heights Michigan USA
- --------------------------------------------------------------------------------
Auburn Hills USA
- --------------------------------------------------------------------------------
Polyurethanes Cartegna facility Cartegna Columbia
- --------------------------------------------------------------------------------
No. 19 Industrial 3rd Road Kuan Yin County Taoyuan 328 Taiwan
- --------------------------------------------------------------------------------
RELEVANT PETROCHEMICALS BUSINESS
- --------------------------------------------------------------------------------
No. 4 and No. 6 Brinefields at Seal Sands Stockton-on-Tees England
- --------------------------------------------------------------------------------
Saltholme Brine Reservoirs, Saltholme, Stockton-on-Tees.
- --------------------------------------------------------------------------------
TIOXIDE BUSINESS
- --------------------------------------------------------------------------------
Factory at Tees Road Greatham England
- --------------------------------------------------------------------------------
Factory at Sub L of 33 Umlazi Native Location No 4676 Umbogintwini South Africa
- --------------------------------------------------------------------------------
East and West Sites Billingham England
- --------------------------------------------------------------------------------
Factory at Pyewipe Road Grimsby (excluding Westfield) England
- --------------------------------------------------------------------------------
Nettleton Bottom Quarry Caistor England
- --------------------------------------------------------------------------------
Land at North Killingholme England
- --------------------------------------------------------------------------------
Factory at 1 Rue des Garennes 62102 Calais France
- --------------------------------------------------------------------------------
Factory at Kawasan Industri Teluk Kalong 24000 Chukai Kemaman Terengganu
Malaysia
- --------------------------------------------------------------------------------
Factory at Loc Casome Scarlino Grosseto Italy
- --------------------------------------------------------------------------------
Factory at Poligano Industrial Nuevo Porto Palos de la Frontera Huelva Spain
- --------------------------------------------------------------------------------
Factory 1690 & 1694 Marie-Victorin Boulevard Tracy Quebec Canada
- --------------------------------------------------------------------------------
Plant Site (known as Farquhar Heirs Property) Northwest quarter of the Northeast
Quarter of Section 17, Township 10 South, Range 9 West, Calcasleu Parish
Louisiana USA
- --------------------------------------------------------------------------------
Landfill Site (known as Relly-Pujo "Rose-Bluff" property) Tract of land in
Section 17, Township 10 South, Range 9 West, Calcasleu Parish Louisiana USA
- --------------------------------------------------------------------------------
Northwest quarter of the North East quarter of Section 17 Cadcasley Parish
Louisiana
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Property Address
- --------------------------------------------------------------------------------
Mitigation Property Site. Hieman Property
- --------------------------------------------------------------------------------
Landfill/Parking Lot, Sulphur City
- --------------------------------------------------------------------------------
Orr Storage Facility, Lake Chartes
- --------------------------------------------------------------------------------
Brinston Rentals Lease
- --------------------------------------------------------------------------------
Part II: Relevant Shared Properties
- --------------------------------------------------------------------------------
Property Address
- --------------------------------------------------------------------------------
POLYURETHANES BUSINESS
- --------------------------------------------------------------------------------
Everslaan 45 B 3078 Everberg Belgium
- --------------------------------------------------------------------------------
Polyurethanes Wilton facility PO Box 90 Middlesborough Cleveland England
- --------------------------------------------------------------------------------
Polyurethanes Rozenburg facility Rotterdam Holland
- --------------------------------------------------------------------------------
9156 Highway 75 PO Box 517 Geismar Louisiana USA
- --------------------------------------------------------------------------------
2795 Slough Street Peel County Missisauga Canada
- --------------------------------------------------------------------------------
Reconquista 2780 1617 El Talar de Pacheo Buenos Aires Argentina
- --------------------------------------------------------------------------------
452 Wenjing Road Minhang Economic & Technical Development Zone Shanghai China
- --------------------------------------------------------------------------------
303 moo 3 Bangpoo Industrial Estate Sukhumvit Road Sumutprakam 10280 Thailand
- --------------------------------------------------------------------------------
RELEVANT PETROCHEMICALS BUSINESS
- --------------------------------------------------------------------------------
Paraxylene V Plant at Wilton Works Wilton Redcar and Cleveland England
- --------------------------------------------------------------------------------
Aromatics Plant and North Tees Logistics Site at North Tees Works Stockton-on
Tees England
- --------------------------------------------------------------------------------
Salt Mines at Salholme, Stockton on Tees
- --------------------------------------------------------------------------------
Boat Jettings and Jetties No 1, 2 and 3, North Tees Works, Stockton on Tees
- --------------------------------------------------------------------------------
Olefins 6 Plant at Wilton Works, Wilton, Redcar and Cleveland, England (in the
agreed form transfer)
- --------------------------------------------------------------------------------
Butadiene Storage, Ethylene Control and Olefins 5 Plant at Wilton Works, Wilton,
Redcar and Cleveland, England (in the agreed form transfer)
- --------------------------------------------------------------------------------
Central Control Area, Wilton Works, Wilton, Redcar and Cleveland, England (in
the agreed form transfer)
- --------------------------------------------------------------------------------
Brine Reservoirs to the south of Wilton Works, Wilton, Redcar and Cleveland,
England (in the agreed form transfer)
- --------------------------------------------------------------------------------
Part of Teesport Works, Redcar and Cleveland, England (shown edged and cross-
hatched red on agreed plan OM1)
- --------------------------------------------------------------------------------
Part of North Tees Works, Stockton on Tees, England (shown edged and cross-
hatched
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Property Address
- --------------------------------------------------------------------------------
red on agreed plan OM2)
- --------------------------------------------------------------------------------
Jetty A, North Tees Works, Stockton on Tees, `England
- --------------------------------------------------------------------------------
Easement rights in relation to Trans Pennine Ethylene Pipeline (excludes Hill
House spur)
- --------------------------------------------------------------------------------
Easement rights in relation to Wilton - Grangemouth Ethylene Pipeline
- --------------------------------------------------------------------------------
Lima Compound 8 (in the agreed form transfer)
- --------------------------------------------------------------------------------
Compound 38, Wilton Works, Wilton
- --------------------------------------------------------------------------------
Ethylene Pipeline Garage, Wilton
- --------------------------------------------------------------------------------
Offices and Store at Castner-Kelner, Cheshire
- --------------------------------------------------------------------------------
Ethylene Conditioning Compound, Lostock, Cheshire (shown on agreed plan OM3)
- --------------------------------------------------------------------------------
Easement rights in relation to Trans Pennine Ethylene Pipeline (Runcorn to
Holford Spur and Shell Interchange)
- --------------------------------------------------------------------------------
PART E
Post-Closing Indemnity
Limitations on liability
1.1 The limitations on liability set out in Clauses 11.1, 12.2, 12.8(b),
12.8(e), 12.8(g), 12.10, 12.13, 13.1 and 13.2 of the Agreement inclusive shall
apply to any claim made in respect of the Post-Closing Counter Indemnity.
1.2 The Purchaser shall not be liable for any claim under this Post-Closing
Counter Indemnity unless ICI shall have given the Purchaser written notice
containing (so far as reasonably available) specific details of the claim,
including ICI's estimate (on a without prejudice basis and so far as it can
reasonably be made at the date of the notice) of the amount of such claim. ICI
shall not be disentitled from claiming under this Post-Closing Counter Indemnity
as a result of any reasonable delay in providing such notice or reasonable
failure to provide information in such short notice, where such delay or failure
has not prejudiced the Purchaser.
Trigger conditions
2.1 Subject to paragraph 2.2 below, ICI shall not be entitled to make a claim
under sub-paragraph 14.1(i) of Part A of Schedule 14 of the Post-Closing Counter
Indemnity unless and to the extent that Environmental Proceedings have been
commenced or issued under Environmental Law or
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Future Environmental Law by a Governmental Authority or any other person in
respect of the same subject matter and such Environmental Proceedings would
(even if contested) result in a notice, order or requirement which is Final.
2.2 Paragraph 2.1 shall be deemed to have been satisfied if:
(i) notice has been given to the Purchaser as required under paragraphs 1.2 and
6.1;
(ii) Environmental Proceedings would have been commenced or issued, and would
(even if contested) have resulted in a notice, order or requirement which
is Final, but for a settlement or agreement reached with the relevant
Governmental Authority or other person in accordance with paragraphs 4 and
6, to the extent such settlement or agreement results in Environmental
Losses no greater than would have been the case were any such Final notice,
order or requirement to have been imposed.
2.3 Where the Purchaser has conduct under paragraph 6.2 and sub-paragraph
2.2(ii) is satisfied in relation to the relevant matter at any subsequent time,
any right of ICI to claim under this Post-Closing Counter Indemnity shall not be
adversely affected or reduced as a result of any unreasonable delay or failure
by the Purchaser thereafter in reaching the relevant settlement or agreement,
the assessment of reasonableness to take account of the effect of any such delay
or failure both on the terms of any settlement or agreement which may be reached
and on the ICI's claim under this Post-Closing Counter Indemnity.
2.4 The requirements of paragraph 2.1 are deemed to be satisfied by an
Emergency unless the final determination by an expert under paragraph 10 is that
the matter which is the subject of the claim is not an Emergency.
Post-completion conduct
3. The Purchaser shall not be liable under this Post-Closing Counter Indemnity
in respect of any matter to the extent that such claim would not have arisen but
for, results from or is increased by:
(i) ownership or occupation by ICI of any adjacent or affected property (except
for the Relevant Properties, the Relevant Shared Properties and the North
Tees Works as defined in the Pie Crust Leases as defined in this
Agreement); or
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(ii) any direct or indirect interest of ICI in any present or former owner of
any adjacent or affected property (except for the Relevant Properties,
the Relevant Shared Properties and the North Tees Works as defined in the
Pie Crust Leases as defined in this Agreement);
(iii) any Remedial Action required by any Governmental Authority at any
properties owned or occupied by ICI or any member of ICI's Group at any
time and adjacent to any Relevant Property or Relevant Shared Property
under or as a condition of any Permit or informal or formal agreement
issued by or made with a Governmental Authority in connection with any
development, extension, expansion, construction or intensification or any
change of use (Development) after Closing at any property other than any
Relevant Property or Relevant Shared Property or North Tees Works; or
(iv) the deliberate taking by ICI or any member of ICI's Group of any action
or step which is calculated or designed to give rise to Environmental
Proceedings in order to trigger a claim under this Post-Closing Counter
Indemnity; or
(v) any intrusive Investigative Works by ICI or any member of ICI's Group
(their employees, contractors, sub-tenants and licensees) which either do
not (a) satisfy the requirements of paragraph 8, or (b) are undertaken
otherwise than for Development; or
(vi) any admission of liability (in whole or part) or settlement of any claim
by ICI or any member of ICI's Group other than in accordance with
paragraph 6; or
(vii) any tax, duty or levy imposed or calculated in relation to claims under
paragraph 14 of Part A of Schedule 14; or
(viii) town and country planning (in the United Kingdom) or comparable land use
planning or zoning systems in other jurisdictions except to the extent
relating to Hazardous Materials or Waste.
Mitigation
4.1 ICI and any relevant Protected Person shall mitigate any Environmental
Losses under this Post-Closing Counter Indemnity.
4.2 ICI shall not be entitled to claim under this Post-Closing Counter
Indemnity in respect of Environmental Losses incurred in obtaining professional
services in relation to the subject matter, conduct or validity of
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the claim during the period prior to making that claim in accordance with
paragraph 1.2 above.
Disclosure to Governmental Authorities
5.1 Subject to paragraph 5.2, neither ICI nor any member of ICI's Group shall
disclose any information in relation to any matter which could reasonably be
expected to be the subject of a claim under this Post-Closing Counter Indemnity
to any Governmental Authority without the prior written consent of the Purchaser
except (following prior written notice to and consultation with the Purchaser in
relation to sub-paragraphs (ii), (iii) and (iv)) as provided for below:
(i) in an Emergency where, because of the circumstances it is impracticable to
obtain the prior written consent of the Purchaser; or
(ii) as required by law;
(iii) following the final determination by the expert under paragraph 10 (or
earlier agreement between the parties) that there is a Significant
Environmental Impact; or
(iv) in relation to Post-Closing Environmental Conditions but only insofar as
these are issues of discharges to controlled waters or sewers or emissions
to air following the final determination by the expert under paragraph 10
(or earlier agreement between the parties) that there is a high likelihood
that a Governmental Authority would require ICI or any member of ICI's
Group to carry out Remedial Action at a cost in excess of (Pounds)100,000
(excluding for these purposes the cost of Investigative Works (High
Likelihood).
5.2 The notice referred to in paragraph 5.1 shall contain specific reasonable
details of the matter proposed to be disclosed, the identity of the Governmental
Authority and individual officers to whom the disclosure is to be made and the
proposed manner and timetable for disclosure (including any documents or
presentations or drafts of the same). The Purchaser shall be given 30 days in
which to review and comment on the proposals for disclosure and the Vendor shall
have regard to and incorporate the reasonable requests of the Purchaser in
relation to the proposed disclosure.
5.3 In the event that the Purchaser withholds its consent to a disclosure in
circumstances where ICI notifies the Purchaser in writing that it is of the
opinion that there is a Significant Environmental Impact or High Likelihood (as
applicable) then the provisions of paragraph 10 shall apply.
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Claims Procedure
6.1 Upon ICI becoming aware of a matter which could reasonably be expected to
give rise to a claim for Environmental Losses under this Post-Closing Counter
Indemnity ICI shall as soon as reasonably practicable thereafter notify the
Purchaser by written notice.
6.2 The Purchaser shall have conduct of any Environmental Proceedings or
Remedial Action in respect of any matter which could reasonably be expected to
become a claim under this Post-Closing Counter Indemnity unless the Purchaser is
in breach of paragraph 6.3 in circumstances which would result in any material
Environmental Losses being incurred by ICI which are not covered by a valid
claim under this Schedule and/or would materially adversely affect the value of
the Relevant Property or Relevant Shared Property or the goodwill or good name
of ICI, in which event ICI shall be entitled to have conduct.
6.3 The Purchaser shall (subject to appropriate arrangements to maintain
confidentiality and privilege):
(i) provide reasonably frequent and reasonably detailed reports to ICI
regarding the progress of any Environmental Proceedings or Remedial
Action;
(ii) allow ICI a reasonable opportunity to review and comment in advance on
proposals for Remedial Action;
(iii) develop in consultation with ICI, proposals for Remedial Action, having
regard to the Purchaser's obligation at sub-paragraph (vi) below;
(iv) have regard to and incorporate the reasonable requests of ICI in relation
to such Environmental Proceedings or Remedial Action (unless any such
request of ICI would in excess of the cost of complying with (v) and (vi)
increase the amount of ICI's claim or the cost of the Remedial Action in
excess of the cost of complying with (v) and (vi) in which case ICI shall
be liable to the Purchaser for any such increase in relation to such
request which is accepted by the Purchaser);
(v) carry out Remedial Action in a proper and workmanlike manner and proceed
with the same in a timely manner and with due diligence;
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(vi) so far as reasonably practicable avoid or minimise interruption or
disruption to the business carried on at any of the affected properties
adjacent to the Relevant Properties or Relevant Shared Properties.
6.4 In the event that ICI shall be entitled to have conduct of any
Environmental Proceedings or Remedial Action on the grounds as provided for in
paragraph 6.2 ICI shall have the right at any time to assume by written notice
to the Purchaser conduct of all or any part of any Environmental Proceedings or
the carrying out of any Remedial Action relating to or affecting any Post-
Closing Environmental Conditions provided that if ICI has assumed any such
conduct the provisions of paragraph 6.3 shall apply mutatis mutandis.
Standard of Works
7. ICI shall not be entitled to claim under the Post-Closing Counter Indemnity
in respect of the cost of carrying out Remedial Action except for the reasonable
costs of such Remedial Action which are the minimum necessary:
(i) to comply with the Final notice, order or requirement of a Governmental
Authority acting under Environmental Law or Future Environmental Law or a
settlement or agreement under paragraph 2.2; or
(ii) to address the Emergency (which for the avoidance of doubt excludes
anything other than such works as are necessary at the time of the
Emergency to (a) remove the direct cause of, and (b) control the immediate
effects of the Emergency).
Investigative Works
8. ICI shall not be entitled to claim under this Post-Closing Counter
Indemnity for any Investigative Works except where such Investigative Works:
(a) are specifically and lawfully ordered or required by the relevant
Governmental Authority under law;
(b) are carried out in accordance with paragraph 6 in relation to a matter
where:
(i) a notice has been served under paragraph 1.2; and
(ii) ICI has assumed conduct under paragraph 6.4;
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(iii) on the basis of the available information (prior to the relevant
Investigative Works) there are reasonable grounds to believe
that Significant Environmental Impact or High Likelihood may
exist.
Statements
9. In the event of any circumstances arising which do or could reasonably be
expected to give rise to a claim for Environmental Losses under this Post-
Closing Counter Indemnity neither the Purchaser nor ICI nor any member of ICI's
Group shall make any public statements (including, for the avoidance of doubt,
any statement to any Governmental Authority, unless required by law or in an
Emergency) regarding such circumstances without first discussing with the other
party and reaching written agreement on the text of any such public statement
before it is made, such agreement not to be unreasonably withheld or delayed by
either party and without prejudice to paragraph 5.1.
Disputes
10.1 If any dispute arises between ICI and the Purchaser as to:
(i) whether or not an Emergency arose; or
(ii) whether or not High Likelihood exists; or
(iii) whether or not a Significant Environmental Impact has occurred,
the matter shall be referred for final determination in accordance with the
Criteria, at the request of either of ICI or the Purchaser to an independent
environmental consultant having experience relevant to the matter in dispute as
agreed between ICI and the Purchaser or in default of any such agreement within
seven days of such request by ICI or the Purchaser, nominated in accordance with
the criteria set out below at the request of either ICI or the Purchaser by or
on behalf of the Chief Executive of the Environmental Auditors Registration
Association or their equivalent in the relevant jurisdiction or, if he or she is
unable to make a nomination within 28 days of the request made to him or her, by
the President for the time being of the Chartered Institute of Arbitrators.
Such independent environmental consultant shall act as an expert and not as an
arbitrator and his fees and expenses shall be borne as he shall direct.
10.2 The criteria referred to and to be applied in the nomination of the
independent environmental consultant shall be that he shall not have less than
10 years experience relevant to the matter in issue and he shall be a member
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of a company or firm which has been established for at least three years
preceding the date of the nomination.
10.3 The said environmental consultant shall be offered the appointment within
seven business days of the parties reaching agreement on the appointment or upon
nomination by the Chief Executive of the Environmental Auditors Registration
Association or President of the Chartered Institute of Arbitrators as the case
may be, he can only be dismissed by the mutual agreement of ICI and the
Purchaser. The said environmental consultant shall present his written
determination within four weeks of his appointment or nomination or such longer
period as ICI and the Purchaser may mutually agree.
10.4 The terms of appointment of the environmental consultant will include a
provision that neither ICI nor the Purchaser will engage the environmental
consultant or any Consultancy firm with which he is associated after his
nomination in relation to the relevant matter without the written consent of the
other party.
10.5 The decision of the said environmental consultant in relation to the
matters referred to in Clause 10.1 shall in the absence of manifest error be
final and binding on the parties hereto.
Payment
11. Any sums for which either party is liable under this Post-Closing Counter
Indemnity shall be due and payable 30 days from the day following service of a
proper invoice in accordance with this Agreement.
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SCHEDULE 14A
HSCC Environmental Indemnity
PART A
Interpretation
1.1 In this Schedule 14A:
Closed Site Liabilities means any liabilities arising from soil and groundwater
contamination only under Future Environmental Law in respect of any property
owned, or occupied by the PO/MTBE Business at Closing at which business
operations, industrial processes or other uses carried on at any time prior to
Closing have as at Closing permanently ceased (Closed Sites);
Conduct Party means the party having the conduct of Environmental Proceedings,
Remedial Action and any other matter the subject of a notice given pursuant to
paragraph 9.1 only;
Criteria means:
(i) the nature of the legal obligation which has been or which may be
breached or the legal liability which has or may have arisen or may
arise;
(ii) the legal powers and remedies available to the Governmental Authority or
third party to bring Environmental Proceedings (including any limitations
on those powers);
(iii) the likelihood of Environmental Proceedings being commenced and
successfully completed by a Governmental Authority or third party acting
under Environmental Law in the jurisdiction in question having regard to
applicable enforcement practice therein;
(iv) the likelihood of any notice order or requirement to carry out Remedial
Action falling on the Purchaser;
(v) in relation to soil or groundwater contamination, the nature and extent
of the impact or risk of impact to the Environment; and
(vi) the costs and benefits of carrying out the proposed Remedial Action
(where applicable) (including the consequences of not carrying out the
proposed Remedial Action at that time);
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Disclosed Pre-Closing Compliance Issues means Pre-Closing Compliance Issues
fairly disclosed in the Data Room or otherwise disclosed by and in accordance
with the Disclosure Letters in either case pursuant to this Agreement (provided
that for the purposes of this definition, any such disclosure against any
particular warranty shall be deemed to be disclosure for the purposes of
determining whether a Pre-Closing Compliance Issue is a Disclosed Pre-Closing
Compliance Issue);
Disposal to Off-Site Landfills means the presence of Hazardous Materials or
Waste prior to Closing in, at or under and (if present prior to Closing) at any
time before or thereafter, migrating, escaping, leaking or emanating from:
(i) any off-site facility or property which prior to Closing but not thereafter
was used in whole or in part as a landfill site for the disposal of
Hazardous Materials or Waste from the PO/MTBE Properties or any other site
at any time occupied, owned or used by the PO/MTBE Business (including such
businesses as they may have been carried on at any time prior to Closing
and any predecessor of any such business) (Closed Off-Site Landfills); and
(ii) any off-site facility or property which prior to Closing and thereafter was
used in whole or in part as a landfill site for the disposal of Hazardous
Materials or Waste from the PO/MTBE Properties or any other site at any
time occupied, owned or used by the PO/MTBE Business (including such
businesses as they may have been carried on at any time prior to Closing
and any predecessor of any such business) provided that this sub-paragraph
(ii) applies in relation to such use prior to Closing only (On-going
Disposal Sites);
Emergency means in respect of Pre-Closing Soil or Groundwater Contamination
only, a fire, explosion, act of God or flood or other sudden and catastrophic
event where such an event would result in significant Environmental Losses or
would significantly increase Environmental Losses;
Environment means all or any of the following media, namely air (excluding media
within buildings or other natural or man made structures above or below ground),
water or land and any living organisms or systems supported by those media;
Environmental Law means any applicable statutes, subordinate legislation and
other national, federal, state and local laws (including common law and any
contractual obligations), rules, regulations, orders, ordinances, judgments or
injunctions and codes of practice, guidance notes and judicial and
administrative interpretation of each of the foregoing each as is valid and
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enforceable on the Purchaser at Closing (or, in relation to contractual
obligations or liabilities, after Closing as a direct consequence of the
completion of the transactions provided for in this Agreement) each as relate to
Pre-Closing Environmental Conditions. For the avoidance of doubt, any enactment
or statutory provision being an Environmental Law is as it may have been, or may
from time to time be, amended, modified, consolidated or re-enacted (with or
without modification) and includes all instruments or orders made under such
enactment, but only insofar as such amendment, consolidation or re-enactment of
such legislation does not increase the liability of HSCC under this Schedule
14A;
Environmental Losses means all fines, penalties, damages, losses, liabilities,
costs and expenses (including reasonable professional and consultants' fees)
(Losses) incurred under or to the extent necessary to comply with Environmental
Proceedings or a settlement or agreement as referred to in paragraph 4.2(ii) or
an emergency as provided for in paragraph 10(ii) (but excluding indirect,
consequential or incidental Losses (including any loss of anticipated profits or
revenue and costs attributable to the loss of use or business interruption or
disruption (Indirect Losses)) provided that Losses shall not be Indirect Losses
merely because they arise or are imposed under contract law);
Environmental Permit means any Permit under Environmental Law;
Environmental Proceedings means any criminal, civil, judicial, regulatory or
administrative proceeding, suit or claim of any Governmental Authority or third
party or Final notice, order or requirement of any Governmental Authority or
third party in each case under Environmental Law (or Future Environmental Law in
the case of Protected Matters only);
Final means, in relation to a notice, order or requirement that it is binding
and is either not capable of appeal, review or challenge, or there is no
reasonable prospect of a successful appeal, review or challenge;
Former Sites means any property not owned, occupied or used in connection with
the PO/MTBE Business at Closing, but formerly so owned, occupied or used
(including such businesses as they may have been carried on at any time prior to
Closing and any predecessor of any such business);
Former Sites Liabilities means any losses under Future Environmental Law arising
from the occupation, ownership or use by the PO/MTBE Business (including such
businesses as they may have been carried on at any time prior to Closing and any
predecessor of any such business) of any Former Sites;
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Future Environmental Law means all applicable statutes, subordinate legislation
and other national, federal, state and local laws (including the common law and
any contractual obligations), rules, regulations, orders, ordinances, judgments
or injunctions and codes of practice, guidance notes and judicial and
administrative interpretation of each of the foregoing each as is valid and
enforceable on the Purchaser from time to time and each as relate to Protected
Matters;
Governmental Authority means any governmental agency, regulatory body, court of
law or tribunal with jurisdiction under Environmental Law or, in the case of
Protected Matters only and in relation to paragraphs 8.1(ii) and 11(a), Future
Environmental Law;
Hazardous Materials means a substance which alone or in combination with other
things is or are capable of causing significant harm or damage to property or to
man or to the Environment or which are specified to be hazardous under
Environmental Law or Future Environmental Law;
High Likelihood has the meaning given in paragraph 8.1(iv);
Investigative Works means inspections, investigations, assessments, audits,
sampling or monitoring;
Permit means any authorisation, licence, permission, consent or approval issued
by a Governmental Authority acting lawfully;
PO/MTBE Properties means the two properties listed in Part I of Schedule 17 of
the Agreement under the heading PO/MTBE Business;
Post-Closing Environmental Conditions means:
(a) any soil or groundwater contamination first in existence, at, in, on, over
or under the PO/MTBE Properties after Closing; or
(b) the exposure of employees, contractors, agents or licensees to any
Hazardous Materials first in existence at, in, on, over or under the
PO/MTBE Properties after Closing; and
(c) any post-Closing breach of or non-compliance with Future Environmental Law
or Environmental Permits except to the extent resulting from Pre-Closing
Environmental Conditions:
which is in any case increased, exacerbated, enhanced, caused or permitted as a
result of circumstances occurring after Closing as the result of any act or
omission of the Purchaser (its employees, contractors, agents, sub-tenants or
licensees of the same); or
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(d) any post-Closing migrating, leaching or escaping of any Pre-Closing Soil
or Groundwater Contamination to the extent attributable in whole or in
part to, arising from or increased by the negligent acts or omissions or
any spillages after Closing of or by the Purchaser (its employees,
contractors, agents, sub-tenants or licensees) or third parties, or the
carrying out or failure to carry out any routine maintenance by the
Purchaser (its employees, contractors, agents, sub-tenants or licensees)
or third parties;
Pre-Closing Environmental Conditions means the following:
(i) in relation to the PO/MTBE Properties soil or groundwater contamination
existing at or migrating, leaching or escaping from any such property at
or prior to Closing including any subsequent migration leaking or escape
of any such pre-Closing contamination (Pre-Closing Soil or Groundwater
Contamination);
(ii) any pre-Closing breach of or non-compliance with Environmental Law or
Environmental Permits (excluding, for the avoidance of doubt, any Pre-
Closing Soil or Groundwater Contamination or Pre-Closing Health and
Safety Issues) in relation to the PO/MTBE Business by HSCC within the
period of three years prior to Closing (Pre-Closing Compliance Issues)
excluding, for the avoidance of doubt, any Disclosed Pre-Closing
Compliance Issues;
(iii) the exposure of employees, contractors, agents or licensees to any
Hazardous Materials prior to Closing as the result of their work for the
PO/MTBE Business or their presence on any property at any time used,
occupied or owned in connection with such business (including such
businesses as they may have been carried on at any time prior to Closing
and any predecessor of any such business) (Pre-Closing Health and Safety
Issues);
excluding in each case any Post-Closing Environmental Conditions;
Protected Matters means the following:
(i) Former Sites Liabilities;
(ii) Closed Sites Liabilities;
(iii) Disposal to Off-Site Landfills;
or any of them;
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Reasonable and Prudent Operator means a person exercising that degree of skill,
diligence, prudence and foresight which would reasonably and ordinarily be
expected from a skilled and experienced operator in substantial compliance with
all applicable laws engaged in the same type of undertaking in the same locality
and under the same or similar circumstances and conditions, and any reference to
the standard of a Reasonable and Prudent Operator herein shall be a reference to
such degree of skill, diligence, prudence and foresight as aforesaid;
Remedial Action means works for preventing, removing, remedying, cleaning-up,
containing or ameliorating soil or groundwater contamination including
Investigative Works and in relation to any Pre-Closing Compliance Issue means
works to remedy or recover from such non-compliance (a) which works are required
by a Governmental Authority acting lawfully under Environmental Law to have been
carried out at or prior to Closing only or, (b) which non-compliances were prior
to Closing an existing breach of Environmental Law;
Significant Environmental Impact means any Pre-Closing Soil or Groundwater
Contamination only (i) which represents a significant existing impact on the
Environment; or (ii) in respect of which there is a very high probability that
it will give rise to a significant impact on the Environment and in either case
would be likely to result in a Governmental Authority acting lawfully under
Environmental Law issuing or making a notice, order or requirement for Remedial
Action to be taken in respect of the same matter;
Waste means any waste including anything which is abandoned, unwanted or
surplus:-
(i) (including any such thing which is capable of any beneficial use or of
being recovered or recycled or has any value (Re-use Material)); but
(ii) excluding any Re-use Material which has in fact been put to beneficial use
or recovered or recycled.
Indemnities
2.1 Subject to the limitations set out in paragraphs 3 to 15 insofar as
applicable below HSCC shall indemnify, defend and hold the Purchaser harmless on
an after Tax basis from and against:
(A) Protected Matters
all Environmental Losses incurred, suffered or sustained by the Purchaser at any
time after Closing in respect of Protected Matters;
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(B) Pre-Closing Environmental Conditions
all Environmental Losses incurred, suffered or sustained by the Purchaser at any
time after Closing in respect of Pre-Closing Environmental Conditions.
2.2 For the avoidance of doubt, nothing in this Schedule 14A and in particular
any limitations set out hereunder shall effect, impact or otherwise
prejudice any other rights or entitlements of ICI (whether for itself or on
behalf of the Purchaser) under this Agreement and, in particular, Clause
8.2 thereto.
Limitations on Liability
3.1 The limitations on liability set out in Clauses 11.1, 12.2, 12.8(b) (as if
in each case the reference therein to Designated Purchaser was to the
Purchaser), 12.8(e), 12.8(g), 12.10, 12.13, 13.1 and 13.2 of the Agreement
inclusive shall apply mutatis mutandis to any claim made in respect of
paragraph 2.1 above.
3.2 Subject always to the limitations in paragraph 3.3 below the maximum
aggregate liability of HSCC in respect of claims made under paragraph
2.1(B) (Pre-Closing Environmental Conditions) above after paragraph 3.4 has
been applied shall not in any event exceed:
(i) an amount equal to (Pounds)100,000,000; and
(ii) the following percentage of Environmental Losses in relation to claims made
in the identified year:
<TABLE>
<CAPTION>
----------------------------------------------------------
Relevant Year Vendor's Share
----------------------------------------------------------
<S> <C>
Each year on or after Closing up to 100%
the tenth anniversary of Closing
Date
----------------------------------------------------------
Year commencing on the tenth 67%
anniversary of Closing Date
----------------------------------------------------------
Year commencing on the eleventh 33%
anniversary of Closing Date
----------------------------------------------------------
On or after the twelfth anniversary 0%
of Closing
----------------------------------------------------------
</TABLE>
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<TABLE>
----------------------------------------------------------
<S> <C>
Date
----------------------------------------------------------
</TABLE>
such annual percentage in each case being applied in respect of all
claimable Environmental Losses in respect of each valid claim made in the
relevant year.
3.3 HSCC shall have no liability unless and until:
(i) in the case of any individual claim under paragraph 2.1(A) (Protected
Matters) or 2.1(B) (Pre-Closing Environmental Conditions) the Environmental
Losses arising from such claim exceed (Pounds)100,000 in which event HSCC
shall only be liable for the excess of the Environmental Losses over and
above (Pounds)100,000;
(ii) in the case of any claims under paragraph 2.1(B) (Pre-Closing Environmental
Conditions), the aggregate of all Environmental Losses in respect of all
valid claims made in a Relevant Year (in accordance with the table in
paragraph 3.2(ii) and for the purpose of this sub-paragraph only
disregarding sub-paragraph 3.3(i) exceeds (Pounds)1,000,000 in which event
HSCC shall only be liable in relation to those claims for the excess of the
relevant Environmental Losses over and above (Pounds)1,000,000.
3.4 For the avoidance of doubt:
(i) any amount for which HSCC has no liability under paragraph 3.1 or by which
HSCC's liability is reduced as a consequence of the operation of paragraphs
3.5 to 14 below shall not be capable of constituting a claim or increasing
the amount thereof for the purpose of this paragraph 3;
(ii) for the purpose of this paragraph 3 where a claim is caused by more than
one event, circumstance, act or omission (not being one sequence or set
(where the members of the set are substantially similar in nature to each
other and have a common cause) of like events, acts or omissions at a
single site) which event, circumstance, act or omission would separately
give rise to a right to claim under paragraph 2.1 each such claim shall be
treated as a separate claim when calculating whether the thresholds in
paragraph 3.3 have been exceeded.
3.5 HSCC shall not be liable for any claim under paragraph 2.1(A) (Protected
Matters) or 2.1 (B) (Pre-Closing Environmental Conditions) unless ICI shall have
given HSCC written notice containing (so far as reasonably
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available) specific details of the claim, including the Purchaser's estimate (on
a without prejudice basis and so far as it can reasonably be made at the date of
the notice) of the amount of such claim. The Purchaser shall not be disentitled
from claiming under this Schedule 14A as a result of any reasonable delay in
providing such notice or reasonable failure to provide information in such
notice, where such delay or failure has not prejudiced HSCC.
3.6 Subject to paragraph 3.7 HSCC shall not be liable unless:
(i) in the case of Pre-Closing Soil or Groundwater Contamination and Pre-
Closing Health and Safety Issues each written notice has been given before
the twelfth anniversary of Closing;
(ii) in the case of Pre-Closing Compliance Issues such written notice has been
given before the third anniversary of Closing.
3.7 The liability of HSCC in respect of such claim under paragraph 2.1(A)
(Protected Matters) or 2.1(B) (Pre-Closing Environmental Conditions) under this
Schedule 14A shall absolutely determine (if such claim has not been satisfied,
settled, or withdrawn) if, after the relevant Final notice, order or requirement
referred to in paragraph 4.1 exists, legal proceedings in respect of such claim
shall not have been commenced by the Purchaser against HSCC within 12 months of
the service of notice by HSCC requiring commencement of proceedings (a Claim
Commencement Notice) and for this purpose proceedings shall not be deemed to
have been commenced unless they shall have been properly issued and validly
served upon HSCC.
Trigger Conditions
4.1 Subject to paragraphs 4.2 and 4.3 below, the Purchaser shall not be
entitled to make a claim under paragraph 2.1(A) (Protected Matters) or 2.1 (B)
(Pre-Closing Environmental Conditions) unless and to the extent that:
(i) in the case of any Protected Matters, Environmental Proceedings have been
commenced or issued under Future Environmental Law by a Governmental
Authority or any other person in respect of the same subject matter and
such Environmental Proceedings would (even if contested) result in a
notice, order or requirement which is Final;
(ii) in the case of any Pre-Closing Soil or Groundwater Contamination or any
Pre-Closing Health and Safety Issue, Environmental Proceedings have been
commenced or issued under Environmental Law by a Governmental Authority or
any other person in respect of the same
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subject matter and such Environmental Proceedings would (even if
contested) result in a notice, order or requirement which is Final;
(iii) in the case of any Pre-Closing Compliance Issues, the subject matter of
the claim constitutes an actual breach of or non-compliance with
Environmental Law and any Environmental Proceedings have been commenced
or issued under Environmental Law by a Governmental Authority or any
other person in respect of the same subject matter and such Environmental
Proceedings would (even if contested) result in a notice, order or
requirement which is Final;
4.2 Sub-paragraphs 4.1(i) to (iii) (as applicable) shall be deemed to have
been satisfied if:
(i) notice has been given to HSCC as required under paragraphs 3.5 and 9.1;
(ii) Environmental Proceedings would have been commenced or issued, and would
(even if contested) have resulted in a notice, order or requirement which
is Final, but for a settlement or agreement reached with the relevant
Governmental Authority or other person in accordance with paragraphs 7
and 9, to the extent such settlement or agreement results in
Environmental Losses no greater than would have been the case were any
such Final notice, order or requirement to have been imposed.
4.3 Where HSCC has assumed conduct under paragraph 9 and sub-paragraph
4.2(ii) is satisfied in relation to the relevant matter at any subsequent time,
any right of the Purchaser to claim under this Schedule 14A shall not be
adversely affected or reduced as a result of any unreasonable delay or failure
by HSCC thereafter in reaching the relevant settlement or agreement, the
assessment of reasonableness to take account of the effect of any such delay or
failure both on the terms of any settlement or agreement which may be reached
and on the Purchaser's claim under this Schedule 14A.
4.4 The requirements of paragraph 4.1 are deemed to be satisfied by an
Emergency unless the final determination by an expert under paragraph 13 is that
the matter which is the subject of the claim is not an Emergency.
Post-Completion Conduct
5. HSCC shall not be liable under paragraph 2.1(A) (Protected Matters) or
2.1(B) (Pre-Closing Environmental Conditions) in respect of any matter to the
extent that such claim would not have arisen but for, results from or is
increased by:
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(i) the cessation after Closing of any operations at any of the PO/MTBE
Properties; or
(ii) any new or different mode or form of industrial process outside the
current production methods of the business as at Closing (Changed
Industrial Process) at any of the PO/MTBE Properties after Closing except
to the extent that a valid claim under this Schedule 14A could have
arisen irrespective of the Changed Industrial Process, had the existence
of the relevant matter been known; or
(iii) demolition or de-commissioning of plant and equipment by or on behalf of
the Purchaser; or
(iv) any development, extension, expansion, construction or intensification or
any change of use (Development), except to the extent that (a) such
Development amounts (in aggregate from Closing) to no more than 20 per
cent of the built footprint at any PO/MTBE Property after Closing
(Permitted Development) or (b) if the information revealed by the
Development had become known through some other means, (not involving any
Development) it would have given rise to a valid claim under this
Schedule 14A provided that, in relation to any Development which could
affect, disturb or reveal Pre-Closing Soil or Groundwater Contamination:
(a) the Purchaser shall give prior written notice to HSCC;
(b) the Purchaser shall consult in good faith with HSCC and shall take
account of any reasonable requests of HSCC made in relation to the
process of obtaining permission for and carrying out the
Development; and
(c) the Purchaser (its employees, contractors, agents, sub-tenants and
licensees) shall in relation to such Development act at all times
non-negligently and in accordance with the standards of a
Reasonable and Prudent Operator; or
(v) any Remedial Action required by any Governmental Authority under or as a
condition of any Permit issued by or informal or formal agreement with a
Governmental Authority in connection with Development except to the
extent that if the information revealed by the Development had become
known through some other means, (not involving any Development) it would
have given rise to a valid claim under this Schedule 14A; or
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(vi) any Remedial Action required by any Governmental Authority at any PO/MTBE
Property under or as a condition of any Permit or informal or formal
agreement issued by or made with a Governmental Authority in connection
with any Development after Closing at any property other than any PO/MTBE
Property; or
(vii) subject to paragraph 16, any sale or change of occupier or grant of any
right of interest in relation to all or part of any of the PO/MTBE
Properties after Closing; or
(viii) any voluntary modification, renewal, termination, surrender or variation
by the Purchaser (its employees, contractors, agents, sub-tenants and
licensees) after Closing of any lease or other agreement or arrangement
under which the Purchaser occupies or uses all or any part of any PO/MTBE
Property; or
(ix) ownership or occupation by the Purchaser of any adjacent or affected
property (except for the PO/MTBE Properties); or
(x) any direct or indirect interest of the Purchaser in any present or former
owner of any adjacent or affected property (except for the PO/MTBE
Properties); or
(xi) the instigation or initiation by the Purchaser of any Environmental
Proceedings, actions or claims by a Governmental Authority, without
prejudice in all cases (a) to any permitted act or right of the Purchaser
under this Schedule 14A; (b) to the Purchaser acting as a Reasonable and
Prudent Operator balancing the potential Environmental Losses which may
be sustained as a result of its conduct against the potential benefits of
such conduct (such balance to be assessed on the hypothetical assumption
that any such Environmental Losses would not be recoverable under this
Schedule 14A or otherwise); or
(xii) the deliberate taking by the Purchaser of any action or step which is
calculated or designed to give rise to Environmental Proceedings in order
to trigger a claim under this Schedule 14A; or
(xiii) any intrusive Investigative Works by the Purchaser (its employees,
contractors, sub-tenants and licensees) which either:
(a) do not satisfy the requirements of paragraph 11; or
(b) do not fall within (a) and are undertaken otherwise than for the
purpose of Development as referred to in paragraph 5(iv) or,
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though carried out for that purpose, are not carried out in
accordance with paragraph 5(iv); or
(xiv) any admission of liability (in whole or part) or settlement of any claim
by the Purchaser other than in accordance with paragraph 9; or
(xv) any contractual obligation entered into, varied, amended or otherwise
modified after Closing other than pursuant to this Agreement so as to
establish or increase the Environmental Losses of the Purchaser.
Specific Exclusions
6.1 The Purchaser shall not be entitled to claim for any Environmental Losses
under paragraph 2.1(A) (Protected Matters) or 2.1 (B) (Pre-Closing Environmental
Conditions) to the extent that the relevant claim would not have arisen but for,
results from or is increased by matters which relate to:
(a) except in relation to soil or groundwater contamination the carrying out
of or the failure to carry out works which are routine or recurring as a
result of the normal and lawful operation of the business of the Purchaser
in a negligent manner or other than in accordance with the standards of a
Reasonable and Prudent Operator;
(b) use and recovery of packaging or packaging waste;
(c) land use planning or zoning systems except to the extent relating to
Hazardous Materials or Waste;
(d) any tax, duty or levy imposed or calculated in relation to claims under
paragraph 2.1(B);
(e) to the extent that any allowance, provision or reserve made for such fact,
matter, event, circumstance or Tax Liability in the Accounts or the
Closing Statements or the Tax Liability which has been noted in or was
taken into account in the preparation of the Accounts or the Closing
Statements, or to the extent that payment or discharge of the relevant
matter has been taken into account therein.
6.2 In respect of any claim under paragraph 2.1(B) (Pre-Closing Environmental
Conditions) and except in relation to paragraphs 8.1(ii) and 11(a), HSCC shall
not be liable to the extent that the relevant claim would not have arisen but
for, results from or is increased by Future Environmental Laws, provided that
HSCC shall not be entitled to exclude, avoid or reduce its liability under this
Schedule 14A as a result of Future Environmental Laws
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which are no more onerous than Environmental Laws and references to
Environmental Laws shall be interpreted accordingly.
6.3 Any reference to liability under Environmental Laws or Future
Environmental Laws (as applicable) shall be deemed to include any contractual
obligation by which the Purchaser is responsible for or to contribute to that
liability, to the extent such obligation is in force and binding on the
Purchaser at or prior to Closing or as the direct result of the transactions
provided for in this Agreement.
Mitigation
7.1 The Purchaser shall mitigate any Environmental Losses under this Schedule
14A.
7.2 The Purchaser shall not be entitled to claim under paragraph 2.1(A)
(Protected Matters) or 2.1(B) (Pre-Closing Environmental Conditions) in respect
of Environmental Losses incurred in obtaining professional services in relation
to the subject matter, conduct or validity of the claim during the period prior
to making that claim in accordance with paragraph 3.5 above.
Disclosure To Governmental Authorities
8.1 Subject to paragraph 8.2 and 9, neither ICI, any member of ICI's Group nor
the Purchaser shall disclose any information in relation to any matter which
could reasonably be expected to be the subject of a claim under paragraph 2.1 to
any Governmental Authority without the prior written consent of HSCC except
following prior written notice to and consultation with HSCC in relation to sub-
paragraphs (ii), (iii) and (iv) below:
(i) in an Emergency where, because of the circumstances it is impracticable to
obtain the prior written consent of HSCC; or
(ii) as required by law;
(iii) following the final determination by the expert under paragraph 13 (or
earlier agreement between the parties) that there is a Significant
Environmental Impact; or
(iv) in relation to Pre-Closing Compliance Issues but only insofar as these are
issues of discharges to controlled waters or sewers or emissions to air
following the final determination by the expert under paragraph 13 (or
earlier agreement between the parties) that there is a high likelihood
that a Governmental Authority would require the Purchaser to carry out
Remedial Action at a cost in excess of (Pounds)100,000
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(excluding for these purposes the cost of Investigative Works (High
Likelihood).
8.2 The notice referred to in paragraph 8.1 shall contain specific reasonable
details of the matter proposed to be disclosed, the identity of the Governmental
Authority and individual officers to whom the disclosure is to be made and the
proposed manner and timetable for disclosure (including any documents or
presentations or drafts of the same). HSCC shall be given 30 days (or such
lesser period which allows compliance with the relevant law where paragraph
8.1(ii) applies) in which to review and comment on the proposals for disclosure
and the Purchaser shall have regard to and incorporate the reasonable requests
of HSCC in relation to the proposed disclosure.
8.3 In the event that HSCC withholds its consent to a disclosure in
circumstances where the Purchaser notifies HSCC in writing that it is of the
opinion that there is a Significant Environmental Impact or High Likelihood (as
applicable) then the provisions of paragraph 13.1 shall apply.
8.4 In the event that such disclosure is made, the provisions of paragraph
9.4 and 9.6 below shall apply mutatis mutandis.
Claims Procedure
9.1 Upon the Purchaser becoming aware of a matter which could reasonably be
expected to give rise to a claim for Environmental Losses under this Schedule
14A the Purchaser shall as soon as reasonably practicable thereafter notify HSCC
by written notice. Without limiting the obligation of the Purchaser to comply
with this paragraph 9.1, the purpose of such notice shall be to alert HSCC to
the existence of the relevant matter in order that HSCC may decide to exercise
its rights in relation to conduct and such notice shall (if the Purchaser wishes
to proceed with a claim under this Schedule 14A) be accompanied by or followed
by a notice under clause 3.5.
9.2 HSCC shall conduct any Environmental Proceedings or Remedial Action in
respect of any matter which could reasonably be expected to become a claim under
paragraph 2.1(A) (Protected Matters), unless the Purchaser (i) notifies HSCC in
writing within a reasonable time thereafter, that it is in breach of paragraph
9.10 in circumstances which would result in any material Environmental Losses
being incurred by the Purchaser which are not covered by a valid claim under
this Schedule 14A and/or would materially adversely affect the value of the
PO/MTBE Property or the goodwill or good name of the Purchaser in which event
the Purchaser shall be entitled to have conduct but in any event such right of
conduct shall
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immediately cease upon ICI disposing of its interest in the Purchaser at which
time conduct shall immediately revert to HSCC. For the avoidance of doubt the
provisions of paragraph 9.6 shall not apply to such conduct by HSCC of
Environmental Proceedings or Remedial Action under this paragraph.
9.3 Subject to paragraph 9.10 below HSCC shall have conduct of all or any part
of any Environmental Proceedings or the carrying out of any Remedial Action
relating to or affecting any Pre-Closing Environmental Conditions as set out in
paragraph 9.2 above.
9.4 The Purchaser shall promptly provide HSCC with such reports, documents,
correspondence, information, assistance and facilities relating to any
Environmental Proceedings or Remedial Action or other matter for which written
notice has been given under paragraph 3.6 or 9.1 as HSCC may reasonably require
the Purchaser to provide (including if required by HSCC reasonable access to any
PO/MTBE Property or so far as practicable adjacent or affected property) except
that nothing in this paragraph shall require any waiver of legal privilege or
breach of any duty of confidentiality excluding any duty of confidentiality
between the Purchaser and any consultant in respect of or relating to
Environmental Proceedings or Remedial Action or other matter the subject of
written notice under paragraph 9.1. Each party shall use its reasonable
endeavours to avoid assuming any duty of confidentiality which would impede the
efficient operation of this paragraph 9.
9.5 The Conduct Party shall be entitled to avoid, dispute, deny, defend,
resist, appeal, compromise or contest any Environmental Proceedings, or any
matter the subject of the relevant written notice (including, without
limitation, making counterclaims or other claims against third parties in its
own name) and to have the conduct of any Environmental Proceedings, and any
related Remedial Action or appeals or other matter the subject of the relevant
written notice but no admission of liability shall be made by or on behalf of
the Conduct Party and the Environmental Proceedings or other matter the subject
of written notice under paragraph 9.1 shall not be compromised, disposed of or
settled without, in each case, the consent of the other party (such consent not
to be unreasonably withheld or delayed and provided that such consent shall not
be withheld where the relevant settlement or agreement satisfies the criteria in
paragraph 4.2(ii) (including as to quantum of Environmental Losses) and has been
reached in accordance with this paragraph 9);
9.6 The Conduct Party (where the Purchaser is the Conduct Party) shall use its
reasonable endeavours to ensure that:
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(i) the other party shall be informed promptly of any information which comes
to the knowledge of the Conduct Party other than information which the
Conduct Party reasonably considers to be immaterial to the Environmental
Proceedings or any other matter the subject of the relevant written
notice;
(ii) the other party shall be allowed a reasonable opportunity to review and to
comment upon any material reports documents and correspondence to be
prepared and provided by the Conduct Party to the other parties, or to any
Governmental Authority hearing administering or involved in, any
Environmental Proceedings or matter the subject of the relevant written
notice under paragraph 9.1 and the Conduct Party shall have regard to the
views of the other party on such reports, documents or correspondence;
(iii) the other party shall be provided with advance notice of and be allowed to
attend and participate in any material site visit meeting or negotiation
involving the Conduct Party (or any subsidiary of the Conduct Party) and
any other parties to, or the Governmental Authority hearing, administering
or involved in, any Environmental Proceeding or matter the subject of the
relevant written notice under paragraph 9.1 and if it so requests and
undertakes to pay for the reasonable cost of taking and providing such
notes the other party shall be provided promptly with reasonably full and
accurate but not verbatim notes of such visit meetings negotiations which
it does not attend and participate in;
(iv) if the other party so requests, copies of all material correspondence and
documents passing between the Conduct Party and other parties to the
Environmental Proceedings or matter the subject of the relevant written
notice under paragraph 9.1 or provided by the Conduct Party to the
Governmental Authority hearing, administering or involved in the
Environmental Proceedings or matter the subject of the relevant written
notice under paragraph 9.1 shall be provided promptly to the other party;
(v) subject to the other party undertaking to pay the reasonable cost thereof
detailed written reports shall be provided to the other party regarding
the status and progress of any Environmental Proceedings or any other
matter the subject of the relevant written notice under paragraph 9.1 as
frequently and in such form and detail as the other party shall reasonably
require;
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(vi) the other party shall be provided with reasonable notice of any proposal
by the Conduct Party or any third party (to the extent the Conduct Party
is aware of such proposal) to undertake Remedial Action Provided that
this obligation shall not apply in case of an Emergency;
(vii) any Remedial Action carried out by the Conduct Party or any contractor or
subcontractor of the Conduct Party shall be carried out using all
reasonable skill and care;
(viii) the other party shall be allowed to send such representatives as the
other party may reasonably require to attend and inspect the carrying out
of Remedial Action whilst they are being carried out Provided that such
representatives shall not interfere with the proper undertaking of the
Remedial Action or the operation of the relevant business or the
activities of any third party;
(ix) where an environmental expert is to be appointed the Conduct Party shall
consult with the other party and have regard to the other party's views
on whom to appoint, the scope of the appointment and the terms and
conditions of appointment.
9.7 Each party shall comply with the reasonable requests of the other for
arrangements or procedures to maintain confidentiality or legal privilege in
relation to any matters arising out of or relating to any Environmental
Proceedings, Remedial Action or other matter the subject of written notice under
paragraph 9.1.
9.8 The other party shall give the Conduct Party or its agents or contractors
access to personnel, premises, chattels, documents and records as the Conduct
Party may reasonably request and allow without limitation entry to premises to
make such examination and investigations as the Conduct Party may consider
necessary, the taking of samples, measurements, photographs and recordings of
soil, air, water or substances and combinations of substances at any PO/MTBE
Property, with the full co-operation of the other party, the interviewing of any
person the Conduct Party has reasonable cause to believe to be able to give
relevant information and the production of extracts, papers and records in
relation to any matter which is or is likely to be the subject of a claim under
paragraph 2.1.
9.9 The other party shall in a timely fashion:
(i) provide the Conduct Party with such information as it may reasonably
require to enable it to assist in the conduct of Environmental
Proceedings;
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(ii) consult in good faith with the Conduct Party in relation to Environmental
Proceedings; and
(iii) provide the Conduct Party with such material information as comes to the
knowledge of the other party and which relates to the Environmental
Proceedings.
9.10 Where HSCC has conduct of all or any part of Environmental Proceedings
pursuant to paragraph 9.2 above, HSCC shall (subject to appropriate arrangements
to maintain confidentiality and privilege):
(i) provide reasonably frequent and reasonably detailed reports to the other
party regarding the progress of Environmental Proceedings or Remedial
Action;
(ii) allow the other party a reasonable opportunity to review and comment in
advance on proposals for Remedial Action;
(iii) develop in consultation with the other party, proposals for Remedial
Action, having regard to HSCC's obligation at sub-paragraph (vi) below;
(iv) have regard to and incorporate the reasonable requests of the other party
in relation to such Environmental Proceedings or Remedial Action (unless
any such request of the other party would in excess of the cost of
complying with (v) and (vi) increase the amount of the Purchaser's claim
or the cost of the Remedial Action in excess of the cost of complying
with (v) and (vi) in which case the Purchaser shall be liable to HSCC for
any such increase in relation to such request which is accepted by HSCC);
(v) carry out Remedial Action in a proper and workmanlike manner and proceed
with the same in a timely manner and with due diligence;
(vi) so far as reasonably practicable avoid or minimise interruption or
disruption to the business carried on at any of the PO/MTBE Properties.
(vii) if so requested by the Purchaser (a) carry out any intrusive
Investigative Works where and to the extent that the criteria in
paragraph 11 are satisfied; and (b) make any disclosure where and to the
extent that the criteria in paragraph 8 are satisfied. Any right of the
Purchaser to claim under this Schedule 14A which would have arisen had
the Purchaser retained conduct and carried out such work or made such
disclosure shall not be adversely affected or reduced as a
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result of any unreasonable delay in complying with any such request (the
assessment of reasonableness to take account of all relevant matters
including the effect of any such delay on the Purchaser's claim under
this Schedule 14A or the claim which the Purchaser would have had, but
for such delay having regard to when the Purchaser might reasonably have
been expected to have carried out such work or made such disclosure had
the Purchaser retained conduct.
Standard of Works
10. The Purchaser shall not be entitled to claim under paragraph 2.1 in
respect of the cost of carrying out Remedial Action except for the reasonable
costs of such Remedial Action which are the minimum necessary:
(i) to comply with the Final notice, order or requirement of a Governmental
Authority acting under Environmental Law or (in relation to Protected
Matters) Future Environmental Law or a settlement or agreement under
paragraph 4.2; or
(ii) to address the Emergency (which for the avoidance of doubt excludes
anything other than such works as are necessary at the time of the
Emergency to (a) remove the direct cause of, and (b) control the
immediate effects of the Emergency).
Investigative Works
11. The Purchaser shall not be entitled to claim under paragraph 2.1 for any
Investigative Works in relation to any Protected Matters or Pre-Closing
Environmental Conditions except and to the extent that such Investigative Works:
(a) are specifically and lawfully ordered or required by the relevant
Governmental Authority under law; or
(b) are carried out in accordance with paragraph 7 and 9 in relation to a
matter where:
(i) a notice has been served under paragraph 3.6;
(ii) HSCC has not assumed conduct under paragraph 9;
(iii) on the basis of the available information (prior to the relevant
Investigative Works) there are reasonable grounds to believe that
Significant Environmental Impact or High Likelihood may exist.
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Statements
12. In the event of any circumstances arising which do or could reasonably be
expected to give rise to a claim for Environmental Losses neither HSCC, the
Purchaser, ICI nor any member of ICI's Group shall make any public statements
(including, for the avoidance of doubt, any statement to any Governmental
Authority, unless required by law or in an Emergency) regarding such
circumstances without first discussing with the other party and reaching written
agreement on the text of any such public statement before it is made, such
agreement not to be unreasonably withheld or delayed by either party and without
prejudice to paragraph 8.1.
Disputes
13.1 If any dispute arises between HSCC and the Purchaser as to:
(i) whether or not an Emergency arose; or
(ii) whether or not High Likelihood exists; or
(iii) whether or not a Significant Environmental Impact has occurred,
the matter shall be referred for final determination in accordance with the
Criteria, at the request of either the Purchaser or HSCC to an independent
environmental consultant having experience relevant to the matter in dispute as
agreed between the Purchaser and HSCC or in default of any such agreement within
seven days of such request by the Purchaser or HSCC, nominated in accordance
with the criteria set out below at the request of either the Purchaser or HSCC
by or on behalf of the Chief Executive of the Environmental Auditors
Registration Association or their equivalent in the relevant jurisdiction or, if
he or she is unable to make a nomination within 28 days of the request made to
him or her, by the President for the time being of the Chartered Institute of
Arbitrators. Such independent environmental consultant shall act as an expert
and not as an arbitrator and his fees and expenses shall be borne as he shall
direct.
13.2 The criteria referred to and to be applied in the nomination of the
independent environmental consultant shall be that he shall not have less than
10 years experience relevant to the matter in issue and he shall be a member of
a company or firm which has been established for at least three years preceding
the date of the nomination.
13.3 The said environmental consultant shall be offered the appointment within
seven business days of the parties reaching agreement on the appointment or upon
nomination by the Chief Executive of the Environmental
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Auditors Registration Association or President of the Chartered Institute of
Arbitrators as the case may be and he can only be dismissed by the mutual
agreement of the Purchaser and HSCC. The said environmental consultant shall
present his written determination within four weeks of his appointment or
nomination or such longer period as the Purchaser and HSCC may mutually agree.
13.4 The terms of appointment of the environmental consultant will include a
provision that neither the Purchaser nor HSCC will engage the environmental
consultant or any consultancy firm with which he is associated after his
nomination in relation to the relevant matter without the written consent of the
other party.
13.5 The decision of the said environmental consultant in relation to the
matters referred to in Clause 13.1 shall in the absence of manifest error be
final and binding on the parties hereto.
Payment
14. Any sums for which either party is liable under this Schedule 14A shall
be due and payable 30 days from the day following service of a proper invoice in
accordance with this Agreement.
Further Protected Person
15.1 In this paragraph 15.1:-
Asset Transaction means the sale or other disposal of all or any part of the
PO/MTBE Business after Closing or the sale or other disposal of all or any part
of any PO/MTBE Property after Closing;
Further Protected Person means:
(i) in the context of an Asset Transaction, the new owner of the PO/MTBE
Business or the relevant part of such business or of any PO/MTBE Property
or part of it following the Asset Transaction; and
(ii) in the context of a Share Transaction, the entity which was the subject
of the Share Transaction and also the person who has acquired the
relevant shares interest in such entity;
in either case not being a member of the HSCC Group;
Share Transaction means the sale or disposal of all or a controlling interest in
the shares in an entity forming part of the PO/MTBE Business after Closing;
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Transaction means an Asset Transaction or a Share Transaction, as applicable.
15.2 HSCC agrees that, in the event of a Transaction, the Purchaser shall be
entitled in its sole discretion to claim under this Schedule 14A in respect of
Environmental Losses of Further Protected Persons, as if such Further Protected
Persons were Protected Persons, provided that this 15.2 shall cease to apply in
relation to any Further Protected Person upon the occurrence of any subsequent
Transaction, to the extent such subsequent Transaction relates to a Further
Protected Person or to any PO/MTBE Property or part of it which was subject to
the first Transaction.
15.3 It is a condition of any claim by the Purchaser in relation to
Environmental Losses of a Further Protected Person that the Purchaser shall
comply with and shall procure that each Further Protected Person shall comply
with and in all respects be bound by paragraphs 3 to 14 of this Schedule 14A.
15.4 For the avoidance of doubt, no Further Protected Person shall acquire any
right against HSCC by virtue of this paragraph 15 and this paragraph 15 shall
not extend or increase HSCC's liabilities under this Schedule 14A.
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SCHEDULE 15
LOCAL CONDITIONS
The transfers referred to below shall be subject to the condition identified in
respect of them or it and ICI, HSCC and the Purchaser shall use reasonable
endeavours to procure the satisfaction of each such condition. Reference in
this Schedule 15 to any transfer shall be deemed to include all proposed steps
(as set out in Schedules 4 and 18) required or proposed to effect such transfer
and shall, in the case of a transfer of shares or assets include (without
limitation) where relevant the establishment of a new legal entity in the
relevant jurisdiction:
(a) the transfer of the assets of ICI Argentina S.a.i.c. is subject to the
approval of the General Inspection of Justice to the formation of a new
company in Argentina and the approval of the Inspection of Corporations to
the required asset transfer as a "going concern" or through a "spin-off" of
the assets of ICI Argentina S.a.i.c. to an Argentine newco;
(b) the transfer of the shares in PT. ICI Indonesia is subject to the approval
of the following authorities in Indonesia: the Badan Koordinasi Penanaman
Modal, the Ministry of Justice, and the Ministry of Industry and Trade;
(c) the transfer of the shares in PT. ICI Indonesia is subject to all
publications required to be made by Indonesian law having been duly made,
no objections having been made by PT. ICI Indonesia's creditors and to the
approval of the transfer by the shareholders of PT. ICI Indonesia;
(d) the transfer of the shares in ICI Mex SA de DV is subject to all required
notifications to the National Foreign Investment Registry in Mexico having
been made;
(e) the transfer of the shares in Arabian Polyol Company Ltd is subject to the
approval of the shareholders and all relevant governmental authorities in
Saudi Arabia, including (without limitation):
(i) the Foreign Investment Committee at the Ministry of Industry and
Electricity; and
(ii) the Ministry of Commerce; and
the making of all necessary filings with the relevant Saudi authorities;
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(f) the transfer of the shares in Tioxide Malaysia is subject to the approval
of the Bank Negara Malaysia and the Ministry of International Trade and
Industry in Malaysia and to the approval of the transfer by the
shareholders of Tioxide Malaysia;
(g) the transfer of the assets of ICI Espana S.A. is subject to the prior
approval of the Exchange Control Authorities in Spain;
(h) the transfer of the shares of Tioxide Europe S.A. is subject to the prior
approval of the Exchange Control Authorities in Spain;
(i) the transfer of the assets of ICI Taiwan Ltd is subject to the prior
approval of the Investment Commission of the Ministry of Foreign Affairs in
Taiwan and all other necessary governmental or regulatory approvals;
(j) the transfer of the assets of ICI 1996 (Thailand) Ltd is subject to the
prior approval of the Board of Investment and/or the Department of
Commercial Registration (as appropriate) and the Industrial Estates
Authority in Thailand (if required);
(k) the transfer of the shares in ICI Holland BV, ICI Polyurethanes (China)
Holdings BV and Chemical Blending BV is subject to the relevant works
council (ondernemingsraad) of ICI in The Netherlands having rendered its
advice pursuant to section 25 of the Works Council Act (Wet op de
Ondernemingsraden) and, if such advice is negative, no appeal having been
lodged by the relevant works council with the Companies Chamber of the
Amsterdam Court within one month after the date of such advice; and
(l) the transfer of the Olefins Manufacturing Business of ICI Chemicals and
Polymers Limited is subject to the condition(s) precedent set out in clause
3.1 of the Tripartite Agreement dated 30 June 1999 made between BP
Chemicals Limited, ICI, HSCC, the Purchaser and HIC and others (other than
the element of such condition(s) which requires Closing to have taken place
or the closing meetings for Closing to have commenced and there being no
reasonable prospect that Closing will not take place in order to be
satisfied) having been fulfilled or waived.
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SCHEDULE 16
DELAYED CLOSINGS
1. Where any Delayed Company, Delayed Business or Delayed Assets have not been
acquired by the relevant Designated Purchaser at Closing, the following
provisions shall apply until they are acquired. The provisions of this Schedule
16 shall not apply to those of the Joint Venture Interests to which clause 16
applies which shall, in the event of a Delayed Closing in respect thereof, be
dealt with in accordance with the provisions of that clause. The provisions of
this Schedule 16 shall apply to those pre-Closing steps which are set out in
Schedule 18 and which are intended to be effected prior to Closing but which are
not effected prior to Closing. In such circumstances, the parties to the pre-
Closing step shall use all reasonable endeavours to effect the transfer and/or
acquisition of the shares or assets by the same parties that were initially
envisaged and companies to which such shares relate shall be treated as Delayed
Companies (and the Current Parent of any such company (as identified in column 1
of Part II of Schedule 1) shall constitute a Share Selling Company) and such
assets shall be treated as Delayed Assets (unless they comprise all of the
assets of a Business Vendor which are required for a Local Business to continue
to operate for all practical purposes in the manner in which it operated prior
to Closing, in which case all the assets of that Business Vendor will not be
transferred and such assets shall be treated as a Delayed Business for the
purposes of this Schedule 16).
2. The relevant Share Selling Company or Business Vendor and the Purchaser
shall continue to use all reasonable endeavours to effect the acquisition of any
Delayed Shares, Delayed Business or Delayed Assets by the Designated Purchaser
as soon as reasonably practicable including, without limitation, using all
reasonable endeavours to obtain the consent or agreement of any third party
which is required to the transfer of any Business Asset. For the avoidance of
doubt, no Share Selling Company or Business Vendor shall be obliged to effect
the transfer of any Delayed Shares, Delayed Business or Delayed Assets all the
while such transfer would be in breach of any Regulatory Action.
3. The risk in any such Delayed Company, Delayed Business or Delayed Asset
shall pass to the Designated Purchaser with effect from Closing. The relevant
Share Selling Company or Business Vendor shall, if so requested by the
Designated Purchaser, execute a declaration of trust pursuant to which it will
hold the benefit of such Delayed Companies, Delayed Businesses or Delayed Assets
on trust for the Designated Purchaser. The relevant Business Vendor or Share
Selling Company shall account to that member of the
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Purchaser's Group for all sums received, less any direct costs (not including
management time) which relate to any Delayed Company, Delayed Business or
Delayed Asset. If the benefit of it cannot be held on trust for the relevant
member of the Purchaser's Group, the parties will use their respective
reasonable endeavours to make such other arrangements between themselves to
implement the transfer of the benefit of it as far as possible. During that
period, the relevant Business Vendor or Share Selling Company shall comply with
all reasonable requests of the relevant member of the Purchaser's Group in
relation to such Delayed Company, Business or Asset. The Purchaser on behalf of
the Designated Purchaser shall indemnify the relevant Business Vendor or Share
Selling Company on an after Tax basis against all Costs (including Tax
Liabilities) suffered or reasonably incurred by it in connection with such
Delayed Company, Business or Asset, provided that the Purchaser shall not be
obliged to indemnify the relevant Business Vendor or Share Selling Company in
respect of its internal administrative costs, nor to indemnify it to the extent
that the Costs are caused by the Business Vendor's or Share Selling Company's
failure to comply with its obligations under this Schedule.
In the case of any Delayed Company or Delayed Business which is shown in
Schedule 6 as containing a systems house for the purposes of the Polyurethanes
Business, without prejudice to its general obligation under clause 5 in relation
to the operation of the business, the relevant Business Vendor or Company shall
not purchase from any other supplier raw materials which are within the product
range of the Purchaser's Group, save where the Purchaser's Group is unable to
supply and, in the reasonable opinion of the relevant member(s) of ICI's Group,
it is commercially sensible for it to purchase those raw materials from other
sources in order for it to maintain its product range.
4. If the Designated Purchaser has not acquired any Delayed Company or Delayed
Business, and the Purchaser has not been able to nominate a person who is able
to acquire it, on or before the second anniversary of Closing, then the
Purchaser shall be entitled to elect either:
(a) to require ICI to continue the arrangement then existing in relation to it
on the same basis, in which case, in the case of an entity which is not a
Systems House Entity, the Purchaser as agent for the relevant Designated
Purchaser shall pay to ICI the sum resulting from the following
calculation:
1/4 of ( X )x$2,426,550,000
-------------------
pounds962.6 million
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where x is the Value (as defined in clause 6.3) of the relevant Delayed
Company or Delayed Business and, in the case of an entity which is a
Systems House Entity, the sum which is one quarter of the value shown
against that entity in Schedule 6. Any sum paid by the Purchaser pursuant
to this paragraph 4(a) shall be by way of adjustment to the consideration
that has been paid or transferred in respect of the relevant Delayed
Company (or of its holding undertaking) or Delayed Business under Schedule
18 (in the case of any Delayed Company or Delayed Business which is a
Schedule 18 Company or Schedule 18 Business) or, as the case may be, by way
of adjustment to the Final Consideration payable in respect of the Sale
Shares of the appropriate Delayed Company or the appropriate Business
Assets (in the case of any Delayed Company or Delayed Business which is not
a Schedule 18 Company or Schedule 18 Business);
(b) to terminate the existing arrangement then existing in relation to it, in
which case:
(i) such Delayed Company or Delayed Business shall from that time be
excluded from the transaction contemplated by this Agreement and
ICI shall pay the sum resulting from the following calculation to
the Purchaser as agent for the relevant Designated Purchaser:
y - (1/4 X z
------------------- X $2,426,550,000)
pounds962.9 million
where y is the Fair Value of the relevant Delayed Company or
Delayed Business and z is, in the case of an entity which is not a
Systems House Entity, the Value of the relevant Delayed Company or
Delayed Business and, in the case of an entity which is a Systems
House Entity, the value shown against the entity in Schedule 6. Any
sum paid by ICI pursuant to this paragraph 4(b)(i) shall be by way
of adjustment to the consideration to be paid or transferred in
respect of the relevant Delayed Company (or of its holding
undertaking) or Delayed Business under Schedule 18 (in the case of
any Delayed Company or Delayed Business which is a Schedule 18
Company or Schedule 18 Business) or, as the case may be, by way of
adjustment to the Final Consideration payable in respect of the
Sale Shares of the appropriate Delayed Company or the appropriate
Business Assets (in the case of any Delayed
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Company or Delayed Business which is not a Schedule 18 Company or
Schedule 18 Business);
(ii) in the case of any Delayed Company, the Final Cash Balance and
Final Financial Debt for that Company on the second anniversary of
Closing shall be calculated (for which purpose references to the
Closing Adjustments Date in the definitions of those terms shall be
read as references to the second anniversary of Closing) and if:
(aa) the Final Cash Balance as at the Closing Adjustments Date less
the Final Financial Debt as at the Closing Adjustments Date (the
Original Cash/Debt) is greater than the Final Cash Balance on the
second anniversary of Closing less the Final Financial Debt on the
second anniversary of Closing (the Return Cash/Debt) then the
Purchaser as agent for the relevant Designated Purchaser shall pay
the amount of the difference in dollars to ICI on behalf of the
relevant Selling Company; or (bb) if the Return Cash/Debt is
greater than the Original Cash/Debt, then ICI on behalf of the
relevant Selling Company shall pay the amount of the difference in
dollars to the Purchaser as agent for the relevant Designated
Purchaser the difference; and
(iii) in the case of any Delayed Company or Delayed Business, the Closing
Working Capital in respect of it shall be calculated (again,
treating any reference to the Closing Adjustments Date in the
definition of that term as a reference to the second anniversary of
Closing) and, if the resulting sum exceeds the Closing Working
Capital for that Delayed Company or Delayed Business as at the
Closing Adjustments Date, then ICI on behalf of the relevant
Selling Company shall pay the amount of the difference in dollars
to the Purchaser as agent for the relevant Designated Purchaser
and, if the resulting sum is less than the Closing Working Capital
for that Delayed Company or Delayed Business as at the Closing
Adjustments Date, then the Purchaser as agent for the relevant
Designated Purchaser shall pay the amount of the difference in
dollars to ICI on behalf of the relevant Selling Company.
ICI will then be entitled to retain such Delayed Company or Business and to
conduct the relevant business, or to transfer it to any person selected by
it in its absolute discretion.
5. If a Delayed Asset has not been transferred to a member of the Purchaser's
Group within 3 months of Closing and the Purchaser considers in
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good faith that such Delayed Asset has a Fair Value of (Pounds)2.5 million or
more, then it shall be entitled to serve a notice on the relevant Vendor with a
view to requiring a rebate under this paragraph. If the relevant Vendor agrees
that the Delayed Asset in question has a Fair Value of (Pounds)2.5 million or
more, or if the Independent Firm determines the Fair Value to be (Pounds)2.5
million or more, then the Purchaser shall be entitled to require the relevant
Vendor to pay the sum representing one quarter of that Fair Value to the
Purchaser. If the relevant Delayed Asset is subsequently transferred to a member
of the Purchaser's Group, then the Purchaser shall repay that sum to the
relevant Vendor.
6. If any Delayed Asset has not been transferred to a member of the
Purchaser's Group by the second anniversary of Closing, then the Purchaser shall
be entitled to elect either:
(a) to require the relevant Vendor to continue the arrangement then existing in
relation to that Delayed Asset on the same basis, in which case the
Purchaser shall account to the relevant Vendor for the amount of any
payment previously made in respect of such Delayed Asset pursuant to
paragraph 5 above; or
(b) to terminate the arrangement then existing in relation to that Delayed
Asset, in which case the relevant Vendor shall pay to the Purchaser the
Fair Value of that Delayed Asset (or, if the Purchaser has previously
required a payment to be made in respect of that Delayed Asset pursuant to
paragraph 5 above, the Fair Value of that Delayed Asset less the amount of
the payment pursuant to paragraph 5).
7. For the purposes of paragraphs 4(b), 5 and 6 above and clause 6.3(d), the
Fair Value of a Delayed Company, Delayed Business or Delayed Asset shall be what
would have been the open market value of the relevant Delayed Company, Delayed
Business or Delayed Asset between a willing seller and a willing third party
buyer (in the context of a disposal of the ICI Business or the PO/MTBE Business,
as applicable) as at the Closing Date. Each of ICI and the Purchaser shall
notify each other of what it considers in good faith to be the Fair Value of
such Delayed Company, Delayed Business or Delayed Asset and they shall use
reasonable endeavours to agree upon the Fair Value. If they have been unable to
agree it within 10 Business Days, then either of them may refer the question of
the valuation to the Independent Firm to certify the Fair Value. The
Independent Firm shall determine the Fair Value within 15 Business Days of being
so instructed. In doing so, it shall assume that the relevant Delayed Company,
Delayed Business or Delayed Asset is capable of transfer. The parties shall
provide the Independent Firm with all the information it reasonably requires in
order to determine the Fair Value.
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<PAGE>
The Independent Firm shall act as an expert and not an arbitrator and its
decision shall be final and binding on the parties. The relevant Vendor and the
Purchaser shall bear the cost of obtaining the Independent Firm's valuation
equally.
8. Pending completion of the acquisition of any Delayed Companies, Businesses
or Assets by the Purchaser as agent for the Designated Purchaser, the relevant
Share Selling Company or Business Vendor shall comply with all reasonable
requests for information in relation to such Delayed Companies, Businesses or
Assets to the extent that it is able to do so in compliance with all applicable
laws and regulations.
9. On the Delayed Closing Date in respect of any Delayed Shares or Delayed
Business, completion of the sale of such Delayed Shares or Delayed Business
shall take place in accordance with clause 6 (and the provisions of clause 6
shall apply to such completion as if the Delayed Closing Date were the Closing
Date).
10. The Purchaser and the relevant Share Vendor or Business Vendor shall keep
each other reasonably informed of matters within their knowledge which are
reasonably likely to affect the other in relation to Companies and Local
Businesses to which this Schedule applies. In particular, the Purchaser and the
relevant Share Selling Company or Business Vendor shall inform the other of
significant events known to them in relation to health and safety and
environmental matters of such Companies and Local Businesses.
11. Where in respect of any Delayed Company, Delayed Business or Delayed Asset
it is proposed that completion of its sale and purchase should take place after
the Closing Date, the Purchaser and the relevant Share Selling Company or
Business Vendor shall be entitled to amend any notifications given by them and
to serve any notifications not previously given by them in relation to the sale
and purchase which are, in each case, notifications required to be given a
certain number of days or Business Days prior to the Closing Date, at any time
prior to the date falling such number of days or Business Days prior to the date
for which such completion is scheduled to take place as such notification is
required to be given prior to the Closing Date.
12. Where all or a substantial part of the Business Assets in a particular
jurisdiction owned by a Business Vendor have not been acquired at Closing, the
relevant Vendor shall procure that the relevant Business Vendor holding such
Business Assets shall from the Closing Date until the Delayed Closing Date in
relation to those Business Assets establish (if not already established) and
maintain separate books of account:
Page 388
<PAGE>
(i) corresponding to such part of the ICI Business or PO/MTBE Business, as the
case may be, as is conducted by or on behalf of that Business Vendor using
those Business Assets (the Acquired Business); and
(ii) corresponding to the other businesses of that Business Vendor,
and the books of account referred to in paragraph (i) are referred to in this
Agreement as Purchaser Local Accounts and shall be maintained at the expense of
the Acquired Business and the books of account referred to in paragraph (ii) are
referred to in this Agreement as Business Vendor Local Accounts.
13. The Business Assets referred to in paragraph 12 above and the associated
Assumed Liabilities shall be reflected in the Purchaser Local Accounts and all
other assets and liabilities of such Business Vendor shall be reflected in the
Business Vendor Local Accounts.
14. From the Closing Date until the Delayed Closing Date all such assets and
liabilities (which shall include Tax assets and all Tax liabilities) and all
such profits and losses of the Business Vendor to the extent they relate to the
Acquired Business shall be reflected in the Purchaser Local Accounts. All other
assets and liabilities and profits and losses of such Business Vendor shall be
reflected in the Business Vendor Local Accounts. Without prejudice to clause
2.11, at Closing of the sale and purchase of the Delayed Business, the assets
and liabilities and profits and losses reflected in the Purchaser Local Accounts
shall be transferred to the Purchaser or as it may direct, for no additional
consideration. From the Closing Date to the Delayed Closing Date and unless
otherwise agreed by the relevant Vendor and the Purchaser, the Purchaser and the
relevant Vendor shall procure that the assets, liabilities, profits and losses
reflected in the Purchaser Local Accounts shall be used only for the purposes of
the Acquired Business and assets, liabilities, profits and losses reflected in
the Business Vendor Local Accounts shall be used only for purposes of the other
businesses of the Business Vendor.
15. From the Closing Date until the Delayed Closing Date, any dividend or
distribution declared, made or paid or any return of capital or repurchase or
redemption of share capital of the Business Vendor made or any equivalent
transactions in other jurisdictions and any other transaction in respect of the
share capital of the Business Vendor shall be reflected in the Business Vendor
Local Accounts.
16. If at any time after the Closing Date but before the Delayed Closing Date:
Page 389
<PAGE>
(i) any asset is acquired or disposed of by the Business Vendor then, in either
case, to the extent that such asset relates to the Acquired Business the
acquisition or disposal shall be reflected in the Purchaser Local Accounts
and to the extent that such asset does not so relate the acquisition or
disposal shall be reflected in the Business Vendor Local Accounts; and
(ii) any liability (contingent or otherwise) is incurred by the Business Vendor
or where any liability (contingent or otherwise) of the Business Vendor is
satisfied, compromised or released then, in either case, to the extent that
such liability relates to the Acquired Business the incurrence,
satisfaction, compromise or release shall be reflected in the Purchaser
Local Accounts and to the extent that such liability does not so relate the
incurrence, satisfaction or release shall be reflected in the Business
Vendor Local Accounts.
17. If at any time it appears to the Purchaser or the Vendors that there has
been a misapplication of income, expenses, assets, credits or liabilities as
between the relevant Purchaser Local Accounts and the relevant Business Vendor
Local Accounts, the allocation to such accounts may be varied with the agreement
of both the Purchaser and the relevant Vendor.
18. If the Purchaser and the relevant Vendor are unable to reach agreement as
to the variation of the Purchaser Local Accounts or the Business Vendor Local
Accounts in respect of any apparent misallocation, then either of the Purchaser
or the relevant Vendor may by notice in writing to the other and the relevant
Business Vendor require that any such allocation be varied so as to accord with
a certificate (which shall be provided to the other at the same time as notice
in writing is given) prepared by its auditors setting out the size and nature of
the variation that is required to place the Purchaser Local Accounts and the
Business Vendor Local Accounts in the position they would have been in if all
allocations had been properly reflected in those accounts.
19. Within 10 Business Days of a certificate being provided to the relevant
Vendor or the Purchaser in accordance with paragraph 18, such party may serve a
notice on the other disputing the certificate, stating the reasons for such
dispute and endorsed by its auditors, whereupon the matter shall be referred for
determination to the Independent Firm who shall be instructed to notify both the
relevant Vendor and the Purchaser of its determination and of the reasons for it
within 10 Business Days of such referral. In making its determination the
Independent Firm shall act as expert and not arbitrator and his determination
shall, in the absence of manifest error, be final and binding and deemed to have
been accepted and approved by the relevant Vendor and
Page 390
<PAGE>
the Purchaser. The fees and costs of the Expert incurred under this paragraph
shall be paid as to one-half by the relevant Vendor and one-half by the
Purchaser unless otherwise directed by the Independent Firm (who shall have the
authority to make such direction if it deems it equitable).
20. The Purchaser Local Accounts and the Business Vendor Local Accounts shall
be prepared on the basis and in accordance with the principles, policies,
procedures, methods and practices of accounting set out in the relevant Vendor's
accounting manual and using month ends and reporting timetables of the relevant
Vendor's Group and no member of the relevant Vendor's Group (except for
employees of the relevant Business Vendor engaged in the Acquired Business)
shall be responsible for preparing accounts in relation to the Acquired Business
to meet the requests of the Purchaser's Group other than such Purchaser Local
Accounts. The cost of preparing the Purchaser Local Accounts shall be for the
account of the Acquired Business.
21. The Purchaser shall not be entitled to access to the Business Vendor Local
Accounts. The Purchaser's auditor shall be entitled to reasonable access to the
Business Vendor Local Accounts for the purposes only of determining whether or
not there has been any misallocation of income, expenses, assets, credits or
liabilities as between the Purchaser Local Accounts and Business Vendor Local
Accounts in accordance with paragraph 16 or for preparing accounts in relation
to the Acquired Business required by the Purchaser subject to such auditor
executing a confidentiality undertaking to the reasonable satisfaction of the
relevant Vendor.
22. The Vendors shall take reasonable steps, insofar as they are able, to keep
confidential all confidential information in relation to any Delayed Company or
Business including, without limitation, from other members of the relevant
Vendor's Group and, in the case of Delayed Businesses, from employees of the
Business Vendor who are not employed in relation to the ICI Business or the
PO/MTBE Business, as the case may be, except where it is reasonably necessary
for such employees to have access to such information. For the purposes of this
paragraph, actions or omissions of employees of any such Company or Business
Vendor (where such employees are engaged in relation to the Delayed Business)
shall not constitute actions or omissions of the relevant Vendor. This paragraph
shall not operate to restrict or prevent information being made available where
this is required by any law, regulatory authority or securities exchange in any
jurisdiction or by the relevant Vendor's auditors in connection with the
preparation of accounts for any member of the relevant Vendor's Group and, in
such circumstances, the Purchaser shall take all steps reasonably requested by
the relevant Vendor to ensure that information is made available provided that,
in any such case,
Page 391
<PAGE>
such information is made available (to the extent practicable) subject to an
obligation to use it only for the purposes of such requirements and subject to a
duty of confidentiality.
23. Subject to clause 5.3, between the Closing Date and the relevant Delayed
Closing Date, the Vendors shall take no steps which would result in any Delayed
Companies and Delayed Businesses carrying on business otherwise than in the
ordinary course. Subject to clause 5.3 in particular (but without prejudice to
the generality of the foregoing), the Vendors shall take no steps between the
Closing Date and the relevant Delayed Closing Date which would result in the
acts or matters specified in clause 5.4 occurring in relation to the relevant
Delayed Company or Delayed Business without the prior written consent of the
Purchaser (such consent not to be unreasonably withheld or delayed). For the
purposes of this paragraph, steps taken by employees of either the ICI Business
or the PO/MTBE Business, as the case may be, shall not constitute steps taken by
the Vendors.
Page 392
<PAGE>
SCHEDULE 17
Part I
The Properties
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Property Address Interest Legal Owner of Transferred
relevant Interest Property
Yes/No
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
POLYURETHANES BUSINESS
- -----------------------------------------------------------------------------------------------------
Everslaan 45 B 3078 Everberg Belgium Freehold ICI Europe Ltd No
- -----------------------------------------------------------------------------------------------------
Polyurethanes Wilton facility PO Freehold ICI C&P Limited Yes
Box 90 Middlesborough Cleveland
England - shown on agreed Plan 1
- -----------------------------------------------------------------------------------------------------
Polyurethanes Wilton facility PO Leasehold ICI Plc Yes
Box 90 Middlesborough Cleveland
England - shown on agreed Plan 1
- -----------------------------------------------------------------------------------------------------
Polyurethanes Shepton facility Freehold ICI Plc Yes
Hitchin Lane Shepton Mallet
Somerset England
- -----------------------------------------------------------------------------------------------------
Polyurethanes Rozenburg facility Leasehold ICI Holland BV No
Rotterdam Holland
- -----------------------------------------------------------------------------------------------------
Betriebsstatte der Deutsche ICI Freehold Deutche ICI GmbH Yes
Land Au 30 94469 Deggendorf Germany
- -----------------------------------------------------------------------------------------------------
Polyurethanes Ternate facility Freehold ICI Italia SpA Yes
Ternate Italy
- -----------------------------------------------------------------------------------------------------
9156 Highway 75 PO Box 517 Geismar Freehold Rubicon Inc No
Louisiana USA
- -----------------------------------------------------------------------------------------------------
9156 Highway 75 PO Box 517 Geismar Freehold ICI Americas Inc Yes
Louisiana USA
- -----------------------------------------------------------------------------------------------------
Undeveloped land in vicinity of Freehold ICI Americas Inc Yes
Polyurethanes Geismar facility
Geismar Louisiana USA
- -----------------------------------------------------------------------------------------------------
286 Mantua Grove Road West Deptford Freehold ICI Americas Inc Yes
New Jersey 08066 USA
- -----------------------------------------------------------------------------------------------------
6555 15 Mile Road Sterling Heights Leasehold ICI Americas Inc Yes
Michigan USA
- -----------------------------------------------------------------------------------------------------
Auburn Hills USA Leasehold/ ICI Americas Inc Yes
Agreement for
lease
- -----------------------------------------------------------------------------------------------------
Suite 1037 8201 Greensboro Drive Leasehold ICI Americas Inc Yes
McClean Virginia USA
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 393
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Property Address Interest Legal Owner of Transferred
relevant Interest Property
Yes/No
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2795 Slough Street Peel County Leasehold ICI Canada Inc Yes
Missisauga Canada
- -----------------------------------------------------------------------------------------------------
Polyurethanes Cartegna facility and Freehold ICI Columbia SA Yes
adjoining vacant land Cartegna
Columbia
- -----------------------------------------------------------------------------------------------------
Rio Lerma 32 Fraccionamiento Freehold ICI Mex Sa de DV No
Industrial Tlazcolpan CP 54030
Edo. de Mexico
- -----------------------------------------------------------------------------------------------------
Reconquista 2780 1617 El Talar de Leasehold ICI Argentia Saic Yes
Pacheco Buenos Aires Argentina
- -----------------------------------------------------------------------------------------------------
Laboratory at Av. dos Estatos 4826 Leasehold ICI Brasil Quimca Yes
parte Santo Andre Brazil Ltda
- -----------------------------------------------------------------------------------------------------
Unused RDC premises Singapore Leasehold ICI Polyurethanes No
(Asia Pacific) Pte
Ltd
- -----------------------------------------------------------------------------------------------------
452 Wenjing Road Minhang Economic & Leasehold ICI Polyurethanes No
Technical Development Zone (China) Ltd
Shanghai China
- -----------------------------------------------------------------------------------------------------
G/F Zhong Sui An Tai Building Bao Leasehold ICI Polyurethanes No
Shi Road Guanzhou Economic & (China) Ltd
Development District Guanzhou
51030 China
- -----------------------------------------------------------------------------------------------------
Man Po offices, Shanghai, China Leasehold ICI Polyurethanes No
(Asia Pacific) Ltd
- -----------------------------------------------------------------------------------------------------
303 moo 3 Bangpoo Industrial Estate Leasehold ICI 1996 Thailand No
Sukhumvit Road Sumutprakam 10280 Limited
Thailand
- -----------------------------------------------------------------------------------------------------
No. 19 Industrial 3rd Road Kuan Yin Paid up ICI Taiwan Ltd Yes
County Taoyuan 328 Taiwan lease/licence
with option to
call for
freehold
transfer,
subject to
local law
requirements
- -----------------------------------------------------------------------------------------------------
Avda. de la Granvia 179, 08908 Leasehold ICI Espana Yes
L'Hospitalet Barcelona Spain
- -----------------------------------------------------------------------------------------------------
RELEVANT
PETROCHEMICALS BUSINESS
- -----------------------------------------------------------------------------------------------------
Paraxylene V Plant at Wilton Works Freehold ICI C&P Limited Yes
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 394
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Property Address Interest Legal Owner of Transferred
relevant Interest Property
Yes/No
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wilton Redcar and Cleveland
England (shown on Agreed Plan 2)
- -----------------------------------------------------------------------------------------------------
Aromatics Plant at North Tees Works Leasehold ICI C&P Limited Yes (grant of pie
Stockton-on Tees England (shown on crust lease)
Agreed Plan 3)
- -----------------------------------------------------------------------------------------------------
Saltholme Brine Reservoirs at Freehold ICI C&P Limited Yes
Saltholme Stockton-on-Tees England
(shown on Agreed Plan 4)
- -----------------------------------------------------------------------------------------------------
No. 4 and No. 6 Brinefields at Seal Freehold ICI C&P Limited Yes
Sands Stockton-on-Tees England
(shown on Agreed Plan 5)
- -----------------------------------------------------------------------------------------------------
Parts of the Salt Mines at Leasehold ICI C&P Limited Yes
Billingham England
- -----------------------------------------------------------------------------------------------------
North Tees Works Stockton-on-Tees Leasehold ICI C&P Limited Yes (grant of pie
England (shown on Agreed Plan 6) crust lease)
- -----------------------------------------------------------------------------------------------------
Boat Jetty and Jetties Nos. 1, 2 & Leasehold ICI C&P Limited Yes
3 North Tees Works
Stockton-on-Tees England
- -----------------------------------------------------------------------------------------------------
OLEFINS MANUFACTURING BUSINESS
- -----------------------------------------------------------------------------------------------------
1. Olefins 6 Plant at Wilton Freehold Lion C&P Limited Yes
Works, Wilton, Redcar and
Cleveland, England
- -----------------------------------------------------------------------------------------------------
2. Butadiene Storage, Ethylene Freehold Lion C&P Limited Yes
Control and Olefins 5 Plant at
Wilton Works, Wilton, Redcar and
Cleveland, England
- -----------------------------------------------------------------------------------------------------
3. Central Control Area, Wilton Freehold Lion C&P Limited Yes
Works, Wilton, Redcar and
Cleveland, England
- -----------------------------------------------------------------------------------------------------
4. Brine Reservoirs to the south Freehold Lion C&P Limited Yes
of Wilton Works, Wilton, Redcar
and Cleveland, England
- -----------------------------------------------------------------------------------------------------
5 Lima Compound 8 Freehold Lion C&P Limited Yes
- -----------------------------------------------------------------------------------------------------
Note: Properties 1-5 are comprised in a transfer in agreed form
- -----------------------------------------------------------------------------------------------------
Part of Teesport Works, Redcar and Leasehold Lion C&P Limited Yes (grant of
Cleveland, England (shown edged underlease of
and cross-hatched red on agreed part)
plan OM1)
- -----------------------------------------------------------------------------------------------------
Part of North Tees Works, Stockton Leasehold Lion C&P Limited Yes (grant of
on Tees, England (shown edged and piecrust lease)
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 395
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Property Address Interest Legal Owner of Transferred
relevant Interest Property
Yes/No
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
shown cross-hatched red on agreed
plan OM2)
- -----------------------------------------------------------------------------------------------------
Jetty A, North Tees Works, Stockton Leasehold Lion C&P Limited Yes
on Tees, England
- -----------------------------------------------------------------------------------------------------
Easement rights in relation to Freehold/ Lion C&P Limited Yes
Trans Pennine Ethylene Pipeline Leasehold
(excludes Hill House Spur)
- -----------------------------------------------------------------------------------------------------
Easement rights in relation to Freehold/ Lion C&P Limited Yes
Wilton - Grangemouth Ethylene Leasehold
Pipeline
- -----------------------------------------------------------------------------------------------------
Ethylene Conditioning Compound, Freehold [ICI C&P Limited] Yes
Lostock, Cheshire (shown on agreed
plan OM3)
- -----------------------------------------------------------------------------------------------------
Compound 38, Wilton Works, Wilton Freehold ICI C&P Limited Yes
- -----------------------------------------------------------------------------------------------------
No. 2 Process Office, Wilton Works Leasehold ICI C&P Limited Yes (underlease
of part)
- -----------------------------------------------------------------------------------------------------
Ethylene Pipeline Garage, Wilton Leasehold ICI C&P Limited Yes
- -----------------------------------------------------------------------------------------------------
Offices and Store at Leasehold ICI C&P Limited New lease
Castner-Kelner, Cheshire
- -----------------------------------------------------------------------------------------------------
Wilton Centre Offices Licence ICI C&P Limited Assignment or
sub-licence
- -----------------------------------------------------------------------------------------------------
Easement rights in relation to Freehold/ ICI C&P Limited Yes
Trans Pennine Ethylene Pipeline Leasehold
(Runcorn to Holford Spur and Shell
Interchange)
- -----------------------------------------------------------------------------------------------------
TIOXIDE BUSINESS
- -----------------------------------------------------------------------------------------------------
Factory at Tees Road Greatham Freehold Tioxide Europe No
England Limited
- -----------------------------------------------------------------------------------------------------
East and West Sites Billingham Freehold Tioxide Europe No
England Limited
- -----------------------------------------------------------------------------------------------------
Factory at Pyewipe Road Grimsby Freehold Tioxide Europe No
England Limited
- -----------------------------------------------------------------------------------------------------
Healing Cress Beds Grimsby England Freehold Tioxide Europe No
Limited
- -----------------------------------------------------------------------------------------------------
Nettleton Bottom Quarry Caistor Freehold Tioxide Europe No
England Limited
- -----------------------------------------------------------------------------------------------------
Land at North Killingholme England Freehold Tioxide Europe No
Limited
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 396
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Property Address Interest Legal Owner of Transferred
relevant Interest Property
Yes/No
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Strip of land on banks of the River Leasehold Tioxide Europe No
Humber England Limited
- -----------------------------------------------------------------------------------------------------
Gypsum Store at Ownby England Leasehold Tioxide Europe No
Limited
- -----------------------------------------------------------------------------------------------------
Lincoln House 137-143 Hammersmith Leasehold Tioxide Group No
Road London England Limited
- -----------------------------------------------------------------------------------------------------
No 3 & 4 of first floor 748/754 Leasehold Tioxide Europe No
Wilmslow Road Didsbury England Limited
- -----------------------------------------------------------------------------------------------------
Land at Yarm Back Lane Carlton Freehold Tioxide Europe No
England Limited
- -----------------------------------------------------------------------------------------------------
49 Bargate Grimsby England Freehold Tioxide Europe No
Limited
- -----------------------------------------------------------------------------------------------------
Factory at 1 Rue des Garennes 62102 Freehold Tioxide Europe SA No
Calais France
- -----------------------------------------------------------------------------------------------------
Land in the North East of Calais Freehold Tioxide Europe SA No
France
- -----------------------------------------------------------------------------------------------------
Depot in Calais France Leasehold Tioxide Europe SA No
- -----------------------------------------------------------------------------------------------------
Office at C van Kerckhovenstraat Leasehold TESA/ NV No
110 BUS 203 2880 Bornem Belgium
- -----------------------------------------------------------------------------------------------------
Office at s-402 23 Gothenburg Sweden Leasehold TEAB No
- -----------------------------------------------------------------------------------------------------
Factory at Kawasan Industri Teluk State concession Tioxide Malaysia No
Kalong 24000 Chukai Kemaman lease
Terengganu Malaysia
- -----------------------------------------------------------------------------------------------------
5th floor Wisma Avon 13A Jalan 219 Leasehold Tioxide Malaysia No
46100 Selangor Darul Ehsan
Petaling Jaya Malaysia
- -----------------------------------------------------------------------------------------------------
Office at Kultur Sitesi Camlik Yolu Leasehold TET No
Sokak E1 Daire 2 Etiler 80600
Istanbul Turkey
- -----------------------------------------------------------------------------------------------------
Factory at Loc Casome Scarlino Part Freehold/ TESRL No
Grosseto Italy Part State
concession
- -----------------------------------------------------------------------------------------------------
Sales office in Milan Italy Leasehold TESRL No
- -----------------------------------------------------------------------------------------------------
Factory at Sub L of 33 Umlazi Freehold TSA No
Native Location No 4676
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 397
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Property Address Interest Legal Owner of Transferred
relevant Interest Property
Yes/No
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Umbogintwini South Africa
- -----------------------------------------------------------------------------------------------------
69 Plots of vacant land in Leasehold TSA No
Kwamakhuta Township South Africa
- -----------------------------------------------------------------------------------------------------
Office at Am Brull 17 D-40878 Leasehold TEG No
Ratingen Germany
- -----------------------------------------------------------------------------------------------------
Factory at Poligano Industrial Freehold TES No
Nuevo Porto Palos de la Frontera
Huelva Spain
- -----------------------------------------------------------------------------------------------------
Part of factory at Poligano Leasehold OL No
Industrial Nuevo Porto Palos de la
Frontera Huelva Spain
- -----------------------------------------------------------------------------------------------------
Warehouse at Docks Levante Carni Leasehold TES No
Real de Madrid Km234 46469
Beniparrel Valencia Spain
- -----------------------------------------------------------------------------------------------------
Warehouse at Transportes Francisco Leasehold TES No
Bermejo C/Plomo No.3 28045 Madrid
Spain
- -----------------------------------------------------------------------------------------------------
Warehouse at Credito & Docks Leasehold TES No
Poligano Industrial Manso Mateu
08820 El Prat do Llobregat
Barcelona Spain
- -----------------------------------------------------------------------------------------------------
Warehouse at Doman Barrio Juncal Leasehold TES No
S/N Aparcavisa 48510 Valle de
Trapaga Bilbao Spain
- -----------------------------------------------------------------------------------------------------
Sales office at Renta Inmobiliaria Leasehold TES No
SA c/Orense 34-7a 28020 Madrid
Spain
- -----------------------------------------------------------------------------------------------------
Warehouse at Palos de la Frontera Leasehold OL No
Spain
- -----------------------------------------------------------------------------------------------------
Factory 1690 & 1694 Marie-Victorin Freehold Tioxide Canada No
Boulevard Tracy Quebec Canada Inc
- -----------------------------------------------------------------------------------------------------
Land at Lot 708-102 of the official Freehold Tioxide Canada No
cadastre of the Parish of Inc
Notre-Dame-de-la-Nativite-de
Becancour and Lot 879-10 of the
Official Cadastre of the Parish of
Saint-Edouard-de-Gentilly Canada
- -----------------------------------------------------------------------------------------------------
9999 Cavendish Boulevard Ville St. Leasehold Tioxide Canada No
Laurent Canada Inc
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 398
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Property Address Interest Legal Owner of Transferred
relevant Interest Property
Yes/No
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
350 Burnhamthorpe Road West Suite Leasehold Tioxide Canada No
210 Mississagua Canada Inc
- -----------------------------------------------------------------------------------------------------
2001 Butterfield Road Suite 601 Leasehold Tioxide Americas No
Downers Grove Illinois 1660515 USA Inc
- -----------------------------------------------------------------------------------------------------
Plant Site (known as Farquhar Heirs Freehold Louisiana Pigment No
Property) Northwest quarter of the Corporation
Northeast Quarter of Section 17,
Township 10 South, Range 9 West,
Calcasleu Parish Louisiana USA
- -----------------------------------------------------------------------------------------------------
Landfill Site (known as Relly-Pujo Freehold Louisiana Pigment No
"Rose-Bluff" property) Tract of Corporation
land in Section 17, Township 10
South, Range 9 West, Calcasleu
Parish Louisiana USA
- -----------------------------------------------------------------------------------------------------
Administrative Building and parking Freehold Louisiana Pigment No
lot site (known as Pelly-Pujo 20 Corporation
acres) East 20 Acres of the
Northwest quarter of the Northeast
Quarter of Section 17, Township 10
South, Range 9 West, Calcasleu
Parish Louisiana USA
- -----------------------------------------------------------------------------------------------------
Mitigation property site (known as Freehold Louisiana Pigment No
Heinen Property) the East half of Corporation
the Northeast Quarter of Section
25, Township 9 South, Range 13
West, lying south of the Sabine
River Diversion Canal less a tract
containing approximately 3 acres
Louisiana USA
- -----------------------------------------------------------------------------------------------------
Landfill/Parking lot (City of Leasehold Louisiana Pigment No
Sulphur Lease USA Corporation
- -----------------------------------------------------------------------------------------------------
Ore Storage facility (Lake Charles Leasehold Louisiana Pigment No
Harbour Lease) USA Corporation
- -----------------------------------------------------------------------------------------------------
Brimstone Rentals Lease USA Leasehold Louisiana Pigment No
Corporation
- -----------------------------------------------------------------------------------------------------
PO/MTBE BUSINESS
- -----------------------------------------------------------------------------------------------------
PO/TBA Pilot Plant Facility Travis Leasehold HSCC Yes
Texas USA
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 399
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Property Address Interest Legal Owner of Transferred
relevant Interest Property
Yes/No
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PO/MTBE Plant Port Neches Freehold/cotenancies in cogeneration HSCC Yes
Jefferson County Texas USA wastewater treatment plants and SK
substation
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Part II
Excluded Properties
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Property Address Tenure Legal Owner
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
POLYURETHANES BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------
Disused plant and site at Hillhouse England Not available ICI PLC
- ------------------------------------------------------------------------------------------------------------------------------------
Wilton Centre Wilton England Not available ICI C&P Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Sales office Bogata Columbia Freehold ICI Colombia SA
- ------------------------------------------------------------------------------------------------------------------------------------
Office rented by ICI Colombia SA in Venezuela Not available ICI Colombia SA
- ------------------------------------------------------------------------------------------------------------------------------------
Sales office Sao Paulo Brazil Leasehold ICI Brasil Quimica Ltda
- ------------------------------------------------------------------------------------------------------------------------------------
San Lorenzo blending facility Argentina Not available ICI Argentina Saic/Du Real
- ------------------------------------------------------------------------------------------------------------------------------------
ICI plant at Moterrey Mexico Leasehold ICI Mex SA de CV
- ------------------------------------------------------------------------------------------------------------------------------------
Wakaguri 1372-1 Ami-machi Inashiki-gun Ibaraki Oref Not available ICI Japan Ltd
300-0333 Tokyo Japan
- ------------------------------------------------------------------------------------------------------------------------------------
Land at Vilvoorde, Belgium Not available Not available
- ------------------------------------------------------------------------------------------------------------------------------------
RELEVANT PETROCHEMICALS BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------
Wilton Centre Wilton England Not available ICI C&P Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Reversionary interest in Pie Crust Leases Freehold ICI C&P Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Olefins Land Wilton England Freehold ICI C&P Ltd
- ------------------------------------------------------------------------------------------------------------------------------------
TIOXIDE BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------
Former EA West Site Derby England Freehold Tioxide Europe Limited
- ------------------------------------------------------------------------------------------------------------------------------------
West Field Grimsby (shown for identification edged Freehold Tioxide Europe Limited
black on agreed plan 7) England
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 400
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Property Address Tenure Legal Owner
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GENERALLY
- ------------------------------------------------------------------------------------------------------------------------------------
The Sales Offices Various Various
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Part III
The Sales Offices
Such of the national selling offices as are used by the following companies in
the following jurisdictions as agent, support or other service provider for the
Polyurethanes, Relevant Petrochemicals and (as the case may be) Tioxide
Businesses:
<TABLE>
---------------------------------------------------------------------------
<S> <C>
ICI International Limited Russia (Moscow/St. Petersburg)
Ukraine (Kiev)
Rumania (Bucharest)
Bulgaria (Sofia)
Yugoslavia (Belgrade)
Slovenia (Ljubnia)
Croatia (Zargreb)
---------------------------------------------------------------------------
ICI Polska Sp.Z00 Poland
---------------------------------------------------------------------------
ICI Czechoslovakia Sro Czech Republic
---------------------------------------------------------------------------
ICI Slovakia Sro Slovakia
---------------------------------------------------------------------------
ICI Hungary Kft Hungary
---------------------------------------------------------------------------
ICI Korea Ltd Korea
---------------------------------------------------------------------------
ICI Singapore Private Ltd Singapore
---------------------------------------------------------------------------
ICI Japan Ltd Japan
---------------------------------------------------------------------------
ICI (Malaysia) Holdings Sdn Bhd Malaysia
---------------------------------------------------------------------------
ICI China Ltd Hong Kong
---------------------------------------------------------------------------
ICI France SA France
---------------------------------------------------------------------------
ICI Norden Sweden
Finland
---------------------------------------------------------------------------
Norway
---------------------------------------------------------------------------
ICI Switzerland AG Switzerland
---------------------------------------------------------------------------
ICI Israel Israel
---------------------------------------------------------------------------
</TABLE>
Page 401
<PAGE>
<TABLE>
---------------------------------------------------------------------------
<S> <C>
ICI National Starch Thailand
---------------------------------------------------------------------------
ICI Vietnam Vietnam
---------------------------------------------------------------------------
</TABLE>
Part IV
Provisions for the transfer of Transferred Properties
Definitions
1.1 In this Schedule the following expressions shall bear the following
meanings:
agreed plan means any one plan forming part of the agreed volume of plans.
agreed volume of plans means the bundle of plans initialled for identification
purposes by the parties hereto.
Excluded Properties means the interests and/or estates of the relevant Companies
or Business Vendors in the properties referred to in Part II of this Schedule
and Excluded Property shall be construed accordingly.
Material US Properties means the ICI Americas Inc. owned Properties at Geismar
Louisiana and West Deptford New Jersey, the HSCC leased Property at Travis Texas
and the HSCC owned Property at Port Neches Jefferson County Texas.
Retained Business means the Business of the Retained Group.
Sales Offices means the properties referred to in Part III of this Schedule.
Transferred Property Approval means, in relation to any Transferred Property,
the consent, waiver, approval or acquiescence of any landlord or other third
party required for the underlease of the Transferred Property to the Designated
Purchaser;
Transferred Property Consent means, in relation to any Transferred Property, the
consent, waiver, approval or acquiescence of any landlord or other third party
required for the transfer of the whole or any part of the Transferred Property
to the Designated Purchaser;
1.2 In Part VII of this Schedule a reference to the property shall be a
reference to the Property to which the relevant paragraph refers.
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Matters to which the sale is subject
2. The Transferred Properties are sold subject to and (where appropriate) with
the benefit of the following matters (other than liens and encumbrances securing
financial charges):
(A) all local land charges and all matters capable of registration as local
land charges;
(B) all notices served and orders, demands, proposals or requirements made by
any local or other competent authority;
(C) all exceptions and reservations, all rights of way, water, light, air or
other rights, easements, quasi-easements, servitudes, wayleaves and other
encumbrances (whether constituted in the title deeds or otherwise) and
third party rights of possession or occupation;
(D) in the case of a Transferred Property which is leasehold, the covenants,
obligations and conditions on the part of the lessee contained in the
lease;
(E) in the case of a Transferred Property which is affected by any lettings in
favour of third parties (Transferred Property Lettings), the covenants,
obligations and conditions on the part of the relevant Business Vendor in
the Transferred Property Lettings and the other terms and conditions
therein;
(F) the liens encumbrances and other matters described in the Disclosure
Letter; and
(G) the Permitted Encumbrances.
Vacant possession
3. Each Transferred Property is sold subject to the Transferred Property
Lettings and the other matters set out in paragraph 2 above but otherwise with
vacant possession of the whole at Closing.
Title
4.1 Subject to obtaining Transferred Property Consents or Transferred Property
Approvals the relevant Business Vendor shall transfer the Transferred Properties
to the relevant Designated Purchaser in accordance with clause 2 and the
remaining terms of this Schedule on the Closing Date.
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4.2 Each Designated Purchaser shall accept the title of the Business Vendor to
each of the relevant Transferred Properties at Closing and shall raise no
objection or requisition thereto.
Property consents
5.1 This paragraph and paragraph 6 applies to those Transferred Properties in
relation to which a Transferred Property Consent is required for the sale,
transfer or (as the case may be) assignment to the Designated Purchaser and if
such Transferred Property Consent remains to be obtained as at Closing this
paragraph shall continue to apply until the relevant Transferred Property
Consent shall have been obtained or until this Agreement shall cease to apply to
such Transferred Properties in accordance with the terms of this Agreement.
5.2 The relevant Business Vendor shall use all reasonable endeavours at its own
expense to obtain the Transferred Property Consents. The Designated Purchaser
shall provide to any landlord or other third party lawfully requiring the same a
direct covenant by the Designated Purchaser with the landlord or other third
party to observe and perform the terms of the relevant lease or other applicable
agreement, together with (if lawfully required by the relevant landlord or third
party) a guarantee or other surety provided by the Designated Purchaser.
5.3 The relevant Business Vendor shall pay the professional and other fees of
any landlord incurred in connection with all applications for the Transferred
Property Consents.
5.4 The Designated Purchaser shall supply all references and other evidence and
information reasonably required by any landlord or any other third party in
order to obtain the Property Consents.
5.5 If any Transferred Property Consent shall not have been obtained by 18
months following the Closing the relevant Business Vendor shall (or shall
procure) in relation to each Transferred Property so affected:
(A) at the parties' joint expense make and pursue an application to a Court for
a declaration that the Transferred Property Consent is being withheld
unreasonably (where the relevant landlord is not entitled to withhold
consent in such a manner) unless either the Business Vendor and the
Purchaser agree that such an application has no reasonable prospect of
success or the Business Vendor obtains advice from leading counsel to the
same effect; and
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(B) if paragraph 7 of this Part IV applies at its own expense apply to the
relevant landlord for a Transferred Property Approval to an underlease to
the Designated Purchaser for a term equal to the residue of the term of the
relevant lease (less 3 days) and otherwise on the same terms of such lease.
Delayed legal completion
6.1 If a Transferred Property Consent has not been obtained by the Closing Date
in relation to a Transferred Property then the date for legal completion of the
transfer or assignment (as the case may be) of the relevant Transferred Property
shall be postponed to the day 10 Business Days after the earlier of:
(A) the date on which the Transferred Property Consent is obtained;
(B) the expiration of the period for the lodging of an appeal against a
decision of a court of competent jurisdiction that the Transferred Property
Consent is being unreasonably withheld without such appeal being lodged;
and
(C) the Designated Purchaser (if it so elects) giving notice that it wishes to
complete the transfer or assignment (as the case may be) of the Transferred
Property notwithstanding the non-issue of the Transferred Property Consent
in which case the transfer or assignment to the Designated Purchaser shall
contain an indemnity in favour of the relevant Business Vendor in respect
of any Costs arising as the result of the transfer or assignment (as the
case may be) taking place without consent.
6.2 Pending legal completion and with effect from the Closing Date the relevant
Business Vendor will or will procure that in relation to any relevant Business
Property:
(A) the Transferred Property is held on trust for the Designated Purchaser;
(B) the Designated Purchaser shall (with all persons authorised by it) have the
use and occupation of either the whole of the Transferred Property or such
parts of the Transferred Property as are not subject to any Transferred
Property Lettings or other third party rights;
(C) the relevant Business Vendor does not enter into any arrangement, contract
or other dealing (other than as contemplated by this Agreement), effect or
accept any variation or surrender or other termination of any leases nor
serve any notices upon a landlord or
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tenant thereunder nor (in respect of any lease where the rent is now or
prior to assignment becomes subject to review) agree to take any steps in
relation to any review of the rent without the prior written consent of the
Designated Purchaser (such consent not to be unreasonably withheld or
delayed). Each relevant Business Vendor shall with all due expedition take
such action as the Designated Purchaser (at the expense of the Designated
Purchaser) may reasonably require in connection with any such rent review;
(D) if the relevant Transferred Property is leasehold and subject to being put
in funds by the Designated Purchaser, the rents, service charges and other
sums reserved by the relevant lease are paid; and
(E) the Designated Purchaser is accounted to forthwith for any income received
from the Transferred Property.
6.3 Pending legal completion and with effect from the Closing Date in relation
to any relevant Transferred Property, the Designated Purchaser will:
(A) pay on demand to the relevant Business Vendor a licence fee equivalent to
all rents, service charges and other outgoings properly paid by the
relevant Business Vendor in respect of the Transferred Property;
(B) by way of indemnity only observe and perform the covenants and conditions
contained in the title deeds and documentation relating to the relevant
Transferred Property including without limitation those on the part of the
lessee in the relevant lease (other than payment of rents);
(C) indemnify the relevant Business Vendor against the acts or omissions of the
employees, servants, agents, licensees and invitees of the Designated
Purchaser in or about the relevant Transferred Property.
6.4 The Designated Purchaser acknowledges that:
(A) as against any person from whom a Transferred Property Consent is to be
obtained in accordance with this Agreement it has no right to possession or
occupation of the relevant Transferred Property;
(B) in the event of legal proceedings in respect of inter alia a breach caused
by the occupation of such Designated Purchaser being issued by any such person
it will vacate the relevant Transferred Property on demand.
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6.5 If paragraph 6.4(B) of this Part IV of this Schedule applies and the
Designated Purchaser vacates the Transferred Property in accordance therewith
then the Designated Purchaser may by written notice at any time thereafter
unless and until a relevant Transferred Property Consent or Transferred Property
Approval is in fact obtained elect by written notice or notices to treat any
such Transferred Property so affected as withdrawn from the sale and purchase
set out in this agreement so that the parties' obligations in respect of the
relevant Transferred Property shall end immediately after the relevant notice is
served without limiting any accrued rights of action. If the value (as referred
to in paragraph 11 (Value)) of the relevant Transferred Property is other than a
nil amount the relevant Business Vendor will forthwith pay the Designated
Purchaser an amount equivalent to that value and the Designated Purchaser shall
surrender its interest in such Transferred Property to the relevant Business
Vendor.
Underlease
7.1 This clause shall apply to any Transferred Property (an Unconsented
Property) in relation to which a Transferred Property Consent is required where:
(A) the parties agree that the Transferred Property Consent has been reasonably
withheld; or
(B) the Transferred Property Consent has been refused and the landlord has no
obligation to act reasonably in deciding whether or not to grant a
Transferred Property Consent; or
(C) the relevant Business Vendor having complied with its obligations under
sub-paragraph 5.5(A) the Court has refused to grant a declaration; or
(D) the Transferred Property Consent has not been issued by the date 18 months
after the date of this Agreement unless an application has been made to the
Court for a declaration that the Transferred Property Consent has been
unreasonably withheld and such application has not been determined.
7.2 The relevant Business Vendor and the Designated Purchaser will at the
election of either such party enter into an agreement for grant and the taking
up of, an underlease of each Unconsented Property.
7.3 The provisions of paragraphs 5.2, 5.3, 5.4 and 5.5 (except sub-paragraph
5.5 (B)) shall apply to Transferred Property Approvals (mutatis mutandis).
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7.4 Such agreement for underlease shall specify that the underlease shall be
completed on the tenth Business Day after the earlier of:
(A) the Transferred Property Approval being obtained; and
(B) the expiry of the period for the lodging of an appeal against a decision
made by a Court of competent jurisdiction that the Transferred Property
Approval has been unreasonably withheld without such appeal being lodged.
7.5 Such agreement for underlease should specify that the underlease of each
Unconsented Property will be for a term equal to the unexpired term of the lease
of the relevant Transferred Property less three days and will be otherwise on
the same terms as, and otherwise in compliance with, the relevant lease with
provisions for the rent to be the same as the rent agreed or determined from
time to time under the lease, a covenant by the underlessee to observe and
perform the terms of the lease other than those relating to the payment of rent
and a covenant by the underlessor to pay the rent reserved by the lease.
7.6 Where the Transferred Property Consent is obtained or a declaration is
obtained that such Transferred Property Consent has been unreasonably withheld
after completion of such underlease this Agreement shall continue to take effect
for the purpose of assigning or transferring the lease of the relevant
Transferred Property to the Designated Purchaser subject to and with the benefit
of the underlease.
Deposits
8. Insofar as it is able to do so, on legal completion the relevant Business
Vendor will transfer to the Designated Purchaser the benefit of all Transferred
Property Lettings or any documents entered into pursuant to them.
The Property Transfer
9.1 On legal completion the relevant Business Vendor will deliver a duly
executed transfer or (as the case may be) assignment of the Transferred
Properties to the Designated Purchaser.
9.2 The relevant Business Vendor will not by reason of the covenants implied by
law or statute or otherwise expressed in any transfer/assignment of a
Transferred Property which is leasehold be deemed to covenant expressly or
impliedly that the obligations contained in any lease of the Transferred
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Property relating to its state and condition have been complied with and the
transfer/assignment shall contain a declaration to that effect.
9.3 The Designated Purchaser shall (where appropriate) covenant (by way of
indemnity only) to observe and perform all covenants, conditions and obligations
on the part of the owner of the relevant Transferred Property and to indemnify
and keep indemnified the owner of the relevant Transferred Property against any
future failure to observe and perform the same.
9.4 The transfer/assignment shall (where appropriate) contain such rights and
reservations as may be necessary or otherwise required pursuant to the
provisions of Part VII of this Schedule.
General
10.1 The Business Vendors and the Designated Purchaser will co-operate in any
reasonable arrangements proposed by either of them designed to provide for the
Designated Purchaser to receive the benefits and assume the burdens of the
Transferred Properties with effect from Closing, including (without limitation):
(A) enforcement (at the cost and for the account of the Designated Purchaser)
of all rights of the relevant Business Vendors against any third party;
(B) taking or, as the case may be, joining in such action as the Designated
Purchaser may reasonably request (in either case at the expense of the
Designated Purchaser) in relation to the Transferred Properties; and
(C) noting the Designated Purchaser's interest in the Transferred Properties on
any insurance.
10.2 To the extent that there shall be disagreement in respect of any matters
to be agreed or settled between the parties pursuant to this Part IV of this
Schedule, the provisions of paragraph 2.6 of Part VII of this Schedule shall
apply (mutatis mutandis).
Value
11. Subject to the remaining provisions of this Agreement in respect of such
matters, as soon as practicable following the date of this Agreement the
relevant Business Vendor and the relevant Designated Purchaser will discuss in
good faith and use all reasonable endeavours to agree a realistic value having
regard to any other agreement relating to apportionment to be
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attributed to any of the Transferred Properties where a value is required to be
attributed for the purposes of payment of stamp duty or any equivalent duty.
HM Land Registry
12. On Closing ICI will provide to the Relevant Purchaser of the Land at
Wilton, Saltholme and North Tees a certified copy of a letter dated 22 February
1988 from HM Land Registry together with the written confirmation referred to
therein.
Non-Merger
13. The provisions of this Schedule 17 shall remain in full force and effect
notwithstanding Closing insofar as they remain to be implemented after Closing.
Section 2 Law of Property (Miscellaneous Provisions) Act 1989
14. The parties hereby declare that this Agreement and any other agreement to
be entered into pursuant hereto contain all material terms and conditions of the
agreement between the parties and (to the extent required for the purpose of
section 2 of the Law of Property (Miscellaneous Provisions) Act 1989) the
provisions of such other agreements are incorporated in this Agreement.
Evidence of Title of Material US Properties
15.1 Title Commitment: Within 20 days after the date hereof, each Business
Vendor:
(i) shall obtain a commitment (a Title Commitment) at such Business Vendor's
sole cost and expense for the Title Commitment from a title insurance
company of national recognition to issue a title insurance policy (a Title
Policy) insuring fee title to the owned Material US Properties and
leasehold title to the leased Material US Properties in the name of the
Designated Purchaser in an amount to be reasonably determined by the
Designated Purchaser therefor at the sole cost and expense of the
Designated Purchaser for the Title Policy; and
(ii) shall deliver copies of the Title Commitments to each of ICI and HSCC for
their review.
15.2 Review: Each of ICI and HSCC shall have 20 days following the date of its
receipt of the Title Commitment and the documents referred to therein, but in no
event later than 20 days prior to Closing (the Title Review Period)
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during which to review the Title Commitments. The Designated Purchaser shall
accept title to the Material US Properties subject to:
(i) the Permitted Encumbrances and other matters described in paragraph 2 of
this Part IV of this Schedule; and
(ii) any other matters disclosed in the Title Commitment to which:
(a) HSCC does not object in the case of the ICI Material US
Properties; and
(b) ICI does not object in the case of the HSCC Material US
Properties
in each case prior to the expiration of the Title Review Period (items (i) and
(ii) above being herein the Permitted Title Encumbrances). If prior to the
expiration of the Title Review Period:
(i) HSCC discovers an exception to the title to any ICI US Material Property
which is not a Permitted Encumbrance, another matter described in
paragraph 2 of this Part IV of this Schedule or is not otherwise
acceptable to HSCC; or
(ii) ICI discovers an exception to the title to any HSCC Material US Property
which is not a Permitted Encumbrance, another matter described in
paragraph 2 of this Part IV of this Schedule or is not otherwise
acceptable to ICI
(in each case a Disapproved Title Exception), the party identifying such
Disapproved Title Exception shall give written notice of its objection thereto
to the relevant Business Vendor. If such Business Vendor fails to cause such
Disapproved Title Exception to be removed from, or insured over by, the Title
Policy, ICI, HSCC, the relevant Business Vendor and the Designated Purchaser
shall nevertheless proceed to Closing, but if such Disapproved Title Exception
constitutes a breach by ICI or HSCC, as the case may be, of a Warranty given by
it under paragraph 16.2(A) of Schedule 9 to this Agreement, then ICI and HSCC
shall have such rights and obligations with respect to such breach as are
provided in clauses 10, 11, 12 and 13 of this Agreement.
15.3 Owner's Policy: At the time of the transfer of the Material US Properties
to the Designated Purchaser, the Designated Purchaser shall purchase a Title
Policy with respect to each Material US Property in the name of the Designated
Purchaser, in an amount to be reasonably determined by the Designated Purchaser
at the sole cost and expense of the Designated
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Purchaser for the Title Policy, insuring the Designated Purchaser upon
recordation of the deed with respect to each owned Material US Property and the
assignment of the lease for the leased Material US Property, title to such owned
Material US Property or the leasehold estate in such leased Material US Property
shall be vested in the Designated Purchaser, subject only to the Permitted
Encumbrances.
15.4 Condemnation: If before Closing, all or any part of any Property located
in the United States of America is taken by eminent domain (or is the subject of
a pending or contemplated taking by eminent domain known to the relevant
Business Vendor which has not been consummated), the applicable Business Vendor
shall promptly notify ICI and HSCC of such taking and, in the event, ICI, HSCC,
the relevant Business Vendor and the Designated Purchaser shall proceed to the
Closing in accordance with this Agreement, without modification of the terms of
this Agreement, except that:
(i) such Property will not include the part thereof so taken; and
(ii) the applicable Business Vendor will assign and turn over to the Designated
Purchaser, all awards for such taking, less:
(a) any amounts that the Business Vendor has incurred to collect such
awards;
(b) any amounts that the Business Vendor has incurred to protect or
restore such Property; and
(c) any awards that are compensation for interruption of the Business
Vendor's business prior to Closing.
16. The transfer or other disposition of property to be made pursuant to
Schedule 18 shall be made pursuant to the terms of this Schedule 17 which shall
apply mutatis mutandis.
Part V
Excluded Properties
Excluded Properties
1. ICI will procure that the Excluded Properties at Derby, West Field Grimsby
and Vilvoorde Belgium are transferred from the current legal owner(s) of such
Excluded Properties to a member of the ICI Retained Group or some other third
party.
2. Without prejudice to paragraph 1 of this Part V, the provisions of Part IV
of this Schedule shall apply to the Excluded Properties (mutatis
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mutandis) where appropriate so that the Excluded Properties shall be transferred
to a member of the ICI Retained Group.
Part VI
Existing Intra-Group Provisions
Release
1. In relation to the Property at Haverton Hill Road, Billingham, ICI will
prior to the Closing Date procure the release of the benefit of the registered
option right of pre-emption in favour of members of the ICI Retained Group.
2. In relation to the Polyurethanes plant at Wilton, ICI will procure that
before Closing ICI C&P Limited shall agree to sell its interest therein to ICI.
Part VII
Site Separation
Steps to be taken
1. At Closing or as soon as practicable thereafter ICI and HSCC will or will
procure that the following steps are taken and appropriate documentation entered
into:
A. Polyurethanes business
1. PU Plant, Wilton, Redcar and Cleveland:
(a) deeds of grant of easements for access to and to maintain existing pipes
and cables in a form consistent with the existing regime for the grant of
easements at Wilton over the transferred land and the adjoining ICI
retained land;
(b) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at Teesport;
(c) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at North Tees and Bran Sands;
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(d) the grant of a licence permitting the occupation of such part of the Wilton
Centre, Wilton as is used at the date of this agreement by relevant
employees of the Polyurethanes Business, on prevailing terms for occupation
of the Wilton Centre
2. Everberg, Belgium
The grant of lease(s) to relevant members of the ICI Retained Group of such
part(s) of the property as is at the date of this Agreement occupied by
such Retained Business as currently occupy the property.
3. Rozenburg, Holland
(a) The grant of lease(s) to relevant members of the ICI Retained Group of such
parts of the property as are at the date of this Agreement occupied by the
Retained Business for a term of years equal to the residue of the term of
the headlease at a rent equal to a fair and reasonable proportion of the
rent payable under the headlease and a fair and reasonable proportion of
the outgoings payable in respect of the property. The entry into an
infrastructure agreement by members of the ICI Retained Group, ICI Holland
BV and the landlord;
(b) Either:
(i) the acceptance by the communal port authorities of Rotterdam (the Port) of
a surrender by the relevant Company of its current lease of the part of the
Rosenberg site shown edged red on Agreed Plan 8 (the Acroleine Site) and
the contemporaneous grant by the Port of a lease of the Acroleine Site to
such member of the ICI Retained Group as ICI may direct for the purpose of
ICI's Quest business on the same terms (including as to rent) as those
which apply under the relevant Company's current lease (with such
amendments as ICI reasonably requires) or
(ii) the grant by the relevant Company of a sublease of the Acroleine Site to
such member of the ICI Retained Group as ICI may direct for the purpose of
ICI's Quest business on the terms required by the Port, but, subject
thereto, on the same terms (including as to rent) as those which apply
under the relevant Company's current lease (with such amendments as ICI or
HSCC reasonably requires) and subject to the payment of a fair and
reasonable proportion of the outgoings payable in respect of the Rosenberg
site
both ICI and HSCC acknowledging that:
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(A) the current rent paid by the Company in relation to the Acroleine Site is
3.23 Dutch guilders per square metre (exclusive of VAT)
(B) the Acroleine Site measures approximately 70 metres by 286 metres and that,
whilst its position on the southern boundary of the Rosenberg site may be
moved along such boundary by agreement, the position of the Acroleine Site
must remain adjacent to the railway so that access to and from the railway
is protected
(C) the Acroleine Site is required by the Quest Business for the purpose of
development of an acroleine processing plant. Accordingly, the following
provisions of this Schedule which relate to the continued use of a part of
a Property or Excluded Property shall be read (in relation to the Acroleine
Site) as if they referred to the intended use and development by the Quest
business
(D) any lease or sublease of the Acroleine Site should be for a term equivalent
to the residue of the term of the relevant Company's current lease and that
any sublease shall contain an obligation on the landlord to consult with
the tenant before terminating, renewing or extending its headlease with a
view to enabling the tenant to continue to use the Acroleine Site
(E) these provisions override any existing agreements or arrangements
(contractual or otherwise) between any members of ICI's Group in relation
to the Acroleine Site
4. Auburn Hills Michigan USA
Clause 18.2 shall apply to all liabilities of a tenant assigning a lease,
guarantees, indemnities, counter- indemnities, assurances, commitments and
letters of comfort of any nature whatsoever in connection with the
development of the Property at Auburn Hills, as if such matters were Inter
Group Guarantees and if appropriate release(s) are not obtained by Closing
then, at ICI's election, the Business Vendor shall instead grant an
underlease (in accordance with paragraph 7.5 of Part IV of this Schedule)
to the relevant Designated Purchaser provided that in the event of any
future full and complete release of such obligations, HSCC shall be
entitled to require a transfer of the lease to the Designated Purchaser.
5. Pacheco Argentina
Peel, Canada
Tialanpantia Whs Mexico
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The grant of short term lease(s) of such part(s) of the properties
occupied by the Retained Business at the date of this Agreement to relevant
members of the Retained Group.
5A. Tenarte Italy
The grant of a comodato in respect of occupation of employee(s) of ICI
Italia Srl of the part of the property occupied by the ICI Retained
Business at 15 April.
6. Sales Offices
(a) To the extent that a Sales Office will be owned at Closing by a Company if
no steps are taken in relation to it, the relevant Company shall at Closing
assign/transfer such Sales Office to a member of the ICI Retained Group in
accordance with the provisions of Part IV of this Schedule (mutatis
mutandis).
(b) At the expiry of any agreement to be implemented pursuant to Schedule 5 in
relation to sales agency, if the option to be contained therein is validly
exercised, ICI shall at that time procure the grant of a tenancy/licence
agreement (on terms determined in accordance with this Schedule) relating
to that part(s) of such Sales Office as the employees so transferred, then
occupy provided that the relevant member of the ICI Retained Group shall be
under no obligation to HSCC or any Designated Purchaser to renew any lease
under which it holds a Sale Office.
7. Sales Office Sao Paulo Brazil
ICI Representative Office Jakarta Indonesia
The grant of short term lease(s) of such parts of such properties occupied
by the Polyurethanes Business at the date of this Agreement to relevant
members of the Polyurethanes Business.
8. Bangpoo Industrial Estate, Sumutprakam, Thailand
The surrender by ICI 1996 (Thailand) Limited of its lease of the property
and the grant by the landlord of a new lease of the property to the
Designated Purchaser.
9. Monterrey Mexico
The surrender of any right, title and interest held by ICI Mex SA de CV in
the property and the grant of a new lease to the ICI Retained Group by the
landlord.
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10. Vilvoorde Belgium
ICI shall indemnify ICI Europe Limited in respect of all claims, demands,
liabilities and costs incurred by ICI Europe Limited arising from any
breach of the terms of the lease under which the Property at Vilvoorde (the
Vilvoorde Property) is held or otherwise in relation to the Vilvoorde
Property save for all rent or other outgoings payable in respect of the
Vilvoorde Property proportionate to the extent of the occupation or use of
the Vilvoorde Property by or on behalf of any member of the Purchaser's
Group and/or where such claim demand liability of cost arises out of a
breach of the provisions of such lease or other action or inaction by any
member of the Purchaser's Group, its servants agents or employees after the
date hereof. ICI shall be given full conduct of all actions, negotiations,
discussions, proceedings and settlements in respect of the Vilvoorde
Property and the Purchaser shall and shall procure that all relevant
members of its Group shall, take all reasonable steps to mitigate its or
their respective losses. This indemnity shall not apply if ICI Europe or
any member of the Purchaser's Group shall withdraw or purport to withdraw
the notice of termination served on the landlord prior to the date hereof,
or if such lease is renewed or extended by ICI Europe Limited or any member
of the Purchaser's Group.
To the extent that the lease of the Vilvoorde Property as not terminated on
31.12.1999 the Purchaser shall procure that the Vilvoorde Property is
transferred to any ICI Retained Group company in accordance with the
provisions of Part IV of this schedule.
B. Relevant Petrochemicals business
1. Paraxylene Plant, Wilton, Redcar and Cleveland England:
(a) deeds of grant of easements for access to and to maintain existing pipes
and cables in a form consistent with the existing regime for the grant of
easements at Wilton over the transferred land and the adjoining ICI
retained land;
(b) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at Teesport;
(c) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing
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regime for the grant of easements in the relevant service corridors
relating to the service corridors at North Tees and Bran Sands;
(d) The grant (at the option of HSCC) of an underlease or licence to retain
assets in respect of the 3 storage tanks at Teesport and at the date of
this Agreement by the Relevant Petrochemicals Business.
2. Aromatics Plant and North Tees Logistics Plant, North Tees Works, Stockton-
on-Tees England
(a) deeds of grant of easements for access to and to maintain existing pipes
and cables in a form consistent with the existing regime for the grant of
easements at Wilton over the transferred land and the adjoining ICI
retained land;
(b) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at Teesport;
(c) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at North Tees and Bran Sands;
3. Cavity Storage No.4 (Part) and No.6 Brinefields, Stockton-on-Tees England.
Note: the areas shown hatched red on agreed plan 7 are excluded.
(a) deeds of grant of easements for access to and to maintain existing pipes
and cables in a form consistent with the existing regime for the grant of
easements at Wilton over the transferred land and the adjoining ICI
retained land;
(b) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at Teesport;
(c) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at North Tees and Bran Sands;
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(d) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the deeds referred to
at sub-paragraphs (b) and (c) above for the benefit of the retained areas
hatched red on agreed plan 7;
4. Brine Reservoirs Stockton-on-Tees England
(a) deeds of grant of easements for access to and to maintain existing pipes
and cables in a form consistent with the existing regime for the grant of
easements at Wilton over the transferred land and the adjoining ICI
retained land;
(b) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at Teesport;
(c) a deed of grant of easements for access to and to lay and maintain new and
existing service conduits in a form consistent with the existing regime for
the grant of easements in the relevant service corridors relating to the
service corridors at North Tees and Bran Sands;
(d) the grant of a deed of grant in favour of the relevant Business Vendor and
BP in respect of that part of the Wilton-Grangemouth Ethylene pipeline
which crosses part of the property, such grant to be in a form consistent
with that usually used by the relevant Business Vendor in connection with
the formal grant of existing easements granted in relation to such
pipeline.
5. Cavities - Part No. 4 Brinefield Stockton-on-Tees England
The assignment of part of the relevant Business Vendor's lease of the
premises to contain provisions for a fair and reasonable apportionment of
the rent and other outgoings payable and other liabilities under the
headlease. Cavities owned and operated by ICI's retained Chlor-Chems
business to be excluded.
6. No.2 Jetty Wilton Redcar and Cleveland England
Terra Nitrogon UK Limited (TNUK) has required ICI Chemicals & Polymers
Ltd to grant to TNUK rights in respect of apparatus on No 2 Jetty and
rights to use the Jetty. The rights of user will apply only when the owner
from time to time of No 2 Jetty fails to provide to TNUK or its successors
in title jetty services as provided at the date of this Agreement on
reasonable commercial terms. HSCC will permit
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such grant by ICI Chemicals & Polymers prior to Closing in the form
approved prior to the date of this Agreement (subject to such further
amendments as may be approved by HSCC acting reasonably or as may be
lawfully required) or, if such grant has not been completed prior to
Closing, HSCC will procure that such right is granted by the Relevant
Purchaser within one year following closing. The Grant will be by way of
sub-licence and will provide for TNUK to comply with all reasonable
regulations and to pay a fair contribution to the cost of maintaining the
Jetty when the rights of user are exercised (as aforesaid).
7. Wilton Centre Wilton Redcar and Cleveland England
The grant of a licence permitting the occupation of such part of the Wilton
Centre, Wilton (used at the date of this agreement by relevant employees of
the Relevant Petrochemicals Business, on terms prevailing for the
occupation of the Wilton Centre.
8. Olefins Plant at Wilton
(a) Deeds of Grant of Easement for access to and to maintain existing
pipes and cables in a form consistent with the existing regime for the
grant of easements at Wilton over the transferred land and the
adjoining Lion retained land.
(b) A Deed of Grant of Easement for access to and to lay and maintain new
and existing service conduits in a form consistent with the existing
regime for the grant of easements in the relevant service corridors
relating to the service corridors at Teesport and North Tees.
(c) Deed of Grant of Easement for access to and to lay and maintain new
and existing service conduits in a form consistent with the existing
regime for the grant of easements in the relevant service corridors
relating to the service corridors at Bran Sands.
9. Olefins Plants at North Tees and Teesport
(a) Deeds of Grant of Easement for access to and to maintain existing
pipes and cables in a form consistent with the existing regime for the
grant of easements at Wilton over the transferred land and the
adjoining Lion retained land.
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(b) A Deed of Grant of Easement for access to and to lay and maintain new
and existing service conduits in a form consistent with the existing
regime for the grant of easements in the relevant service corridors
relating to the service corridors at Teesport and North Tees.
(c) A Deed of Grant of Easement for access to and to lay and maintain new
and existing service conduits in a form consistent with the existing
regime for the grant of easements in the relevant service corridors
relating to the service corridors at Bran Sands.
(d) A Deed of Grant of Easement in a form consistent with the existing
regime relating to the Wilton to Grangemouth Ethylene Pipeline over
ICI's retained land.
(e) A Deed of Grant of Easement in a form consistent with the existing
regime relating to the Trans Pennine Ethylene Pipeline at ICI's
retained land.
10. Compound 38, Saltholme, Stockton on Tees
(a) Deeds of Grant of Easement for access to and to maintain existing
pipes and cables in a form consistent with the existing regime for the
grant of easements at Wilton over the transferred land and the
adjoining Lion retained land.
(b) A Deed of Grant of Easement for access to and to lay and maintain new
and existing service conduits in a form consistent with the existing
regime for the grant of easements in the relevant service corridors
relating to the service corridors at Teesport and North Tees.
(c) A Deed of Grant of Easement for access to and to lay and maintain new
and existing service conduits in a form consistent with the existing
regime for the grant of easements in the relevant service corridors
relating to the service corridors at Bran Sands.
11. Wilton Centre, Wilton
Grant or assignment of a Licence to Occupy space at Wilton Centre in a form
consistent with the existing licences for the Wilton Centre.
12. Castner-Kelner, Runcorn
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The grant of a lease of first floor offices and store plus 5 parking spaces
at Castner-Kelner for a term of 5 years at an annual rent of (Pounds)14,874
per annum (inclusive of outgoings) with a tenant's right to break on 6
months' notice.
13. No. 2 Process Office, Wilton
The grant of an underlease of the part of the property occupied by the
Olefins Manufacturing Business.
C. Tioxide Business
1. East Billingham England
A lease to ACMA Limited in respect of the part of the office building at
East Billingham occupied by ACMA Limited at the date of this agreement, for
a term of 2 years (subject to a tenant's break right on 3 months notice).
2. Nettleton Bottom Quarry Caistor England
Land at North Killingholme England
The current owners (Broadcount Properties Limited and WT Scales Limited
respectively) shall transfer the properties to Tioxide Europe Limited in
accordance with the provisions of Part IV of this Schedule (mutatis mutandis).
2.1 Following the date of this Agreement, the parties will agree the form of
appropriate deeds, memoranda, transfers, leases or other agreements (Separation
Documents) to reflect the arrangements described in this Part VII of this
Schedule. Each Separation Document is to be in a form appropriate to the
jurisdiction in which the relevant property is situate and will comply with all
formalities and other requirements in the relevant jurisdiction. Nothing in
this Part VII of this Schedule 17 shall give either party the right to require
that any lease to be granted pursuant hereto shall be a pie crust lease save
where provision to that effect is specifically made.
2.2 The Separation Documents which are underleases will follow the form of the
relevant headlease (other than in respect of the amount of rent and the length
of term) insofar as is reasonably appropriate.
2.3 Each Separation Document will grant and reserve rights to continue to use
all roads, accesses and conduits used and enjoyed by the relevant parts of the
properties at the date of this Agreement on terms reflecting as closely as
possible their use at the date of this Agreement.
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2.4 Without prejudice to the principles (as to the preservation of arrangements
existing at the date hereof) set out in the remainder of this paragraph, all
Separation Documents are to be negotiated between the parties in good faith and
on an arms length basis and on reasonable commercial terms. The Separation
Documents will enable the Designated Purchaser and/or (as the case may be) the
relevant member of the ICI Retained Group to continue to use the relevant
Properties and/or Excluded Properties in the same manner (including as to terms
and costs) as they are used at the date of this Agreement and will incorporate
such other provisions as are fair and reasonable in all the circumstances.
2.5 The provisions of Part IV of this Schedule will apply to this Part VII
(mutatis mutandis) save that paragraph 5 thereof shall not apply to any
arrangement with a term of 1 year or less. In the case of any inconsistency
between the terms of this Part VII and Part IV, the terms of this Part VII will
prevail.
2.6 In the event of disagreement, the matter may be referred by either party to
nominated senior management of ICI and HSCC and (in the event of continuing
disagreement) for determination by an independent lawyer in the relevant
jurisdiction with not less than ten years experience in dealing with commercial
property transactions. Such independent lawyer is to be appointed in the absence
of agreement by the President of the Law Society or other body responsible for
regulation of the legal profession in the relevant jurisdiction on the
application of either party. The independent lawyer will act as an expert and
not as an arbitrator and may obtain any additional professional advice in
relation thereto as he may deem necessary or desirable. The cost of the
determination must be met by the parties in equal shares.
Preservation of Rights/Listed Apparatus
3.1 All facilities (meaning access rights, services, utilities and conducting
media) which are currently enjoyed by the relevant Business Vendor and (as the
case may be) the relevant Designated Purchaser will be maintained in respect of
each Transferred Property and any part of a Property where such Property is the
subject of a Separation Document pursuant to this Schedule and where appropriate
either general or specific rights will be granted within the transfer or
otherwise where the relevant Transferred Property adjoins or is adjacent to land
to be retained by a business of the Retained Group which either provides or
shares such facilities.
3.2 If following Closing the Designated Purchaser or the relevant Business
Vendor shall be of the view that transfer or lease of a Transferred Property,
Excluded Property or part of a Property which is the subject of a Separation
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Document omits the grant or reservation of any rights (whether of access or with
regard to any item of apparatus or equipment) which is required for the purposes
of the business carried out at the Transferred Properties or the property of the
Retained Group (Omitted Rights or Easements) it shall give the notice referred
to in paragraph 3.3 of this part of this Schedule and the parties (acting
reasonably and in the utmost good faith) will meet and attempt to reach
agreement with regard thereto and to any amendments needed to the transfer or
lease of the relevant Transferred Property or Excluded Property or (as the case
may be) the relevant Separation Document to remedy the deficiency.
3.3 If any party identifies any Omitted Rights or Easements that party shall
give written notice thereof to the other party as soon as reasonably practicable
and in any event within two years of the Closing Date (time to be of the
essence).
3.4 As soon as reasonably practicable following the date of this Agreement the
parties shall procure that their representatives shall meet in order to agree
and sign by way of identification for future record lists of the items of
apparatus belonging to each party at each of the Transferred Properties at
Teesside England (Listed Apparatus). Such representatives will act reasonably
and in good faith.
3.5 Any dispute or difference as to Omitted Rights or Easements or any
amendments required to the transfer of the Transferred Property or Listed
Apparatus shall be resolved by means of a reference to an independent person
(Independent Person) appointed in accordance with this clause.
3.6 The Independent Person will be appointed by agreement between ICI and HSCC
or if within 5 working days they are unable to agree then on the application of
any of the parties by the President for the time being of the Royal Institution
of Chartered Surveyors or its equivalent in the jurisdiction in which the
Transferred Property is situated.
3.7 The Independent Person will act as an expert and not an arbitrator and his
decision shall be final and binding upon the parties. The Independent Person
shall consider any representations made by or on behalf of ICI or HSCC but shall
not be bound thereby and the parties shall use all reasonable endeavours to
procure that the Independent Person shall give his decision as speedily as
possible. The cost of appointing the Independent Person shall be shared between
the parties in such proportions as the Independent Person shall determine.
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3.8 As soon as practicable following agreement or determination as to any
Omitted Rights or Easements or Listed Apparatus and in any case within 2 months
of such agreement or determination ICI and HSCC will procure to be executed any
deeds or other documents requisite for the purpose.
Part VIII
General
The parties acknowledge and undertake to each other that:
(A) notwithstanding that certain of the arrangements provided for or envisaged
by this Schedule (including without limitation the form of property
transfer required by paragraph 9 of Part IV of this Schedule) may not be
capable of being directly or appropriately applied in jurisdictions other
than England and Wales (Other Jurisdictions) under the laws, established
law practices and procedures of those jurisdictions (Foreign Laws), the
commercial principles underlying the provisions and intentions of this
Schedule shall be applied as closely as possible in the Other Jurisdictions
to produce as nearly as possible the same commercial results;
(B) to the extent that the arrangements provided for or envisaged by this
Schedule including without limitation the form of the property transfer
cannot readily or appropriately and with reasonable practicality be wholly
applied in Other Jurisdictions under Foreign Law, they will apply subject
to such alteration and amendment as may be necessary or desirable in order
to achieve in reasonably practical terms the same commercial results (or as
nearly as possible the same commercial results, taking into account the
relevant Foreign Law) as would be achieved in England and Wales on the
application of those arrangements;
(C) to the extent necessary in order to achieve in Other Jurisdictions the
commercial results intended by this Schedule, clause 18.3 (further
assurance) will apply.
(D) to the extent required to give effect to these provisions each party agrees
to ensure that any relevant local registration, filing or other requirement
is complied with as soon as possible hereafter.
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SCHEDULE 18
PRE-CLOSING STEPS
The parties to this Agreement agree that this Schedule 18 reflects the intention
of the parties as at the date of this Agreement. It is expressly agreed that
the parties may agree amendments to the provisions of this Schedule 18 and any
consequential amendments required to any other provision of this Agreement.
Where, pursuant to paragraph 1 of this Schedule, one company (the Forming
Company) is required to form another company (the Formed Company), the Formed
Company may be incorporated under another company or companies in the relevant
group and then transferred to the Forming Company.
Words or expressions defined in Schedule 4 shall have the same meaning in this
Schedule.
The parties agree that the following provisions of this Agreement shall apply
with any necessary modifications to the transactions referred to in paragraphs
1(h), 2(c), 3(n), 4, 5 and 6 of this Schedule: clauses 2, 3.5, 3.7, 3.8, 3.10 to
3.15 (inclusive), 4.2, 4.3, 5.1, the first two sentences of 6.1, 6.2, 6.3(b),
6.10 to 6.19 (inclusive), 7.1 (to the extent provided), 9.2, 16, 18.3 and 18.9
and Schedules 4, 12, 15, 16, 17 and 19. Such provisions shall apply as if:
(i) the shares referred to in this Schedule 18 as being transferred (other
than shares being transferred to a member of ICI's Retained Group) were
Sale Shares;
(ii) the assets referred to in this Schedule 18 as being transferred (other
than assets being transferred to a member of ICI's Retained Group) were
Business Assets of a Local Business;
(iii) the transferor of shares referred to in this Schedule 18 (other than
where the shares are being transferred to a member of ICI's Retained
Group) were a Share Selling Company;
(iv) the transferor of assets referred to in this Schedule 18 (other than
where the assets are being transferred to a member of ICI's Retained
Group) were a Business Vendor;
(v) the transferee of shares or assets referred to in this Schedule 18 (other
than where the transferee is a member of ICI's Retained Group) were a
Designated Purchaser;
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(vi) the time of transfer of shares or assets under this Schedule 18 were
immediately prior to Closing.
Formation of holding companies and other entities
1. As soon as reasonably practicable after the date of this Agreement:
(a) ICI shall effect a conversion of the share capital (the Conversion) of
TGL. The share capital shall be converted into:
(i) 280,999,000 fixed rate preference shares (Preference Shares). The
Preference Shares will have a nominal value of (Pounds)1 per share
and carry the right to a cumulative dividend of 7% (when declared);
(ii) 900 Class A ordinary shares (Class A Shares) which will not have
any voting rights and which will have liquidation rights limited to
the par value of the shares - the Class A Shares will rank pari
passu in dividend and liquidation rights to the ordinary shares,
but junior in right to the Preference Shares. The Class A Shares
will have a nominal value of (Pounds)1 per share; and
(iii) 100 ordinary shares which will have dividend rights, on a per share
basis, of nine hundred (900) times the dividend rights on the Class
A Shares. The ordinary shares will have a nominal value of
(Pounds)1 per share.
(b) TGL will form a wholly-owned Subsidiary in England and Wales registered as
an unlimited liability company, Huntsman ICI (Holdings) UK (UK Holdings).
TGL (and, in respect of one share only, a nominee of TGL) will subscribe
for 2 classes of ordinary shares in UK Holdings, being 1,950 UK Holdings
Class 1 ordinary shares having a nominal value of (Pounds)100 per share
and for an aggregate subscription price of (Pounds)195,000 and 1,050 UK
Holdings Class 2 ordinary shares having a nominal value of (Pounds)100 per
share and for an aggregate subscription price of (Pounds)105,000. The UK
Holdings Class 1 ordinary shares will have, as a class, 65% of the total
voting rights of UK Holdings and the UK Holdings Class 2 ordinary shares
will have no right to vote. Otherwise the two classes of ordinary share
shall rank pari passu. Huntsman International Investments Corporation
shall subscribe for 50 UK Holdings fixed rate preferred shares (which have
a nominal value of (Pounds)100 per share) for an aggregate subscription
price of (Pounds)5,000. The UK Holdings fixed rate preferred shares will
have, as a class, 35% of the total voting rights of UK Holdings and will
be
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limited and preferred as to dividends and liquidation. The UK Holdings
fixed rate preferred shares will be entitled to a cumulative 7% dividend
when declared, and will have liquidation rights limited to their initial
subscription price.
(c) UK Holdings will form:
(i) a wholly-owned limited liability Subsidiary registered in England
and Wales, Huntsman ICI Polyurethanes (UK) Limited and subscribe
for 2 ordinary shares of Huntsman ICI Polyurethanes (UK) Limited at
(Pounds)1 each. Huntsman ICI Polyurethanes (UK) Limited will be
authorised to issue 1,000 ordinary shares;
(ii) a wholly-owned limited liability Subsidiary registered in England
and Wales, Huntsman ICI Petrochemicals (UK) Limited and subscribe
for 2 ordinary shares of Huntsman ICI Petrochemicals (UK) Limited
at (Pounds)1 each. Huntsman ICI Petrochemicals (UK) Limited will be
authorised to issue 1,000 ordinary shares; and
(iii) a wholly-owned limited liability Subsidiary registered in England
and Wales, Huntsman ICI (UK) Limited and subscribe for 26,438
ordinary shares for an aggregate consideration of (Pounds)26,438.
Huntsman ICI (UK) Limited will be authorised to issue 26,438
ordinary shares.
(d) Huntsman ICI (UK) Limited will form a wholly-owned Subsidiary registered in
the Netherlands, Huntsman ICI Investments (Netherlands) BV (Dutch Mixer),
and subscribe for all of the outstanding shares of Dutch Mixer for an
aggregate subscription price of EUR 40,000. Dutch Mixer will be authorised
to issue an appropriate further number of shares;
(e) Huntsman ICI Polyurethanes (UK) Limited will form a wholly-owned limited
liability Subsidiary registered in England and Wales, Huntsman ICI
Polyurethanes Sales Limited and subscribe for 2 ordinary shares at
(Pounds)1 each. Huntsman ICI Polyurethanes Sales Limited will be
authorised to issue 1,000 ordinary shares.
(ee) Dutch Mixer will form, as wholly-owned Subsidiaries and for the minimum
subscription required by law, the following entities in the following
jurisdictions:
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Jurisdiction Type of Company Name
Netherlands BV Huntsman ICI
(Netherlands) BV
(Dutch Holdco)
Netherlands BV Huntsman ICI
(Canadian Investments) BV
(f) Dutch Mixer will (or, in the case of Huntsman ICI (Canada) Corporation,
Huntsman ICI (Canadian Investments) BV will) form entities as wholly-owned
Subsidiaries (collectively referred to as the Other Polyurethanes Opcos) of
the following types in the following jurisdictions and transfer the
following subscription amounts (each such entity to be referred to in the
remainder of this Schedule 18 and in Schedule 4 by the name indicated
against the relevant jurisdiction below):
Jurisdiction Type of Company Subscription Name
(if known) price
Argentina Limitada minimum Huntsman ICI
required by (Argentina)
law SRL
Belgium SPRL minimum Huntsman ICI
required by (Belgium)
law SRL
Brazil Limitada minimum Huntsman ICI
required by (Brazil)
law Limitada
Canada Corporation minimum Huntsman ICI
(unlimited liability) required by (Canada)
law Corporation
Colombia Limitada minimum Huntsman ICI
required by Colombia
law Limitada
Germany GmbH minimum Huntsman ICI
required by (Germany)
law GmbH
Italy S.r.l. minimum Huntsman ICI
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required by (Italy) S.r.l
law
Spain Sociedad Limitada minimum Huntsman ICI
required by Espana
law Limitada
Taiwan Limited company minimum Huntsman ICI
required by (Taiwan)
law Limited
Thailand private limited company minimum Huntsman ICI
required by (Thailand)
law Limited
(g) ICI Italia SpA will form a wholly-owned limited liability subsidiary in
Italy, Huntsman ICI (Italian Operations) Srl with an appropriate authorised
share capital.
All the companies established pursuant to this paragraph 1 shall be Companies
for the purposes of this Agreement.
Reorganisation of ICI Subsidiaries
2. Before Closing:
(a) TAI will distribute a $40,000,000 intercompany note to IAHI;
(b) ICI will cause IAHI and TAI to take all steps necessary or desirable under
Section 390 of the General Corporation Law of the State of Delaware
(Section 390) to effectuate the transfer of TAI to the Cayman Islands, or
such other jurisdiction as ICI and HSCC reasonably agree (the New
Jurisdiction) including without limitation, obtaining all requisite
approvals of the board of directors and stockholders of TAI and filing with
the Delaware Secretary of State the certificate of transfer to the New
Jurisdiction in accordance with Section 390. ICI will also cause TAI to
take all steps necessary or desirable to cause such transfer to be
effective in the New Jurisdiction, including the compliance with provisions
to continue TAI under the laws of the New Jurisdiction. Within 75 days
after the date on which TAI becomes a New Jurisdiction company, ICI will
cause TAI to elect to be treated as a disregarded entity within the meaning
of Treasury Regulations Section 301.7701-3(c), as of the date of the
transfer;
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(c) TGL will issue a $3,071,344 intercompany note to IAHI in exchange for
IAHI's entire shareholding in TAI (the TGL/IAHI Temporary Note);
(d) The TGL Class A Shares will be transferred to GI Services Limited in
exchange for cash in the amount of (Pounds)3,000;
(e) ICI shall apply to the Registrar of Companies to reregister TGL as an
unlimited company pursuant to the provisions of section 49 Companies Act
1985, save that ICI may first transfer to a nominee(s) the legal title to
the shares in TGL held by ICI in which case ICI shall procure that such
nominee(s) make such application; and
(f) ICI will cause TGL to elect to be treated as a disregarded entity within
the meaning of Treasury Regulations Section 301. 7701-3(c).
Removal/Insertion of Assets
3. Before Closing:
(a) ICI Holland BV will transfer all of its assets other than assets of the
Polyurethanes Business conducted by ICI Holland BV to a member of ICI's
Retained Group;
(b) TGL will transfer all of its interest in Australian Titanium Products
Proprietary Ltd. to a member of ICI's Retained Group;
(c) TGL will transfer all of its interest in BTP Tioxide Ltd. to a member of
ICI's Retained Group;
(d) TGL will transfer all of its interest in TIL Ltd. to a member of ICI's
Retained Group;
(e) TGL will transfer all of its interest in Technical and Analytical Services
Ltd to a member of ICI's Retained Group;
(f) TGL will transfer all of its interest in Tioxide Investment Holdings Ltd.
to a member of ICI's Retained Group;
(g) TGL and Tioxide Group Services Ltd. will each transfer all of their
interest in Tioxide Overseas Investments Ltd. to a member of ICI's Retained
Group;
(h) ICI Europe Ltd will transfer all of its assets other than assets of the
Polyurethanes Business conducted by ICI Europe Ltd to ICI Belgium NV or to
another member of ICI's Retained Group;
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(i) ICI Mex SA DE CV will transfer all of its assets other than assets of the
Polyurethanes Business conducted by ICI Mex SA DE CV to a member of ICI's
Retained Group;
(j) ICI shall procure the transfer by Broadcount Properties Limited to Tioxide
Europe Ltd of the freehold land situated at Nettleton Bottom Quarry
Caistor, England and North Killingholme, England as referred to in Schedule
17;
(k) Tioxide Canada, Inc. will redeem its entire issued preference share
capital;
(l) Tioxide Europe Limited shall transfer land at Derby to a member of ICI's
Retained Group;
(m) Tioxide Europe Limited shall transfer land at West Fields, Grimsby to a
member of ICI's Retained Group;
(n) The other property which it has been agreed will not be acquired will be
transferred out; and
(o) ICI Italia SpA will transfer its Polyurethanes Business to Huntsman ICI
(Italian Operations) Srl in exchange for shares in that company.
Transfers to Huntsman ICI Holdings' Subsidiaries
4. Before Closing:
(a) Dutch Mixer will issue a $188,306,272 intercompany note to Omicron (the
Dutch Mixer/Omicron Temporary Note) in exchange for all of the outstanding
shares of ICI Holland BV;
(b) Huntsman ICI Espana Limitada will issue an intercompany note to ICI Espana
SA for the amount in euros which equates to $114,964,993 (on the basis of
the Euro/Dollar Rate) (the Huntsman ICI Espana Limitada/ICI Spain Temporary
Note) in exchange for all of the outstanding shares of Tioxide Europe SA
(Spain);
(c) Dutch Mixer will issue a $5,000,000 intercompany note to Deutsche ICI GmbH
in exchange for all of the outstanding shares of Tioxide Europe GmbH
(Tioxide Germany);
(d) Dutch Mixer will issue a $65,000,000 intercompany note to Omicron (the
Dutch Mixer/Omicron Malaysian Temporary Note)in exchange for 23,050,000
preferred shares of Tioxide (Malaysia) Sdn Bhd (or such other number of
preferred shares of Tioxide (Malaysia) Sdn Bhd
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as shall be held by Omicron following any pre-Closing redemption of
preferred shares by Tioxide (Malaysia) Sdn Bhd);
(e) Dutch Mixer will issue a $700,000 intercompany note to Theta in exchange
for all of the outstanding shares of ICI Polyurethanes (Asia Pacific) Pte.
Ltd.;
(f) Dutch Mixer will issue a $10,000,000 intercompany note to Theta in exchange
for all of the outstanding shares of ICI PU (China) Holdings BV;
(g) Dutch Mixer will issue a $31,000,000 intercompany note to ICI in exchange
for ICI's entire shareholding (750,000 ordinary shares) in Nippon
Polyurethane Industry Co. Ltd.;
(h) Dutch Mixer will issue a $3,000,000 intercompany note to ICI in exchange
for ICI's entire shareholding (12,800 ordinary shares) in Arabian Polyol
Company Limited, save that ICI may transfer such entire shareholding in
Arabian Polyol Company Limited to a wholly owned subsidiary of ICI
(proposed to be called Huntsman ICI (Arabian Investments) BV) formed for
the purpose in which case the $3,000,000 intercompany note shall be issued
by Dutch Mixer to ICI in exchange for ICI's entire shareholding in such
wholly owned subsidiary of ICI;
(i) Dutch Mixer will issue a $200,000 intercompany note to Omicron (the Dutch
Mixer/Omicron Chemical Blending Temporary Note) in exchange for all of the
outstanding shares of Chemical Blending Holland BV;
(j) Dutch Mixer will issue a $25,998,957 intercompany note to Grupo ICI Mexico
SA DE CV in exchange for 24,924 shares of ICI Mex SA DE CV;
(k) Dutch Holdco will issue a $1,043 intercompany note to Atlas DE Mexico SA DE
CV in exchange for 1 share of ICI Mex SA DE CV; and
(l) Huntsman ICI (Italy) Srl will issue an intercompany note to ICI Italia SpA
for the amount in euros which equates to $14,500,000 (on the basis of the
Euro/Dollar Rate) in exchange for the outstanding shares of Huntsman ICI
(Italian Operations) Srl.
5. Before Closing, the following Other Polyurethanes Opcos shall acquire the
assets relating to the Polyurethanes Business in each of the following
jurisdictions from the Company identified in respect of the relevant
Page 433
<PAGE>
jurisdiction, in consideration of the issue by the company making the
acquisition of intercompany notes (the Other Polyurethanes Temporary Notes) in
an aggregate amount of $40,300,000.
Jurisdiction Purchaser Seller Value of
intercompany
note issued as
consideration ($)
Argentina Huntsman ICI ICI Argentina 7,000,000
(Argentina) S.R.L. S.a.i.c.
Belgium Huntsman ICI ICI Belgium NV/SA 500,000
(Belgium) SPRL
Brazil Huntsman ICI ICI Brasil Quimica 3,200,000
(Brazil) Limitada Ltda
Canada Huntsman ICI ICI Canada Inc. 3,600,000
(Canada)
Corporation
Colombia Huntsman ICI ICI Colombia SA 7,000,000
Colombia Limitada
Germany Huntsman ICI Deutsche ICI GmbH 5,500,000
(Germany) GmbH
Spain Huntsman ICI Espana ICI Espana SA 500,000
Limitada
Taiwan Huntsman ICI ICI Taiwan Limited 8,000,000
(Taiwan) Limited
Thailand Huntsman ICI ICI 1996 (Thailand) 5,000,000
(Thailand) Limited Ltd.
6. Huntsman ICI Polyurethanes Sales Limited (HIPS), a company having temporary
approval for a representative office in Indonesia, will issue a $200,000
intercompany note to PT ICI Indonesia in exchange for its Polyurethanes Business
assets.
7. ICI will use its reasonable endeavours to identify the steps necessary to
elect to treat certain of its subsidiaries as a disregarded entity within the
meaning of Treasury Regulations Section 301. 7701-3(c) and shall consult
Page 434
<PAGE>
with HSCC with respect to the same, including, without limitation, the timing of
any elections.
Local Currency Transfers
8. Notwithstanding paragraph 5 of this Schedule, ICI may at its sole
discretion elect, provided it makes that election no later than 4 Business Days
before Closing, to do any or all of the following at any time prior to Closing:
(a) procure that ICI Finance plc transfers to Dutch Mixer the sum of $3,200,000
in exchange for an intercompany note in that amount (the Dutch Mixer/ICI
Finance Brazilian Temporary Note), and then procure that Dutch Mixer
transfers to Huntsman ICI (Brazil) Limitada the sum of $3,200,000
(converted into Brazilian Reals) in exchange for shares in Huntsman ICI
(Brazil) Limitada, in which case the consideration for the acquisition of
the assets relating to the Polyurethanes Business in respect of Brazil
pursuant to paragraph 5 of this Schedule shall be the payment of the sum of
$3,200,000 (as converted into Brazilian Reals) and not the issue of an
intercompany note in that amount; and/or
(b) procure that ICI Finance plc transfers to Dutch Mixer the sum of $7,000,000
in exchange for an intercompany note in that amount (the Dutch Mixer/ICI
Finance Colombian Temporary Note), and then procure that Dutch Mixer
transfers to Huntsman ICI Colombia Limitada the sum of $7,000,000
(converted into Colombian Pesos) in exchange for shares in Huntsman ICI
Colombia Limitada, in which case the consideration for the acquisition of
the assets relating to the Polyurethanes Business in respect of Colombia
pursuant to paragraph 5 of this Schedule shall be the payment of the sum of
$7,000,000 (as converted into Colombian Pesos) and not the issue of an
intercompany note in that amount; and/or
(c) procure that ICI Finance plc transfers to Dutch Mixer the sum of $8,000,000
in exchange for an intercompany note in that amount (the Dutch Mixer/ICI
Finance Taiwanese Temporary Note), and then procure that Dutch Mixer
transfers to Huntsman ICI (Taiwan) Limited the sum of $8,000,000 (converted
into Taiwanese Dollars) in exchange for shares in Huntsman ICI (Taiwan)
Limited, in which case the consideration for the acquisition of the assets
relating to the Polyurethanes Business in respect of Taiwan pursuant to
paragraph 5 of this Schedule shall be the payment of the sum of $8,000,000
(as converted into Taiwanese Dollars) and not the issue of an intercompany
note in that amount.
Page 435
<PAGE>
The parties agree that the costs involved in converting the amounts being paid
for shares in Huntsman ICI (Brazil) Limitada, Huntsman ICI Colombia Limitada and
Huntsman ICI (Taiwan) Limited into local currency pursuant to this paragraph 8
or in connection with paragraph 48 of Part 1 of Schedule 4 (as the case may be),
together with the costs of converting such local currency back into dollars
immediately prior to or shortly following Closing, shall be borne equally by
HSCC and ICI.
Notarised Share Issues
9. Notwithstanding paragraph 5 of this Schedule, ICI may at its sole
discretion elect, provided it makes that election no later than 4 Business Days
before Closing, to do any or all of the following at any time prior to Closing:
(a) procure that ICI Finance plc transfers to Dutch Mixer the sum in euros
which equates to $500,000 (on the basis of the Euro/Dollar Rate) in
exchange for an intercompany note in that amount (the Dutch Mixer/ICI
Finance Belgium Temporary Note), and then procure that Dutch Mixer
transfers to Huntsman ICI (Belgium) SPRL the said sum in euros in exchange
for shares in Huntsman ICI (Belgium) SPRL, in which event the consideration
for the acquisition of the assets relating to the Polyurethanes Business in
respect of Belgium pursuant to paragraph 5 of this Schedule shall be the
payment of the sum in euros which equates to $500,000 (on the basis of the
Euro/Dollar Rate) and not the issue of an intercompany note; and/or
(b) procure that ICI Finance plc transfers to Dutch Mixer the sum in euros
which equates to $500,000 (on the basis of the Euro/Dollar Rate) in
exchange for an intercompany note in that amount (the Dutch Mixer/ICI
Finance Spanish First Temporary Note), and then procure that Dutch Mixer
transfers to Huntsman ICI Espana Limitada the said sum in euros in exchange
for shares in Huntsman ICI Espana Limitada, in which event the
consideration for the acquisition of the assets relating to the
Polyurethanes Business in respect of Spain pursuant to paragraph 5 of this
Schedule shall be the payment of the sum in euros which equates to $500,000
(on the basis of the Euro/Dollar Rate) and not the issue of an intercompany
note.
10. Notwithstanding paragraph 4(b) of this Schedule, ICI may at its sole
discretion elect, provided it makes that election no later than 4 Business
Days before Closing, to do any or all of the following at any time prior to
Closing:
Page 436
<PAGE>
(a) ICI Finance plc transfers to Dutch Mixer the sum in euros which
equates to $33,000,000 (on the basis of the Euro/Dollar Rate) in
exchange for an intercompany note in that amount (the Dutch
Mixer/ICI Finance Spanish Second Temporary Note) and then that Dutch
Mixer transfers to Huntsman ICI Espana Limitada such sum in euros in
exchange for shares in Huntsman ICI Espana Limitada;
(b) ICI Finance plc transfers to UK Holdings the sum in euros which
equates (on the basis of the Euro/Dollar Rate) to $81,964,993 (as
adjusted to reflect any adjustment made pursuant to clause 3.4) in
exchange for an intercompany note in that amount (the UK
Holdings/ICI Finance Spanish Temporary Note) and then that UK
Holdings transfers to Huntsman ICI Espana Limitada the said sum in
euros in exchange for a note in that amount secured by all of the
assets of Huntsman ICI Espana Limitada (the Huntsman ICI Espana
Limitada/UK Holdings Intercompany Note);
in which event:
(i) the consideration for the acquisition by Huntsman ICI Espana
Limitada of all of the outstanding shares of Tioxide Europe SA
(Spain) pursuant to paragraph 4(b) of this Schedule shall be the
payment of the sum in euros which equates to $114,964,993 (on the
basis of the Euro/Dollar Rate) and not the issue of an intercompany
note;
(ii) in accordance with paragraph 37 of Part 1 of Schedule 4, Dutch Mixer
shall, instead of being required to subscribe for additional shares
in Huntsman ICI Espana Limitada, be required instead to pay to ICI
Finance plc the sum in euros which equates to $33,000,000 (on the
basis of the Euro/Dollar Rate) in satisfaction of the Dutch
Mixer/ICI Finance Spanish Second Temporary Note;
(iii) in accordance with paragraph 38 of Part 1 of Schedule 4, UK Holdings
shall, instead of being required to transfer $81,964,993 (as
adjusted to reflect any adjustment made pursuant to clause 3.4), be
required instead to pay to ICI Finance plc the sum in euros which
equates to $81,964,993 (on the basis of the Euro/Dollar Rate) in
satisfaction of the UK Holdings/ICI Finance Spanish Second Temporary
Note; and
Page 437
<PAGE>
(iv) Huntsman ICI Espana Limitada shall not be required to transfer
$114,964,993 to ICI Espana SA in accordance with paragraph 39 of Part
1 of Schedule 4.
11. Notwithstanding paragraph 4(l) of this Schedule, ICI may at its sole
discretion elect, provided it makes that election no later than 4 Business
Days before Closing, to do any or all of the following at any time prior to
Closing:
(a) ICI Finance plc transfers to Dutch Mixer the sum in euros which
equates to $4,500,000 (on the basis of the Euro/Dollar Rate) in
exchange for an intercompany note in that amount (the Dutch Mixer/ICI
Finance Italian Temporary Note) and then that Dutch Mixer transfers
to Huntsman ICI (Italy) Srl such sum in euros in exchange for shares
in Huntsman ICI (Italy) Srl;
(b) ICI Finance plc transfers to UK Holdings the sum in euros which
equates to $10,000,000 (on the basis of the Euro/Dollar Rate) in
exchange for an intercompany note in that amount (the UK Holdings/ICI
Finance Italian Temporary Note) and then that UK Holdings transfers
to Huntsman ICI (Italy) Srl the said sum in euros in exchange for a
note in that amount (the Huntsman ICI (Italy) Srl/UK Holdings
Intercompany Note)
in which event:
(i) the consideration for the acquisition by Huntsman ICI (Italy) Srl of
all of the outstanding shares of Huntsman ICI (Italian Operations)
pursuant to paragraph 4(l) of this Schedule shall be payment of the
sum in euros which equates to $14,500,000 (on the basis of the
Euro/Dollar Rate) and not the issue of an intercompany note;
(ii) in accordance with paragraph 45 of Part 1 of Schedule 4, Dutch Mixer
shall, instead of being required to subscribe for additional shares
in Huntsman ICI (Italy) Srl, be required instead to pay to ICI
Finance plc the sum in euros which equates to $4,500,000 (on the
basis of the Euro/Dollar Rate) in satisfaction of the Dutch Mixer/ICI
Finance Italian Temporary Note;
(iii) in accordance with paragraph 46 of Part 1 of Schedule 4, UK Holdings
shall, instead of being required to transfer $10,000,000, be required
instead to pay to ICI Finance plc the sum in euros which equates to
$10,000,000 (on the basis of the
Page 438
<PAGE>
Euro/Dollar Rate) in satisfaction of the UK Holdings/ICI Finance
Italian Temporary Note; and
(iv) Huntsman ICI (Italy) Srl shall not be required to transfer $14,500,000
to ICI Italia SpA in accordance with paragraph 47 of Part 1 of
Schedule 4.
12. Notwithstanding paragraphs 32 and 33 of Schedule 4, ICI may at its sole
discretion elect, provided that it makes the election no later than 4
Business Days before Closing, to procure that ICI Finance plc transfers to
UK Holdings a sum in dollars and euros which equates to $407,006,272 (on
the basis of the Euro/Dollar Rate) in exchange for an intercompany note in
that amount (the UK Holdings/ICI Finance $407,006,272 Temporary Note), and
then procure that UK Holdings transfers to Huntsman ICI (UK) Limited the
sum in dollars and euros which equates to $407,006,272 (on the basis of the
Euro/Dollar Rate) in exchange for shares in Huntsman ICI (UK) Limited, and
then procure that Huntsman ICI (UK) Limited transfers to Dutch Mixer the
sum in dollars and euros which equates to $407,006,272 (on the basis of the
Euro/Dollar Rate) in exchange for shares in and/or as a capital
contribution to Dutch Mixer, in which event:
(a) in accordance with paragraph 32 of Part 1 of Schedule 4, UK Holdings
shall, instead of being required to transfer [$407,006,272] to
Huntsman ICI (UK) Limited in exchange for shares in Huntsman ICI (UK)
Limited, be required instead either (i) to pay to ICI Finance plc the
sum of [$407,006,272] in satisfaction of the UK Holdings/ICI Finance
$407,006,272 Temporary Note or (ii) to pay to Dutch Mixer the sum of
[$407,006,272] (UK Holdings will enter into a Set-Off Agreement with
ICI Finance plc and Dutch Mixer in this regard);
(b) Huntsman ICI (UK) Limited shall not be required to transfer
$407,006,272 to Dutch Mixer in exchange for shares in Dutch Mixer
and/or as a capital contribution in accordance with paragraph 33 of
Part 1 of Schedule 4;
(c) ICI may elect to procure that part of the funds made available to
Dutch Mixer pursuant to this paragraph 12 are used by Dutch Mixer for
the purposes of funding prior to Closing any or all of the share
subscriptions referred to in paragraph 8, 9, 10(a) and/or 11(a) of
this Schedule 18 which ICI elects to fund prior to Closing, in which
case the amounts due to be loaned by ICI
Page 439
<PAGE>
Finance plc to Dutch Mixer in accordance with the said paragraph(s) of
this Schedule 18 and the amounts to be repaid to ICI Finance plc
pursuant to paragraphs 37 and/or 45 and/or 48(iii) of Part 1 of
Schedule 4 (as the case may be) shall be reduced accordingly;
Formation of Newco
13. Before Closing, a Delaware corporation (US Newco) will be incorporated by
IAI.
Page 440
<PAGE>
SCHEDULE 19
ADDITIONAL/EXCLUDED EMPLOYEES
Unless otherwise agreed to the contrary between the Vendor and the Purchaser,
the Employees named at (1) below shall be Additional Employees and the Employees
named at (2) below shall be Excluded Employees.
1. The Additional Employees
The Relevant Petrochemicals Business will need the following 28 employees who
have responsibility for commercial and other "overarching" functional and
management resources, including members of the management team, either to run a
commercial Olefins operation or to manage the Aromatics and North Tees Logistics
businesses. The parties agree that Schedule 9 (Warranties) will only apply in
relation to the Additional Employees at Closing (and not at the date of this
Agreement). The Purchaser acknowledges that disclosures against Schedule 9 in
relation to such employees may be made at any time prior to Closing.
Page 441
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prefix Surname Initials Dept Nm 3 Dept Nm 4 Dept Nm 5 Local Job Grade
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ms Gotledge A Petroc & Ferts Busns Systems Development Acc U
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Hoey MD Petroc & Ferts Busns Accounts It Industrial Trainee U
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs May CA Petroc & Ferts Busns Accounts Business Admin Accts Receiv Admin (Role 2) U
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Styles S Petroc & Ferts Busns Accounts It Industrial Trainee U
- ------------------------------------------------------------------------------------------------------------------------------------
Vacancy Petroc & Ferts Busns Accounts It Industrial Trainee U
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Emerson D Petroc & Ferts Busns Pip Pip Limited Finance Mgr 39
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Galbraith JW Petroc & Ferts Busns Management Teesside Sites She Mgr 39
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Hughes DL Petroc & Ferts Busns Accounts It Hydrocarbons IT Manager 37
- ------------------------------------------------------------------------------------------------------------------------------------
Dr Scott WJ P&F North Tees Pip Refinery Pip Operations Mgr 37
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Tonge M Petroc & Ferts Busns Accounts Business Admin Fin Control 37
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Leach SJ Information Systems It Services Teesside Site IT
Infrastr Mgr 36
- ------------------------------------------------------------------------------------------------------------------------------------
Dr Taylor JA Petroc & Ferts Busns Planning & Quality Pchems Models Grp Leader 36
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Wright BL Petroc & Ferts Busns Industrial Products Project Diamond Bus Pro Des Pro Diamond 35
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Mitchell J Petroc & Ferts Busns Accounts It Business Analyst 34
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Short S Petroc & Ferts Busns Accounts It Business Analyst 34
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Lofthouse M Petroc & Ferts Busns Accounts It Systems Analyst 33
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Allday M Petroc & Ferts Busns Accounts It Man applic Developer 32
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Brown TK Petroc & Ferts Busns Industrial Products Project Diamond Business Proc Mgr Reporting 32
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Jones JS Petroc & Ferts Busns Industrial Products Project Diamond Asst Prod Mgr 32
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Read P Petroc & Ferts Busns Accounts It Man applic Developer 32
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Smith A Petroc & Ferts Busns Industrial Products Project Diamond Business Process Mgr SD/MM 32
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Neate Petroc & Ferts Busns Secretarial Personal Assistant 31
- ------------------------------------------------------------------------------------------------------------------------------------
Mr Johnstone T Petroc & Ferts Busns Accounts Business Admin C&P Fincl Acctg Assist 31
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Raine SL Petroc & Ferts Busns Industrial Products Project Diamond Proj Spprt Admin P Diano 30
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Bergdahl PF Tops Safety Management Audit Administrator 29
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Riordan S Petroc & Ferts Busns Accounts Business Admin Accts Receiv Admin (Role 1) 29
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Smith BE Petroc & Ferts Busns Accounts Business Admin Banking & Paying Administration 29
- ------------------------------------------------------------------------------------------------------------------------------------
Mrs Smith L Petroc & Ferts Busns Olefins Cfst Senior Secretary/Supervisor 29
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 422
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Prefix Surname Initials Dept Nm 3 Dept Nm 4 Dept Nm 5 Local Job Grade
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mr Upton CW Petroc & Ferts Busns Accounts It Small Sys Control 29
- ----------------------------------------------------------------------------------------------------------------------
29
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 443
<PAGE>
2. The Excluded Employees
(a) Employees largely engaged in Sales Office activities.
POLYURETHANES:
EMPLOYEES OF NATIONAL SELLING COMPANIES
*Please note that numbers given below are approximate
France - ICI France SA - 7 employees
Hong Kong - ICI China Ltd. - 5 employees in Hong Kong.
Czech Republic - ICI Cz sro )
ICI International Limited - a number of branches in East Europe )
Slovakia - ICI Slovakia sro )12 employees
Poland - ICI Polska Sp.zo.o )
Hungary - ICI Hungary Kft )
Japan - ICI Japan Ltd. - 3 employees
Korea - ICI Korea Ltd - 4 employees
Malaysia - ICI (Malaysia) Holdings Sdn Bhd - 2 employees
Scandinavia - ICI Norden - 7 employees
Singapore - ICI (Singapore) Private Ltd. - 3 employees
Page 444
<PAGE>
TIOXIDE:
Employees of National Selling Companies
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
COUNTRY PRESENTATION NOTES
===============================================================================================================================
<S> <C> <C>
ASIA
- -------------------------------------------------------------------------------------------------------------------------------
Japan ICI Japan (100% ICI owned) 2 X individuals wholly employed on matters Tioxide formally
Tioxide Japan employees before that company was folded into ICI
Japan Tioxide pick-up all costs. No contract.
- -------------------------------------------------------------------------------------------------------------------------------
South Korea ICI Korea - Exclusive for 1 X individual 20% of his time. No contract.
Fibres grades
- -------------------------------------------------------------------------------------------------------------------------------
Taiwan ICI Dulux (100% ICI owned) 1 X individual wholly employed on matters Tioxide. Tioxide
pick up all costs.
- -------------------------------------------------------------------------------------------------------------------------------
Hong Kong ICI China (100% ICI owned) 2 X individuals wholly employed on matters Tioxide. Tioxide
picks up all costs.
- -------------------------------------------------------------------------------------------------------------------------------
Thailand National Starch (100% ICI 3 X individuals wholly employed on matters Tioxide. Tioxide
owned) pick up all costs.
2 year termination. No existing contract but the parties
continue to act on the basis of the contract with ICI 1996
(Thailand) Ltd.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 445
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
COUNTRY PRESENTATION NOTES
===============================================================================================================================
<S> <C> <C>
Vietnam ICI Vietnam (100% ICI owned) No contract.
- -------------------------------------------------------------------------------------------------------------------------------
India IC India (51% ICI owned) 3 individuals wholly employed on matters Tioxide individuals
wholly employed on matters Tioxide. Unsigned 10 year contract
which, nonetheless, may have legitimacy under Indian law. Sole
and exclusive. 41% overriding commission. Termination with 12
months notice from 4/2002 at the earliest.
- -------------------------------------------------------------------------------------------------------------------------------
Pakistan ICI Pakistan (61% ICI owned) No contract.
- -------------------------------------------------------------------------------------------------------------------------------
Sri Lanka ICI Sri Lanka (40% ICI owned) No contract.
- -------------------------------------------------------------------------------------------------------------------------------
MIDDLE EAST
- -------------------------------------------------------------------------------------------------------------------------------
Saudia Arabia ICI Saudi Arabia (40% ICI One year termination. Contract not available.
owned)
- -------------------------------------------------------------------------------------------------------------------------------
Israel ICI Israel (100% ICI owned) Individual 50% employee on matters Tioxide. 3 months
termination. Contract not available.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 446
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
COUNTRY PRESENTATION NOTES
===============================================================================================================================
<S> <C> <C>
EASTERN EUROPE
CIS ICI (100% ICI owned) 1 X individual wholly employed and 1 x individual partly
employed on matters Tioxide. 1 year termination. Managed
through ICI Polyurethanes.
- -------------------------------------------------------------------------------------------------------------------------------
Czech Republic ICI (100% ICI owned) 1 X individual wholly employed on matters Tioxide. 1 year
termination. Managed through ICI Polyurethanes..
- -------------------------------------------------------------------------------------------------------------------------------
Hungary ICI (100% ICI owned) 2 X individuals partly employed on matters Tioxide. 1 year
termination. Managed through ICI Polyurethanes..
Poland ICI (100% ICI owned) 2 X individuals partly employed on matters Tioxide. 1 year
termination. Managed through ICI Polyurethanes..
- -------------------------------------------------------------------------------------------------------------------------------
Bulgaria ICI (100% ICI owned) 2 X individuals partly employed on matters Tioxide. 1 year
termination. Managed through ICI Polyurethanes
- -------------------------------------------------------------------------------------------------------------------------------
EUROPE
- -------------------------------------------------------------------------------------------------------------------------------
Switzerland ICI (Switzerland) AG (99.2% Individual less than 50% employed on matters Tioxide. Contract
ICI owned) due to end 6/99. Tioxide is considering extending for 3 months
until it puts in place a German distributor.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 447
<PAGE>
(b) Relevant Petrochemicals Business Excluded Employees
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Cont.
ID Prefix Surname Initials Local Job Grade Type Term Date
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
001187828 Mr Baker RA Planner/modeller 34 M&P
- ------------------------------------------------------------------------------------------------------------------
001176776 Mr Bell I ICI Petrochemicals HR Dev Mngr 37 SNR
- ------------------------------------------------------------------------------------------------------------------
001177497 Mr Blackhall NW Business Engineering Mngr 38 SNR
- ------------------------------------------------------------------------------------------------------------------
001186948 Mr Booth P Olefines Production Mgr 40 SNR Note: to be
seconded to
Huntsman ICI
Petrochemicals
(UK) Limited
for 18 months
- ------------------------------------------------------------------------------------------------------------------
001241035 Mrs Brettle EH Personal Assit/Snr Secretary 29 BAS
- ------------------------------------------------------------------------------------------------------------------
001250153 Mr Buenting H Aromatics Marketing Manager 36 OSC
- ------------------------------------------------------------------------------------------------------------------
001177169 Mr Butler RM Materials Manager 35 M&P 2000-03-31
- ------------------------------------------------------------------------------------------------------------------
000247714 Mr Clayton HD Aromatics Outside Op 6 SA 1999-07-31
- ------------------------------------------------------------------------------------------------------------------
001187363 Dr Comes PL Olefines Business Director 42 SNR
- ------------------------------------------------------------------------------------------------------------------
001176615 Mrs Cotterill MT Cashier Supervisor 30 BAS
- ------------------------------------------------------------------------------------------------------------------
001250513 Mr Cusworth PM Industrial Trainee U SSU
- ------------------------------------------------------------------------------------------------------------------
001252020 Miss De Jong N Industrial Trainee U SSU 1999-06-30
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 448
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Cont.
ID Prefix Surname Initials Local Job Grade Type Term Date
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
001228441 Mrs Denye M Mktg Prod Mgr 36 M&P
- ------------------------------------------------------------------------------------------------------------------
000045574 Mr Donaghue CP JVO6 Cold End Princ Tech 7 SA
- ------------------------------------------------------------------------------------------------------------------
001119627 Mr Gale DT P&f Business Process Mgr 37 SNR 1999-11-30
- ------------------------------------------------------------------------------------------------------------------
001210176 Miss Gardner DC Busn Excellence Co-ordinator 30 BAS
- ------------------------------------------------------------------------------------------------------------------
001156355 Mr Gardner M CEO Petrochemicals C8 EXEC
- ------------------------------------------------------------------------------------------------------------------
000043548 Mr Goodchild RE C/rm Senr Outside Op 6 SA 1999-07-31
- ------------------------------------------------------------------------------------------------------------------
001227083 Mr Harrison SJ Accountant 36 M&P
- ------------------------------------------------------------------------------------------------------------------
001140696 Mrs Jones EV Sales & Mktg Mgr Tsl 34 M&P 2000-03-31
- ------------------------------------------------------------------------------------------------------------------
001119464 Dr Lake IJS Senior Research Chemist 34 M&P
- ------------------------------------------------------------------------------------------------------------------
001128398 Mr Lawes PJ P&f Busn Technology Mngr 41 SNR 1999-09-30
- ------------------------------------------------------------------------------------------------------------------
001217011 MS Leonard K Financial Services Account 33 M&P
- ------------------------------------------------------------------------------------------------------------------
001235790 Mrs Maxfield G Personal Assistant 29 BAS
- ------------------------------------------------------------------------------------------------------------------
001223061 Mrs McMahon S Training Manager 33 M&P
- ------------------------------------------------------------------------------------------------------------------
001096286 Dr Moore CA Commercial Manager 38 SNR
- ------------------------------------------------------------------------------------------------------------------
001156642 Mr Otterbum EW P&f Tech Planning Mgr 35 M&P 2000-03-31
- ------------------------------------------------------------------------------------------------------------------
001220003 Mr Paton NA Diamond Project Manager 37 SNR
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 449
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Cont.
ID Prefix Surname Initials Local Job Grade Type Term Date
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
000255711 Mr Paul R Area Contracts Coord 31 BAS 1999-07-09
- ------------------------------------------------------------------------------------------------------------------------
001187764 Mrs Pearson-Pratt AM Secretary 28 BAS
- ------------------------------------------------------------------------------------------------------------------------
001160341 Mr Reynolds JK Busn Mngr Indust Chems 41 SNR 1999-07-31
- ------------------------------------------------------------------------------------------------------------------------
001228636 Mr Richardson CA JVO6 Allocation Sprt Mgr 31 BAS
- ------------------------------------------------------------------------------------------------------------------------
001144780 Mr Shovlin TA Petrochems CFO 42 SNR
- ------------------------------------------------------------------------------------------------------------------------
001239234 Mrs Smith L Senior Secretary/Supervisor 29 BAS
- ------------------------------------------------------------------------------------------------------------------------
000257467 Mr Smith J Pipe Cover/lag 5 SA 1999-07-11
- ------------------------------------------------------------------------------------------------------------------------
001218426 Mr Smith DN Olefines Area Task Mgr 35 M&P
- ------------------------------------------------------------------------------------------------------------------------
001239522 Mr Steinbach GPW Comm Mgr - Aromatics 39 OSC Note: to be
seconded to
Huntsman ICI
Petrochemicals
(UK) Limited
for 6 months
- ------------------------------------------------------------------------------------------------------------------------
001125678 Mr Stoney JR Methanol Business Director 41 SNR
- ------------------------------------------------------------------------------------------------------------------------
001157146 Mr Taylor GR Joint Venture/develt Mgr 38 SNR
- ------------------------------------------------------------------------------------------------------------------------
001160902 Mr Trotter PM HR Mgr Petroc&ferts Busn 39 SNR
- ------------------------------------------------------------------------------------------------------------------------
001160317 Miss Watson A Financial Accountant 34 M&P
- ------------------------------------------------------------------------------------------------------------------------
001177172 Mr Westlake RP Op Srvs Snr Prod Mgr 39 SNR
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 450
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Cont.
ID Prefix Surnames Initials Local Job Grade Type Term Date
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
001179109 Mr White JM HR Director Petrochems 41 SNR
- ------------------------------------------------------------------------------------------------------------------
001228219 Miss Wigmore AS Accounting Support 29 BAS
- ------------------------------------------------------------------------------------------------------------------
001157159 Mr Williams G Measurement Tech 29 BAS 1999-07-31
- ------------------------------------------------------------------------------------------------------------------
001250514 Mr Wood EC Industrial Trainee U SSU
- ------------------------------------------------------------------------------------------------------------------
Total Employees 46
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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SCHEDULE 20
I.T. SCHEDULE
1. INTERPRETATION
1.1 In this Schedule, and subject to paragraph 1.2 below, defined terms shall
have the same meaning as those terms in clause 1 of this Agreement.
1.2 The following terms shall have the following meanings:
Business Owned Software means all software owned by ICI or its Retained Group
and which is used exclusively or predominantly in the ICI Business in the 12
months prior to Closing including without limitation the Diamond Software
(subject to paragraph 3.5 of this Schedule 20) but excluding:
(a) the Excluded Software;
(b) the Retained Software;
(c) the Functional Services Software; and
(d) for the avoidance of doubt, the Lotus Notes Database Rights;
Copied/Cloned System means any I.T. systems used by the ICI Business or any
member of ICI's Retained Group which the parties agree require copying/cloning
under paragraph 9.1.2 and Copy/Clone and Copying/Cloning shall be construed
accordingly;
Diamond Software means so much of the Intellectual Property Rights as are owned
by ICI or its Retained Group in the software comprised in the Petrochemicals
SAP/R3 System known as Diamond;
Excluded Services means the I.T. transition services which the Purchaser agrees
shall not be made available by ICI as set out in attachment 4;
Excluded Software means all software owned by ICI or its Retained Group as
referred to in attachment 1 to this Schedule;
Functional Services Software means software owned by ICI or its Retained Group
used by ICI staff to provide functional services to the ICI Business or software
accessed by staff of the ICI Business to receive functional services to the ICI
Business;
Licensed Back Software means Business Owned Software which is:
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(a) used by ICI or its Retained Group during the 12 months prior to Closing;
and
(b) reasonably required for the ongoing conduct of ICI or its Retained Group in
substantially the manner operated during the 12 months prior to Closing;
ICI Network means the wide area and local area networks (including the ICI Lotus
Notes Backbone service and the Shiva and Compuserve dial in services) of ICI and
ICI's Retained Group;
Licensed ICI Owned Software means the Permanently Licensed ICI Owned Software
together with the Temporarily Licensed ICI Owned Software;
ICI Retained Software means Licensed ICI Owned Software; the Excluded Software;
the Retained Software; the Functional Services Software, the Lotus Notes
Database Rights and the Diamond Software;
Lotus Notes Database Rights means all Intellectual Property Rights (if any) in
the Lotus Notes Databases which are owned by ICI or members of ICI's Retained
Group and which include data relating to the ICI Business but which are not used
exclusively or predominantly by the ICI Business;
Permanently Licensed ICI Owned Software means the software owned by ICI or
members of ICI's Retained Group which is used by the ICI Business in the 12
months prior to Closing and reasonably required for the ongoing conduct of the
ICI Business in substantially the manner operated in the 12 months prior to
Closing
but excluding:
(i) the Excluded Software;
(ii) the Retained Software;
(iii) the Functional Services Software;
Relevant Term Sheet means the term sheets which the parties shall agree shall
apply to the provision of a Transitional Service in accordance with the
provisions of paragraph 13;
Relevant Transitional Period means the duration for which each Transitional
Service is provided in accordance with paragraph 15;
Retained Software means the following software owned by ICI or its Retained
Group:
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(a) Process Engineering Library;
(b) Engineering standards; and
(c) SHE standards;
(which, for the avoidance of doubt, may be licensed to the Purchaser by ICI on
an arms' length commercial basis separate from and not the subject of this
Schedule);
Temporarily Licensed ICI Owned Software means the software owned by ICI or
members of ICI's Retained Group which is licensed to the Purchaser under the
terms of paragraph 4.2 below;
Transitional Services means the I.T. transition services agreed to be made
available by ICI to the Purchaser under paragraph 13.1 as set out in attachment
3 as may be amended by the parties pursuant to paragraph 13.3, or such
Transitional Services as may be agreed to be made available by the Purchaser
under paragraph 20;
TSA means the transitional I.T. services agreement to be agreed by the parties
in accordance with paragraph 13 of this Schedule;
Zeneca means Zeneca Limited or any of its successors or assigns.
1.3 Except as expressly provided, all references to paragraphs and attachments
in this Schedule shall refer to the paragraphs of and attachments to this
Schedule.
1.4 In the event of any conflict in relation to the subject matter of this
Schedule and other terms appearing in the remainder of this Agreement and the
Ancillary Agreements, the terms of this Schedule shall prevail.
2. INTRODUCTION
2.1 This document defines:
2.1.1 the general principles both parties will adhere to in relation to
separation and transition arrangements;
2.1.2 the principles agreed by the parties concerning the transfer of
Intellectual Property Rights in Business Owned Software and the
license to the ICI Business of Intellectual Property Rights in
certain Licensed ICI Owned Software; and
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2.1.3 the general conditions which will be incorporated into the TSA to be
agreed by the parties by the date of Closing.
2.2 In defining and carrying out their obligations under paragraphs 3 to 20 of
this Schedule, the objectives of the parties are:
2.2.1 to achieve a satisfactory and prompt separation of I.T. systems and
services used by the ICI Business from the I.T. systems and services
used by ICI and its Retained Group;
2.2.2 to ensure the continuity of the I.T. services supplied to the ICI
Business during a limited period; and
2.2.3 to ensure that there is no adverse impact on the I.T. operations of
ICI and its Retained Group due to separation.
3. Assignment of Rights in Business Owned Software
3.1 Subject always to Zeneca's consents where necessary, the Intellectual
Property Rights in all Business Owned Software shall be assigned from ICI to the
Purchaser in accordance with this Agreement.
3.2 In the event that it is discovered at any time after Closing that ICI or
any member of its Retained Group owns any Business Owned Software which was
owned by such member as at Closing and which is exclusively or predominantly
used in the ICI Business, ICI hereby undertakes to assign or procure the
assignment of such software as soon as reasonably practicable to the Purchaser
or its nominee.
3.3 In the event that it is discovered at any time after Closing that any
member of the Purchaser's Group owns any Intellectual Property Rights in ICI
Retained Software which are owned by such member immediately after Closing and
which were assigned to it pursuant to this Agreement and which either:
(a) were not exclusively or predominantly used by the ICI Business; or
(b) are not licensed to the Purchaser pursuant to this Schedule,
the Purchaser hereby undertakes to assign or procure the assignment of such
rights as soon as reasonably practicable to ICI or its nominee.
3.4 For the purposes of this clause 3 the determination of whether Business
Owned Software or Intellectual Property Rights in ICI Retained Software are
exclusively or predominantly used in the ICI Business is to be made in
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accordance with the state of the ICI Business in the 12 months prior to Closing.
3.5 In the event that the Olefins Manufacturing Business is a Delayed Business,
the Diamond Software shall be deemed to constitute Permanently Licensed ICI
Owned Software and shall be excluded from the definition of Business Owned
Software, but only until the Delayed Closing of the Olefins Manufacturing
Business whereupon the Diamond Software will become part of the Business Owned
Software and shall be assigned from ICI to the Purchaser in accordance with this
Agreement.
4. LICENCES OF LION OWNED SOFTWARE
4.1 Subject always to Zeneca's consents where necessary, ICI hereby grants, and
shall procure that such relevant member of its Retained Group shall grant, to
the Purchaser and the Purchaser's Group a perpetual, royalty free, worldwide,
non-exclusive licence to use the Permanently Licensed ICI Owned Software in the
business of the Purchaser and the Purchaser's Group.
4.2 In relation to the Temporarily Licensed ICI Owned Software where
Transitional Services are agreed to be supplied under paragraphs 13 to 19 below,
then, subject always to Zeneca's consents where necessary, ICI shall grant and
shall procure that each relevant member of its Retained Group shall grant, to
the Purchaser a licence of such software as shall be owned by ICI or its
Retained Group which is necessary for the Purchaser to receive the benefit of a
Transitional Service for the duration of that Transitional Service.
5. LICENSED BACK SOFTWARE
5.1 The Purchaser hereby grants to ICI and its Retained Group a perpetual,
royalty free, worldwide, non-exclusive licence of the Licensed Back Software for
use in the business of ICI and ICI's Retained Group.
6. LOTUS NOTES DATABASE RIGHTS
6.1 ICI hereby grants and shall procure that each relevant member of its
Retained Group shall grant, so far as they are able, a perpetual, royalty free,
world-wide, non-exclusive licence to use the Lotus Notes Database Rights in the
ICI Business.
6.2 ICI reserves the right to delete or remove any data held on such databases
which it considers sensitive and does not relate to the ICI Business.
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7. LION EXCLUDED SOFTWARE
7.1 The parties agree that, save for any Temporarily Licensed ICI Owned
Software licensed to the Purchaser under paragraph 4.2 above, nothing in this
Agreement or any of the Ancillary Agreements shall require ICI or any member of
its Retained Group to assign, license or otherwise transfer to the Purchaser any
rights in the Excluded Software.
8. LICENCE OF PURCHASER SOFTWARE
8.1 Where Transitional Services are agreed to be supplied by the Purchaser
under paragraph 20 below, the Purchaser shall grant, and shall procure the grant
by each relevant member of its Group, to the service recipient of a licence of
such software as shall be owned by the Purchaser or any member of the
Purchaser's Group which is necessary for the service recipient to receive the
benefit of each such Transitional Service for the duration of that Transitional
Service.
9. SEPARATION PROJECT MANAGEMENT
9.1 Immediately on signing this Agreement the parties shall work together to
establish an appropriate separation project team and process to achieve timely
separation of I.T. systems, networks and services. In particular the parties
shall immediately effect:
9.1.1 a joint investigation of the network infrastructure presently used by the
ICI Business and any possible alternatives; and
9.1.2 a joint investigation of the I.T. systems used by the ICI Business and/or
members of ICI's Retained Group which may require Copying/Cloning;
9.1.3 in conducting the above investigation, close liaison will be maintained
with the other teams working on separation issues, in particular, but
without limitation, those working on national selling companies, HR and
payroll services, financial management and research and technology to
ensure that any I.T. separation issues arising from the separation
decisions made in other functional areas are addressed; and
9.1.4 the parties shall in accordance with paragraphs 10.1 and 10.2 and in good
faith mutually agree (such agreement not to be unreasonably withheld or
delayed) and implement a separation plan and timetable for the migration
off of the ICI Networks and the shared local I.T. systems and equipment.
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9.2 During the separation the parties shall liaise in relation to Year 2000
testing and remediation work and share Year 2000 status reports in so far as
they relate to the ICI Business.
10. SEPARATION FROM LION NETWORKS
10.1 The Purchaser will use its reasonable endeavours to migrate off the ICI
Networks by 60 days after Closing.
10.2 If the parties agree that the Purchaser shall remain on the ICI Networks
beyond the date referred to in paragraph 10.1 then both parties will use their
reasonable endeavours to achieve separation as quickly as practicable and, in
any event, within 3 months of Closing save where this would require separation
to occur during a period determined by ICI as being millennium sensitive in
which such case the parties agree that such separation shall to await the end of
such period.
10.3 ICI shall ensure all transferring Lotus Notes accounts are moved to
dedicated servers where such accounts do not reside on servers which are
transferring to the Purchaser.
10.4 During any period in which the Purchaser remains connected to the ICI
Networks:
10.4.1 current network services shall continue to be made available;
10.4.2 ICI, HSCC and the Purchaser shall work together to establish mutually
beneficial and secure communication links as appropriate to their
evolving business relationships;
10.4.3 the Purchaser shall not establish any connection to any other company
except via a ICI approved firewall; and
10.4.4 the Purchaser shall comply with ICI I.T. Security standards (see
attachment 2 to this Schedule).
10.5 Once network separation is completed, ICI shall ensure provision of
necessary firewalls and gateways to enable temporary access to any ICI systems
provided under the TSA. The Purchaser shall pay the associated costs as a
Transitional Service charge.
11. SHARED LOCAL EQUIPMENT
11.1 Subject to necessary consents, Copied/Cloned Systems shall be provided
by ICI to the Purchaser on Closing.
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11.2 If a Copied/Cloned System cannot be made available to the Purchaser by
Closing then ICI shall use its reasonable endeavours to ensure a Copied/Cloned
System is made available to the Purchaser as quickly as possible after Closing.
11.3 If within 3 months after Closing the Purchaser can demonstrate to the
reasonable satisfaction of ICI that a Copied/Cloned System was used during the 3
months before Closing and is required by the Purchaser to continue the
operations of the Business as operated by ICI immediately prior to Closing then
ICI will, subject to obtaining necessary consents, use its reasonable endeavours
to provide such Copied/Cloned System.
11.4 The Purchaser shall be responsible for the use of, the support and the
ongoing development of any Copied/Cloned System.
12. SEPARATION COSTS
12.1 ICI shall pay all of the following costs associated with the separation:
12.1.1 making ready/suitable for transfer any I.T. systems/services which are
not so and for which it is agreed this is a practical solution e.g.
Copying/Cloning; and
12.1.2 achieving separation tasks e.g. separation from ICI's Network, managing
exit from non-transferring I.T. systems, and managing impact on ICI's
Retained Group.
12.2 The Purchaser shall pay all of the following costs associated with the
separation:
12.2.1 taking and modifying I.T. systems/services transferred from ICI so that
they meet the Purchaser's requirements;
12.2.2 changing the Purchaser's I.T. systems/services to assimilate new
business, or creating any new I.T. systems/services needed e.g. network
services;
12.2.3 where the ICI Business is continuing to benefit from and is currently
paying or has agreed to pay an agreed share of millennium project costs
associated with a transferred system, costs on the same basis until the
millennium project is completed; and
12.2.4 the charges for using ICI's Networks between Closing and separation at
the same charging rates as charged to other members of ICI's Retained
Group.
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12.3 The parties shall bear their own costs of discharging their respective
obligations under paragraphs 9 and 10 above.
13. TRANSITIONAL SERVICES
13.1 So far as ICI is able and subject to any third party consents which may
be required, ICI shall make available to Purchaser the Transitional Services and
to that end the parties shall use their reasonable endeavours to agree (such
agreement not to be unreasonably withheld or delayed) before Closing a TSA and
Relevant Term Sheets to be attached to the TSA on the basis set out below.
13.2 Unless provided under paragraph 13.5 below, the Excluded Services shall
not be made available to the Purchaser.
13.3 If the Purchaser can demonstrate that the ICI Business requires:
13.3.1 an I.T. service not currently included as a Transitional Service which
was provided by ICI or a member of ICI's Retained Group to the ICI
Business immediately before Closing; and
13.3.2 that service is reasonably required by the Purchaser to continue the
operation of the Business as operated by ICI prior to Closing; then
the parties shall in good faith use their reasonable endeavours to agree term
sheets for the provision of such service (such agreement not to be unreasonably
withheld or delayed) in which case such service will be deemed to be a
Transitional Service. For the avoidance of doubt this paragraph 13.3 shall not
apply to Excluded Services.
13.4 ICI shall provide and the Purchaser shall purchase the agreed
Transitional Services for the Relevant Transitional Period.
13.5 If at Closing, the Purchaser, despite having used its reasonable
endeavours to do so, is unable to put in place alternatives to the Excluded
Services and such Excluded Services are required to avoid substantial disruption
to the ICI Business then ICI will use its reasonable endeavours to continue to
provide such Excluded Services to the Purchaser for a maximum of 3 months after
Closing.
13.6 The parties have agreed that the Polyurethanes Business should not
continue with its previous planned implementation of the standard support
environment service from IBM negotiated under Project Quantum pending further
discussions between the parties after signing and before Closing. It has also
been agreed that the Polyurethanes Business should continue its
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planned implementation of its standard operating environment under Project
Quantum. Subject to agreeing a Relevant Term Sheet for the provision of such a
Transitional Service, ICI is prepared to provide the standard support
environment service to the Purchaser on a transitional basis.
14. CHARGES AND PAYMENT FOR TRANSITIONAL SERVICES
14.1 The charge made by ICI for each Transitional Service will be set out in
the Relevant Term Sheet and shall be calculated in accordance with the following
principles:
14.1.1 on the same basis as those made by ICI or a member of ICI's Retained
Group to the ICI Business for that service; or, where explicit charges
are not being made at the time of Closing, the actual cost to ICI of
providing the service (or procuring a third party to provide all or part
of that service) together with a reasonable and proportionate amount of
its overheads in so doing; plus
14.1.2 where the ICI Business is currently paying or has agreed to pay an
agreed share of millennium project costs associated with that service,
those costs on the same basis until the millennium project is completed;
and
14.1.3 termination costs incurred by ICI for early exit as set out in the
relevant term sheets.
14.2 Charges shall be subject to increase or decrease as the case may be if:
14.2.1 associated costs change (including third party supplier costs); or
14.2.2 for any quarter, the volume usage of a Transitional Service by the ICI
Business increases or decreases by 10% or more over the volume usage of
that Transitional Service by the ICI Business in the previous quarter.
15. DURATION OF TRANSITIONAL SERVICES
15.1 The Relevant Transitional Period will be set out in the Relevant Term
Sheet. The parties agree that:
15.1.1 subject always to paragraph 15.1.2 below, no Relevant Term Sheet shall
have a duration in excess of 18 months beyond Closing unless and to the
extent that a Transitional Service is necessary to deliver to the
Purchaser a service for a greater period and that Transitional Service
is a service which the Purchaser cannot reasonably be expected to obtain
from another source; and
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15.1.2 no term sheet shall require ICI to supply any Transitional Services
which are dependent upon a third party supplier contract or third party
licences beyond the expiry date of such third party supplier contract or
third party licences; and
15.1.3 the parties will use reasonable endeavours to minimise the agreed
duration of Transitional Services.
15.2 Three months written notice of early termination is required unless
stated otherwise in Relevant Term Sheets.
15.3 Upon the expiry of a Transitional Service, ICI will provide reasonable
assistance to the Purchaser in liaising with current third party suppliers with
a view to establishing an ongoing direct service, but otherwise shall have no
obligation to provide or broker such on-going I.T. services.
15.4 In agreeing a Relevant Term Sheet, ICI may include an indication of
whether or not ICI would (so far as it is then able and subject to any third
party consents which may be required) be prepared to either renew the Relevant
Term Sheet for that Transitional Service or grant to the Purchaser a licence of
the I.T. systems used to deliver that Transitional Service, in both cases on
terms to be agreed by the parties before the expiry of the Relevant Term Sheet.
16. LIMITATIONS TO TRANSITIONAL SERVICES
16.1 Information/I.T. security is paramount and must not be compromised by or
for either party. Where security of ICI data cannot be adequately protected if
the Purchaser has direct access to a given I.T. system, then that I.T. system
will only be used indirectly through ICI staff or in accordance with other
arrangements agreed by ICI.
16.2 ICI will not be required to (a) modify or (b) extend the system life of
existing I.T. shared systems to meet the Purchaser's needs, other than in
circumstances in which Purchaser's business is at risk. The Purchaser would
bear the full cost for such modified/extended service.
16.3 To the extent that the Purchaser receives ICI site-based I.T. services,
it will comply with I.T. site infrastructure 'rules', and appoint a contact
responsible for compliance with these rules.
17. THIRD PARTY CONSENTS
17.1 ICI shall be responsible for obtaining any third party consents
necessary for the provision of the Transitional Services which it may agree to
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provide to the Purchaser in accordance with the provisions of the TSA. The
reasonable costs associated with obtaining such consents shall be deemed
included in the charges made by ICI to the Purchaser for the Transitional
Services.
17.2 ICI shall use its reasonable endeavours to obtain any consents necessary
from Zeneca to give effect to the provisions of this Schedule.
18. CHANGE CONTROL
Unless mutually agreed, no modifications will be made to ICI I.T. systems or
services on behalf of the Purchaser during the Relevant Transition Period. ICI
reserves the right to modify the systems for its own purposes during this time,
provided always that such modifications shall not adversely affect the
Transitional Services provided.
19. END OF TRANSITIONAL SERVICES
19.1. Subject to any exit charges specified in the Relevant Term Sheet, if,
during the Relevant Transition Period, the Purchaser (at its discretion)
contracts directly for a Transitional Service with any sub-contractor ICI uses
to supply that service, the Transitional Service shall cease on written notice
of such circumstances.
19.2. Where requested by the Purchaser, and subject to agreement by ICI (not
to be unreasonably withheld or delayed), ICI will provide assistance to the
Purchaser with its migration away from ICI systems and services at the end of
the Relevant Transition Period. The Purchaser shall be responsible for project
managing such work. This work will be covered by a migration support service
term sheet and will be charged on a time and materials basis.
20. TRANSITIONAL SERVICES FROM THE PURCHASER
20.1 Paragraphs 13 to 19 above relate to Transitional Services to be provided
by ICI to the Purchaser for a transitional period after Closing. The parties
agree that transitional I.T. services required from the Purchaser to ICI will be
provided on the same basis.
21. WARRANTY AND THE YEAR 2000
21.1 ICI will warrant in the TSA to be agreed that it will provide the
Transitional Services with reasonable skill and care, to the same standard as it
provides comparable services to other members of the ICI group from time to
time, using suitably qualified staff.
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21.2 ICI does not and will not warrant that the Transitional Services will be
accurate, uninterrupted, operable, or not adversely affected by any date
occurring before, after or during the Year 2000.
21.3 Subject to paragraph 21.1 above, ICI shall have no liability for any
inaccuracies, interruptions, inoperation or other affect caused by any date
occurring before, during or after the year 2000.
21.4 The Purchaser shall acknowledge when entering into the TSA that it has
not relied on any warranty, representation or undertaking given by ICI other
than those expressly set out in the TSA and in this Agreement.
22. FURTHER TERMS FOR TRANSITIONAL SERVICES
22. The parties agree that the terms of the TSA shall expressly include
terms substantially in the same form mutatis mutandis, as the clauses included
in attachment 5 to this Schedule save where:
(a) those terms cannot rationally be applied in the context of an agreement
for the provision of service; and
(b) additional terms or amended terms would be normal in the context of the
supply of such Transitional Services; or
(c) the parties expressly agree otherwise.
23. DISPUTES
23.1 In agreeing and implementing the terms of the TSA and any Relevant Term
Sheet the parties shall, and shall procure that the members of their respective
Retained Groups shall, act in such a way so that the recipient of any
Transitional Service shall be treated fairly and equitably in comparison with
any other members of the providers own Group who may receive the same service.
23.2 If, having used their reasonable endeavours and in good faith the
parties fail to agree:
23.2.1 the separation plan and timetable referred to in paragraph 9.1.4;
23.2.2 the terms of the TSA in accordance with paragraph 13.1;
23.2.3 the terms of any Relevant Term Sheet in accordance with paragraphs 13,
14, 15 and 16; or
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23.2.4 whether under paragraph 13.3 a service is required to be provided as a
Transitional Service
then the parties agree that such dispute shall constitute a Disputed Matter for
the purposes of clauses 15.9 to 15.12 of this Agreement and such dispute shall
be resolved having regard to the principles set out in this Schedule.
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PROJECT ALTA
I.T. SCHEDULE 20
ATTACHMENT I
EXCLUDED SOFTWARE
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EXCLUDED SOFTWARE
1. CAS/AU - Financial Management and Accounting Systems
2. Creditors Analysis - Creditor Analysis System
3. C&P Accounts - C&P Accounts System
4. Tax Reporting - Tax Reporting System
5. Merlin - Engineering Maintenance
6. NEWPS - Engineering Purchasing
7. PCMS - Project Cost Monitoring
8. Premium - Trip/Alarm Test Scheduling
9. IDSS (aka IQF) - Management Reporting from mainframe systems
10. CABS - Cash and Bank System
11. ICARUS - IT Supplier Charging System
12. SAP - Rozenburg - Rozenburg Engineering Purchasing System
13. Checkov - Annual Assurance System
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PROJECT ALTA
I.T. SCHEDULE 20
ATTACHMENT 2
LION'S I.T. SECURITY STANDARDS
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PROJECT ALTA
I.T. SCHEDULE 20
ATTACHMENT 3
TRANSITIONAL SERVICES
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TRANSITIONAL SERVICES
Part A : Services from ICI to the Purchaser
- -------------------------------------------
Polyurethanes
Quantum - IBM Global Desktop Service
Ibiza - IBM Local Infrastructure Services
Merlin - Engineering Maintenance System
NEWPS - Engineering Purchasing System
SAP/R2 - Rozenburg - Rozenburg Engineering Purchasing System
Relevant Petrochemicals
IDSS (aka as IQF) - Management Reporting System
Merlin - Engineering Maintenance System
NEWPS - Engineering Purchasing System
PCMS - Project Cost Monitoring
Premium - Trip/Alarm Test Scheduling System
RSS - Remote VAX System Support Service
Peoplesoft - HR System
Ibiza - IBM Local Infrastructure Services
Tioxide
None
Together with all such other I.T. Transitional Services which the parties shall
agree are to be supplied as Transitional Services from time to time under
paragraph 13.3
Part B :Services from the Purchaser to ICI
- ------------------------------------------
To be agreed.
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PROJECT ALTA
I.T. SCHEDULE 20
ATTACHMENT 4
EXCLUDED SERVICES
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EXCLUDED SERVICES
CAS/AU - Financial Management and Accounting Systems *
C&P Accounts - C&P Accounts System
Tax Reporting - Tax reporting System
CABS - Cash and Bank System
ICARUS - IT Supplier Charging System
Networks - ICI's WANs and LANs
OMNI - ICI's Lotus Notes Backbone service
Compuserve - Dial-in service
Shiva - Dial-in service
Checkov - Annual Assurance System
European VAT Reporting - European VAT Reporting System
VAT registrations - Creation and management of VAT registrations
Bank Interfaces - Creation and management of bank interfaces
ICI Business Systems - Transitional services will not be offered in
respect of IT systems transferred to the
Purchaser because such systems are used
exclusively or predominantly by a ICI Business
*These systems are not available to be accessed and used by ICI Business staff
as a Transitional Service. They will however be used to route data between SAP
R/3 and Merlin, NEWPS or PeopleSoft for as long as these latter three systems
are being provided as a Transitional Service to the Relevant Petrochemicals
Business by ICI.
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PROJECT ALTA
I.T. SCHEDULE 20
ATTACHMENT 5
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1. SUB-CONTRACTING
(1) For the avoidance of doubt, the Supplier may appoint sub-contractors to
supply the Services provided that:
(a) the Services shall be supplied in accordance with the provisions of this
agreement (including the relevant attachments hereto);
(b) the Supplier shall remain primarily liable for the provision of such
Services (to the extent that it is so liable under the terms and conditions
of this agreement); and
(c) no new sub-contractors who are required to work on or use assets belonging
to Service Recipient shall be appointed by the Supplier without the prior
written consent of Service Recipient (not to be unreasonably withheld or
delayed).
2. TERMINATION
(1) If either party shall have a receiver or administrator appointed, or shall
pass a resolution for winding-up (other than a winding-up for the purpose of, or
in connection with, any solvent amalgamation or reconstruction) or a court shall
make an order to that effect, or if a party shall enter into any composition or
arrangement with its creditors (other than relating to a solvent restructuring)
or shall cease to carry on business, then the other party may, without prejudice
to its other rights, terminate this agreement forthwith by written notice unless
it is reasonably satisfied that the party affected is able to continue and will
continue to perform its obligations under this agreement in full.
(2) If either party (the Breaching Party) is in wilful breach of this
agreement, the other party (the Non-Breaching Party) shall be entitled to serve
written notice on the Breaching Party notifying the Breaching Party that it
intends to terminate this agreement. If the Breaching Party remains in the
wilful breach of this agreement 30 days or more after the service of that
notice, then the Non-Breaching Party may serve a further notice immediately
terminating this agreement.
(3) Any waiver by either party of a breach of any provision of this agreement
shall not be considered to be a waiver of any subsequent breach of the same or
any other provision hereof.
(4) The right to terminate this agreement contained in this clause 2 shall not
prejudice any other right or remedy of either party in respect of any breaches
of this agreement.
Page 474
<PAGE>
3. VAT AND SALES TAXES
(1) Unless otherwise provided, the price of each Service as set forth in the
relevant Schedule, shall not include any Value Added Tax (VAT) or other
applicable sales tax or duty, which (if applicable) shall be added to such price
in question (or any adjustment to that price) and shall be paid by Service
Recipient to the Supplier and in the case of VAT the Supplier shall issue to the
Service Recipient a proper VAT invoice in respect thereof.
4. LIABILITY
(1) Nothing in this agreement shall exclude or limit the liability of the
Supplier or Service Recipient or their affiliates or representatives for:
(a) death or personal injury resulting from the negligence as defined in the
Unfair Contract Terms Act 1977; or
(b) fraud or any other matter if and to the extent that, under English law,
liability for it cannot be excluded, restricted or limited as against
Service Recipient or the Supplier or their affiliates or representatives in
the context of this agreement.
(2) Except in the case of wilful breach of this agreement, in no event shall a
party be liable for loss of profits, loss of margin, loss of use, loss of
contract, loss of goodwill or any indirect or consequential losses of any nature
whatsoever, whether or not caused by or resulting from the negligence of such
party or a breach of its statutory duties or a breach of its obligations
howsoever caused.
(3) Except in the case of wilful breach of this agreement, the aggregate amount
of any claims of any kind, whether as to a Service provided or for the non-
provision of any Service, and whether or not based on negligence or other
tortious act or omission for a Relevant Transitional Period shall not be greater
in amount than the price of the relevant Service for that Relevant Transitional
Period (or 12 months if shorter) and failure to give notice of claim within 90
days from the date on which the Service was provided, or should have been
provided shall constitute a waiver by the Service Recipient of all claims in
respect of such Services.
(4) Service Recipient and Supplier (as the case may be) shall use all
reasonable endeavours to mitigate the loss and damage (if any) incurred by it as
a result of any breach by the other party of that other party's obligations
under this Agreement.
Page 475
<PAGE>
(5) Neither party shall owe or incur any liability whatsoever to the other
party under this agreement (howsoever arising, whether in contract or in tort,
including negligence or otherwise), except in respect of breach of any
obligation, warranty or covenant contained in this agreement, subject to the
limitations expressly provided for in this agreement.
(6) Service Recipient acknowledges that this clause is fair and reasonable and
is reflected in the price for each Service. Service Recipient shall insure
and/or accept risk accordingly.
(7) Each of the restrictions in each paragraph or subclause above shall be
enforceable independently of each of the others and its validity shall not be
affected if any of the others is invalid. If any of those restrictions is void
but would be valid if some part of the restrictions were deleted, the
restriction in question shall apply with such modification as may be necessary
to make it valid.
5. FORCE MAJEURE
(1) The party affected shall be excused performance of its obligations under or
pursuant to this agreement if, and to the extent that, performance of such
obligations is delayed, hindered or prevented by Force Majeure.
(2) In the event of Force Majeure affecting the ability of the Supplier to
provide a Service hereunder, for the period of such Force Majeure the Supplier
shall be relieved of its obligations to provide such Service and Service
Recipient shall be relieved of its obligations to purchase such Service and
Service Recipient shall accordingly be reimbursed (where payment has already
been made) for the period during which the Service was not provided. To the
extent permitted by its legal obligations, Service Recipient shall, upon prior
written notice to the Supplier of such intention, have the right to purchase the
Service elsewhere at its own risk and cost, as may be necessary to cover its
requirements during the Force Majeure. The Supplier shall co-operate with
Service Recipient's efforts to obtain such substitute third party supply of
Services, including allowing a responsible third party reasonable access to that
Supplier's facilities for provision of such Service.
(3) If a party is prevented in whole or in part from performing its obligations
by reason of Force Majeure or is aware of the likelihood of being so prevented,
it shall notify the other party in writing immediately of the cause and extent
of such non-performance or likely non-performance, the date or likely date of
commencement thereof and the means proposed to be adopted to remedy or abate the
Force Majeure; and the parties shall without prejudice to the other provisions
of this clause 5 consult with a view to taking
Page 476
<PAGE>
such steps as may be appropriate to mitigate the effects of such Force Majeure
on both parties.
(4) The party prevented from performing its obligations under this agreement by
reason of Force Majeure shall:
(a) use all reasonable endeavours to remedy or abate the Force Majeure as
expeditiously as possible; however, for the avoidance of doubt, nothing in
this clause 5 shall require the Supplier to purchase any Service from third
parties for resale to Service Recipient or shall require either party to
make good any shortfall in supply of Services due to the period of Force
Majeure after the end of the Force Majeure period or shall require either
party to settle or compromise any strike or labour dispute;
(b) keep the other party regularly informed during the period of Force Majeure
as to when resumption of performance shall, or is likely to, occur;
(c) notify the other party when the Force Majeure has ceased or the
circumstances have changed to an extent which permits resumption of
performance to occur; and
(d) resume performance as expeditiously as possible after the end of the period
of Force Majeure or the circumstances have changed to an extent which
permits resumption of such performance.
(5) Subject to any practical, logistical or physical limitation and without
prejudice to Service Recipient's rights under this agreement, if for any reason,
the resources available to the Supplier to provide any Service shall be
insufficient to satisfy the Supplier's requirements and those of its affiliates
and the Supplier's arrangements for the provision of that Service to third
parties (including Service Recipient) existing prior to the cause of the
insufficiency, then for so long as such insufficiency shall continue, the
Supplier shall apportion a fair and equitable manner the actual resources
available for the provision of the Service.
Page 477
<PAGE>
SCHEDULE 21
DEFINITION OF POLYURETHANES BUSINESS
In this Agreement, Polyurethanes Business means:
(A) Development, manufacture (including for the avoidance of doubt manufacture
through toll manufacturing arrangements), distribution, marketing and sale
of (and the provision of related technical support services in respect of):
(i) nitrobenzene
(ii) aniline and its derivatives cyclohexylamine and dicyclohexylamine
(iii) nitric acid, dinitrotoluene and toluene diamine
(iv) diphenyl methane diisocyanate (MDI), its oligomers and isomers
(v) prepolymers of MDI and of its oligomers and isomers
(vi) toluenediisocyanate (TDI), its isomers and prepolymers
(vii) mixtures of any combination of (iv) to (vi) above
(viii) thermoplastic polyurethanes
(ix) Polyurethanes Polyols as defined below
(x) co-products and by-products in so far as they are made in the
course of manufacturing the above
and
(B) Blending of systems comprising any combination of (A)(iv) to (ix) and,
optionally, together with other ingredients such as polyols (other than
Polyurethanes Polyols) and additives as carried out at the following sites:
Shepton Mallet, Rozenburg, Deggendorf, Ternate, Everberg, Sumuttrakarn
Bangpu, Yin County Taoyuan, Shanghai Minhang, Guanzhou, West Deptford,
Sterling Heights, Geismar, Peel Mississauga and Cartagena, and such other
of the Properties as are described in Schedule 17 under the heading
Polyurethanes Business at which such blending of systems may be carried
out, but not at any other of ICI's operating sites. For the avoidance of
doubt, blending activities carried out by or on behalf of ICI's retained
Paints or
Page 478
<PAGE>
Uniqema businesses at Everberg, Sumuttrakarn Bangpu and Guanzhou are not
included in this definition
and
(C) Development, distribution, marketing and sale of (and the provision of
related technical support services in respect of) such blended systems
referred to in (B) above
and
(D) Licensing of technology associated with the manufacture of (A)(i) to (x)
above and the blending referred to in (B) above
and
(E) Rendering of brokerage and intermediary trading and purchase for resale of
the products listed in A(i) to (x) above
all in each case as presently conducted by the Companies and Business Vendors.
Polyurethanes Polyols means:
(i) flexible polyether polyols which are hydroxyl-terminated polyethers made by
the addition of propylene oxide or propylene oxide and ethylene oxide on
one or more initiators selected from glycerol, trimethylolpropane,
diethylene glycol, dipropylene glycol and poly propylene glycols having
equivalent molecular weights in excess of 2000
(ii) rigid polyether polyols which are hydroxyl-terminated polyethers made by
the addition of propylene oxide or propylene oxide and ethylene oxide on
one or more initiators selected from water, maleic anhydride, bisphenol A,
ethylene glycol, diethylene glycol, glycerol, trimethylolpropane,
pentaerythritol, sorbitol, sucrose, triethanolamine, toluene diamine,
ethylene diamine, diaminodiphenylmethane and diethylene triamine
(iii)polyester polyols which are saturated polyesters with terminal hydroxyl
groups selected from poly (ethylene tetramethylene adipate) and polyesters
formed by the condensation reaction between one or more glycols selected
from glycerol, diethylene glycol, butane diol, trimethylolpropane,
caprolactone monomer, castor oil and monoethylene glycol and one or more
carboxylic acids selected from
Page 479
<PAGE>
adipic acid, glutaric acid, succinic acid, dimethyl terephthalate and
phthalic acid.
Polyurethanes Polyols presently sold or under development includes
<TABLE>
<S> <C> <C>
DALTOCEL AH 00500 DALTOLAC 80 DALTOREZ 1220
DALTOCEL B 110 DALTOLAC C 4 DALTOREZ 1320
DALTOCEL F 1606 DALTOLAC C 5 DALTOREZ 1520
DALTOCEL F 416 DALTOLAC D 40 DALTOREZ 1620
DALTOCEL F 417 DALTOLAC D 90 DALTOREZ 2360 A
DALTOCEL F 422 DALTOLAC DP531 DALTOREZ EA-20
DALTOCEL F 426 DALTOLAC P 120 DALTOREZ P 708
DALTOCEL F 428 DALTOLAC P 130 DALTOREZ P 716
DALTOCEL F 430 DALTOLAC P 140 DALTOREZ P 720
DALTOCEL F 432 DALTOLAC P 160 DALTOREZ P 723
DALTOCEL F 435 DALTOLAC P 170 DALTOREZ P 725
DALTOCEL F 436 DALTOLAC P 180 DALTOREZ P 726
DALTOCEL F 438 DALTOLAC P 190 DALTOREZ P 727
DALTOCEL F 442 DALTOLAC P 200 DALTOREZ P 732
DALTOCEL F 443 DALTOLAC P 210 DALTOREZ P 751
DALTOCEL F 448 DALTOLAC P 220 DALTOREZ P 765
DALTOCEL F 452 DALTOLAC P 230 DALTOREZ P 774
DALTOCEL F 455 DALTOLAC P 240 DALTOREZ P 775
DALTOCEL F 456 DALTOLAC P 260 DALTOREZ P 776
DALTOCEL F 457 DALTOLAC R 005 DALTOREZ P 778
DALTOCEL F 459 DALTOLAC R 018 DALTOREZ P 779
DALTOCEL F 460 DALTOLAC R 040 DALTOREZ P 875
DALTOCEL F 463 DALTOLAC R 090 DALTOREZ SF
DALTOCEL F 4801 DALTOLAC R 104 DALTOREZ TA-20
DALTOCEL F 481 DALTOLAC R 105 DALTOREZ TF
DALTOCEL F 488 DALTOLAC R 124 PBA 5075 A
DALTOCEL F 489 DALTOLAC R 130 PBA 5127
DALTOCEL F 516 DALTOLAC R 140 PBA 5408
DALTOCEL F 517 DALTOLAC R 144 SORANE P 125
DALTOCEL F 525 DALTOLAC R 145 SORANE P 132
DALTOCEL F 526 DALTOLAC R 151 SORANE P 176
DALTOCEL F 532 DALTOLAC R 159 SORANE P 179 S
DALTOCEL F 540 DALTOLAC R 160 SORANE PD 65
DALTOCEL F 548 DALTOLAC R 170 DALTOLAC P 710
DALTOCEL F 634 DALTOLAC R 180 DALTOLAC P 744
DALTOCEL F 660 DALTOLAC R 190 DALTOLAC P 767
DALTOCEL F 681 DALTOLAC R 200 H 76798
DALTOCEL T 112 DALTOLAC R 210 PBA 5044A
DALTOCEL T 160 DALTOLAC R 230 PBA 5513
DALTOCEL T 48 35 DALTOLAC R 240 DALTOLAC P 510
DALTOCEL T 56 DALTOLAC R 260 RUBINOL R 744
PBA 7516 DALTOLAC R 304 RUBINOL R 805
PBA 7517 DALTOLAC R 352
DALTOCEL F 2805 DALTOLAC SW
DALTOCEL F 3001 H 88025
DALTOCEL T 32/75 PBA 3040
</TABLE>
Page 480
<PAGE>
<TABLE>
<S> <C>
DALTOCEL F 3507 PBA 5051-1
DALTOCEL F 3601 PBA 5059
DALTOCEL PA 38 PBA 5059-1
DALTOCEL F 4803 PBA 5144
DALTOCEL F 5204 PBA 5786
DALTOCEL F 5502 UROPOL G 1652
DALTOCEL B 56 UROPOL G 790
PBA 1657 UROPOL TG 542
PBA 5159 RUBINOL R 015
PBA 5160 RUBINOL R 128
PBA 5181 RUBINOL R 140
PBA 5160 RUBINOL R 146
DALTOCEL T 32/75S RUBINOL R 162
PBA 5151 RUBINOL R 180
LUBROL FSA RUBINOL R 241
PBA 5130 RUBINOL R 242
RUBINOL F 428 RUBINOL R 243
RUBINOL F 436 RUBINOL R 244
RUBINOL F 443 RUBINOL R 245
RUBINOL F 455 RUBINOL R 246
RUBINOL F 456 RUBINOL R 247
RUBINOL F 460 RUBINOL R 260
RUBINOL F 517 RUBINOL XR 005
RUBINOL F 995 RUBINOL XR 102
RUBINOL XF 417 RUBINOL XR 118
RUBINOL XF 999 RUBINOL XR 119
RUBINOL XR 124
RUBINOL XR 135
</TABLE>
and such other polyols as are manufactured at the Properties listed in Schedule
17 under the heading Polyurethanes Business but excluding any other polyols
manufactured by ICI at any other of ICI's operating sites.
Page 481
<PAGE>
SCHEDULE 22
National Selling Companies
1. In this Schedule, and in relation to NSC Companies in Schedule 12, the
following expressions shall have the following meanings:
NSC Companies means the companies listed in this schedule (and any other
companies agreed between the parties) and which provide agency, support and
other services to the Companies and/or Business Vendors or any of them.
NSC Employees means those employees (and secondees) who are employed by (or who
are seconded to) the NSC Companies and who, on average, spend 50% or more of
their time providing services to the ICI Business.
2.1 Each NSC Company will continue to provide services to Tioxide,
Polyurethanes and Relevant Petrochemicals (the NSC Services) on the same basis
that those NSC Services are provided immediately prior to the date of this
Agreement for a maximum period of two years after Closing (the Transitional
Period).
2.2 The Purchaser will pay or procure the payment of all costs and charges
(including, without limitation, employee costs and contributions to business
accommodation costs) arising in connection with the provision of the NSC
Services during the Transitional Period on the same basis as such costs and
charges are payable immediately prior to the date of this Agreement.
2.3 If the Purchaser wishes to terminate the provision of any of the NSC
Services before the end of the Transitional Period it may do so by giving ICI
not less than 12 months written notice of termination of such NSC Services, such
notice to be served not later than 12 months from the date of Closing.
Notwithstanding the foregoing, where there is a written agreement evidencing the
basis on which an NSC Service is provided and which specifies a notice period of
shorter than 12 months, that shorter notice period shall prevail.
2.4 With effect from termination of the provision of an NSC Service (the
Termination Date), the Purchaser will offer employment to any NSC Employee
engaged in the provision of that NSC Service and who is required by the
Purchaser or a relevant member of the Purchaser's Group. Any such offer (and
where relevant the transfer of any employment contract by operation of law)
shall be subject to applicable legislation or other laws.
2.5 Each such NSC Employee shall be treated as if he were a Business Employee
and the provisions of clauses 6.10, 8.1(a), 9, 10(3)(e) and the provisions of
Schedules 9 and 11 of the Agreement, shall apply in relation to
Page 482
<PAGE>
such NSC Employee mutatis mutandis, and subject in particular to the following:
(i) the indemnity in clause 8.1(a) shall apply from Closing;
(ii) in clause 9.1, the Applicable Period shall commence at Closing, but
the Purchaser shall only be obliged to procure the employment of
the NSC Employee from the Termination Date and on terms and
conditions no less favourable as a whole than those applicable to
him at the Termination Date;
(iii) in clauses 6.10, 9.2 and 9.6, reference to the Termination Date
shall be substituted for reference to Closing; and
(iv) in Schedule 11, Part 1 A, paragraph 2.1, reference to the
Termination Date shall be substituted for reference to Closing in
sub paragraph (a), and Part 1 C shall not apply.
So far as possible the assets used and/or owned by the NSC Company for the
purpose of providing the NSC Service will be transferred to the Purchaser at
cost or net book value. All liabilities relating to moveable property
(including, but not limited to, vehicles, office and computer equipment) used by
such NSC Employees in providing the NSC Service will be assumed by the Purchaser
at the end of the Transitional Period unless the parties agree otherwise.
2.6 The Purchaser will further indemnify ICI and each member of the ICI
Retained Group against all Costs which relate to or arise out of the termination
of the employment of any NSC Employee who is offered employment by the Purchaser
or a member of the Purchaser's Group in accordance with clause 2.4 above and of
any NSC Employee who is not offered employment by the Purchaser and whose
contract of employment terminates or is terminated by ICI or a member of the ICI
Retained Group. For the avoidance of doubt, this indemnity will apply where an
NSC Employee refuses to transfer, notwithstanding an offer of employment by the
Purchaser.
2.7 The parties shall co-operate in good faith to minimise any costs associated
with the termination of each NSC Service.
2.8 The parties acknowledge that it may, subject to agreement between the
parties, be appropriate to transfer the shares of particular NSC Companies to
the Purchaser after Closing (becoming a Transferred NSC Company) but before the
end of the Transitional Period. Any such transfer will be subject to the terms
provided mutatis mutandis in the Agreement. Where a
Page 483
<PAGE>
Transferred NSC Company provides a sales agency service to ICI or any member of
the Retained ICI's Group (the Excluded Service) immediately prior to such
transfer, such Excluded Service will continue to be provided mutatis mutandis on
the terms specified in clauses 2.1 (but only for the period from the date of
such transfer to the end of the Transitional Period) - 2.4 and the provisions of
clauses 2.6 and 2.7 shall apply in relation to the employees of the Transferred
NSC Company engaged in the provision of the Excluded Service on termination of
the provision of that Excluded Service.
NSC COMPANIES
POLYURETHANES
*Please note that the list below may not be exhaustive
France - ICI France SA
Hong Kong - ICI China Ltd.
Czech Republic - ICI Cz sro
ICI International Limited - a number of branches in East Europe
Slovakia - ICI Slovakia sro
Poland - ICI Polska Sp.zo.o
Hungary - ICI Hungary Kft
Japan - ICI Japan Ltd.
Korea - ICI Korea Ltd
Malaysia - ICI (Malaysia) Holdings Sdn Bhd
Scandanavia - ICI Norden
Singapore - ICI (Singapore) Private Ltd.
Page 484
<PAGE>
TIOXIDE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
COUNTRY COMPANY
==============================================================================
<S> <C>
ASIA
- ------------------------------------------------------------------------------
Japan ICI Japan (100% ICI owned)
- ------------------------------------------------------------------------------
South Korea ICI Korea - Exclusive for Fibres grades
- ------------------------------------------------------------------------------
Taiwan ICI Dulux (100% ICI owned)
- ------------------------------------------------------------------------------
Hong Kong ICI China (100% ICI owned)
- ------------------------------------------------------------------------------
Thailand National Starch (100% ICI owned)
- ------------------------------------------------------------------------------
Vietnam ICI Vietnam (100% ICI owned)
- ------------------------------------------------------------------------------
India IC India (51% ICI owned)
- ------------------------------------------------------------------------------
Pakistan ICI Pakistan (61% ICI owned)
- ------------------------------------------------------------------------------
Sri Lanka ICI Sri Lanka (40% ICI owned)
- ------------------------------------------------------------------------------
MIDDLE EAST
- ------------------------------------------------------------------------------
Saudia Arabia ICI Saudi Arabia (40% ICI owned)
- ------------------------------------------------------------------------------
Israel ICI Israel (100% ICI owned)
- ------------------------------------------------------------------------------
EASTERN EUROPE
- ------------------------------------------------------------------------------
CIS ICI (100% ICI owned)
- ------------------------------------------------------------------------------
Czech Republic ICI (100% ICI owned)
- ------------------------------------------------------------------------------
Hungary ICI (100% ICI owned)
Poland ICI (100% ICI owned)
- ------------------------------------------------------------------------------
Bulgaria ICI (100% ICI owned)
- ------------------------------------------------------------------------------
EUROPE
- ------------------------------------------------------------------------------
Switzerland ICI (Switzerland) AG (99.2% ICI owned)
- ------------------------------------------------------------------------------
</TABLE>
Page 485
<PAGE>
SCHEDULE 23
INDEMNITY
Wilton aniline pipe indemnity
1 In this Schedule the following terms shall have the following meanings:
Aniline Pipe means the pipeline (in part running through the No. 2 Tees Tunnel
and known as System 98) existing at the date of this Agreement which is used by
the Polyurethanes Business for the transfer of aniline from the Wilton Plant to
the Tees Storage Tanks;
BP means BP International Limited and its successors in title
Tees Storage Tanks means the storage tanks used at the date of this Agreement by
the Polyurethanes Business at Seal Sands Teesside England;
Wilton Plant means the Polyurethanes Plant at Wilton, England.
2. If:
(a) at any time during the period of ten years following Closing, BP serve
notice in consequence of which the Designated Purchaser's right to use the
Aniline Pipe will be lost or
(b) ICI so elects (at its discretion) or
(c) the period of ten years following Closing expires without either of the
events mentioned in (a) or (b) above having occurred
the provisions of the following paragraphs of this Schedule shall apply.
3. ICI shall provide or procure the provision to the Designated Purchaser at
the cost of ICI of such facilities as shall be reasonably required to enable the
Purchaser to continue to convey aniline produced by the Polyurethanes Business
(in quantities no greater than those capable of being conveyed by the Aniline
Pipe at the date the right is lost or (as the case may be) the relevant event
mentioned in paragraph 2 occurs) to the Tees Storage Tanks or to some other
reasonably convenient location for export via the River Tees (the Export
Alternative).
4. The nature of the Export Alternative shall be subject to the prior written
approval of the Purchaser which shall not be unreasonably withheld or delayed in
the case of an Export Alternative which is reasonably
<PAGE>
convenient practicable and commercially sensible commensurate with the
requirements of both parties to use all reasonable endeavours to ensure that:
(a) any costs associated with operating the Export Alternative are not
materially greater than the then current costs of operating the Aniline
Pipe (as increased by RPI and any reasonable operating requirements);
(b) the operational risks associated with implementation of the Export
Alternative are not materially greater than the operational risks of
operating the Aniline Pipe; and
(c) any costs associated with providing and implementing the Export Alternative
are minimised in so far as reasonably practicable.
5. Without prejudice to the generality of the foregoing ICI and the Purchaser
agree that acceptable Export Alternatives under paragraph 4 above would include
any, or any combination, of the following:
(a) the construction of a new Aniline Pipe (or of a new part or parts thereof)
to a functional specification reasonably equivalent in all material
respects to that of the Aniline Pipe;
(b) the provision by ICI to the Designated Purchaser of the whole or some part
or parts of an existing pipeline or pipelines in substitution of the
Aniline Pipe or parts of it to a functional specification reasonably
equivalent in all material respects to that of the Aniline Pipe;
(c) procuring that BP relinquishes any right or entitlement to use (and any use
of) the Affected Pipe (whether by providing to BP a pipeline for use by BP
in replacement for the Affected Pipe or otherwise);
(d) the provision of new storage tanks and ancillary apparatus adjoining the
River Tees with access to and use of loading and berthing facilities at
least equivalent in all material respects to those enjoyed at the date of
this Agreement such that cargo sizes need to be no smaller and access to
berthing facilities no less frequent than at the date of this Agreement
(whether or not in conjunction with any or all of terms (a) (b) and/or(c)
above);
but not so as to limit in any way the generality of paragraph 4 above.
6. ICI will bear and be responsible for any costs which may be incurred in:
(a) obtaining from third parties; and/or
Page 487
<PAGE>
(b) providing over ICI's retained land
any easement wayleaves or other rights which may be needed for the routing
and/or location of any pipes cables tankage or other apparatus needed to render
viable and implementable the Export Alternative (Export Apparatus) Provided That
the Purchaser will afford to ICI (at ICI's reasonable cost) any assistance which
may be reasonably required in negotiating with third parties in regard to the
acquisition of any rights required.
7. ICI will bear and be responsible for the cost of constructing any Export
Apparatus (or where the Export Apparatus includes any pipes or other apparatus
made available by ICI for the cost of any refurbishment reasonably required by
the Designated Purchaser to implement the Export Alternative).
8. The provisions of clauses 12.2, 12.8 - 12.11 (inclusive), 12.15 and 13.1 of
the Agreement shall apply (mutatis mutandis) to the matters set out in this
Appendix as if a claim made by the Purchaser pursuant to this Schedule were a
Claim.
9. ICI will bear any difference between the increased cost of operating the
Export Alternative and the cost that would have been incurred in operating the
Aniline Pipe for a period of ten years from Closing. In the event of any
dispute as to such difference in costs the provisions of paragraph 2.6 of Part
VII of Schedule 17 shall apply.
10. If ICI has not procured that the Export Alternative is made available for
use prior to the date on which the use by the Designated Purchaser of the
Aniline Pipe is terminated, ICI will arrange at its cost to the reasonable
satisfaction of the Designated Purchaser transport for the transfer of aniline
from the Wilton Plant to the Tees Storage Tanks until the Export Alternative is
made available for use (subject to the quantities of aniline being no greater
than those capable of being conveyed by the Aniline Pipe at the date its use by
the Designated Purchaser is terminated).
11. Once ICI has made the Export Alternative available for use in accordance
with this Schedule 23 ICI's obligations under this Schedule shall cease and
determine.
Page 488
<PAGE>
SCHEDULE 24
Assets Included In the Relevant Petrochemicals Business
1. WILTON SITE
1.1 No. 6 Cracker and ancillary plants
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Plot/Assets Comments Asset Ownership
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
JV06 + land "footprint" See map/plot ICI 80% BPCL 20%
- --------------------------------------------------------------------------------------------------------------------
incl. JVB3 Wilton. 1.1 ICI 80% BPCL 20%
- --------------------------------------------------------------------------------------------------------------------
incl. GTU ICI 80% BPCL 20%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
1.2 Olefins Storages including cavities, Butadiene storage, Olefins 5 and
Ethylene Control
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Plot/Assets Comments Asset Ownership
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Wilton Ethylene Control (compressors, Within Cracker No.5 area ICI
driers, lines, gas distribution etc.)
- --------------------------------------------------------------------------------------------------------------------
Wilton Ethylene cavities (2, 3, 6, 7, 8 & 5 Total Capacity as ethylene is 51,750 mt ICI
decomm'd)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
All other associated Ethylene System Equip. ICI
- --------------------------------------------------------------------------------------------------------------------
Naphtha storage F 1962 A/B ICI
- --------------------------------------------------------------------------------------------------------------------
All other associated Naphtha System Equip. Includes link line to North Tees ICI
- --------------------------------------------------------------------------------------------------------------------
Refined Butadiene Storage (F1940 A/B & Capacity is 10 kt ICI
F1946)
- --------------------------------------------------------------------------------------------------------------------
Raffinate - 1 storage NF 1364/1365 2 spheres each 2000 mt ICI
- --------------------------------------------------------------------------------------------------------------------
Mixed C4's cavity (W4) Capacity approx. 12 kt. ICI
- --------------------------------------------------------------------------------------------------------------------
All other associated Gasoline System Equip. ICI
South of River Tees outside Teesport
- --------------------------------------------------------------------------------------------------------------------
Certain associated olefin equipment (e.g. ICI/4/
flare, WEC, etc)
- --------------------------------------------------------------------------------------------------------------------
Olefins South offices ICI
- --------------------------------------------------------------------------------------------------------------------
Workshops/No. 4 depot ICI
- --------------------------------------------------------------------------------------------------------------------
Raw pygas storage F1961 ICI
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
________________________________________________________________________________
/4/ The ownership of land at this site shall be included in the transfer but the
Olefins 5 Site (and Butadiene 2) shall be excluded. See Schedule 12.
Page 490
<PAGE>
WILTON SITE
1.3 Central Control Area
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Plot/Assets Comments Asset Ownership
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Central Control Area including propylene Propylene system, Propane system, B'd & ICI
system (NF 38 a/b) and pumps Raff-1 system, pygas & C5 systems,
naphtha system all run by Central Control.
- -----------------------------------------------------------------------------------------------------------------------------
Road loading terminal -
Propylene
Butadiene
Propane
- -----------------------------------------------------------------------------------------------------------------------------
But also CHX, Benzene, where an
operating agreement for various third party
(incl. UCI) needs would be required.
Includes flare stack on adjacent plot.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 491
<PAGE>
WILTON SITE
1.4 Brine reservoirs
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Plot/Assets Comments Asset Ownership
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Brine Reservoirs (4) Reservoirs 1, 2, 3, 4 ICI
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. NORTH TEES WORKS
2.1 Ethylene liquefaction and Export Terminal, Propylene Export Terminal - (To
be operated by NTL)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Assets Comments Asset Ownership
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NTL area and equipment Essentially the Riverside area, tank storage ICI
areas, and the cavity storage areas
- -----------------------------------------------------------------------------------------------------------------------------
Ethylene Liquefaction Units & associated Includes storage tanks (2) Units 2A, 2B, 3. ICI
equipment
- -----------------------------------------------------------------------------------------------------------------------------
Ethylene export/import equipment (loading ICI
arms, etc.)
- -----------------------------------------------------------------------------------------------------------------------------
Propylene export/import sphere N 920F ICI
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 492
<PAGE>
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Associated Propylene equipment & export kit ICI
- -----------------------------------------------------------------------------------------------------------------------------
Tanks N900F, N901F, N902F, N903F Formerly used for gasoline components ICI
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NORTH TEES WORKS
2.2 Naphtha Import/Export Terminal
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Assets Comments Asset Ownership
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Naphtha Storage Includes import/export system at NTL and ICI
N904/905/906F System 30 to Wilton
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 493
<PAGE>
NORTH TEES WORKS
2.3 Others
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Assets Comments Asset Ownership
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Certain Other North Tees Cavities and Brine ICI
Winning system
- -----------------------------------------------------------------------------------------------------------------------------
Link lines - systems 28 and 29 - Wilton to Not used for several years and re-used by ICI
North Tees ICI (Polyurethanes Business)
- -----------------------------------------------------------------------------------------------------------------------------
System 31 (part) Capacity up to 800 tpd ICI
Propylene to BASF
- -----------------------------------------------------------------------------------------------------------------------------
Propane and butane link lines from Phillips System 35 and that part of System 34 from ICI
UK at Seal Sands to JV06 at Wilton via Phillips Petroleum to Wilton
No. 2 tunnel
- -----------------------------------------------------------------------------------------------------------------------------
North Tees Jetties including Jetty 1A ICI
- -----------------------------------------------------------------------------------------------------------------------------
NTL/CDC Riverfront footprint/associated ICI
assets not mentioned above
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 494
<PAGE>
3. TEESPORT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Assets Comments Asset Ownership
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Teesport equipment to be allocated ICI (leased)
- -----------------------------------------------------------------------------------------------------------------------------
Pygas/C5's Storage and associated pumps for ICI
loading/export/import
- -----------------------------------------------------------------------------------------------------------------------------
Arthur Taylor Jetty - One loading arm Used for butadiene, mixed C4s or ICI (leased jetty)
Raffinate-1
- -----------------------------------------------------------------------------------------------------------------------------
West Byng, Jetty - loading arms 1 x C4's butadiene, raffinate - 1 arm ICI (leased jetty)
1 x C4/pygas arm
- -----------------------------------------------------------------------------------------------------------------------------
Flare stack Used for C4s ICI
- -----------------------------------------------------------------------------------------------------------------------------
QE2 Jetty Not in use currently ICI (leased jetty)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
4. OLEFINS OFFSITES
4.1 Easements to retain existing off-plot pipelines, apparatus, equipment
infrastructure (if any) dedicated to Olefins Operations.
Page 495
<PAGE>
5. WILTON GRANGEMOUTH ETHYLENE PIPELINE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Assets Comments Asset Ownership
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ICI share of WGEP ICI 50%, BPCL 50%
- -----------------------------------------------------------------------------------------------------------------------------
Assignment of Deed of Grant of Easement Shown in red on Plan
- -----------------------------------------------------------------------------------------------------------------------------
Deed of Grant of Easements for sections on
ICI retained land, no. 2 tunnel, etc,
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. TRANS-PENNINE ETHYLENE PIPELINE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Assets Comments Asset Ownership
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TPEP including LDS/metering at Runcorn ICI
- -----------------------------------------------------------------------------------------------------------------------------
Associated Ethylene compress/conditioning ICI
plant at Lostock
- -----------------------------------------------------------------------------------------------------------------------------
Assignment of deed of Grant of Easement Shown in red on Plan
of TPEP
- -----------------------------------------------------------------------------------------------------------------------------
Deed of Grant of Easement for TPEP sections
on ICI retained land at Wilton.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 496
<PAGE>
Schedule 24 (CONTINUED)
ASSET LISTING FOR NORTH TEES
Assets at North Tees included in Relevant Petrochemicals Business
The assets included are generally those within the "Aromatics" and "Logistics"
boundaries on the maps of the North Tees site and the Saltholme brinefields and
include assets forming part of the Olefines Manufacturing Business.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
INCLUDED
- --------------------------------------------------------------------------------
DESCRIPTION REFERENCE DUTY OUT OF
INFORMATION SERVICE?
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Plants: Aromatics I
- --------------------------------------------------------------------------------
Aromatics II
- --------------------------------------------------------------------------------
Cumene
- --------------------------------------------------------------------------------
Ethylene Liquifaction Plants 2A, 2B, 3
plants
- --------------------------------------------------------------------------------
Effluent treatment
- --------------------------------------------------------------------------------
Jetties 1, 1A, 2, 3, Jetty 1 Berth only available y
including loading
facilities:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jetty 1A with Ethylene Some loading facilities
propylene loading only on jetty 1A.
- --------------------------------------------------------------------------------
Jetty 2 Loading facilities for
multiple products.
- --------------------------------------------------------------------------------
Jetty 3 Loading facilities for
multiple products.
- --------------------------------------------------------------------------------
Some loading facilities
only on jetty 4.
- --------------------------------------------------------------------------------
Tanks (including F8/001 Reformer Naphtha
- --------------------------------------------------------------------------------
associated lines and F8/002 Reformer Naphtha
- --------------------------------------------------------------------------------
pump systems): F8/003 Reformer Naphtha/BPN
- --------------------------------------------------------------------------------
N-3018F Reformer Naphtha
- --------------------------------------------------------------------------------
N-3000F Reformer Naphtha
- --------------------------------------------------------------------------------
N-5003F Ethyle Benzene.
(ship)
- --------------------------------------------------------------------------------
</TABLE>
Page 499
<PAGE>
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
N-5004F Ethyle Benzene.
(ship)
- --------------------------------------------------------------------------------
N-5005F Ethyle Benzene. (Run
Down)
- --------------------------------------------------------------------------------
N-5006F Ethyle Benzene. (Run
Down)
- --------------------------------------------------------------------------------
N-5007F Ethyle Benzene. (Run
Down)
- --------------------------------------------------------------------------------
N-3019F Cyclohexane
- --------------------------------------------------------------------------------
N-3020F Cyclohexane
- --------------------------------------------------------------------------------
N-3021F Cyclohexane
- --------------------------------------------------------------------------------
N-5000F Cyclohexane
- --------------------------------------------------------------------------------
N-5001F Cyclohexane
- --------------------------------------------------------------------------------
N-5002F Cyclohexane. (Off
spec.)
- --------------------------------------------------------------------------------
N-5014F C9's
- --------------------------------------------------------------------------------
N-5015F C9's
- --------------------------------------------------------------------------------
N-3007F C9's
- --------------------------------------------------------------------------------
N-3008F C9's Column
Bottoms(petrinex T9)
- --------------------------------------------------------------------------------
N-3009F Cumene Col Bottoms
(aromasol 12)
- --------------------------------------------------------------------------------
N-3010F Benzene
- --------------------------------------------------------------------------------
N-3011F Benzene
- --------------------------------------------------------------------------------
N-904F Cracking Naphtha
(BPN)
- --------------------------------------------------------------------------------
N-5008F Benzene
- --------------------------------------------------------------------------------
N-5009F Benzene
- --------------------------------------------------------------------------------
N-2800F Cumene
- --------------------------------------------------------------------------------
N-2801F Cumene
- --------------------------------------------------------------------------------
N-2802F Cumene (off spec.)
- --------------------------------------------------------------------------------
2401F Oil rundown tank
PIP's (redundant)
- --------------------------------------------------------------------------------
N-2750F De-Ballast. (floating
roof)
- --------------------------------------------------------------------------------
N-2402FA De-Ballast. (open
tank)
- --------------------------------------------------------------------------------
</TABLE>
Page 500
<PAGE>
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
N-2402FB De-Ballast. (open
tank)
- --------------------------------------------------------------------------------
N-2402FC De-Ballast. (fixed
roof )
- --------------------------------------------------------------------------------
N-3002F Toluene
- --------------------------------------------------------------------------------
N-5010F Toluene
- --------------------------------------------------------------------------------
N-5011F Toluene
- --------------------------------------------------------------------------------
P-902F Propylene Sphere.
- --------------------------------------------------------------------------------
675F Ethylene
- --------------------------------------------------------------------------------
602F Ethylene
- --------------------------------------------------------------------------------
P-900F C6? empty
- --------------------------------------------------------------------------------
P-901F C8's
- --------------------------------------------------------------------------------
P-902F Toluene
- --------------------------------------------------------------------------------
P-903F C7's/ Toluene
- --------------------------------------------------------------------------------
N-905F Cracking Naphtha.
(BPN)
- --------------------------------------------------------------------------------
N-906F Cracking Naphtha.
(BPN)
- --------------------------------------------------------------------------------
F8/004 Toluene
- --------------------------------------------------------------------------------
N-5012F Xylene
- --------------------------------------------------------------------------------
N-5013F Xylene
- --------------------------------------------------------------------------------
N-5026F Xylene
- --------------------------------------------------------------------------------
N-5018F Pentane
- --------------------------------------------------------------------------------
N-5019F Iso Raffinate y
- --------------------------------------------------------------------------------
N-3029F HSFO
- --------------------------------------------------------------------------------
N-5017F Gasoil - Washoil Aro
II
- --------------------------------------------------------------------------------
N-3027F Redundant Methanol
- --------------------------------------------------------------------------------
N-3006F Crude Aromatics (Aro I)
- --------------------------------------------------------------------------------
N-3001F Platfinate. (Aro I)
- --------------------------------------------------------------------------------
N-1009F Crude Aromatics (Aro
II)
- --------------------------------------------------------------------------------
N-1008F Reformate. (Aro II)
- --------------------------------------------------------------------------------
N-2780F Premium Motor Spirit.
(PMS)
- --------------------------------------------------------------------------------
</TABLE>
Page 501
<PAGE>
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
N-2781F Unleaded Motor
Spirt. (PUMS)
- --------------------------------------------------------------------------------
N-2782F Premium Motor
Spirit. (PMS) y
- --------------------------------------------------------------------------------
N-2783F Unleaded Motor
Spirt. (PUMS) y
- --------------------------------------------------------------------------------
N-2205F Firewater
- --------------------------------------------------------------------------------
2206F Water Tank
- --------------------------------------------------------------------------------
N-3701F Methanol Tank
(Propane Ship Exp)
- --------------------------------------------------------------------------------
cavities (incl 47 Crude oil
wellhead and
associated equipment):
- --------------------------------------------------------------------------------
48 Crude oil
- --------------------------------------------------------------------------------
49 Crude oil
- --------------------------------------------------------------------------------
51 Light rejects
- --------------------------------------------------------------------------------
52 Gas oil y
- --------------------------------------------------------------------------------
54 Gas oil y
- --------------------------------------------------------------------------------
56 Crude oil y
- --------------------------------------------------------------------------------
57 LPG
- --------------------------------------------------------------------------------
64 CO y
- --------------------------------------------------------------------------------
68 Naphtha
- --------------------------------------------------------------------------------
69 Naphtha
- --------------------------------------------------------------------------------
72 Nitrogen
- --------------------------------------------------------------------------------
73 Nitrogen
- --------------------------------------------------------------------------------
74 Propylene
- --------------------------------------------------------------------------------
75 hydrogen
- --------------------------------------------------------------------------------
76 hydrogen
- --------------------------------------------------------------------------------
77 hydrogen
- --------------------------------------------------------------------------------
85 BASF propylene
- --------------------------------------------------------------------------------
82 propane
- --------------------------------------------------------------------------------
97 propane
- --------------------------------------------------------------------------------
98 propane
- --------------------------------------------------------------------------------
99 propane
- --------------------------------------------------------------------------------
</TABLE>
Page 502
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
43 ex-brine winning y
cavities in the
bounded area.
- -------------------------------------------------------------------------------------------------
4 ex-storage cavities, y
no longer usable.
- -------------------------------------------------------------------------------------------------
4 new cavities part
developed on No.6
field.
- -------------------------------------------------------------------------------------------------
Brine reservoirs, Nos. 1 & 2 That part of the brine
incl. associated reservoirs owned by
equipment ICI.
- -------------------------------------------------------------------------------------------------
No. 3 Brine reservoir.
- -------------------------------------------------------------------------------------------------
Road tanker gantries: 1 C9's
- -------------------------------------------------------------------------------------------------
pentane
- -------------------------------------------------------------------------------------------------
toluene y
- -------------------------------------------------------------------------------------------------
benzene y
- -------------------------------------------------------------------------------------------------
2 toluene y
- -------------------------------------------------------------------------------------------------
aromosal 12
- -------------------------------------------------------------------------------------------------
cumene
- -------------------------------------------------------------------------------------------------
EB's
- -------------------------------------------------------------------------------------------------
Link and vein lines All pipelines listed
(incl. service on the attached table
distribution lines): except for system 36
- -------------------------------------------------------------------------------------------------
Land: as per land maps in
A1, A2, A3, A4
- -------------------------------------------------------------------------------------------------
Others: Site drains.
- -------------------------------------------------------------------------------------------------
Other site
infrastructure e.g.
roads, lights.
- -------------------------------------------------------------------------------------------------
All buildings within
the Aromatics and
Logistics
- -------------------------------------------------------------------------------------------------
boundaries on the
North Tees main site.
- -------------------------------------------------------------------------------------------------
</TABLE>
Page 503
<PAGE>
INCLUDED LINKLINES
<TABLE>
<CAPTION>
System Conveyed Product Owning Plant/Area - Site - Plant/Area - Site - GEP SRP
No. Business Start of System Start of End of System End of Operating
System System Mgr
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
8 Paraxylene Aromatics Central Control Wilton Storage Tanks Teesport Ogden T Ogden T
AF3, AF3A, AF12
- ----------------------------------------------------------------------------------------------------------------------------
16 Mixed Xylenes Aromatics Xylenes Storage North Tees Paraxylene V Wilton Farrar R G Maddren C
(Xylole) Tanks
- ----------------------------------------------------------------------------------------------------------------------------
18 Paraxylene Aromatics Paraxylene V Wilton Aromatics North Tees Ogden T Ogden T
Light Ends
(Aramasol L)
- ----------------------------------------------------------------------------------------------------------------------------
22 Cyclohexane Aromatics Teesport Nylon Solvents Wilton Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
45 Cyclohexane Aromatics Aromatics North Tees Teesport Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
52 Spare Aromatics Aromatics North Tees Oil Works Billingham Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
55 Spare (was MTBE) Aromatics Tees Storage North Tees MTBE Metering TSC Farrar R G -
Seal Sands Skid
- ----------------------------------------------------------------------------------------------------------------------------
62 HP Nitrogen Aromatics Compound 38 Link Cavities 72 and Cavities Chatha C S Chatha C S
corridor 73
- ----------------------------------------------------------------------------------------------------------------------------
68 Brine Aromatics Brine Reservoirs Brinefields No4 Site Weak Cavities Chatha C S Chatha C S
Brine Tank
- ----------------------------------------------------------------------------------------------------------------------------
78 Compressed Air Aromatics North Tees Road/Rail Road/Rail Farrar R G Maddren C
Filling
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
System Budget RME RME's
No. Owner nominee
- ----------------------------------------------
<S> <C> <C> <C>
8 Tyrie J C Tyrie J C Crowther P
- ----------------------------------------------
16 Tyrie J C Tyrie J C Crowther P
- ----------------------------------------------
18 Tyrie J C Tyrie J C Crowther P
- ----------------------------------------------
22 Tyrie J C Tyrie J C Crowther P
- ----------------------------------------------
45 Tyrie J C Tyrie J C Cruickshank I D
- ----------------------------------------------
52 Tyrie J C Tyrie J C Cruickshank I D
- ----------------------------------------------
55 Tyrie J C Tyrie J C Cruickshank I D
- ----------------------------------------------
62 Tyrie J C Tyrie J C Cruickshank I D
- ----------------------------------------------
68 Tyrie J C Tyrie J C Cruickshank I D
- ----------------------------------------------
78 Tyrie J C Tyrie J C Cruickshank I D
- ----------------------------------------------
</TABLE>
Page 504
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
System Conveyed Product Owning Plant/Area - Site - Plant/Area - Site - GEP SRP
No. Business Start of System Start of End of System End of Operating
System System Mgr
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
80 Light Aromatics Aromatics II North Tees Cavity 51, North Tees Farrar R G Maddren C
Reject/Naphtha Brinefields
- -------------------------------------------------------------------------------------------------------------------------
81 Light Rejects Aromatics Aromatics II North Tees Central Control Wilton Farrar R G Maddren C
- -------------------------------------------------------------------------------------------------------------------------
86 Naphtha Aromatics Storage Compound North Tees Cavity 69, Cavities Farrar R G Maddren C
Brinefields
- -------------------------------------------------------------------------------------------------------------------------
90 LPG Aromatics Cavity 57, Cavities Aromatics North Tees Farrar R G Maddren C
Brinefields
- -------------------------------------------------------------------------------------------------------------------------
97 Benzene Aromatics Benzene Metering North Tees Nitrobenzene Wilton Farrar R G Maddren C
Bay Plant
- -------------------------------------------------------------------------------------------------------------------------
5 Hydrogen Hydrogen Production Billingham Site Main Wilton Farrar R G Brown C H
Services
- -------------------------------------------------------------------------------------------------------------------------
2 Spare (was C4's Olefines Central Control Wilton BASF Cage North Tees Harrison M Harrison
Butane) A M A
- -------------------------------------------------------------------------------------------------------------------------
3 Depentanised Olefines Central Control Wilton Aromatics North Tees Harrison M Harrison
Hydrotreated A M A
Gasoline
- -------------------------------------------------------------------------------------------------------------------------
6 Butenes Olefines Central Control Wilton Teesport Harrison M Harrison
A M A
- -------------------------------------------------------------------------------------------------------------------------
10 Mono Ethylene Olefines EO2 Wilton Teesport Harrison M Harrison
Glycol A M A
- -------------------------------------------------------------------------------------------------------------------------
11 LPG Olefines Aromatics/Crude North Tees Olefines 6 Wilton Farrar R G Maddren C
Oil Unit
- -------------------------------------------------------------------------------------------------------------------------
12 Butane/Mixed Olefines Teesport Central Control Wilton Harrison M Harrison
C4's A M A
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System
No. Budget RME RME's
Owner nominee
- ---------------------------------------------------
<S> <C> <C> <C>
80 Tyrie J C Tyrie J C Cruickshank I D
- ---------------------------------------------------
81 Tyrie J C Tyrie J C Cruickshank I D
- ---------------------------------------------------
86 Tyrie J C Tyrie J C Cruickshank I D
- ---------------------------------------------------
90 Tyrie J C Tyrie J C Cruickshank I D
- ---------------------------------------------------
97 Tyrie J C Tyrie J C Crowther P
- ---------------------------------------------------
5 Brown C H Tyrie J C Cruickshank I D
- ---------------------------------------------------
2 Harrison Tyrie J C Crowther P
M A
- ---------------------------------------------------
3 Harrison Tyrie J C Crowther P
M A
- ---------------------------------------------------
6 Harrison McQuillan Walker AP
M A K W
- ---------------------------------------------------
10 Harrison McQuillan Walker AP
M A K W
- ---------------------------------------------------
11 Harrison Tyrie J C Crowther P
M A
- ---------------------------------------------------
12 Harrison McQuillan Walker AP
M A K W
- ---------------------------------------------------
</TABLE>
Page 505
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
System Conveyed Product Owning Plant/Area - Site - Plant/Area - Site - GEP SRP
No. Business Start of System Start of End of System End of Operating
System System Mgr
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
13 Gasoline Olefines Central Control Wilton Teesport Harrison M Harrison
A M A
- -------------------------------------------------------------------------------------------------------------------------
14 C5 Liquid Olefines Central Control Wilton Compound 38 Teesport Harrison M Harrison
(cut back to TP) A M A
- -------------------------------------------------------------------------------------------------------------------------
15 Methane Olefines JV06 Wilton North Tees Harrison M Harrison
A M A
- -------------------------------------------------------------------------------------------------------------------------
24 Butadiene Olefines Ethylene Control Wilton Teesport Harrison M Harrison
A M A
- -------------------------------------------------------------------------------------------------------------------------
29 Spare Olefines JV06 Wilton P Compound P Compound Harrison M Harrison
A M A
- -------------------------------------------------------------------------------------------------------------------------
30 Naphtha Olefines North Tees JV06 Wilton Farrar R G Maddren C
- -------------------------------------------------------------------------------------------------------------------------
31 Propylene Olefines Central Control Wilton Cavity 74, North Tees Harrison M Harrison
Brinefields A M A
- -------------------------------------------------------------------------------------------------------------------------
32 Ethylene Olefines Ethylene Control Wilton Compound 38 North Tees Harrison M Harrison
A M A
- -------------------------------------------------------------------------------------------------------------------------
34 Propane Olefines Cavities 82, 97, Cavities JV06 Wilton Harrison M Harrison
98 and 99 via A M A
North Tees and
also from
Phillips
Petroleum
- -------------------------------------------------------------------------------------------------------------------------
35 Butane Olefines Phillips PIP JV06 Wilton Harrison M Harrison
Petroleum Seal A M A
Sands
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------
System
No. Budget RME RME's
Owner nominee
- ----------------------------------------------
<S> <C> <C> <C>
13 Harrison McQuillan Walker A P
M A K W
- ----------------------------------------------
14 Harrison McQuillan Walker A P
M A K W
- ----------------------------------------------
15 Harrison Tyrie J C Crowther P
M A
- ----------------------------------------------
24 Harrison McQuillan Walker A P
M A K W
- ----------------------------------------------
29 Harrison Tyrie J C Crowther P
M A
- ----------------------------------------------
30 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
31 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
32 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
34 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
35 Harrison Tyrie J C Crowther P
M A
- ----------------------------------------------
</TABLE>
Page 506
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
System Conveyed Product Owning Plant/Area - Site - Plant/Area - Site - GEP SRP
No. Business Start of System Start of End of System End of Operating
System System Mgr
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
53 Propylene Olefines ICI/BASF Cav 85 Cavity 85, BASF Chatha C S Chatha C
Easement Area Brinefields
- -------------------------------------------------------------------------------------------------------------------------
54 Spare Olefines Simon Storage Simon Cumene Plant North Tees Farrar R G Maddren C
Storage
- -------------------------------------------------------------------------------------------------------------------------
69 Brine Olefines Brine Reservoir Brinefields Cavities H2 Cav Chatha C S Chatha C
Pumps De-Gassing Pots
- -------------------------------------------------------------------------------------------------------------------------
79 Brine Olefines Brine Reservoir Brinefields Cavities Cavities Chatha C S Chatha C
Saltholme
- -------------------------------------------------------------------------------------------------------------------------
85 Propane Olefines Cavities 82, 97, Cavities Propane Billingham Chatha C S Maddren C
98, 99 Vaporiser 701C
- -------------------------------------------------------------------------------------------------------------------------
88 Spare (was Olefines Petrol Blending North Tees Simon Storage Simon Farrar R G
Petrol PMS) & Storage Co, Seal Sands Storage
- -------------------------------------------------------------------------------------------------------------------------
89 Spare (was Olefines Petrol Blending North Tees Simon Storage Simon Farrar R G
Petrol ULMS) & Storage Co. Seal Sands Storage
- -------------------------------------------------------------------------------------------------------------------------
91 Brine Olefines No3 Brine Brinefields Brine Heater North Tees Chatha C S Chatha C
Reservoir Compound
Saltholme
- -------------------------------------------------------------------------------------------------------------------------
94 Pentanes Plus Olefines Amoco/Cats Amoco North Tees Farrar R G Maddren C
Terminal
- -------------------------------------------------------------------------------------------------------------------------
100 Spare (was C5's) Olefines Central Control Wilton Bravo Teesport Harrison M Harrison
A M A
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------
System Budget RME RME's
No. Owner nominee
- ----------------------------------------------
<S> <C> <C> <C>
53 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
54 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
69 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
79 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
85 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
88 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
89 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
91 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
94 Harrison Tyrie J C Cruickshank I D
M A
- ----------------------------------------------
100 Harrison McQuillan Walker A P
M A K W
- ----------------------------------------------
</TABLE>
The following system is not part of the Petrochemicals business but is operated
by NTL on the owners' behalf, under a SLA:
Page 507
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
System Conveyed Product Owning Plant/Area - Site - Plant/Area - Site - GEP SRP
No. Business Start of System Start of End of System End of Operating
System System Mgr
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
36 Brine Chlor Brine reservoirs North Tees Bain Works Wilton Chatha C S Chatha C S
Chem
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------
System Budget RME RME's
No. Owner nominee
- ------------------------------------------------
<S> <C> <C> <C>
36 Chatha C S Tyrie J C Cruickshank I D
- ------------------------------------------------
</TABLE>
Page 508
<PAGE>
INCLUDED WILTON VEINLINES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System Conveyed Product Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
No. Business Start of System End of System Operating
Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V15 Light Rejects Aromatics Central Control JV06 SW/8917 Farrar RG Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V39 Paraxylene Aromatics Para 5 TA-T7 SW/8941 Ogden T Ogden T
- ------------------------------------------------------------------------------------------------------------------------
V40 Paraxylene Aromatics Para 4 TA-T8 SW/8942/1,2 Ogden T Ogden T
- ------------------------------------------------------------------------------------------------------------------------
V41 Paraxylene Aromatics Para5 Para4/Central SW/8943 Ogden T Ogden T
Control
- ------------------------------------------------------------------------------------------------------------------------
V42 Paraxylene Aromatics Para5 Para4/Central SW/8944 Ogden T Ogden T
Control
- ------------------------------------------------------------------------------------------------------------------------
V48 Aromasol Aromatics Para4/5 Central Control SW/8949/1,2 Ogden T Ogden T
- ------------------------------------------------------------------------------------------------------------------------
V55 Xylene Aromatics Para Storage Para 5 SW/12600 Ogden T Ogden T
- ------------------------------------------------------------------------------------------------------------------------
V56 Xylene Aromatics Para 5 Para Storage SW/12599 Ogden T Ogden T
- ------------------------------------------------------------------------------------------------------------------------
V02 Hydrogen Hydrogen Various Various SW/8904 Farrar R G Brown C H
(Distribution) (Distribution)
- ------------------------------------------------------------------------------------------------------------------------
V04 HP Steam Olefines JV06 T7/T8 SW/8906/1,2 Bence H W Jones S
- ------------------------------------------------------------------------------------------------------------------------
V06 Ethylene Olefines WEC Ethox SW/8908 Harrison M Harrison MA
2/Poly5/Para5/EO2 A
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------
System Budget RME RME's
No. Owner nominee
- --------------------------------------------------
<S> <C> <C> <C>
V15 Tyrie J C Tyrie J C Crowther P
- --------------------------------------------------
V39 Ogden T Tyrie J C Crowther P
- --------------------------------------------------
V40 Ogden T Tyrie J C Crowther P
- --------------------------------------------------
V41 Ogden T Tyrie J C Crowther P
- --------------------------------------------------
V42 Ogden T Tyrie J C Crowther P
- --------------------------------------------------
V48 Ogden T Tyrie J C Crowther P
- --------------------------------------------------
V55 Ogden T Tyrie J C Crowther P
- --------------------------------------------------
V56 Ogden T Tyrie J C Crowther P
- --------------------------------------------------
V02 Brown C H Tyrie J C Crowther P
- --------------------------------------------------
V04 Harrison M McQuillan Sanderson K J
A K W
- --------------------------------------------------
V06 Harrison M McQuillan Walker A P
A K W
- --------------------------------------------------
</TABLE>
Page 509
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System Conveyed Product Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
No. Business Start of System End of System Operating
Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V07 Polypurge Olefines Poly 5/6 JV06 SW/8909/1,2 Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V08 Redundant (was Olefines LPG Storage North & South SW/8910 Harrison M Harrison M A
LPG) Tank Nf31 Vaporisers A
- -------------------------------------------------------------------------------------------------------------------------
V09 Methane Olefines JV06 Central SW/8911/1,2 Harrison M Williams M
control(LinkLine A
15)
- -------------------------------------------------------------------------------------------------------------------------
V10 Raw Gasoline Olefines B7 Central Control SW/8910/1,2 Bence H W Jones S
- -------------------------------------------------------------------------------------------------------------------------
V11 Propylene Olefines JV06 Central Control SW/8911/1,2,3 Harrison M Harrison M A
SW/8913 A
- -------------------------------------------------------------------------------------------------------------------------
V12 Off Spec Olefines JV06/WEC Central Control SW/8914 Harrison M Harrison M A
Propylene A
- -------------------------------------------------------------------------------------------------------------------------
V13 Butenes Olefines JV06/WEC Central Control SW/8915 Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V14 Flare Share Olefines JV06/WEC Central Control SW/8916 Bence H W Williams M
- -------------------------------------------------------------------------------------------------------------------------
V16 Ethylene Olefines Ethylene Ethylene Driers SW/8918 Harrison M Harrison M A
Storage Cavities A
- -------------------------------------------------------------------------------------------------------------------------
V17 Ethylene Olefines WEC TPEP SW/8919 Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V18 Ethylene Olefines WEC Central Control SW/8920 Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
System Budget RME RME's
No. Owner nominee
- ---------------------------------------------------
<S> <C> <C> <C>
V07 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V08 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V09 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V10 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V11 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V12 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V13 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V14 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V16 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V17 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V18 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
</TABLE>
Page 510
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
System Conveyed Product Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
No. Business Start of System End of System Operating
Mgr
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V19 Butadiene Olefines Butadiene2 Central Control SW/8921/1 Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V20 Mixed C4's Olefines JV06 Butadiene3/Well SW/8922/1,2,3 Harrison M Harrison M A
4/Ole5/Central A
Control
- -------------------------------------------------------------------------------------------------------------------------
V21 C5 Redundant Olefines Central Control MPS Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V22 Raw Gasoline Olefines JV06 B7/Central SW/8924/1,2 Bence H W Williams M
Control
- -------------------------------------------------------------------------------------------------------------------------
V23 C5s Olefines JV06 Central Control SW/8925 Harrison M Williams M
A
- -------------------------------------------------------------------------------------------------------------------------
V24 Butane Olefines Central Control EDC SW/8926 Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V25 Ethylene Olefines JV06 WEC/EDCVCM/EO2 SW/8927/1,2 Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V26 Ethylene Olefines Ethylene WEC SW/8928 Harrison M Harrison M A
Storage Cavities A
- -------------------------------------------------------------------------------------------------------------------------
V27 Ethylene Olefines JV06 EO2 SW/8929 Bence H W Williams M
- -------------------------------------------------------------------------------------------------------------------------
V28 Raw Butene (C4 Olefines WEC/CC/LinkLine JV06 SW/8930/1,2 Harrison M Williams M
Raffinate) 6 A
- -------------------------------------------------------------------------------------------------------------------------
V29 Butadiene Olefines Butadiene 3 WEC SW/8931 Harrison Williams M
M A
- -------------------------------------------------------------------------------------------------------------------------
V44 Ethylene Olefines JV06 BASF SW/8946 Bence H W Williams M
REDUNDANT
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
System Budget RME RME's
No. Owner nominee
- ---------------------------------------------------
<S> <C> <C> <C>
V19 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V20 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V21 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V22 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V23 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V24 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V25 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V26 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V27 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V28 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V29 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V44 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
</TABLE>
Page 511
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
System Conveyed Product Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
No. Business Start of System End of System Operating
Mgr
- -------------------------------------------------------------------------------------------------------------------------
V45 Mixed C4's OUT Olefines WEC Well4 SW/8947 Harrison M Harrison M A
OF USE A
- -------------------------------------------------------------------------------------------------------------------------
V50 H2 REDUNDANT Olefines Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V51 ATG REDUNDANT Olefines Harrison M Harrison M A
A
- -------------------------------------------------------------------------------------------------------------------------
V52 H.P.Ethylene Olefines JV06 R&T Semi Tech SW/10740 Bence H W Williams M
- -------------------------------------------------------------------------------------------------------------------------
V54 Butane Olefines Linkline 35 JV06 SW/11145/1,2 Bence H W Harrison M A
(Lima 8)
- -------------------------------------------------------------------------------------------------------------------------
V57 Boiler Feed Water Olefines TA-T8 JV06 SW/13349 Bence H W Jones S
- -------------------------------------------------------------------------------------------------------------------------
V58 Naphtha Olefines B7 JV06 SW/12563 Bence H W Jones S
- -------------------------------------------------------------------------------------------------------------------------
V59 Recovered Oil Olefines B7 JV06 SW/12564 Bence H W Jones S
- -------------------------------------------------------------------------------------------------------------------------
V60 Wet Flare Olefines JV06 EBL JV06 NE corner SW/12565 Bence H W Williams M
REDUNDANT
- -------------------------------------------------------------------------------------------------------------------------
V62 ATG Spare Olefines New First Avenue Central Control Bence H W Jones S
- -------------------------------------------------------------------------------------------------------------------------
V63 Naphtha Olefines LinkLine System WEC SW/13353 Farrar R G Maddren C
30
- -------------------------------------------------------------------------------------------------------------------------
V66 Naphtha Olefines B7 JV06 SW/14484 Bence H W Jones S
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
System Budget RME RME's
No. Owner nominee
- ---------------------------------------------------
<S> <C> <C> <C>
V45 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V50 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V51 Harrison M McQuillan Walker A P
A K W
- ---------------------------------------------------
V52 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V54 Harrison M McQuillan Sanderson K J
A K W GONE ???
- ---------------------------------------------------
V57 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V58 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V59 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V60 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V62 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
V63 Harrison M Tyrie J C Crowther P
A
- ---------------------------------------------------
V66 Harrison M McQuillan Sanderson K J
A K W
- ---------------------------------------------------
</TABLE>
Page 512
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
No. Product Business Start of System End of System Operating
Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V67 Ethylene Olefines MV/O-19500 E02 Harrison MA Harrison MA
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------
System Budget RME RME's
No. Owner nominee
- -----------------------------------------------
<S> <C> <C> <C>
V67 Harrison M McQuillan Walker A P
A K W
- -----------------------------------------------
</TABLE>
Page 513
<PAGE>
INCLUDED NORTH TEES VEINLINES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V800 Benzene Aromatics 19 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V801 Benzene Aromatics 00153,154, Farrar R G Maddren C
155, 156,180
- ------------------------------------------------------------------------------------------------------------------------
V802 Benzene Aromatics 132 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V803 Benzene Aromatics 131 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V804 Benzene Aromatics 00185,186,187 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V805 Benzene Aromatics 182 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V806 Benzene Aromatics 00188,189 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V807 Benzene Aromatics 00201,202 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V808 Ethyl Benzene Aromatics 20 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V809 Ethyl Benzene Aromatics 21 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V811 Ethyl Benzene Aromatics 00037,38,39 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
-----------------------------------------------------
<S> <C> <C> <C>
V800 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V801 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V802 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V803 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V804 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V805 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V806 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V807 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V808 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V809 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V811 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
</TABLE>
Page 514
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V812 Ethyl Benzene Aromatics 30 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V813 Ethyl Benzene Aromatics 31 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V814 Cumene Aromatics 00026,27 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V815 Cumene Aromatics 00028,29 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V816 Cumene Aromatics 196 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V817 Cumene Aromatics 00024,25 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V818 Cumene Aromatics 23 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V819 Cumene Aromatics 22 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V820 Xylenes Aromatics 14 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V821 Xylenes Aromatics 17 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V822 Xylenes Aromatics 18 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V823 Xylenes Aromatics 00091,92,93 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V824 Xylenes Aromatics 00094, 00148 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
- -----------------------------------------------------
<S> <C> <C> <C>
V812 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V813 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V814 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V815 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V816 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V817 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V818 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V819 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V820 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V821 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V822 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V823 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V824 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
</TABLE>
Page 515
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V825 Toluene Aromatics 00067,68 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V826 Toluene Aromatics 69 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V827 Toluene Aromatics 70 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V828 Toluene Aromatics 00071,72 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V829 Toluene Aromatics 73 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V830 Toluene Aromatics 74 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V831 Toluene Aromatics 75 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V832 Toluene Aromatics 00076,77 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V833 Toluene Aromatics 78 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V834 Toluene Aromatics 79 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V835 Aromasol Aromatics 99 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V836 Cyclohexane Aromatics 63 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V838 Cyclohexane Aromatics 66 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
- -----------------------------------------------------
<S> <C> <C> <C>
V825 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V826 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V827 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V828 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V829 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V830 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V831 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V832 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V833 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V834 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V835 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V836 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V838 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
</TABLE>
Page 516
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V839 Cyclohexane Aromatics 00134,135 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V840 Cyclohexane Aromatics 136 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V841 Cyclohexane Aromatics 137 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V842 Crude Arom Aromatics 32 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V843 Crude Arom Aromatics 33 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V844 Crude Arom Aromatics 34.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V845 Reformate Aromatics 95.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V846 Reformate Aromatics 80.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V847 Reformate Aromatics 81.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V848 Reformate Aromatics 113.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V849 Raffinate Aromatics 100.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V850 Raffinate Aromatics 112.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V851 Raffinate Aromatics 110.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
- -----------------------------------------------------
<S> <C> <C> <C>
V839 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V840 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V841 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V842 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V843 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V844 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V845 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V846 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V847 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V848 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V849 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V850 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V851 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
</TABLE>
Page 517
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V853 C9 Aromatics 35.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V855 C9 Aromatics 62.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V856 C9 Aromatics 36.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V857 C9 Aromatics 00040,43 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V858 C9 Aromatics 61.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V859 Light Rejects Aromatics 00127,128 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V871 Pentane Aromatics 115.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V891 Naphtha Aromatics 00042,43,44 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V893 Naphtha Aromatics 00048,49,50 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V894 Naphtha Aromatics 00051,52,53,54 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V896 Naphtha Aromatics 56.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V905 Fuel Oil Aromatics 167.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V906 Fuel Oil Aromatics 00168,169 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
- -----------------------------------------------------
<S> <C> <C> <C>
V853 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V855 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V856 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V857 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V858 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V859 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V871 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V891 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V893 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V894 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V896 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V905 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V906 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
</TABLE>
Page 518
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V909 Fuel Oil Aromatics 00170,171,172 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V921 Xylenes Aromatics 133.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V922 Benzene Aromatics 210.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V927 Benzene Aromatics 221.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V862 Hydrogen Hydrogen 00096,97,98 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V877 Deballast NTL 00015,16 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V884 Rec Oil NTL 00005,6 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V885 Rec Oil NTL 00007,8 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V886 Rec Oil NTL 9.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V887 Effluent Water NTL 10.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V888 Effluent Water NTL 11.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V889 Effluent Water NTL 12.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V890 Effluent Water NTL 13.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
- -----------------------------------------------------
<S> <C> <C> <C>
V909 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V921 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V922 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V927 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V862 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V877 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V884 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V885 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V886 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V887 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V888 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V889 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V890 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
</TABLE>
Page 519
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V863 Methane Olefines 00145,146 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V864 Ethylene Olefines 00190,191 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V865 Ethylene Olefines 192.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V867 Propylene Olefines 143.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V868 Propylene Olefines 149.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V869 Propylene Olefines 00216,217,218, Farrar R G Maddren C
219,220
- ------------------------------------------------------------------------------------------------------------------------
V870 Propane Olefines 00138,139,140 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V892 Naphtha Olefines 00045,46,47 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V895 Naphtha Olefines 55.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V915 Propylene Olefines 204.00 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V916 Petrol Olefines 00088,89,90 Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
V917 Petrol Olefines 00101,102,103, Farrar R G Maddren C
104,105
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
- -----------------------------------------------------
<S> <C> <C> <C>
V863 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V864 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V865 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V867 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V868 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V869 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V870 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V892 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V895 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V915 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V916 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V917 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
</TABLE>
Page 520
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
V918 Petrol Olefines 00117,118,119 Farrar R G Maddren C
- -------------------------------------------------------------------------------------------- -----------------------------
V919 Petrol Olefines 00120,121,122 Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
V924 Propylene Olefines 211.00 Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
SD950 60 psig Steam Aromatics Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
SD951 120 psig Steam Aromatics Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
SD953 235 psig Steam Aromatics Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
SD954 600 psig Steam Aromatics Roe P M Owen-Hughes J
- ----------------------------------------------------------------------------------------------------------------------------
SD955 Potable (TV) Aromatics Farrar R G Maddren C
Water
- ----------------------------------------------------------------------------------------------------------------------------
SD956 Treated Water Aromatics Wilson M Eales R D
- ----------------------------------------------------------------------------------------------------------------------------
SD957 Gately Water Aromatics Farrar R G Maddren C
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
SD960 De-min Water Aromatics Roe P M Owen-Hughes J
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
- -----------------------------------------------------
<S> <C> <C> <C>
V918 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V919 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
V924 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
- -----------------------------------------------------
SD950 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD951 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
- -----------------------------------------------------
SD953 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD954 Roe P M Tyrie J C Stewart N
- -----------------------------------------------------
SD955 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD956 Wasson A Tyrie J C Stewart N
- -----------------------------------------------------
SD957 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
- -----------------------------------------------------
SD960 Roe P M Tyrie J C Stewart N
- -----------------------------------------------------
</TABLE>
Page 521
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
System No. Conveyed Owning Plant/Area - Plant/Area - Ref Dwgs GEP SRP
Product Business Start of End of System Operating
System Mgr
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SD962 Fire foam/ Aromatics Farrar R G Maddren C
Fire Water
- ------------------------------------------------------------------------------------------------------------------------
SD963 LP Nitrogen Aromatics Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
SD964 HP Nitrogen Aromatics Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
SD965 Plant Air Aromatics Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
SD966 Spare Aromatics Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
SD967 Instrument Air Aromatics Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
SD968 150 psig Fuel Aromatics Farrar R G Maddren C
Gas
- ------------------------------------------------------------------------------------------------------------------------
SD969 LP Fuel Gas Aromatics Farrar R G Maddren C
(pilot)
- ------------------------------------------------------------------------------------------------------------------------
SD970 50psig Steam Aromatics Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
SD971 140 psig Steam Aromatics Farrar R G Maddren C
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------
System No. Budget RME RME's
Owner nominee
- -----------------------------------------------------
<S> <C> <C> <C>
SD962 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD963 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD964 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD965 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD966 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD967 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD968 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD969 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD970 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
SD971 Heath S H Tyrie J C Cruickshank I D
- -----------------------------------------------------
</TABLE>
Page 522
<PAGE>
SIGNED by )
for and on behalf of )
IMPERIAL CHEMICAL )
INDUSTRIES PLC )
SIGNED by )
for and on behalf of )
HUNTSMAN SPECIALTY )
CHEMICALS CORPORATION )
SIGNED by )
for and on behalf of )
HUNTSMAN ICI HOLDINGS, LLC )
SIGNED by )
for and on behalf of )
HUNTSMAN ICI CHEMICALS, LLC )
Page 523
<PAGE>
EXHIBIT 10.2
TABLE OF CONTENTS
PURCHASE AND SALE AGREEMENT
(PO/MTBE BUSINESS)
<TABLE>
<S> <C>
PART ONE:
SUBJECT MATTER OF THE AGREEMENT: DEFINITIONS
AND RULES OF CONSTRUCTION
Section 1.1 Subject Matter............................................ 1
Section 1.2 Definitions............................................... 1
Section 1.3 Rules of Construction..................................... 14
(a) General............................................... 14
(b) Parts and Sections.................................... 14
(c) Other Agreements...................................... 14
PART TWO:
PURCHASE OF PO/MTBE BUSINESS,
PURCHASE PRICE AND TRANSFER OF PO/MTBE BUSINESS
Section 2.1 Purchase and Sale of PO/MTBE Business..................... 14
Section 2.2 Purchase Price............................................ 15
Section 2.3 Transfer of the Assets, Etc............................... 15
(a) Transfer of Assets.................................... 16
(b) Assumed Liabilities................................... 16
(c) Adjusted Interim Cash Flow............................ 17
(d) Non-Assumed Liabilities............................... 17
Section 2.4 Working Capital........................................... 17
(a) Estimated Working Capital............................. 17
(b) Determination of Closing Working Capital.............. 17
(c) Adjustment Payment.................................... 18
(d) Uncollected Accounts Receivable....................... 18
Section 2.5 Payment................................................... 19
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
PART THREE:
REPRESENTATIONS AND WARRANTIES
Section 3.1 Seller.................................................... 19
(a) Organization and Standing of Seller................... 19
(b) Authority............................................. 19
(c) Validity of Agreement................................. 19
(d) No Violation.......................................... 19
(e) No Consent Required................................... 20
(f) Financial Statements.................................. 20
(g) Changes............................................... 20
(h) Conduct of Business................................... 22
(i) Litigation............................................ 22
(j) No Undisclosed Liabilities............................ 22
(k) Intellectual Property Rights.......................... 23
(l) Working Capital....................................... 24
(m) Taxes................................................. 24
(n) Disclosure............................................ 25
(o) Revenues, Costs of Goods Sold and Expenses............ 25
Section 3.2 Company................................................... 26
(a) Organization and Standing of Company.................. 26
(b) Authority............................................. 26
(c) Validity of Agreement................................. 26
(d) No Violation.......................................... 26
(e) No Consent Required................................... 27
(f) Litigation............................................ 27
(g) Contracts............................................. 27
(h) Title to the Assets................................... 28
(i) Condition and Repair.................................. 29
(j) Compliance with Applicable Law........................ 29
(k) Employees............................................. 30
(l) Bank Accounts......................................... 30
(m) Inventories........................................... 30
(n) Manufacture of PO/MTBE................................ 30
(o) ERISA Plan Administration............................. 30
(p) ERISA; Qualified Plans................................ 31
(q) Supporting Assets..................................... 31
Section 3.3 Buyer..................................................... 31
(a) Organization and Standing of Buyer.................... 31
(b) Authority............................................. 31
(c) Validity of Agreement................................. 31
(d) No Violation.......................................... 31
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
(e) No Consent Required................................... 32
(f) Litigation............................................ 32
(g) Corporate Documents................................... 32
(h) Subsidiaries.......................................... 32
(i) ownership of Common Stock............................. 33
(j) Buyer Capitalization.................................. 33
(k) options or Warrants................................... 33
(l) ERISA; Prohibited Transaction......................... 34
(m) Employment Offers..................................... 34
(n) Disclosure............................................ 34
Section 3.4 No Other Warranties....................................... 34
PART FOUR:
COVENANTS REGARDING PO/MTBE BUSINESS
Section 4.1 Covenants of Seller....................................... 35
(a) Conduct of Business................................... 35
(b) Access to Properties and Information.................. 37
(c) Intercompany Accounts................................. 37
(d) Seller's Non-Compete.................................. 37
(e) No Solicitation....................................... 37
(f) Title to the Properties............................... 38
(g) Citibank Lease........................................ 38
(h) Delivery of Additional Data........................... 38
(i) Merox................................................. 39
Section 4.2 Covenants of Buyer........................................ 39
(a) Performance Bonds, Guaranties, Etc.................... 39
(b) Use of Texaco Mark.................................... 39
(c) Accounts Receivable................................... 40
(d) Insurance Claims...................................... 40
(e) Buyer's Release of Insurance Policies................. 40
(f) Non-Assertion of Claims............................... 40
(g) Offset Rights......................................... 41
(h) Capital Structure..................................... 41
(i) Intellectual Property License......................... 41
(j) PO Sales.............................................. 41
Section 4.3 Covenants of Seller and Buyer............................. 42
(a) Compliance with Conditions Precedent.................. 42
(b) Brokers............................................... 42
(c) Certain Filings and Consents.......................... 42
(d) Press Release......................................... 43
(e) Post-Closing Access................................... 43
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
(f) Further Assurances.................................... 43
(g) Transfer of Permits................................... 44
Section 4.4 Confidentiality........................................... 44
(a) Information........................................... 44
(b) Confidentiality....................................... 45
(c) Exceptions............................................ 45
(d) Legally Compelled..................................... 46
(e) Specific Information.................................. 46
(f) Expiration............................................ 47
Section 4.5 Huntsman Agreements, New Service Agreements, Etc.......... 47
(a) Huntsman Agreements................................... 47
(b) New Service Agreements................................ 47
(c) Quarterly Report...................................... 48
(d) Audit Rights.......................................... 49
PART FIVE:
COVENANTS REGARDING THE COMPANY
Section 5.1 Covenants of Seller and Buyer............................. 50
(a) Employees............................................. 50
(b) No Solicitation....................................... 50
(c) Compensation.......................................... 50
(d) No Termination........................................ 50
(e) Buyer Benefit Plans................................... 50
(f) Defined Benefit Plans................................. 51
(g) Separation............................................ 52
(h) Participant List, Etc................................. 53
(i) Defined Contribution Plans............................ 53
(j) Account Balances...................................... 53
(k) Welfare Benefit Plans................................. 54
(l) Disability............................................ 54
(m) Vacation.............................................. 54
(n) Retirees.............................................. 55
(o) Reimbursement, Etc.................................... 55
(p) Employment Claims..................................... 56
PART SIX:
ENVIRONMENTAL
Section 6.1 Definitions............................................... 56
Section 6.2 Seller's Responsibilities................................. 57
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
(a) Seller's Indemnity.......................................... 57
(b) Limitations................................................. 57
Section 6.3 Buyer's Responsibilities........................................ 61
(a) Buyer's Indemnity........................................... 61
(b) Limitations................................................. 61
(c) Changes in Condition........................................ 62
Section 6.4 Covenant of Cooperation......................................... 63
Section 6.5 Performance of Remedies......................................... 64
(a) Performance of Work......................................... 64
(b) Performance of Remediation.................................. 65
(c) Seller's Satisfaction of Responsibilities................... 66
(d) Access...................................................... 67
Section 6.6 Environmental Assessments....................................... 67
(a) Phase I Environmental Assessment............................ 67
(b) Industry Practice........................................... 67
Section 6.7 Procedure for Claiming Reimbursement............................ 67
Section 6.8 Exclusive Remedies.............................................. 68
PART SEVEN:
INDEMNIFICATION
Section 7.1 Seller's Indemnification........................................ 68
Section 7.2 Buyer's Indemnification......................................... 68
Section 7.3 Defense of Action............................................... 69
Section 7.4 Payments........................................................ 70
(a) Indemnity Payments.......................................... 70
(b) Tax Benefit................................................. 70
(c) Additional Indemnity Tax.................................... 70
PART EIGHT:
TAXES
Section 8.1 Sales and Transfer Taxes........................................ 71
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
Section 8.2 Tax Proceedings.................................................. 71
Section 8.3 Payment and Apportionment of Real and Personal Property Taxes.... 72
(a) Real and Personal Property Taxes............................. 72
(b) Liability and Right to Pursue Claims......................... 72
Section 8.4 Allocation of the Purchase Price................................. 72
Section 8.5 Cooperation...................................................... 73
(a) Real Property Tax Assessment................................. 73
(b) Access to Tax Documents...................................... 73
Section 8.6 Equity........................................................... 74
Section 8.7 FIRPTA Certificate............................................... 74
Section 8.8 Preservation of Records.......................................... 74
Section 8.9 Conflict......................................................... 75
PART NINE:
CONDITIONS PRECEDENT
Section 9.1 Conditions Precedent of Buyer.................................... 75
(a) Representations and Warranties True at Closing............... 75
(b) Compliance with Agreement.................................... 75
(c) Certified Resolutions and Officers' Certificate.............. 75
(d) Approval of Proceedings...................................... 76
(e) Opinion of Counsel........................................... 76
(f) Injunction................................................... 76
(g) Consents..................................................... 76
(h) Engineering Service Agreements............................... 76
Section 9.2 Conditions Precedent of Seller................................... 77
(a) Representations and Warranties True at Closing............... 77
(b) Compliance with Agreement.................................... 77
(c) Certified Resolutions and Officers' Certificate.............. 77
(d) Approval of Proceedings...................................... 77
(e) Opinion of Counsel of Buyer.................................. 78
(f) Injunction................................................... 78
(g) Consents..................................................... 78
(h) Engineering Service Agreement................................ 78
</TABLE>
vi
<PAGE>
<TABLE>
<S> <C>
(i) MTBE Supply Agreement....................................... 78
PART TEN:
MISCELLANEOUS
Section 10.1 Notices......................................................... 78
Section 10.2 Modification.................................................... 79
Section 10.3 Governing Law................................................... 79
Section 10.4 Assignment...................................................... 79
(a) No Assignment............................................... 79
(b) Assignment Rights........................................... 80
(c) Related Party Assignment.................................... 80
(d) Financing................................................... 81
(e) Structured Sale............................................. 81
Section 10.5 Counterparts.................................................... 81
Section 10.6 Invalidity...................................................... 82
Section 10.7 Entire Agreement and Construction............................... 82
Section 10.8 Expenses........................................................ 83
Section 10.9 Waivers and Amendments.......................................... 83
Section 10.10 Survival of Representations and Covenants....................... 83
Section 10.11 Section Headings................................................ 84
Section 10.12 Termination..................................................... 84
Section 10.13 Dispute Resolution.............................................. 85
(a) Generally................................................... 85
(b) Violations.................................................. 85
</TABLE>
vii
<PAGE>
PURCHASE AND SALE AGREEMENT
(PO/MTBE BUSINESS)
THE AGREEMENT, dated as of March 21 1997, entered into among Texaco Inc., a
Delaware corporation, having an office at 2000 Westchester Avenue, white Plains,
New York 10650 ("Seller"), Texaco Chemical Inc., a Delaware corporation, having
an office at 3040 Post Oak Boulevard, Houston, Texas 77056 ("Company") and
Huntsman Specialty Chemicals Corporation, a Delaware corporation having an
office at 500 Huntsman Way, Salt Lake City, Utah 84108 ("Buyer").
PART ONE
SUBJECT MATTER OF THE AGREEMENT: DEFINITIONS
AND RULES OF CONSTRUCTION
Section 1.1 Subject Matter. The subject matter of the Agreement is: (i)
--------------
the sale to Buyer by Seller, the Company and TDC, as the case may be, of the
Assets; (ii) the purchase by Buyer of the Assets; (iii) the assumption of the
Assumed Liabilities by Buyer; and (iv) the terms and conditions upon which the
foregoing transactions shall take place.
Section 1.2 Definitions. For purposes of the Agreement, except as otherwise
-----------
expressly provided herein, the terms defined in this Section 1.2 have the
meanings herein assigned to them, and the capitalized terms defined elsewhere in
the Agreement by inclusion in quotation marks and parentheses have the meanings
so ,ascribed to them.
"Adjusted Interim Cash Flow" means a positive or negative amount, as
--------------------------
the case may be, equal to the sum of:
(a) The sum (expressed as a positive amount) of:
(i) collections received on notes and accounts receivable of the
PO/MTBE Business after the Effective Date and ending with the Closing
Date, whether collected by the Company or by Seller or its Affiliates,
excluding intercompany accounts other than Included Intercompany
Accounts;
1
<PAGE>
(ii) current liabilities of the PO/MTBE Business, other than Excluded
Liabilities and excluding intercompany accounts other than Included
Intercompany Accounts, which existed at the Effective Date but were not
included on the Final Statement,
(iii) the value of any claims or rights under Contracts relating to
the PO/MTBE Business which Seller or any Affiliate has disposed of,
waived or permitted to lapse on or after the Effective Date,
(iv) the value of any debts owed to the PO/MTBE Business which were
cancelled after the Effective Date and prior to the Closing Date
excluding intercompany accounts other than Included Intercompany
Accounts, and
(v) to the extent not included in clause (a) (i) above the value of
the proceeds from the transfer or other disposition of any Asset, other
than Excluded Assets, disposed of by Seller or any Affiliate on or
after the Effective Date, and
(b) the sum (expressed as a negative amount) of:
(i) the sum of payments made by the Company or by any Affiliate
after the Effective Date and ending with the Closing Date with respect
to:
(x) Assumed Liabilities; and
(Y) Other current liabilities of the PO/MTBE Business excluding:
the Citibank lease and the termination thereof; Taxes relating
to periods prior to and ending with the Effective Date and
Income Taxes after the Effective Date; all fees and expenses
relative to the Agreement and related transactions; and
intercompany accounts other than Included Intercompany Accounts;
(ii) current Assets of the PO/MTBE Business other than Excluded
Assets, cash, cash equivalents, deferred Income Taxes, and excluding
intercompany accounts other than Included Intercompany Accounts which
existed at
2
<PAGE>
the Effective Date but were not included on the Final Statement; and
(iii) to the extent not included in either (b)(i)above or in the Final
Statement, the prorated (by calendar days) expenses of the PO/MTBE
Business for the period after the Effective Date and ending on the
Closing Date for Employees' salaries and wages, employee plans and
benefits, payroll Taxes and redistributed expenses charged for service
department activity, but excluding salaries and wages expenses for
bonus payments, in all cases in the ordinary course of business.
"Affiliate" means, with respect to any specified Person, 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" (including, with correlative meanings,
"controlling", "controlled by", and "under common control with") means the
power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and, it being understood and agreed
that with respect to a corporation or partnership, control shall mean direct
or indirect ownership of more than fifty percent (%50 of the voting stock or
general partnership interest or voting interest in any such corporation or
partnership.
"Agreement" means this Purchase and Sale Agreement (PO/MTBE Business),
---------
including the Schedules and Exhibits hereto.
"Assets" means the PO/MTBE Assets and the Intellectual Property.
------
"Assumed Liabilities" means (i) current liabilities of the Company as
-------------------
of the Effective Date relating to the PO/MTBE Business which were both
incurred in the ordinary course of business and set forth on the Final
Statement, it being understood that, except for Included Intercompany
Accounts, all other intercompany accounts (representing amounts due from or
payable to Seller or Seller's Affiliates by the Company) for activity
occurring prior to and
3
<PAGE>
including the Effective Date, shall be excluded, (ii) obligations of the
Company arising and relating to periods after the Effective Date under the
Contracts relating to the PO/MTBE Business made prior to the Closing Date,
in the ordinary course of business consistent with past practices (other
than (x) the Contracts set forth on Schedule 3.2(g), (y) the Contracts set
forth on Schedule 2.3(c) and (z) any such other ordinary course Contracts
with Seller or any of its Affiliates), (iii) obligations of the Company
arising and relating to periods after the Effective Date under Contracts as
set forth on Schedule 3.2 (g) (other than the Contracts set forth on 2.3(c))
and (iv) capital expenditure obligations arising after the Effective Date
under contracts made prior to the Effective Date by or on behalf of the
Company pursuant to the asterisked Huntsman Agreements as set forth on
Schedule 4.1(b)in the ordinary course of business consistent with past
practice.
"Business Day" means a day on which banks are open for business in New
------------
York City.
"Capital Charge" means the product of Five Hundred Seventy Six Million
--------------
Five Hundred Thousand Dollars ($576,500,000) multiplied by the one month
LIBOR rate as posted on Page 3750 of the Telerate as of the Effective Date
plus 3/8% for the number of days, if any, from but not including the
Effective Date to and including the Closing Date divided by Three Hundred
Sixty (360) days.
"Closing" means the closing of the transactions contemplated by the
-------
Agreement at 10:00 a.m. New York time, at Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, NY 10022 on the Closing Date, or at
such other time or place as the Parties may mutually agree upon in writing.
"Closing Date" means the third Business Day after the date on which all
------------
of the conditions to all Parties', obligations hereunder have been
satisfied, unless waived by the appropriate Party, or such later date as
shall be agreed upon in writing by the Parties, but in no event later than
March 31, 1997; provided, however, that such date shall be reasonably
-------- -------
extended by Seller if requested by Buyer, due to delay in receiving material
governmental reviews and
4
<PAGE>
approvals; and provided, further, that unless Buyer shall have consented
-------- -------
thereto in writing, such date shall not be prior to March 31, 1997.
"Code" means the United States Internal Revenue Code of 1986, as
----
amended.
"Confidentiality Agreements" means the agreements set forth in Schedule
--------------------------
1.2.
"Consolidated Return" means a return with respect to any Taxes that is
-------------------
filed on a consolidated, combined or unitary basis.
"Contractor" means a contract employee who primarily works in the
----------
Huntsman chemical operations and the PO/MTBE Business.
"Contracts" means contracts, commitments, understandings, binding
---------
arrangements and other agreements of any kind or nature, written or oral,
including leases of real and personal property.
"Corporate Documents" means the Certificate of Incorporation and By-
-------------------
Laws of a Delaware corporation or the equivalent documents of a corporation
organized under the Laws of another Governmental Body.
"Effective Date" means the (i) Closing Date, if the Closing occurs on
--------------
the last day of any calendar month, or (ii) if the Closing does not occur on
the last day of a calendar month, the last day of the calendar month
immediately preceding the calendar month in which the Closing occurs.
"Employees" means the individuals who were employed by the Company,
---------
Seller or its Affiliates as set forth on Schedule 3.2(k)and engaged in the
PO/MTBE Business as of the date of the Agreement and as updated as of the
Closing Date to eliminate individuals whose employment terminated prior to
the Closing Date and to add individuals who were employed after the date of
the Agreement and remained employed to the Closing Date.
"Encumbrances" means liens, charges, mortgages, pledges, security
------------
interests, claims, defects of title, restrictions and any other rights of
third
5
<PAGE>
parties, including rights of set-off, voting trusts, transfers or receipt of
income or other exercise of any attributes of ownership.
"Excluded Assets" means the assets and intangible assets owned, leased
---------------
or otherwise controlled by the Company, as set forth on Schedule 2.3(c).
"Excluded Liabilities" means current liabilities as of the respective
--------------------
balance sheet date for: repairs and maintenance, all liabilities under the
Citibank Lease, including, without limitation, liabilities for excess cash
drawn but not used for construction expenditures, and accruals for Taxes.
"Financial Statements" means the balance sheets of the Company as at
--------------------
December 31, 1994, 1995 and 1996, the related statements of income and
retained earnings and statements of cash flows for the years then ended,
audited by Arthur Andersen LLP, as indicated in its report.
"GAAP" means generally accepted 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 or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession of the United States of America, which are in
effect as of the Closing Date and when used in connection with all or part
of the PO/MTBE Business means as consistently applied by the Seller and the
Company, as the case may be.
"Governmental Body" means any domestic or foreign national, state,
-----------------
provincial, municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental or private body
exercising any regulatory or taxing authority thereunder.
"Huntsman" means Huntsman Petrochemical Corporation, a Delaware
--------
corporation having an office at 3040 Post Oak Boulevard, Houston, Texas
77056.
"Huntsman Agreements" means the agreements as
-------------------
6
<PAGE>
set forth on Schedule 4.1(b).
"Huntsman's Interim Knowledge Matter" means any fact, circumstance or
-----------------------------------
condition arising or occurring after the time at which the Agreement is
executed and delivered by Buyer but on or before the Closing Date with
respect to the existing operations and condition of the PO/MTBE Business of
which, during such period any director, officer, employee or Contractor of
Huntsman or any of its Affiliates had actual knowledge in connection with
Huntsman's performance of the Huntsman Agreements; provided however, that no
-------- -------
such fact, circumstance or condition shall constitute a Huntsman's Interim
Knowledge Matter unless, during such period, such Person knew or reasonably
should have known the effect of such fact, circumstance or condition on the
PO/MTBE Business.
"Huntsman's Knowledge Matter" means any fact, circumstance or condition
---------------------------
with respect to the existing operations and condition of the PO/MTBE
Business of which, prior to or as of the time at which the Agreement is
executed and delivered by Buyer, any director, officer, employee or
Contractor of Huntsman or any of its Affiliates had actual knowledge in
connection with Huntsman's performance of the Huntsman Agreements; provided
--------
however, that no such fact, circumstance or condition shall constitute a
-------
Huntsman's Knowledge Matter unless, prior to or as of such time, such Person
knew or reasonably should have known the effect of such fact, circumstance
or condition on the PO/MTBE Business.
"Included Intercompany Accounts" means amounts due from or payable to
------------------------------
Seller or Seller's Affiliates to or by the Company pursuant to the Contracts
set forth in Schedule 2.4(b) during the calendar month of the respective
balance sheet date.
"Income Tax" means any federal, alternative minimum, state, local or
----------
foreign income, franchise or similar Tax and in each instance any interest,
penalties or additions to Tax attributable to such Tax.
"Indefeasible" means, with respect to any real property owned or any
------------
other real property interest owned, that such real property or interest in
real property cannot be revoked, defeated or voided with
7
<PAGE>
the exception of minor imperfections such as shortages in areas or gaps in
parcels which, individually or in the aggregate, do not materially impair
the use of such real property or real property interest.
"Insurance Policy" means any commercial policies of insurance covering,
----------------
prior to the Closing Date,(i) property damage to the PO/MTBE Assets
(including business interruption), and (ii) liability of the Seller or the
Company including any of their respective employees, directors, officers or
agents.
"Intellectual Property" means intellectual and similar property of
---------------------
every kind and nature, primarily relating to or presently used in the
operation of the PO/MTBE Business including, without limitation, (i) Patents
set forth on Schedule 3.1(k)(ii), (ii) trademarks associated solely with the
PO/MTBE Business excluding all marks containing "Texaco" or "Tex" as a
prefix or suffix or those marks containing the Star T design logo (but
including all Governmental Body trademarks, service marks, logos and
designs, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications
in the United States Patent and Trademark office, any state of the United
States or any other Governmental Body, all goodwill symbolized thereby or
associated therewith and all extensions or renewals thereof which are set
forth on Schedule 3.1(k)(ii)), (iii) copyrights associated solely with the
PO/MTBE Business (including all copyrights, United States and foreign
copyright registrations, and applications to register copyrights which are
set forth on Schedule 3.1(k)(ii)), (iv) inventions, formulae, processes,
engineering data, designs, know-how, show-how, confidential or proprietary
technical and business information and trade secrets or other data or
information, (v) Computer Software,(vi) technical manuals and documentation
made or used in connection with any of the foregoing, (vii) except for
Computer Software, licenses and similar agreements granting to any Person
rights with respect to any of the foregoing, and (viii) except for Computer
Software, all licenses and similar agreements with any Person granting to
Seller, TDC or the Company or its predecessors in interest any rights
relating to the design, development,
8
<PAGE>
construction and utilization (including operation and maintenance) of the
PO/MTBE Assets.
"IRS" means the Internal Revenue Service of the United States.
---
"Laws" means all applicable statutes, laws, rules, regulations, orders,
----
ordinances, judgments and decrees of any Governmental Body, including,
without limitation, the common or civil law of any Governmental Body, and
guidelines that are given the force of law pursuant to any statutes, laws,
rules, regulations, orders, ordinances, judgments and decrees of any
Governmental Body.
"Marketable" means, with respect to any real property owned or other
----------
real property interest owned, that such real property or other real property
interest is free from all Encumbrances, except Permitted Encumbrances.
"MTBE" means methyl tertiary butyl ether and other lower alkyl tertiary
----
butyl ethers.
"MTBE Supply Agreement" means the MTBE Supply Agreement, substantially
---------------------
in the form of Exhibit A to be entered into between Seller and Buyer or
their respective Affiliates as of the Closing Date.
"Party" means any of Buyer or Seller.
-----
"Patents" means all United States and foreign patents, patent
-------
applications and patent disclosures, including all reissues, divisions,
continuations, continuations-in-part, substitutions, extensions or renewals
of any of the foregoing.
"Patent Assignment Agreements" means the agreements conveying to the
----------------------------
Buyer the Patents related to the PO/MTBE Business, substantially in the
forms attached hereto as Exhibit B.
"Permitted Encumbrances" means (i) Encumbrances for Taxes, governmental
----------------------
charges or levies on property not yet due and delinquent and (ii) oil and
gas leases, mineral rights, royalty interests in minerals, easements, rights
of way, licenses, real property leases, encroachments and other minor
imperfections of title, which do not, individually or
9
<PAGE>
in the aggregate, materially impair the use of any real property or any
property interest or materially impair the use of any other PO/MTBE Asset,
or (iii) the Encumbrances set forth in Schedule 2.1. Permitted Encumbrances
shall not include any Encumbrance which evidences or secures payment for a
sum of borrowed money.
"Person" means any individual, partnership, firm, trust, association,
------
corporation, joint venture, unincorporated organization, other business
entity or Governmental Body.
"PG" means propylene glycol.
--
"PO" means propylene oxide.
--
"PO/MTBE" means PO and MTBE individually or collectively, as the case
-------
may be, from time to time.
"PO/MTBE Assets" means, collectively, tangible and intangible assets
--------------
and property, real, personal and mixed, owned, leased or otherwise
controlled by the Company or, if any, by Seller or any of Seller's other
Affiliates in the operation of the PO/MTBE Business, including, but not
limited to: (i) fixed assets, including land, land improvements, buildings,
fixtures, machinery and equipment, tools, furniture, furnishings, plant and
office equipment, process development area equipment at Austin, Texas,
leasehold improvements and vehicles; (ii) inventories, including supplies,
raw materials, work-in-process, finished goods and goods-in-transit from
suppliers or manufacturers; (iii) sales and sales promotional data,
advertising materials, customer lists, supplier lists and business plans and
other books and records; (iv) Contracts to the extent set forth in Clauses
(ii) and (iii) of the definition of Assumed Liabilities; (v) accounts and
notes receivable; (vi) prepaid Taxes (other than prepaid Income Taxes),
prepaid rent, prepaid supplies, advances and other prepaid expenses and
deposits; (vii) goodwill; and (viii) Supporting Assets; but specifically
excluding the Intellectual Property, the Excluded Assets and current assets
excluded from Closing Working Capital as set forth in Section 2.4(b).
"PO/MTBE Business" means the business and
----------------
10
<PAGE>
operations conducted by or on behalf of the Company with respect to (i) the
manufacturing of PO or MTBE at the Company's Port Neches, Texas plant and
the marketing, sale and distribution of MTBE from the Company's Port Neches,
Texas plant or of PO and (ii) the rights of the Company to have PG
manufactured by Huntsman at Huntsman's Port Neches, Texas plant, and the
marketing, sale and distribution of such PG.
"Regulations" means the Income Tax regulations issued with respect to
-----------
the Code.
"Supporting Assets" means all of the Company's right, title and
-----------------
interest in the cogeneration plant and related land at Port Neches, Texas
and related Contracts and in the waste water treatment plant and related
land at Port Neches, Texas and related Contracts.
"Tax" means taxes of any kind, levies or other like assessments,
---
customs, duties, imposts, charges, or fees, including, without limitation,
income, minimum, gross receipts, ad valorem, value added, excise, real or
personal property, asset, sales, use, license, payroll, transaction,
capital, net worth and franchise taxes, withholding, employment, social
security, workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains
taxes or other governmental taxes imposed by or payable to the United States
or any state, county, local or foreign government or subdivision or agency
thereof, and in each instance such term shall include any interest,
penalties or additions attributable thereto.
"TDC" means Texaco Development Corporation, a Delaware Corporation
---
having an office at 2000 Westchester Avenue, White Plains, New York 10650.
"Termination Date" means May 1, 1997; provided, however, that if any
---------------- -------- -------
Governmental Body approval required for the consummation of the transactions
contemplated hereby is not received then the Termination Date shall be
extended for each day that such Governmental Body approval has not occurred
after May 1, 1997, but in no event shall the Termination Date be extended
beyond June 1, 1997.
11
<PAGE>
"Third Party Action" means any claim, demand, action, suit or
------------------
investigation made or instituted by a Person other than a member of the
Buyer Group or Seller Group for which an Indemnified Party may be entitled
to indemnification pursuant to the Agreement.
"Transfer Date" means (i) the Closing Date, if the Closing occurs on
-------------
the first day of any calendar month, or (ii) if the Closing does not occur
on the first day of a calendar month, the first day of the calendar month
immediately following the calendar month in which the Closing occurs.
"Working Capital" means current assets less current liabilities
---------------
determined in accordance with GAAP consistently applied, as adjusted in
accordance with Section 2.4(b).
"Other Definitions" The following terms have the meanings ascribed to
-----------------
them in the Sections noted:
"Acquisition"............................... 4.1(e)
"Additional Indemnity Taxes"................ 7.4
"Adjustment Date"........................... 2.4(c)
"Allocation Statement"...................... 8.4
"Assumption Agreement"...................... 2.3(b)
"Auditors".................................. 2.3(c)
"Audits".................................... 3.1(m) (iv)
"BSRP"...................................... 5.1(f)
"Buyer Benefit Plans"....................... 5.1(e)
"Buyer Group"............................... 7.1
"Buyer's Pre-Closing Indemnity"............. 6.3(a)(ii)
"CAD"....................................... 6.2(b) (ix)
"Cash Flow Statement"....................... 2.3(c)
"Cash Portion".............................. 2.2
"Change".................................... 6.3(c)
"Citibank Lease"............................ 4.1(g)
"Claim"..................................... 10.10
"Claim Termination Date".................... 10.10
"Closing Statement"......................... 2.4(b)
"Closing Working Capital"................... 2.4(b)
"Common Stock".............................. 3.3(i)
"Computer Software"......................... 2.3(a)
"DCA Plume"................................. 6.1
"Defined Benefit Plans...................... 5.1(f)
"Defined Contribution Plans"................ 5.1(i)
"Delivering Party".......................... 10.14
"Disclosing Party".......................... 4.4(a)
12
<PAGE>
"Easements"................................. 3.2(h)(iii)
"Engineering Service Agreement"............. 9.1(h)
"Enhancements".............................. 6.5(b)
"Environmental Claims"...................... 6.1
"Environmental Condition"................... 6.1
"Environmental Law"......................... 6.1
"Environmental Losses"...................... 6.1
"ERISA"..................................... 3.2(o)
"Estimated Working Capital"................. 2.4(a)
"Excluded Marks"............................ 4.2(b)
"Final Statement"........................... 2.4(b)
"Financing Person".......................... 10.4(d)
"$40 Million Cap"........................... 6.2(a)
"HSR"....................................... 4.3(c)
"Huntsman Group"............................ 12.4
"Indemnified Member"........................ 7.4
"Indemnified Party"......................... 7.3
"Indemnifying Party"........................ 7.3
"Individual Deductible"..................... 6.1
"Information"............................... 4.4(a)
"Intellectual Property Licenses"............ 3.1(k) (iii)
"Intersecurity Documents"................... 2.2
"Leased Properties"......................... 3.2(h) (v)
"Liabilities"............................... 7.1
"New Defined Benefit Plans"................. 5.1(f)
"New Defined Contribution Plans"............ 5.1(i)
"New Welfare Benefit Plans"................. 5.1(k)
"Non-Assumed Liabilities"................... 2.3(d)
"Normal Retirement Benefits"................ 5.1(f)
"Offset".................................... 4.2(g)
"Off-Site Waste Disposal"................... 6.2(b)(ii)
"Other Party"............................... 10.14
"Phase I Environmental Assessment".......... 6.1
"PPI"....................................... 6.3(b)(iii)
"Preferred Stock"........................... 2.2
"Property".................................. 3.2(h)(i)
"Purchase Price"............................ 2.2
"Real and Personal Property Taxes".......... 8.3(a)
"Receiving Party"........................... 4.4(a)
"Remediation"............................... 6.1
"Remediation Plan........................... 6.1
"Representatives"........................... 4.4(a)
"Seller Group".............................. 7.2
"Seller's Indemnity Period"................. 6.3(b)(i)
"Structured Sale"........................... 10.4
"Tank Waste Disposal"....................... 6.2(b)(ii)
"Tax Benefit"............................... 7.4
"Transaction Deductible".................... 6.1
"Transferred Employees"..................... 5.1(a)
13
<PAGE>
"Uncollected Receivables"................... 2.4(d)
"Welfare Benefit Plans"..................... 5.1(k)
Section 1.3 Rules of Construction. For purposes of the Agreement:
---------------------
(a) General. Unless the context otherwise requires: (i) "or" is not
-------
exclusive; (ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP; (iii) words in the singular include
the plural, and words in the plural include the singular; (iv) words in the
masculine include the feminine and words in the feminine include the
masculine; (v) any date specified for any action that is not a Business Day
shall be deemed to mean the first Business Day after such date; and (vi)
reference to a corporation, a limited liability company or a partnership
includes such corporation's, limited liability company's or partnership's
successors and assigns.
(b) Parts and Sections. References to Parts and Sections are, unless
------------------
otherwise specified, to Parts and Sections of the Agreement. Neither the
captions to Parts or Sections thereof nor the Table of Contents shall be
deemed to be a part of the Agreement.
(c) Other Agreements. References herein to any agreement or other
----------------
instrument shall, unless the context otherwise requires (or the definition
thereof otherwise specifies), be deemed references to the same as it may
from time to time be changed, amended or extended. There is no incorporation
by reference herein unless expressly so stated. All Schedules and Exhibits
are deemed to be incorporated herein by reference.
PART TWO:
PURCHASE OF PO/MTBE BUSINESS,
PURCHASE PRICE AND TRANSFER OF PO/MTBE BUSINESS
Section 2.1 Purchase and Sale of PO/MTBE Business. At the Closing, Seller
-------------------------------------
shall sell, transfer, assign and deliver or cause to be sold, transferred,
assigned and delivered to Buyer the Assets, free and clear of all Encumbrances
except Permitted Encumbrances, and Buyer shall purchase, receive and accept the
Assets and assume the Assumed Liabilities.
14
<PAGE>
Section 2.2 Purchase Price. The purchase price of the Assets shall be
--------------
Five Hundred Seventy-Seven Million Five Hundred Thousand Dollars ($577,500,000)
as adjusted in accordance with Section 2.4 (the "Purchase Price") . The Purchase
Price shall be payable as follows: (a) on December 24, 1996, One Million Dollars
($1, 000, 000) was paid by or on behalf of Buyer to Seller, (b) at the Closing
Buyer shall deliver (i) to Seller, Five Hundred Eleven Million Five Hundred
Thousand Dollars ($511,500,000) ("Cash Portion") and (ii) to the Company, Sixty
Five Thousand (65, 000) shares of nonvoting, cumulative preferred stock, par
value $1 per share, of Buyer, with an aggregate stated value of Sixty-Five
Million Dollars ($65,000,000) and with the rights and preferences set forth on
Schedule 2.2 (ii) (b) (ii) (the "Preferred Stock") and (c) after the Closing,
the adjustments contemplated by Sections 2.3 (c) and 2.4 shall be made. On or
prior to the Closing, the agreements, and documents and letters with lenders,
third party junior subordinated debt holders, Seller, the Company or other
Persons with terms and restrictions as set forth in Schedule 2.2(ii)(b)
(collectively "Intersecurity Documents") shall be executed and delivered. The
Cash Portion of the Purchase Price shall be payable by Buyer to Seller at the
Closing. The Preferred Stock and Intersecurity Documents shall be dated as of
the Closing Date. The Preferred Stock shall be delivered by the Buyer to the
Company at the Closing. The Purchase Price allocation is agreed to by the
Parties as set forth in Schedule 2.2.
Section 2.3 Transfer of the Assets, Etc. The transfer of the Assets and
---------------------------
assumption of Assumed Liabilities shall be effected as follows:
(a) Transfer of Assets. At the Closing, Seller shall execute and
------------------
deliver or cause to be executed and delivered such certificates, deeds of
trust, bills of sale, assignments or other deeds or documents, if any, as
are reasonably required to effect the transfer of the Assets, including
without limitation, the documents set forth on Schedule 2.3(a)(i). The
Assets to be transferred shall include computer software presently used in
the PO/MTBE Business and all licenses therefor, but excluding (i) Seller's
or its Affiliates, proprietary computer software presently used both in
Seller's or its Affiliates, business and in the PO/MTBE Business as set
forth on Schedule 2.3 (a) (ii) (provided that at Buyer's request, Seller
shall grant Buyer a royalty-free, irrevocable, nonexclusive license to use
any of such proprietary software in the PO/MTBE Business, excluding Seller's
or its Affiliates main frame software), (ii) the copyright in, but not
licenses to use, third party computer software licensed to the Company,
Seller, or Huntsman and presently used, or provided by Huntsman pursuant to
service agreements, in the PO/MTBE
15
<PAGE>
Business, excluding Seller's or its Affiliates main frame software), (ii)
the copyright in, but not licenses to use, third party computer software
licensed to the Company, Seller, or Huntsman and presently used, or provided
by Huntsman pursuant to service agreements, in the PO/MTBE Business and
(iii) Huntsman's or its Affiliates' proprietary computer software used for
the benefit of the PO/MTBE Business (such software which is included in the
Assets is referred to herein as "Computer Software").
(b) Assumed Liabilities. At the Closing, Buyer and the Company shall
-------------------
enter into an assumption agreement to assume the Assumed Liabilities
substantially in the form of Exhibit C ("Assumption Agreement").
(c) Adjusted Interim Cash Flow. The following is applicable only if
--------------------------
the Closing Date does not occur on the last day of the calendar month.
Seller shall cause the Company to keep accurate records of the Adjusted
Interim Cash Flow as if the cash flow had been held separate as set forth in
this Section 2.3(c) and Buyer and its Affiliates shall reasonably cooperate
with the Company in keeping accurate records. Seller shall calculate the
amount of the Adjusted Interim Cash Flow (the "Cash Flow Statement") as
promptly as possible after the Closing Date, but in no event later than
thirty (30) days after the final determination of Closing Working Capital.
Buyer shall have forty-five (45) days after receipt to review the Cash Flow
Statement. Buyer and its representatives shall be entitled to review the
work papers, schedules, memoranda and other documents used by Seller in
preparation of the Cash Flow Statement. If Seller and Buyer agree on the
resolution of all matters relating to the Cash Flow Statement within such
forty-five (45) day period, the Cash Flow Statement shall be final and
binding. If Seller and Buyer shall fail to reach an agreement within such
forty-five (45) day period, then all disagreements shall be submitted for
resolution to Arthur Andersen LLP and Deloitte & Touche (the "Auditors").
The Auditors shall have up to thirty (30) days after such submission to
resolve the dispute submitted to the Auditors which resolution shall be
final and binding on the Parties. In the event that the final determination
of the Adjusted Interim Cash Flow is a positive amount, Seller shall pay to
Buyer any remaining positive amount, after the deduction from such original
positive amount of the Capital Charge, within ten (10) Business Days. In the
16
<PAGE>
event that the final determination of the Adjusted Interim Cash Flow is a
negative amount, Buyer shall pay such amount to Seller within ten (10)
Business Days. The fees and expenses of Arthur Andersen LLP shall be paid by
Seller and the fees and expenses of Deloitte & Touche shall be paid by
Buyer.
(d) Non-Assumed Liabilities. Except as otherwise expressly provided
-----------------------
for in the Agreement and the transactions contemplated herein, the Parties
agree that Buyer has not agreed to pay, assume or be liable for any
liabilities or obligations of the PO/MTBE Business or of Seller or its
Affiliates related to the PO/MTBE Business ("Non-Assumed Liabilities").
Section 2.4 Working Capital. Buyer and Seller agree as follows:
---------------
(a) Estimated Working Capital. The estimated amount of the Closing
-------------------------
Working Capital ("Estimated Working Capital") shall be Forty Four Million
Three Hundred Three Thousand Nine Hundred Fifty Two Dollars ($44,303,952)
and Seller has provided to Buyer the basis for the calculation.
(b) Determination of Closing Working Capital. As promptly as
----------------------------------------
practicable after the Closing Date (but in no event later than ninety (90)
days after the Closing Date), Buyer shall prepare a statement of the Closing
Working Capital (the "Closing Statement"). The Closing Statement shall be
prepared on the same basis as the Estimated Working Capital, which in both
cases exclude all intercompany accounts other than Included Intercompany
Accounts, Excluded Assets, cash and cash equivalents, Excluded Liabilities
and deferred Income Taxes. Seller shall have forty five (45) days after
receipt to review the Closing Statement and to discuss resolution of the
Closing Statement. Seller and its representatives shall be entitled to
review the work papers, schedules, memoranda and other documents used by
Buyer in preparation of the Closing Statement. If Seller and Buyer agree on
the resolution of all matters relating to the Closing Statement within such
forty five (45) day period, the Closing Statement shall be final and binding
("Final Statement"), and shall set forth the Working Capital included in the
PO/MTBE Assets as of the Effective Date ("Closing Working Capital"). If
Seller and Buyer shall fail to reach an agreement with respect to all
matters relating to the Closing Statement within
17
<PAGE>
such forty five (45) day period, then all disagreements shall be submitted
for resolution to the Auditors. The Auditors shall have up to thirty (30)
days after such submission to resolve the disputes submitted to the Auditors
and shall determine the Closing working Capital which determination shall be
final and binding on the Parties. The fees and expenses of Arthur Andersen
LLP shall be paid by Seller and the fees and expenses of Deloitte & Touche
shall be paid by Buyer and the Final Statement shall be adjusted
accordingly.
(c) Adjustment Payment. Within ten (10) Business Days after the final
------------------
determination of the Closing Working Capital ("Adjustment Date"): (i) in the
event that the Closing Working Capital exceeds the Estimated Working
Capital, the Buyer shall pay to Seller the amount of the excess; or (ii) in
the event that the Closing Working Capital is less than the Estimated
Working Capital, Seller shall pay to Buyer the amount of the shortfall. In
the event the amounts set forth in Section 5.1(o) as payable by Buyer to
Seller have not been paid, the adjustment payment shall include
reimbursement for amounts set forth in Section 5.1(o).
(d) Uncollected Accounts Receivable. The Seller shall promptly
-------------------------------
purchase all notes and accounts receivable of the PO/MTBE Business included
in the Closing Working Capital, which have not been collected by the
Ninetieth (90th) Day following the Closing Date and the Two Hundred Tenth
(210/th/) day for non-U.S. shipments which have payment terms more than
Ninety (90) days ("Uncollected Receivables"). The purchase price for the
Uncollected Receivables shall be the aggregate face amount thereof (net of
the aggregate reserves for bad debts relating to such receivables shown on
the Final Statement); provided however, that if Buyer shall have collected
notes and accounts receivable included in the Closing Working Capital which,
when added to the amount of the Uncollected Receivables, is greater than the
amount of the notes and accounts receivable included in the Closing Working
Capital (after deducting therefrom the reserve for bad debts relating to
such receivables shown on the Final Statement), the difference shall be
credited against the amount of the Uncollected Receivables to be purchased.
In the event that Buyer shall collect any Uncollected Receivables subsequent
to Seller's purchase of such Uncollected Receivables, Buyer shall pay all
amounts so collected to Seller no later than five (5) Business Days after
collection.
18
<PAGE>
Section 2.5 Payment. Unless otherwise expressly provided herein,
-------
any amount payable under the Agreement shall be payable in immediately
available funds, by means of a wire transfer, if to Seller, to Seller's
account number 910-112877-6 at The Chase Manhattan Bank, N.A., New York, New
York (with immediate telephone notice to Peter Wissel at (914) 253-7705 or
to such other account and depository designated by Seller prior to the
Closing by notice to Buyer) or if to Buyer, to Buyer's account number
00358475 at Bankers Trust Company, New York, New York (ABA #021001033) (with
immediate telephone notice to Sean Douglas at (801) 584-5864 or to such
other account and depository designated by Buyer prior to the Closing by
notice to Seller).
PART THREE:
REPRESENTATIONS AND WARRANTIES
Section 3.1 Seller. Seller represents and warrants to Buyer that:
------
(a) Organization and Standing of Seller. Seller has been duly
-----------------------------------
organized and is validly existing in good standing under the Laws of
Delaware.
(b) Authority. Seller has the corporate power and authority to enter
---------
into and perform the Agreement and all agreements and transactions
contemplated hereby. The execution, delivery and performance by Seller of
the Agreement have been duly authorized by all requisite corporate action
and the Agreement has been duly executed and delivered by Seller.
(c) Validity of Agreement. The Agreement is a legal, valid and binding
---------------------
obligation of Seller and is enforceable against Seller in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar Laws affecting the enforcement of creditors' rights in
general. The enforceability of Seller's obligations under the Agreement is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).
(d) No Violation. The execution and delivery of the Agreement by
------------
Seller, and the performance by Seller of the terms of the Agreement do not
(i) conflict with or result in a violation of the Corporate Documents of
Seller or TDC, (ii) conflict with, result in a violation
19
<PAGE>
of or constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or cause the acceleration of the
maturity of any debt or obligation pursuant to the express terms of any
Contract to which Seller or TDC is a party or is subject, except for such
violations, conflicts, defaults, terminations or accelerations which, either
individually or in the aggregate, would not have a material adverse effect
on the PO/MTBE Business, or (iii) violate any Law, except for such
violations which, either individually or in the aggregate, would not have a
material adverse effect on the PO/MTBE Business.
(e) No Consent Required. Except as set forth on Schedule 3.1(e), (i)
-------------------
no consent, waiver, approval, authorization or other action by, or filing
with, any Governmental Body, is required in connection with the execution,
delivery and performance by Seller of the Agreement or the agreements and
transactions contemplated hereby, and (ii) no consent, waiver, approval,
authorization or other action by any Person (other than Governmental Bodies)
is required in connection with the execution, delivery and performance by
Seller of the Agreement or the agreements and transactions contemplated
hereby, except for consents, waivers, approvals, authorizations or actions
which, if not obtained, made or taken, would not have a material adverse
effect on the PO/MTBE Business.
(f) Financial Statements. The Financial Statements are true and
--------------------
complete in all material respects and have been prepared in accordance with
GAAP and fairly present in all material respects, as of the dates thereof,
the financial position of the Company, and for the periods therein referred
to, the results of operations and cash flows of the Company.
(g) Changes. Except as set forth on Schedule 3. 1 (g), since December
-------
31, 1995: (i) or except for Huntsman's Knowledge Matters there has been no
material adverse change in the financial condition (not in the ordinary
course of business) of the PO/MTBE Business; (ii) or except for Huntsman's
Knowledge Matters neither Seller, TDC nor the Company has permitted or
allowed any of the PO/MTBE Assets to be subjected to any Encumbrances,
except for Permitted Encumbrances; (iii) neither Seller, TDC nor the Company
has disposed of,
20
<PAGE>
waived or permitted to lapse claims and rights under Contracts, excluding
indebtedness, relating to the PO/MTBE Business with an aggregate value in
excess of Five Hundred Thousand Dollars ($500,000), other than in the
ordinary course of business consistent with past practice given the state of
the PO/MTBE Business; (iv) or except for Huntsman's Knowledge Matters
neither Seller nor any of Seller's Affiliates has transferred or otherwise
disposed of any PO/MTBE Asset except in the ordinary course of business and
except for the Excluded Assets; (v) neither Seller nor the Company has made
any announcement or proposal concerning or is under any legal obligation to
grant any general increase in the compensation of officers of the Company or
Employees (including, without limitation, any such increase pursuant to any
bonus, pension, profit sharing or other plan or commitment) or any
contractual changes to the benefits other than in the ordinary course of
business; (vi) neither Seller, TDC nor the Company has paid, discharged or
satisfied any claims, liabilities or obligations (absolute, accrued,
contingent or otherwise) relating to the PO/MTBE Business other than the
payment, discharge or satisfaction in the ordinary course of business of
liabilities and obligations reflected or reserved against in the 1995
Financial Statements or incurred in the ordinary course of business, since
the date of the 1995 Financial Statements; (vii) neither Seller, TDC nor the
Company has canceled any debts owed to the PO/MTBE Business in excess of One
Hundred Thousand Dollars ($100,000) individually, or Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate other than intercompany
accounts; (viii) neither Seller, TDC nor the Company had any single capital
expenditure or other commitment which had been contracted to but not
incurred relating to the PO/MTBE Business in excess of Two Million Dollars
($2,000,000) for additions to property, plant, equipment or intangible
capital assets or made aggregate capital expenditures and commitments
relating to the PO/MTBE Business in excess of Ten Million Dollars
($10,000,000) for additions to property, plant, equipment or intangible
capital assets; (ix) neither Seller, TDC nor the Company has made, in
connection with the PO/MTBE Business, (a) any material change in any
accounting methods, principles or practices (including, without limitation,
changes in depreciation or amortization policies or rates or relating to the
establishment or accrual of reserves) or (b) any material election with
respect to Taxes; (x) neither Seller, TDC nor the Company has disposed of or
21
<PAGE>
permitted to terminate or lapse any rights to the use of any Intellectual
Property other than in the ordinary course of business, or disclosed to any
Person other than representatives of Buyer any trade secret, formula,
process or know-how not theretofore a matter of public knowledge, other than
in the ordinary course of business or pursuant to secrecy, confidentiality,
nondisclosure or similar agreements; and (xi) neither Seller, TDC nor the
Company has agreed, whether in writing or otherwise, to take any action
described in clauses (i) to (x) of this Section 3.1(g).
(h) Conduct of Business. Except as set forth on Schedule 3.1(h) or for
-------------------
Huntsman's Knowledge Matters, since December 31, 1995, the PO/MTBE Business
has not been conducted other than in the ordinary course.
(i) Litigation. Except as set forth on Schedule 3.1(i), there are no
----------
actions, suits, investigations or proceedings pending or, to the actual
knowledge of Seller, threatened against Seller or any of its Affiliates
before any court or arbitration tribunal or before or by any Governmental
Body relating to the execution, delivery or performance of the Agreement or
the agreements and transactions contemplated hereby.
(j) No Undisclosed Liabilities. Except as set forth in Schedule
--------------------------
3.1(j), neither Seller nor any of its Affiliates (other than the Company)
has any liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) related to the PO/MTBE Business which (x) would be
required by GAAP to be reflected on a theoretical balance sheet of the
PO/MTBE Business and (y) were not fully reflected or reserved against in the
December 31, 1996 balance sheet in the Financial Statements, except for
liabilities and obligations incurred since December 31, 1996 in the ordinary
course of business and consistent with past practice given the state of the
PO/MTBE Business. Except as set forth in Schedule 3.1(j), the Company does
not have any liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) related to the PO/MTBE Business which would be
required by GAAP to be reflected on a balance sheet of the Company and which
were not fully reflected or reserved against in the December 31, 1996
balance sheet in the Financial Statements, except for liabilities and
obligations incurred since December 31, 1996 in the ordinary course of
business and consistent with past practice given the state of the
22
<PAGE>
PO/MTBE Business.
(k) Intellectual Property Rights. With respect to Intellectual
----------------------------
Property: (i) the Company, Seller or TDC is the owner of or has rights to
use or has rights for Huntsman to use on the Company's behalf, all
Intellectual Property; (ii) based on Seller's, TDC's and the Company's
actual knowledge, Schedule 3.1(k) (ii) sets forth a complete and accurate
list of all registered copyrights, Patents and trademarks owned by or under
obligation of assignment to Seller, TDC or the Company, primarily related to
or used in the conduct of the PO/MTBE Business excluding those marks
containing "Texaco", "Tex" as a prefix or suffix, or the Star T design logo;
(iii) each owner listed on Schedule 3.1(k) (ii) is listed on the records of
the appropriate Governmental Body as the sole owner of record except as
otherwise indicated in such Schedule 3.1 (k)(ii), and based on Seller, TDC,
and the Company's actual knowledge, Schedule 3.1(k)(iii) sets forth a
complete and accurate list of all agreements between Seller, TDC or the
Company or its predecessors in interest, on the one hand, and any Person, on
the other hand, granting any right to use or practice any rights under any
Intellectual Property (collectively "Intellectual Property Licenses"); (iv)
except as set forth on Schedule 3.1(k)(iv), there is no Encumbrance on the
right of the Seller or any of Seller's Affiliates including without
limitation the Company to transfer to Buyer any of the Intellectual
Property, as herein contemplated; (v) based on Seller's, TDC's and the
Company's actual knowledge, no trade secret, formula, process, invention,
design, know-how or other information considered material, proprietary and
confidential has been disclosed or authorized to be disclosed to any Person
who is not an Affiliate of Seller or the Company, except Buyer and Buyer's
Affiliates or except in the ordinary course of business or pursuant to an
obligation of confidentiality binding upon said Person; (vi) based on
Seller's, TDC's and the Company's actual knowledge or except as set forth on
Schedule 3.1(k)(vi), there are no pending proceedings by or before
Governmental Bodies, including oppositions, interferences, proceedings or
suits, relating to such Intellectual Property and based on Seller's, TDC's
and the Company's actual knowledge, no such proceedings are threatened;
(vii) based on Seller's, TDC's and the Company's actual knowledge, the
conduct of the PO/MTBE Business and the exercise of rights relating to
23
<PAGE>
Intellectual Property does not infringe upon or otherwise violate,
intellectual property rights of any Person; (viii) based on Seller's, TDC's
and the Company's actual knowledge, no Person is infringing upon or
otherwise violating any Patents contained within Intellectual Property; (ix)
based on Seller's, TDC's and the Company's actual knowledge, none of Seller
or any of its Affiliates has received notice of any claims, and there are no
pending claims, of any Persons relating to the scope, ownership or use of
any of the Intellectual Property or alleging that the conduct of the PO/MTBE
Business infringes upon or otherwise violates the intellectual property
rights of any Person except as set forth in Schedule 3. 1 (k)(ix) ; and (x)
based on Seller's, TDC's and the Company's actual knowledge, each copyright
registration, Patent and registered trademark and application therefor
listed on Schedule 3.1(k) (ii) is in proper form, not disclaimed and has
been duly maintained, including the submission of all necessary filings in
accordance with the legal and administrative requirements of the appropriate
jurisdictions.
(l) Working Capital. Since September 30, 1996, (i) the Working Capital
---------------
(including each component thereof) of the PO/MTBE Business has been managed
in the ordinary course of business in a manner consistent with past practice
given the state of the PO/MTBE Business, (ii) except for Huntsman's
Knowledge Matters, receivables of the PO/MTBE Business have been collected
in the ordinary course of business consistent with past practice given the
state of the PO/MTBE Business, (iii) inventory levels of the PO/MTBE
Business have been maintained in the ordinary course of business consistent
with past practice given the state of the PO/MTBE Business and (iv) accounts
payable of the PO/MTBE Business have been paid in the ordinary course of
business consistent with past practice given the state of the PO/MTBE
Business.
(m) Taxes. With respect to Taxes:
-----
(i) Except in the case of United States federal Tax Returns and
United States federal Taxes, as applicable, the Company has (x) duly and
timely filed with the appropriate taxing authorities all Tax Returns
required to be filed by it, and all such Tax Returns are true, correct and
complete in all material respects, and (y) timely paid all material Taxes
due or claimed to be due from it by any taxing authority.
24
<PAGE>
(ii) Except in the case of United States federal Tax Returns and
United States federal Taxes, as applicable, the Company has, within the time
and manner prescribed by Law, withheld and paid over to the proper
Governmental Authorities all amounts required to be withheld and paid over
under all applicable Laws.
(iii) Except as set forth in Schedule 3.1(m)(iii) and except in
the case of United States federal Tax Returns and United States federal
Taxes, as applicable, the Company has not requested any extension of time
within which to file any Tax Return in respect of any fiscal year which has
not since been filed and no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns have been given by the Company.
(iv) Except as set forth in Schedule 3.1 (m) (iv), no state or
local audits or other administrative proceedings or court proceedings
("Audits") exist or have been initiated or are presently pending with regard
to any Taxes or Tax Returns of the Company, and none of the Company or any
Affiliate has received any notice that such an Audit is pending or
threatened with respect to any Taxes due from or with respect to the Company
or with respect to any Tax Return filed by or with respect to the Company.
(v) Except in the case of United States federal Taxes, all tax
deficiencies which have been finally determined against the Company have
been fully paid or finally settled.
(n) Disclosure. No representations or warranties by Seller in the
----------
Agreement contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the representations or warranties
of Seller herein, in light of the circumstances under which they were made,
not misleading.
(o) Revenues, Costs of Goods Sold and Expenses. The revenues, costs of
------------------------------------------
goods sold and expenses of the Company for the year 1996 as set forth in the
Financial Statements fairly present, in all material respects, those amounts
for the PO/MTBE Business on the basis operated by the Company subject to the
Citibank Lease and subject to the Huntsman Agreements; provided
25
<PAGE>
however, no representation is made by the Seller or the Company regarding
the pro forma effects had the PO/MTBE Business been owned by Huntsman or the
Buyer during the year 1996, including, but not limited to, the pro forma
effects of elimination of the Citibank Lease, the effects of changes in or
elimination of the Huntsman Agreements, and the effects of elimination of
interest income on intercompany accounts not to be acquired by the Buyer
under the Agreement.
Section 3.2 Company. Seller represents and warrants to Buyer that:
-------
(a) Organization and Standing of Company. The Company has been duly
------------------------------------
organized and is validly existing in good standing under the Laws of
Delaware and is in good standing as a foreign corporation in all
jurisdictions where the nature of its properties or business requires it.
(b) Authority. The Company has the corporate power and authority to
---------
own, lease or otherwise control the PO/MTBE Assets and to conduct its
business as presently conducted. The Company has the corporate power and
authority to enter into and perform the Agreement and the agreements and
transactions contemplated hereby. The execution, delivery and performance by
the Company of the Agreement and the agreements and transactions
contemplated hereby have been duly authorized by all requisite corporate and
shareholder action on the part of the Company, and the Agreement has been
duly executed and delivered by the Company.
(c) Validity of Agreement. The Agreement is a legal, valid and binding
---------------------
obligation of the Company and is enforceable against the Company in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or other similar Laws affecting the enforcement of
creditors' rights in general. The enforceability of the Company's
obligations under the Agreement is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at Law).
(d) No Violation. The execution and delivery of the Agreement, the
------------
performance by the Company of the terms of the Agreement and the sale and
delivery of the Assets do not (i) conflict with or result in a violation of
the Corporate Documents of the Company, (ii) conflict with,
26
<PAGE>
result in a violation of or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
cause the acceleration of the maturity of any debt or obligation pursuant to
the express terms of any Contract to which the Company is a party or is
subject, except for such violations, conflicts, defaults, terminations or
accelerations which, either individually or in the aggregate, would not have
a material adverse effect on the PO/MTBE Business, or (iii) violate any Law,
except for such violations which, either individually or in the aggregate,
would not have a material adverse effect on the PO/MTBE Business.
(e) No Consent Required. Except as set forth on Schedule 3.2(e), (i)
-------------------
no consent, waiver, approval, authorization or other action by, or filing
with, any Governmental Body, is required in connection with the execution,
delivery and performance by the Company of the Agreement or the agreements
and transactions contemplated hereby, and (ii) no consent, waiver, approval,
authorization or other action by any Person (other than Governmental Bodies)
is required in connection with the execution, delivery and performance by
the Company of the Agreement or the agreements and transactions contemplated
hereby except for consents, waivers, approvals, authorizations or actions
which, if not obtained, made or taken, would not have a material adverse
effect on the PO/MTBE Business.
(f) Litigation. Except as set forth in Schedule 3.2(f), there are no
----------
actions, suits, investigations or proceedings pending or, to the actual
knowledge of Seller or the Company, threatened against the Company or any of
its Affiliates before any court or arbitration tribunal or before or by any
Governmental Body relating to the PO/MTBE Business excluding Intellectual
Property. Neither Seller, the Company nor TDC is subject to any judgment,
order or decree entered in any lawsuit, or other proceeding before or by any
Governmental Body which, individually or in the aggregate, would have a
material adverse effect on the conduct of the PO/MTBE Business excluding
Intellectual Property.
(g) Contracts. Except as set forth on Schedule 3.2(g), neither Seller,
---------
the Company nor TDC is, in connection with the PO/MTBE Business, a party to
or subject to (i) any employment or consulting Contract
27
<PAGE>
with any Employee or officer or director of the Company, (ii) any plan,
arrangement or Contract providing for bonuses, pensions, options, deferred
compensation, retirement payments or profit sharing for or with any
Employee, the Company's officers or directors, (iii) any collective
bargaining agreement with any labor union, (v) any instrument evidencing or
related to indebtedness for borrowed money, whether directly or indirectly,
not set forth on the December 31, 1996 balance sheet in the Financial
Statements, (v) any Contract limiting the freedom to conduct PO/MTBE
Business in any geographic area or to compete in any line of business or
with any Person, (vi) any partnership or 3oint venture contract, (vii) any
material Contract between the Company and with Seller or any of its
Affiliates, or (viii) any other Contract which is material to the operations
of the PO/MTBE Business. There exists no default or event of default by
Seller, the Company or TDC, or to Seller's, the Company's or TDC's actual
knowledge, by any other party, under any of the Contracts set forth on
Schedule 3.2(g) which, individually or in the aggregate, would have a
material adverse effect on the PO/MTBE Business.
(h) Title to the Assets. With respect to the Assets: (i) Schedule
-------------------
3.2(h)(i) sets forth a comprehensive description of all PO/MTBE Assets
constituting real property owned in fee, including land, buildings,
improvements and structures thereon and appurtenances thereto ("Property"),
and sets forth the names of the record title owners of the Property; (ii)
subject to the Citibank Lease, the Company has Marketable and Indefeasible
title to the Property; (iii) Schedule 3.2(h)(iii) sets forth a comprehensive
listing of all easements, real property licenses and rights-of-way where the
Company, or its predecessors, is the grantee ("Easements"); (iv) subject to
the Citibank Lease, the Company has Marketable and Indefeasible title to the
Easements subject to their terms and with respect to such Easements: (x) the
easements comprising the Easements are in full force and effect and
constitute the legal, valid and binding obligations of each party thereto,
(y) there exists no default or event of default under any such easements
which in the aggregate would have a material adverse effect on the PO/MTBE
Business, and (z) except as set forth on Schedule 3.2 (h)(iv)(z), no term
easement comprising an Easement which benefits any real property, any real
property interest or any PO/MTBE Asset requires the payment of a sum of
money, excluding rentals, to prevent such term easement from
28
<PAGE>
terminating or to renew such term easement, and Schedule 3.2 (h)(iv)(z) sets
forth the term and the amount payable necessary to renew each easement or
prevent the termination of each easement; (v) Schedule 3.2(h)(v) sets forth
a comprehensive description of all PO/MTBE Assets constituting leasehold
interests in real property where Company is lessee, including buildings,
improvements and structures located thereon and appurtenances thereto
("Leased Properties") and with respect to such Leased Properties: (x) the
leases comprising the Leased Properties are in full force and effect and
constitute the legal, valid and binding obligations of each party thereto,
and (y) there exists no default or event of default under any of such leases
which in the aggregate would have a material adverse effect on the PO/MTBE
Business; (vi) the Company has good title to all other PO/MTBE Assets,
subject to the Permitted Encumbrances and the Citibank Lease, and other than
those that are leased, to which the Company has valid and enforceable
leases; (vii) with the exception of the rights arising under service or
supply agreements in effect between the Company, Seller or Seller's other
Affiliates and Huntsman, except as set forth on Schedule 3.2(h)(vii) and
except for the Supporting Assets, (x) the Intellectual Property and PO/MTBE
Assets constitute all of the material rights and assets which are used in
the conduct of the PO/MTBE Business as the PO/MTBE Business was conducted on
December 31, 1995 and is presently being conducted and (y) no other material
properties or rights whether or not owned by the Company, are required for
the operation of the PO/MTBE Business as the PO/MTBE Business was operated
on December 31, 1995 or is presently being operated.
(i) Condition and Repair. Except as set forth on Schedule 3.2(i) or
--------------------
for Huntsman's Knowledge Matters, the plant, structures and equipment of the
PO/MTBE Assets, excluding Supporting Assets, taken as a whole have been
operated, maintained and repaired in a reasonably prudent manner, in
accordance with industry standards and past practices and contain no known
undisclosed structural defects which in the aggregate would have a material
adverse effect on the PO/MTBE Business.
(j) Compliance with Applicable Law. Except as set forth on Schedule
------------------------------
3.2(j) or for Huntsman's Knowledge Matters, the PO/MTBE Business, excluding
the Supporting Assets, has been and is being conducted in compliance with
all Laws the failure to comply with which would
29
<PAGE>
have a material adverse effect on the PO/MTBE Business, excluding the
Supporting Assets.
(k) Employees. Schedule 3.2(k) sets forth a list of the Employees,
---------
including and specifically identifying as such those Employees, if any, who
may go on long term disability.
(l) Bank Accounts. Schedule 3.2(l) sets forth a complete and accurate
-------------
list of all bank accounts of the Company and the signatories thereunder.
(m) Inventories. The inventories of the PO/MTBE Business (i) consist
-----------
of a quality and quantity usable in the ordinary course of business
consistent with past practice given the state of the PO/MTBE Business, (ii)
with respect to finished inventory, are of a quality to be salable in the
ordinary course of business consistent with past practice given the state of
the PO/MTBE Business, and (iii) are owned by the Company. Inventories of
feedstock, work in process, unfinished products and finished products of the
Company are valued in the December 31, 1996 balance sheet in the Financial
Statements at the lower of cost or market (determined on the average cost
basis except for MTBE valued at market when produced). With respect to
materials and supplies inventories, which are carried on an average cost
basis, the excess of cost over market after any reserves for obsolete or
below standard inventory, does not exceed Two Hundred Thousand Dollars
($200,000).
(n) Manufacture of PO/MTBE. Neither PO nor MTBE were manufactured on
----------------------
the Property prior to August 1, 1994. Except as otherwise set forth on
Schedule 3.2(n) or for Huntsman's Knowledge Matters, there have been no
spills or releases of PO or MTBE, including chemical substances or catalysts
used in the manufacture of PO or MTBE on or from the Property that were
reportable to a Governmental Body.
(o) ERISA Plan Administration. Each Defined Contribution Plan has been
-------------------------
operated and administered in substantial compliance with its terms and with
Law, including but not limited to the Employee Retirement Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA") and the Code.
30
<PAGE>
(p) ERISA; Qualified Plans. Each Defined Contribution Plan that is
----------------------
intended to be "qualified" within the meaning of Section 401(a) of the Code
(or other Law) is so qualified.
(q) Supporting Assets. With respect to the Supporting Assets, except
-----------------
for Section 3.2(h), THERE ARE NO EXPRESS OR IMPLIED WARRANTIES THAT APPLY TO
THE SUPPORTING ASSETS AND THE SELLER AND THE COMPANY SPECIFICALLY DISCLAIM
ANY IMPLIED WARRANTY OF MERCHANTIBILITY AND ANY IMPLIED WARRANTY OF FITNESS
FOR A PARTICULAR PURPOSE.
Section 3.3 Buyer. Buyer represents and warrants to Seller as follows:
-----
(a) Organization and Standing of Buyer. Buyer has been duly organized
----------------------------------
and is validly existing in good standing under the Laws of Delaware.
(b) Authority. Buyer has the corporate power and authority to enter
---------
into and perform the Agreement and all agreements and transactions
contemplated hereby and to purchase the Assets and assume the Assumed
Liabilities. The execution, delivery and performance by Buyer of the
Agreement and the agreements and transactions contemplated hereby and the
purchase of the Assets have been duly authorized by all requisite corporate
action, and the Agreement has been duly executed and delivered by Buyer.
(c) Validity of Agreement. The Agreement is a legal, valid and binding
---------------------
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar Laws affecting the enforcement of creditors' rights in
general. The enforceability of Buyer's obligations under the Agreement is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).
(d) No Violation. The execution and delivery of the Agreement by
------------
Buyer, the performance by Buyer of the terms of the Agreement and the
purchase of the Assets do not (i) conflict with or result in a violation of
the Corporate Documents of Buyer, (ii) conflict with, result in a violation
of or constitute a default (or an event which, with notice or lapse of time
or both, would
31
<PAGE>
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or cause the acceleration of the maturity of
any debt or obligation pursuant to the express terms of any Contract to
which the Buyer is a party or is subject, except for such violations,
conflicts, defaults, terminations or accelerations which, either
individually or in the aggregate, would not have a material adverse effect
on the PO/MTBE Business, or (iii) violate any Law, except for such
violations which, either individually or in the aggregate, would not have a
material adverse effect on the PO/MTBE Business.
(e) No Consent Required. Except as set forth in Schedule 3.3(e), (i)
-------------------
no consent, waiver, approval, authorization or other action by, or filing
with, any Governmental Body, is required in connection with the execution,
delivery and performance by Buyer of the Agreement or the agreements and
transactions contemplated hereby, and (ii) no consent, waiver, approval,
authorization or other action by any Person (other than Governmental Bodies)
is required in connection with the execution, delivery and performance by
the Buyer of the Agreement or the agreements and transactions contemplated
hereby except for consents, waivers, approvals, authorizations or actions
which, if not obtained, made or taken, would not have a material adverse
effect on the PO/MTBE Business.
(f) Litigation. Except as set forth in Schedule 3.3(f), there are no
----------
actions, suits, investigations or proceedings pending or to the actual
knowledge of Buyer, threatened against Buyer or any of its Affiliates before
any court or arbitration tribunal or before or by any Governmental Body
relating to the execution, delivery or performance of the Agreement or the
agreements and transactions contemplated hereby.
(g) Corporate Documents. Copies of the Corporate Documents of the
-------------------
Buyer, which have been made available by the Buyer to Company, constitute
true, correct and complete copies of such Corporate Documents and reflect
all amendments thereto through and including the date of the Agreement.
(h) Subsidiaries. The Buyer has no subsidiaries and holds no interest
------------
in any partnership or other equity interest in any corporation, joint
venture, trust or other entity.
32
<PAGE>
(i) Ownership of Common Stock. The Huntsman Corporation, directly or
-------------------------
through one or more Affiliates, and members of the Huntsman Group, has good
and marketable title to, and record and beneficial ownership of, all of the
outstanding shares of Common Stock, free and clear of any and all proxies or
proxy agreements, covenants, conditions, options and Encumbrances, other
than (i) Encumbrances associated with Buyer's financing arrangements in
connection with the transactions contemplated hereby, and (ii) agreements
and arrangements involving only Buyer's Affiliates or members of the
Huntsman Group.
(j) Buyer Capitalization. The Buyer's authorized capital stock
--------------------
consists of one thousand 1,000 shares of common stock, $0.01 par value, and
Sixty Five Thousand (65,000) shares of preferred stock, $1 par value. There
are One Thousand (1,000) shares of common stock of Buyer issued and
outstanding ("Common Stock"). The Common Stock has been duly authorized and
validly issued, is fully paid and nonassessable. The Common Stock and the
Preferred Stock constitute all of the issued and outstanding capital stock
of Buyer. The Common Stock was not issued in violation of the terms of any
Contract binding upon Buyer and was issued in compliance with all Corporate
Documents of Buyer and all applicable Laws. The Preferred Stock has been
duly authorized and validly issued and, at the Closing, the Preferred Stock
is fully paid, nonassessable and free of preemptive rights. The Preferred
Stock was not issued in violation of the terms of any Contract binding upon
Buyer and was issued in compliance with all Corporate Documents of Buyer and
all applicable Law.
(k) Options or Warrants. Except (i) for options, warrants or
-------------------
subscription rights to purchase Common Stock held by any of Buyer's
Affiliates or any member of the Huntsman Group, (ii) Encumbrances associated
with Buyer's financing arrangements in connection with the transactions
contemplated hereby and (iii) the agreements and transactions contemplated
hereby, there are no outstanding options, warrants or other rights to
purchase or subscribe for shares of capital stock of the Buyer, including,
without limitation, the Preferred Stock or Common Stock, or securities
convertible into or exchangeable for shares of the capital stock of the
Buyer nor are there outstanding any rights, privileges,
33
<PAGE>
preemptive or contractual, to acquire the shares of capital stock of the
Buyer including without limitation the Common Stock or the Preferred Stock.
(l) ERISA; Prohibited Transaction. The consummation by Buyer of the
-----------------------------
transactions contemplated by the Agreement does not, to Buyer's actual
knowledge, result in any prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code for which an exemption is not available.
(m) Employment Offers. To Buyer's actual knowledge, the offers of
-----------------
employment and failure to offer employment with respect to employees or
former employees of Seller, Seller's Affiliates and Company made pursuant to
Section 5.1(a) have been made in accordance with all Laws including but not
limited to Title VII of the Civil Rights Act of 1964, as amended, Americans
with Disabilities Act, the Age Discrimination in Employment Act and the
Texas Commission of Human Rights.
(n) Disclosure. No representations or warranties by Buyer in the
----------
Agreement contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the representations or warranties
of Buyer herein, in light of the circumstances under which they were made,
not misleading.
Section 3.4 No Other Warranties. Except as otherwise provided herein,
-------------------
there are no express or implied warranties that apply to the transactions
contemplated herein.
34
<PAGE>
PART FOUR:
COVENANTS REGARDING PO/MTBE BUSINESS
Section 4.1 Covenants of Seller. Seller covenants with Buyer that:
-------------------
(a) Conduct of Business. Unless otherwise expressly provided in the
-------------------
Agreement or expressly consented to by Buyer, or as set forth in Schedule
4.1(a), from the date of the Agreement up to and including the Closing Date,
Seller shall not, and shall not permit any of its Affiliates with respect to
the PO/MTBE Business, to (i) pledge or subject to any Encumbrance any of the
PO/MTBE Assets other than Permitted Encumbrances; (ii) amend or terminate
any material Contract which are within the definition of Assumed
Liabilities; (iii) increase the salaries or other compensation or benefits
of or make a loan to Employees other than in the ordinary course of business
consistent with past practices given the state of the PO/MTBE Business or as
required by Law; (iv) make any general change in the credit policies or
warranty terms extended to new or existing customers other than in the
ordinary course of business consistent with past practices given the state
of the PO/MTBE Business; (v) sell or dispose of any PO/MTBE Assets other
than in the ordinary course of business consistent with past practices given
the state of the PO/MTBE Business; (vi) enter into any lease of real or
personal property (whether as lessee or lessor) having a term in excess of
one year or involving annual rental payments of One Hundred Thousand Dollars
($100,000) or more, other than contracts with a term of one year or less
entered into in the ordinary course of business consistent with past
practices given the state of the PO/MTBE Business; (vii) enter into any
fixed price Contract for the purchase or sale of inventories other than
Contracts with a term of one year or less entered into in the ordinary
course of business consistent with past practices given the state of the
PO/MTBE Business; (viii) enter into any Contract for the purchase or sale,
or for the exchange or storage of inventory or supplies or for the lease (as
lessor) of any storage facilities owned by or under lease, as the case may
be, other than in the ordinary course of business consistent with past
practices given the state of the PO/MTBE Business or having a term of one
year or less; (ix) enter into any contract for capital expenditures
involving future payments in excess of Five
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Hundred Thousand Dollars ($500,000); (x) pay, discharge or satisfy any
claim, liability or obligation (absolute, accrued, contingent or otherwise)
related to the PO/MTBE Business, other than the payment, discharge or
satisfaction of current liabilities in the ordinary course of business
consistent with past practices given the state of the PO/MTBE Business; (xi)
prepay any obligation related to the PO/MTBE Business other than in the
ordinary course of business consistent with past practices given the state
of the PO/MTBE Business; (xii) cancel any debts which are related to the
PO/MTBE Business, or waive any claims or rights which are related to the
PO/MTBE Business other than in the ordinary course of business consistent
with past practices given the state of the PO/MTBE Business; (xiii) in
connection with the PO/MTBE Business, incur or agree to incur any long-term
indebtedness or, other than in the ordinary course of business consistent
with past practices given the state of the PO/MTBE Business, incur, or
assume or become subject to, whether directly or by way of a guarantee or
otherwise, any obligation or liability (absolute or contingent); (xiv)
declare, set aside or pay any dividend or other distribution in respect of
the capital stock of the Company; (xv) redeem or otherwise acquire any
shares of the capital stock of the Company; (xvi) dispose of or permit to
terminate or lapse, other than through expiration by operation of Law, any
Intellectual Property or dispose of or disclose to any Person other than
Buyer any trade secret, formula, process or know-how owned or used by or
applicable to the PO/MTBE Business except in the ordinary course of business
consistent with past practices or pursuant to an obligation of
confidentiality binding on said Person and not theretofore a matter of
public knowledge; (xvii) permit to lapse any license or permit related to
the PO/MTBE Business; (xviii) dispose of any material records related to the
PO/MTBE Business; or (xix) agree, whether in writing or otherwise, to do any
of the acts prohibited by the foregoing provisions of this sentence. From
the date of the Agreement up to and including the Closing Date, Seller shall
cause the PO/MTBE Business to be conducted in the ordinary and normal course
of the PO/MTBE Business, consistent with past practices given the state of
the PO/MTBE Business and shall cause the Company to use reasonable endeavors
to retain the services of the Transferred Employees and preserve business
relationships of the PO/MTBE Business with labor unions, customers,
suppliers and others; provided
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that Seller shall not be in breach of the covenant in this sentence to the
extent that such breach is caused by Huntsman's breach of the Huntsman
Agreements.
(b) Access to Properties and Information. Except as set forth in
------------------------------------
Section 6.6(a) and Part Eight, and subject to the Confidentiality
Agreements, from the date hereof to the Closing Date, Seller shall afford or
shall cause to be afforded to the officers, employees, accountants and other
representatives of Buyer full and reasonable access to the properties,
management and records pertaining to the PO/MTBE Business, wherever situated
(including Tax records and Tax reports and Tax litigation files as they
relate directly to the PO/MTBE Business), during normal working hours in
order that Buyer may have full opportunity to make such investigations as it
shall desire of the affairs and financial status of the PO/MTBE Business and
all aspects thereof.
(c) Intercompany Accounts. On or prior to the Closing Date, effective
---------------------
as of the Effective Date, Seller shall cause all intercompany accounts
existing and due to or from Seller or Seller's Affiliates related to the
PO/MTBE Business to be excluded from the Closing Working Capital except
Included Intercompany Accounts.
(d) Seller's Non-Compete. For a period of five (5) years after the
--------------------
Closing Date, Seller shall not and shall not permit any of Seller's
Affiliates to engage, directly or indirectly, in competition with Buyer or
any of Buyer's Affiliates in (i) the manufacture of PO or PG or (ii) the
sale of PO or PG to third parties except nothing herein shall preclude
Seller or Seller's Affiliates from selling PG or products containing PG as,
or as a component of, anti-freeze, de-icers, coolants or heat transfer
fluids.
(e) No Solicitation. Prior to the earlier of the Closing and
---------------
termination of the Agreement in accordance with its terms, Seller shall not,
shall cause its Affiliates not to, and shall cause Seller's and Seller's
Affiliates' respective directors, officers, Employees, representatives,
financial and legal advisors and agents not to (i) solicit, initiate,
encourage the initiation of or participate in, discussions or negotiations
with, or solicit or encourage inquiries or proposals from, any Person (other
than Buyer and Buyer's Affiliates and representatives) concerning any
merger, consolidation,
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<PAGE>
liquidation, sale of assets (other than in the ordinary course of business
consistent with past practice), sale of capital stock, change of control,
business combination or similar transaction principally involving the
Company or the PO/MTBE Business (any of the foregoing, an "Acquisition"),
(ii) enter into any Contract with respect to any Acquisition (other than
with Buyer and Buyer's Affiliates and representatives), or (iii) except as
required by Law (including the federal securities Laws), directly or
indirectly disclose to any Person (other than Buyer and Buyer's Affiliates
and representatives) any information not customarily disclosed concerning
the Company or the PO/MTBE Business. In the event that Seller, any of
Seller's Affiliates or any of their respective representatives receives an
offer or proposal relating to an Acquisition, Seller shall immediately
provide Buyer with notice thereof (such notice to include all material terms
of any such offer or proposal, including, in the case of a written offer or
proposal, a copy thereof, and to identify the party making such offer or
proposal); provided, that this restriction shall not apply to the Excluded
Assets or as set forth in Section 4.1(h)
(f) Title to the Properties. Seller binds itself and its successors
-----------------------
and assigns to warrant and forever defend against all and singular the
Property and Easements to Buyer and Buyer's successors and assigns against
any Person whomsoever lawfully claiming or to claim the same or any part
thereof, except as to the Permitted Encumbrances and subject to the terms of
the Easements.
(g) Citibank Lease. Simultaneously with the Closing, Seller shall (i)
--------------
enter into a written agreement providing for the termination of the
participation agreement and (ii) cause the termination of that certain lease
dated as of August 14, 1992 and all related agreements with Citibank, N.A.,
State Street Bank and Trust Company of Connecticut, National Association as
trustee under that certain unrecorded Declaration of Trust dated as of
August 14, 1992 and other financial institutions ("Citibank Lease") and
deliver releases which upon recordation in the proper office for recording
will release all Encumbrances related thereto.
(h) Delivery of Additional Data. At Buyer's request and expense,
---------------------------
Seller and Buyer shall reasonably cooperate
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to provide financial or other data relating to the PO/MTBE Business that is
(i) reasonably required by Buyer's financing sources (including
underwriters) for the transactions contemplated by the Agreement or (ii)
required for Buyer to comply with applicable securities laws.
(i) Merox. On or prior to the Closing, Seller shall cause to be
-----
provided to Buyer a fully paid up license for practice of the UOP Merox
process used in the PO/MTBE Business and limited to the maximum demonstrated
capacity of the Merox unit as of the Closing Date at Seventeen Thousand Five
Hundred (17,500) barrels of fresh stock charge per stream day or Five
Million Seven Hundred Seventy Five Thousand (5,775,000) barrels per calendar
year.
Section 4.2 Covenants of Buyer. Buyer covenants with Seller that:
------------------
(a) Performance Bonds, Guaranties, Etc. With respect to any surety
----------------------------------
bonds, performance bonds, guaranties or financial assurances set forth on
Schedule 4.2(a) relating to the PO/MTBE Business on which Seller or Seller's
Affiliates, including without limitation the Company, is a principal or
guarantor, Buyer shall use its reasonable endeavors to cause such surety
bonds, performance bonds, guaranties or financial assurances to be replaced
or Seller, or its Affiliates to be otherwise released within ninety (90)
days after the Closing Date. Buyer shall reimburse Seller for any amounts
paid by Seller or its Affiliates with respect to such surety bonds,
performance bonds, guaranties or financial assurances to the extent that
such amounts paid by Seller or its Affiliates are related to activities of
the PO/MTBE Business on or after the Closing Date.
(b) Use of Texaco Mark. At the Closing, Buyer shall cease and shall
------------------
cause Buyer's Affiliates to cease using any trademarks, symbols or trade
names containing "Texaco", "Tex" as a prefix or suffix, or similar words, as
well as the Star T Design logo associated with Seller or Seller's Affiliates
("Excluded Marks"). Notwithstanding the preceding sentence, Buyer and
Buyer's Affiliates shall have the right for a reasonable period of time
based on quantity of containers or packages existing in inventory at
Closing, to use or dispose of any inventory in containers or packages
bearing any of the Excluded Marks, and to use or dispose
39
<PAGE>
of previously prepared advertising and promotional materials and brochures,
shipping, packaging and similar materials bearing any of the Excluded Marks,
and to remove or replace identifications and signs; provided, that as soon
as practicable after the Closing Date, Buyer shall cause such containers,
packages or materials to identify Buyer or Buyer's Affiliates as the
distributor of the products bearing the Excluded Marks. Notwithstanding any
provision of this Section 4.2 (b), Buyer shall have the right to use
trademarks, symbols or trade names containing "Tex" or "Texas" (except as
used in the Company names "The Texas Company" and "Texas Chemical Company")
as a prefix, suffix, or individual or base word to the extent that such use
is not confusingly similar to any Texaco trade name or any of the Excluded
Marks such as would constitute a violation of trademark, unfair competition
or false advertising Laws.
(c) Accounts Receivable. Buyer shall use its reasonable endeavors to
-------------------
(i) collect or cause to be collected the accounts and notes receivable
included in the Closing Working Capital and (ii) after the repurchase of the
unpaid accounts and notes receivable pursuant to Section 2.4(d) assist
Seller in the collection of the Uncollected Receivables.
(d) Insurance Claims. Buyer shall not and shall cause Buyer's
----------------
Affiliates not to assert, by way of claim, action, litigation or otherwise,
any right to any Insurance Policy or benefit thereunder. Seller shall retain
all right, title and interest under the Insurance Policies.
(e) Buyer's Release of Insurance Policies. At the Closing, Buyer shall
-------------------------------------
release or cause to be released all rights to all Insurance Policies or
similar insurance which covered the Company prior to the Closing Date. All
Insurance Policies issued in the name of or to the Company, prior to the
Closing Date, shall remain with the Seller or Seller's Affiliates.
(f) Non-Assertion of Claims. Buyer shall not assert, and shall not
-----------------------
permit Buyer's Affiliates to assert, any claims for damages against Seller's
Affiliates in any way arising out of the sale and transfer of the PO/MTBE
Assets and assumption of Assumed Liabilities. Buyer shall assert any such
claims for damages only against Seller.
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(g) Offset Rights. Buyer grants and will cause its subsidiaries, if
-------------
any, to grant Seller and Seller's Affiliates and Seller grants and will
cause its Affiliates to grant Buyer and its subsidiaries, if any, the right
of offset and equitable recoupment ("Offset") for amounts due under any
trade accounts or trade agreements between Buyer or its subsidiaries, if
any, on the one hand, and Seller or any of its Affiliates, on the other
hand. Such right shall only be exercisable by any such party upon the
material default by the other party, under the terms of such accounts or
agreements (and only for so long as such material default is continuing) and
without regard to the mutuality of the obligation between the party
asserting the Offset and the other party. Upon the exercise of the Offset
the offsetting party shall provide the other party prompt notice thereof and
reflect the Offset taken in any revised statement of account.
(h) Capital Structure. Prior to or simultaneously with Closing, Buyer
-----------------
shall issue the Common Stock for no less than Twenty Five Million Dollars
($25,000,000), (Twenty Four Million Dollars ($24,000,000) in cash to
Huntsman Corporation or its Affiliates and One Million Dollars ($1,000,000)
in respect of the portion of the Purchase Price previously paid by or on
behalf of Buyer), and shall issue for cash at least Seventy Five Million
Dollars ($75,000,000) of junior subordinated debt to third parties, as set
forth in the Intersecurity Documents.
(i) Intellectual Property License. On the Closing Date, Buyer shall
-----------------------------
grant to Seller and its Affiliates, and Star Enterprise, Caltex Corporation
and its Affiliates a paid up, irrevocable, nonexclusive, nontransferable
license, without the right to sublicense, to practice the Intellectual
Property identified on Schedule A of Exhibit D which license shall be in a
form substantially as set forth on Exhibit D.
(j) PO Sales. For so long as the Preferred Stock is outstanding, to the
--------
extent Buyer and Buyer's Affiliate sell PO to PO customers that individually
consume no more than twelve million (12,000,000) pounds of PO per year for
nonurethane polyol applications, Buyer agrees that the first twenty million
(20,000,000) pounds per year of such sales shall be made by or for the
account of Buyer.
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Section 4.3 Covenants of Seller and Buyer. Seller and Buyer covenant to
-----------------------------
each other as follows:
(a) Compliance with Conditions Precedent. Seller and Buyer shall each
------------------------------------
use its reasonable endeavors to cause the conditions precedent set forth in
Part Nine, which are for the benefit of the other, to be fulfilled and
satisfied as soon as practicable.
(b) Brokers. The Parties represent to each other, that no broker,
-------
finder, financial advisor or similar person has been retained by a Party
except as set forth below. Seller represents that Seller has retained C.S.
First Boston as financial advisor in connection with the transactions
contemplated by the Agreement. Buyer represents that Buyer has not retained
any financial advisors in connection with the transactions contemplated by
the Agreement. Seller shall have sole responsibility for the fees and
expenses of C.S.First Boston and therefore Buyer and Buyer's Affiliates
shall have no responsibility for the fees and expenses of C.S.First Boston.
Buyer shall have sole responsibility for the fees and expenses of any
financial advisor retained by Buyer or its Affiliates and therefore Seller
and Seller's Affiliates shall have no responsibility for the fees and
expenses of any financial advisor of Buyer or its Affiliates.
(c) Certain Filings and Consents. The waiting periods under the Hart
----------------------------
Scott Rodino Antitrust Improvements Act of 1976 as amended ("HSR") and rules
promulgated thereunder have been satisfied. With respect to any other
filings and consents, the Parties agree that (i) Buyer and Seller shall
cooperate with one another in (x) determining whether any filings are
required to be made or consents, approvals, permits or authorizations are
required to be obtained under any Laws of the United States or any other
country in which a PO/MTBE Asset is located, and (y) making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such consents, permits, authorizations, approvals or
waivers, (ii) Buyer shall promptly endeavor to obtain, and Seller shall
reasonably cooperate in connection with such endeavors, each consent set
forth on Schedules 3.3(e) and 4.2(a), and (iii) Seller shall promptly
endeavor to obtain, and Buyer shall reasonably cooperate in connection with
such endeavors, each consent set forth on Schedules 3.1(e) and 3.2(e).
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<PAGE>
(d) Press Release. Prior to or on the Closing Date, no Party shall
-------------
make any press release or other announcement respecting the subject matter
of the Agreement without the consent of the other Party which consent shall
not be unreasonably withheld, unless a Party refuses to consent and the
Party desiring to make the release or other announcement is advised by its
counsel that the release or other announcement is required to comply with
any Law.
(e) Post-Closing Access. Except as otherwise expressly provided
-------------------
herein, from and after the Closing Date, Buyer and Seller shall reasonably
cooperate and afford each other or cause to be afforded to their respective
Affiliates and their officers, employees, accountants and other
representatives access, upon reasonable notice, during business hours with
respect to the facility to which access has been requested, to review and
copy the books, documents, databases, records or other information systems
of or relating to the PO/MTBE Business, including records preserved as set
forth in Section 8.8 (which books, documents, databases, records, employees
files or other information systems the Parties shall cooperate and assist
one another in identifying and locating), interview, depose or seek
testimony of employees, provide assistance in proceedings with employees as
witnesses or advisors, investigate the physical premises, take photographs
or videotapes, identify employees and contractors with knowledge of any
matter which is the subject of a claim for which a Party has responsibility
and make such employees available to such Party and provide reasonable
office space to do any of the foregoing in connection with any matter
affecting or alleged to affect the Party requesting such access. Access to
Tax records shall be governed by Part Eight.
(f) Further Assurances. Each Party shall, from time to time at the
------------------
request of the other, and without further consideration, execute and deliver
such other instruments of sale, transfer, conveyance, assignment,
clarification and termination and take such other action as the Party making
the request may require to effectuate the intentions of the Parties,
including to transfer, convey and assign to and vest in Buyer, and to place
Buyer in possession of the PO/MTBE Assets and the Intellectual Property and
to the extent transferable, the permits and licenses related to the PO/MTBE
Business and to transfer, assign or convey to and vest in Seller
43
<PAGE>
or its Affiliates the Excluded Assets. Seller intends to convey or cause the
conveyance of the PO/MTBE Assets and the Intellectual Property at Closing
and continue to hold or retain the Excluded Assets on or before Closing,
however, in the event it is determined after Closing that: (i) any part of
the PO/MTBE Assets or the Intellectual Property was not in fact conveyed to
Buyer, and that the title to any part of the PO/MTBE Assets or the
Intellectual Property is incorrectly in the name of any of Seller or
Seller's Affiliates; or (ii) any Excluded Asset is conveyed to Buyer and
that the title to such Excluded Asset is incorrectly in the name of Buyer,
then, after the Closing Date, with respect to each Section 4.3(f)(i) through
(ii), each Party shall take all such action necessary to correctly convey
any part of the PO/MTBE Business, the PO/MTBE Assets or the Intellectual
Property to Buyer or convey any of Excluded Assets to Seller. Without
limiting the rights of Buyer under the Agreement, to the extent Seller, TDC
or the Company cannot transfer or cause to be transferred any Contracts
required to be transferred to Buyer pursuant to the Agreement, Seller, TDC
and the Company shall enter into arrangements reasonably sufficient to
provide equivalent benefits and burdens to Buyer.
(g) Transfer of Permits. Seller and Buyer agree that the transfer and
-------------------
operational control of all environmental permits relating to the PO/MTBE
Business, including, but not limited to, hazardous waste permits, air
permits, wastewater permits and wastewater discharge permits, shall take
place on the Closing Date.
Section 4.4. Confidentiality. From and after the Closing Date, the Parties
---------------
agree as follows:
(a) Information. In connection with each Parties' consideration of a
-----------
possible transaction and the negotiation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, each
Party possesses and may hereafter obtain from the other Party information
that is either non-public, confidential or proprietary in nature, including
without limitation, business, commercial, financial, operational,
environmental and Intellectual Property information, in written form,
visually (such as by inspection) or orally. All information furnished by or
obtained from one Party, its Affiliates, directors, officers, employees,
agents, advisors or representatives ("Representatives" and from time to
time, individually
44
<PAGE>
and collectively referred to as "Disclosing Party") to the other Party, its
Affiliates and Representatives (individually and collectively, "Receiving
Party"), and all analyses, compilations, data studies or other documents
prepared by a Receiving Party containing or based upon, in whole or in part,
any such furnished information, is hereinafter referred to as "Information".
After the Closing, Information relating to the PO/MTBE Business shall be
deemed to be Information of Buyer, as Disclosing Party, and Seller and its
Affiliates shall be deemed Receiving Parties with respect to such
Information.
(b) Confidentiality. From and after the Closing Date, without the
---------------
prior written consent of Disclosing Party, the Receiving Party shall not and
shall cause its Affiliates and their Representatives not to disclose
Disclosing Party Information to any Person or use Disclosing Party
Information, directly or indirectly, for any purpose, provided that, the
Receiving Party and its Affiliates and their Representatives may use
Disclosing Party Information to the extent required in order to perform and
comply with the Agreement and the agreements and transactions contemplated
hereby. Receiving Party shall transmit and shall permit its Affiliates and
their Representatives to transmit the Disclosing Party Information only to
those of Receiving Party's Affiliates and their Representatives who need to
know the Disclosing Party Information for the purposes set forth in this
Section 4.4. Receiving Party shall be responsible for any breach of this
Section 4.4 by its Affiliates and their Representatives. Receiving Party
shall make all reasonable, necessary and appropriate efforts to safeguard
the Disclosing Party Information from disclosure to anyone other than as
permitted by this Section 4.4. Notwithstanding anything to the contrary
contained herein, neither Receiving Party, its Affiliates nor their
Representatives shall be entitled to use any Disclosing Party Information if
the use thereof could reasonably be expected to result in a violation of any
Laws.
(c) Exceptions. This Section 4.4 shall be inoperative as to such
----------
portions of the Disclosing Party Information that: (i) are in the public
domain; (ii) are published or otherwise become part of the public domain
through no fault of Receiving Party, its Affiliates or their
Representatives; (iii) Receiving Party can demonstrate was in the possession
of Receiving Party,
45
<PAGE>
its Affiliates or their Representatives; (iii) Receiving Party can
demonstrate was in the possession of Receiving Party, its Affiliates or
their Representatives at the time of such disclosure and to the actual
knowledge of such Person was not acquired by any such Person directly or
indirectly from the Disclosing Party, its Affiliates or their
Representatives on a confidential basis (provided that this Section 4.4(c)
(iii) shall not apply to Seller or any of its Affiliates or their
Representatives with respect to any Information relating to the PO/MTBE
Business) or; (iv) become available to Receiving Party, its Affiliates or
their Representatives on a non-confidential basis (whether directly or
indirectly) from a source that to the best of any such Person's knowledge
did not acquire the Disclosing Party Information on a confidential basis; or
(v) are independently developed by Receiving Party's Affiliates or such
Affiliates' Representatives who have not had access to the Disclosing Party
Information.
(d) Legally Compelled. The Receiving Party, its Affiliates or their
-----------------
Representatives may disclose Disclosing Party Information to the extent
required by Law, stock exchange rules or by any applicable judgment, order
or decree of any court or Governmental Body having jurisdiction in the
proceeding, or in connection with the preparation of Tax returns,
communications with Governmental Bodies with respect thereto or proceedings
relating to Taxes; provided that Receiving Party, to the extent practicable,
shall provide Disclosing Party with prompt notice thereof so that Disclosing
Party may seek a protective order or other appropriate remedy or waive
compliance with the provisions of this Section 4.4. In the event that such
protective order or other remedy is not obtained or Disclosing Party waives
compliance with the provisions of this Section 4.4, Receiving Party shall or
shall cause the Person required to disclose such Disclosing Party
Information to furnish only that portion of the Disclosing Party Information
that such Person is advised by an opinion of Receiving Party's counsel is
legally required, and, to the extent practicable, Receiving Party shall
exercise its reasonable best efforts to obtain reliable assurance that
confidential treatment is accorded the Disclosing Party Information so
furnished.
(e) Specific Information. Specific Information shall not be deemed to
--------------------
be within the exceptions of Section 4.4 (c) merely because it is embraced by
more general information within such exceptions, nor shall a combination of
features be deemed to be within these
46
<PAGE>
exceptions merely because the individual features, but not the combination
itself, are within these exceptions.
(f) Expiration. With respect to unintentional use or disclosure,
----------
Section 4.4 shall expire Fifteen (15) years after the Closing Date.
Section 4.5 Huntsman Agreements, New Service Agreements, Etc. With
------------------------------------------------
respect to agreements among Buyer and its Affiliates, the Parties agree as
follows:
(a) Huntsman Agreements. On the Closing, the Parties agree the
-------------------
Huntsman Agreements appearing with an asterisk on Schedule 4.1(b) shall
terminate and Buyer shall cause Huntsman to terminate the asterisked
Huntsman Agreements. Upon termination the Parties and Huntsman shall have
no further obligations under the asterisked Huntsman Agreements, including
without limitation, any obligation caused by the termination of any of these
asterisked Huntsman Agreements, provided however, (i) the rights and
obligations relating to services performed or products supplied prior to the
Closing Date shall survive this termination and (ii) Buyer shall assume any
capital expenditure obligations arising after the Effective Date under the
contracts made prior to the Effective Date by or on behalf of the Company
pursuant to the asterisked Huntsman Agreements in the ordinary course of
business consistent with past practice.
(b) New Service Agreements. On the Closing Date, Buyer shall enter
----------------------
into service agreements with Huntsman, in the form reasonably satisfactory
to Buyer and Seller ("New Service Agreements") under the following terms and
conditions: (i) products and services provided to the Buyer and the terms
and fees of the New Service Agreements and nonasterisked Huntsman Agreements
with respect to the PO/MTBE Business shall be substantially similar to the
services and products, terms and fees under the Huntsman Agreements as of
the date of the Agreement; (ii) for each year that the Preferred Stock is
outstanding, Huntsman shall reduce the fees charged, and Buyer shall receive
a reduction against such fees under the New Service Agreements and non-
asterisked Huntsman Agreements in an aggregate amount of at least Twelve
Million Dollars ($12,000,000) per year (or a pro-rata portion of Twelve
Million Dollars ($12,000,000) for any partial year); (iii) for so long as
the Preferred Stock is outstanding, without the prior written consent
47
<PAGE>
of Seller, which consent shall not be unreasonably withheld, Buyer shall not
agree to any amendment to New Service Agreements and nonasterisked Huntsman
Agreements or enter into any additional products and service agreements with
Buyer's Affiliates which would increase the total net cost to Buyer of the
products and services to an amount greater than the cost of services
provided under New Service Agreements and non-asterisked Huntsman
Agreements; (iv) for so long as the Preferred Stock is outstanding, Buyer
shall not request any additional products and services under the New Service
Agreements and non-asterisked Huntsman Agreements unless the prices to be
paid by Buyer for such additional products and services are commercially
reasonable and (A) such additional products and services are required by
Law, (B) such additional products and services are consistent with good
industry practice, (C) such additional products and services are reasonably
necessitated by changes in general economic conditions, (D) such additional
products and services are reasonably required in connection with changes in
plant operations or (E) such additional products and services are
economically justifiable; and (v) for so long as the Preferred Stock is
outstanding, Buyer shall have a right to seek a refund from Huntsman and
Huntsman shall pay such refund to Buyer for fees related to a violation of
the terms and conditions of the New Service Agreements and non-asterisked
Huntsman Agreements as set forth in Section 4.5(b)(ii), (iii) or (iv),
provided that such right is exercised within one year of the violation.
Seller acknowledges and agrees that any Employees hired by Huntsman pursuant
to Part Five shall provide services to Buyer pursuant to one or more of the
New Service Agreements and that such services shall not constitute
"additional services" for purpose of the preceding sentences.
(c) Quarterly Report. For so long as the Preferred Stock is
----------------
outstanding, promptly following the end of each calendar quarter, Buyer
shall provide Seller with a report explaining in reasonable detail (i) any
material increases or decreases from Buyer's actual costs from budget costs
under the New Service Agreements for such quarter, (ii) any material
increase or decrease from the 1996 budget expense under certain Huntsman
Agreements in the amounts set forth on Schedule 4.5(c) for such quarter and
(iii) other terms and conditions as set forth in Schedule 4.5(c). Buyer
shall provide Seller with additional documents and information related to
the
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quarterly report, as reasonably requested by Seller. within thirty (30) days
after receipt of the quarterly report, Seller shall have the right to object
to any violation of Section 4.5(b)(ii), (iii) or (iv) and Buyer shall seek a
refund from Huntsman and Huntsman shall promptly pay such refund under the
New Service Agreements, unless Buyer and Huntsman deliver to Seller evidence
of reasonable compliance with Section 4.5(b)(ii), (iii) or (iv). In the
event the Parties and Huntsman are unable to resolve the dispute, the
disagreement shall be submitted to arbitration, which shall be binding on
the Parties and Huntsman.
(d) Audit Rights. For so long as the Preferred Stock is outstanding,
------------
Seller may, within ninety (90) days of receipt of the final quarterly report
for each calendar year give notice to Buyer of its election to have an audit
performed, at Seller's sole expense, of the accounts and records of Buyer
and its Affiliates related to the performance of the obligations of this
Section 4.5 of such calendar year. Any audit conducted pursuant to this
Section 4.5(d) shall be conducted by Seller's independent public accountants
or with Buyer's consent, in its sole discretion, Seller's internal auditors
during Buyer's ordinary business hours as promptly as possible and shall be
subject to appropriate provisions protecting confidentiality. In connection
with any such audit, Buyer shall reimburse Seller for Seller's independent
public accountants' reasonable out of-pocket expenses in an amount not to
exceed the amount of any refund from Huntsman to Buyer for fees related to a
violation of the terms and conditions of the New Service Agreement and non-
asterisked Huntsman Agreements as set forth in section 4.5 (b) (ii) (iii)
and (iv). In addition, Seller shall coordinate, to the extent practicable,
such audit with any other third party audit of such matters, if requested by
Buyer, to minimize the disruption of Buyer's business. If, in the reasonable
written opinion of the auditors, Buyer has not complied with its
obligations, Buyer and Seller shall meet to resolve the matter within thirty
(30) days after both Parties have received the final written audit report
from the auditors.
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PART FIVE
COVENANTS REGARDING THE COMPANY
Section 5.1 Covenants of Seller and Buyer. Seller and Buyer covenant to
-----------------------------
each other regarding the Company as follows:
(a) Employees. Seller has delivered, or caused to be delivered,
---------
relevant information on Employees and Buyer or an Affiliate of Buyer has
provided written offers of continued employment with the PO/MTBE Business to
those Employees Buyer or such Affiliate desires to continue to employ from
and after the Closing Date. Those Employees who have accepted such offer of
employment and remain employees of the PO/MTBE Business up to the Closing
and continue employment with Buyer on and after the Closing shall be
"Transferred Employees".
(b) No Solicitation. Without the prior written consent of Seller,
---------------
which consent shall not be unreasonably withheld, for one (1) year after the
Transfer Date, Buyer agrees not to employ or otherwise secure the services
of, offer to or solicit to employ, any Employee who received a written offer
of employment from Buyer or an Affiliate of Buyer but elects to retire or
separate from the Company, Seller or its Affiliates on or before the
Transfer Date.
(c) Compensation. For a period of at least Twelve (12) months from the
------------
Closing Date all Transferred Employees shall be paid a base salary, straight
time hourly rate or other compensation as set forth on Schedule 5.1(c) no
less than what such Transferred Employee received from the Company, Seller
or its Affiliates immediately prior to the Closing Date.
(d) No Termination. No Employee shall be treated as having terminated
--------------
employment with the Company or any other Affiliate of Seller by reason of
the sale of the PO/MTBE Business to Buyer and the transactions contemplated
hereby, for the purpose of determining entitlement to severance or
separation pay or any similar payment.
(e) Buyer Benefit Plans. Buyer or an Affiliate of Buyer shall provide
-------------------
the nonrepresented Transferred Employees with benefit plans that, in the
aggregate, are no less favorable than the benefit plans provided as of
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the Closing Date to employees of Buyer or such Affiliate, as set forth on
Schedule 5.1(e) ("Buyer Benefit Plans"). Except as otherwise provided in
Schedule 5.1(e), Buyer Benefit Plans shall credit all service of the
Transferred Employees with the Seller, the Company, Seller's Affiliates and
Star Enterprise and Caltex as of the Transfer Date, for all purposes under
the Buyer Benefit Plans.
(f) Defined Benefit Plans. As of the Transfer Date, any Transferred
---------------------
Employee who is a participant in the retirement plan of Seller ("Defined
Benefit Plans"), shall cease to accrue benefits under the Defined Benefit
Plans. As soon as practicable after the Closing Date and effective as of the
Transfer Date, the Buyer or an Affiliate of Buyer shall establish new
defined benefit plans and related trusts or amend existing plans and, if
applicable, related trusts ("New Defined Benefit Plans") to cover the
Transferred Employees. The New Defined Benefit Plans shall provide each
Transferred Employee, on the Transfer Date, with service for all purposes
and, but only to the extent described below, benefit accrual equal to the
service credited to such Transferred Employee as of the Transfer Date under
the Defined Benefit Plans and any defined benefit plan of Seller's
Affiliates, Star Enterprise and Caltex. The New Defined Benefit Plans shall
provide a pension benefit at Normal Retirement Date, as defined in the New
Defined Benefit Plans that will equal the greater of (i) or (ii), as
follows: (i) the "Normal Retirement Benefits" based on the formula defined
--------------------------
in, and accrued under, the New Defined Benefit Plans including any
applicable Social Security offset and early retirement reductions,
recognizing all benefit service recognized by the Seller, Seller's
Affiliates, Star Enterprise and Caltex as of the Transfer Date and within
two (2) years after the Transfer Date in accordance with the terms of the
Benefit Service Restoration Program ("BSRP") under the Defined Benefit Plans
and all recognized benefit service with Buyer or such Buyer's Affiliate on
or after the Transfer Date, less the Transferred Employee's employer
provided normal retirement benefit accrued under the Defined Benefit Plans
and any defined benefit plans of, or maintained for, Star Enterprise and
Caltex as of the Transfer Date and within two (2) years after the Transfer
Date in accordance with the terms of the BSRP, or (ii) the Normal Retirement
Benefit accrued under the New Defined Benefit Plans including any applicable
Social Security offset and early retirement reductions,
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recognizing only benefit service with Buyer or such Buyer's Affiliate on and
after the Transfer Date. If a Transferred Employee commences the payment of
the Transferred Employee's benefits before Normal Retirement Date, as
defined in the New Defined Benefits Plan, and the amount of the Transferred
Employee's retirement benefit is determined under Section 5. 1 (f) (i) , the
early commencement discount factors under the New Defined Benefit Plans
shall be applied to the net amount of the early retirement benefit after the
offset of the normal retirement benefits accrued under the Defined Benefit
Plans. The benefits determined under the Defined Benefit Plans shall be
based on the base salary received while participating under the Defined
Benefit Plans prior to the Transfer Date. Benefits accrued under the Defined
Benefit Plans by Transferred Employees with respect to (x) benefit service
as of the Transfer Date and (y) benefit service restored within two (2)
years after the Transfer Date, in accordance with the terms of the BSRP,
shall be the sole responsibility of Seller; however, Buyer and Seller shall
cooperate in arranging for the collection of employee contributions, and the
transfer of those contributions to Seller, as required by the BSRP for a
period of two (2) years after the Transfer Date. A Transferred Employee's
service with Buyer or Buyer's Affiliate after the Transfer Date shall be
recognized as vesting service for vesting and eligibility to retire under
the Defined Benefit Plans in accordance with the terms of such plans.
(g) Separation. If a Transferred Employee separates from Buyer or
----------
Buyer's Affiliate after the Transfer Date and meets the age and service
requirements under the Defined Benefit Plans, Seller shall thereafter pay or
cause to be paid to the Transferred Employees the benefits accrued under the
Defined Benefit Plans when the same shall be payable pursuant to the terms
of such Defined Benefit Plans. The transfer of employment of a Transferred
Employee from Seller to Buyer or Buyer's Affiliate shall not be considered
to be a termination of employment for the purposes of the Defined Benefit
Plans. A Transferred Employee' who separates from Buyer or Buyer's Affiliate
after the Transfer Date shall not be eligible for nonpension retirement
benefits from the Seller's benefits plans. A Transferred Employee's benefits
under the Defined Benefit Plans shall not commence until the Transferred
Employee separates from Buyer's or Buyer's Affiliate's employment, unless
otherwise required by Section 401 (a) (9) of the Code.
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(h) Participant List, Etc. At the Closing, Seller shall deliver to the Buyer a
---------------------
list of the Transferred Employees who were participants in the Defined Benefit
Plans as of the Closing Date, setting forth all employee benefit plan
information necessary for Buyer or Buyer's Affiliate to administer the Buyer
Benefit Plans in accordance with the Agreement. Buyer agrees to provide Seller,
when requested, any employee benefit information necessary for Seller to
administer Defined Benefit Plans in accordance with the Agreement. Seller agrees
to provide Buyer with any additional information, when requested, necessary for
Buyer or Buyer's Affiliate, to administer the New Defined Benefit Plans.
(i) Defined Contribution Plans. As of the Transfer Date, any
--------------------------
Transferred Employee who is a participant in the employees thrift plan of
Seller ("Defined Contribution Plans") shall cease to be eligible to make
employee contributions or receive employer contributions in each such plan
as of the Transfer Date and shall be entitled to participate in defined
contribution plans of Buyer or an Affiliate of Buyer ("New Defined
Contribution Plans"). The New Defined Contribution Plans shall provide each
Transferred Employee with (i) service for all purposes equal to the service
credited to such Transferred Employee as of the Transfer Date under the
Defined Contribution Plans and (ii) a rollover account that accepts direct
rollovers of taxable distributions from the Defined Contribution Plans.
(j) Account Balances. The account balances of the Transferred
----------------
Employees held under the Defined Contribution Plans on the Effective Date
shall remain in the Defined Contribution Plans, except in the case of those
Transferred Employees who elect to make a complete withdrawal (both employee
stock ownership account and employee account) and have the funds paid
directly to such Transferred Employee or elect to directly roll over the
taxable portion of their account balance into the New Defined Contribution
Plans or into an Individual Retirement Account. Buyer shall arrange for the
collection of loan payments from the Transferred Employees to the Defined
Contribution Plans and the transfer of those payments to Seller for a period
of up to two (2) years from the Transfer Date. The Parties agree that Buyer
or an Affiliate of Buyer shall function as a collection agent of such loan
payments due to Seller or Seller's employee benefit plan and neither Buyer
nor any of its Affiliates shall have any liability for nonpayment of such
amount.
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(k) Welfare Benefit Plans. As of the Transfer Date, any Transferred
---------------------
Employee who is a participant in the welfare benefit plans set forth on
Schedule 5.1(k) (i) ("Welfare Benefit Plans") shall cease to be a
participant in each such plan as of the Transfer Date, and shall be entitled
to participate in the welfare benefit plans of Buyer or an Affiliate of
Buyer as set forth on Schedule 5.1(k) (ii) ("New Welfare Benefit Plans").
The New Welfare Benefit Plans shall provide each Transferred Employee with
service for all purposes equal to the service credited to such Transferred
Employee as of the Transfer Date under Welfare Benefit Plans. No waiting
period or exclusion from coverage of any preexisting medical condition shall
apply to the Transferred Employee's participation in the New Welfare Benefit
Plans and benefit accruals, on or after the Transfer Date. The Seller shall
pay or shall cause the applicable Welfare Benefit Plan to pay any benefits
or expenses covered by the Welfare Benefit Plans that (i) in the case of any
such medical or dental plans, are incurred with respect to services
performed for the Transferred Employees (or other employees) or their
dependents on or prior to the Transfer Date or (ii) in the case of any life
insurance plans, are payable to the beneficiaries of any Transferred
Employee (or other employee) who dies on or prior to the Transfer Date. The
Seller shall assume and retain all liabilities and obligations arising under
the continuation coverage requirements of Section 4980B of the Code and Part
Six of Title I of ERISA with respect to all Transferred Employees (or any
beneficiaries or dependents thereof) who on or before the Transfer Date have
exercised or are eligible to exercise their rights to such continuation
coverage.
(l) Disability. Payments received by a Transferred Employee from the
----------
short term disability plan of Seller shall cease on the Transfer Date and
such Transferred Employee shall be eligible for benefits under any similar
plan provided by Buyer or an Affiliate of Buyer. Any long term disability
plan benefits, permanent and total disability type benefits, or any similar
benefits provided by Buyer or an Affiliate of Buyer for which such
Transferred Employee may qualify on or after the Transfer Date shall be
Buyer's or such Affiliate's responsibility.
(m) Vacation. All vacation accrued by Transferred Employees under the
--------
Company's vacation plan, but not
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taken by the Closing Date, shall be the Buyer's responsibility, and shall be
credited to the Transferred Employee's account under the Buyer's or an
Affiliate's vacation plan; provided, however, that the Final Statement shall
reflect, as a current liability determined in accordance with GAAP, an
accrual for all vacation accrued by any Transferred Employee (or any other
employee) prior to the Closing Date.
(n) Retirees. Seller shall be responsible for all non-pension
--------
retirement obligations related to any Employee who retires on or before the
Transfer Date. Neither Buyer nor any of its Affiliates shall have any
responsibility for any non-pension retirement obligations payable to any
employees of the Seller and Seller's Affiliates other than Transferred
Employees who retire after the Transfer Date. Buyer shall be responsible
for non-pension retirement obligations of any Transferred Employee who
retires after the Transfer Date. In no event shall Seller be responsible for
any non-pension retirement obligations under the Buyer Benefit Plans of any
Transferred Employee who separates from Buyer's and its Affiliate's
employment after the Transfer Date.
(o) Reimbursement, Etc. From the Effective Date through the Closing
------------------
Date, Seller shall pay wage expenses of the Transferred Employees from the
funds generated by the PO/MTBE Business. After the Closing Date, Transferred
Employees shall continue to participate in the Company Benefit Plans up to
but not including Transfer Date. Buyer shall arrange for the collection of
required employee contributions from the Transferred Employees for
participation in the Seller's benefit plans after the Closing Date and up to
but not including Transfer Date, and for the transfer of those employee
contributions to Seller within thirty (30) days after the Closing Date.
Employee contributions, collected by Seller in the month in which the
Closing occurs with respect to which benefits are provided in the month
immediately following, shall be promptly transferred to Buyer or an
Affiliate of Buyer to purchase similar benefits for such employees in the
month after Closing. Buyer shall pay to Seller as of the Closing Date an
amount representing the Seller's expense to provide the benefits under the
Company Benefit Plans to the Transferred Employees from the Closing Date to
the Transfer Date.
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(p) Employment Claims. Buyer shall be responsible for all employment-
-----------------
type claims of Transferred Employees and the costs and expenses related
thereto (not previously provided for in Section 5.1(o)) relating to events
that occur on or after the Closing Date.
PART SIX
ENVIRONMENTAL
Section 6.1 Definitions. For the purposes of the Agreement, the terms
-----------
defined in Section 6.1 have the following meanings:
"DCA Plume" means the plume consisting of 1,2 Dichloroethane (DCA) and
---------
related constituents located in the shallow sand stratum beneath the
southeastern part of the Property, as set forth in Schedule 6.1.
"Environmental Claims" means legal actions, claims, or proceedings by
--------------------
third parties related to the Property regarding Environmental
Conditions.
"Environmental Condition" means an action, omission, event or
-----------------------
condition, including the disposal of wastes from the Property at a
site other than the Property, related to the Property or the operation
of the PO/MTBE Business, but not including the manufacture, handling,
or marketing of PG, that exists with respect to the air, land, soil,
surface, subsurface strata, or ground water which is not in compliance
with Environmental Law or which is subject to cleanup under
Environmental Law.
"Environmental Law" means any Law relating to pollution, the
-----------------
protection of the environment, or the release or disposal of waste
materials.
"Environmental Losses" means the actual costs incurred related to an
--------------------
Environmental Claim or Remediation of an Environmental Condition.
"Individual Deductible" means, with respect to Environmental Losses
---------------------
related to Environmental Conditions that were caused or arose prior to
the Closing Date, a deductible of Fifty Thousand Dollars ($50,000),
provided however, this
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deductible shall not apply (i) to Environmental Losses related to the
DCA Plume or (ii) until the Transaction Deductible has been satisfied.
"Phase I Environmental Assessment" means an investigation and
--------------------------------
assessment of environmental status based upon available information
and data, including, but not limited to, interviews of Seller's
personnel and review of records maintained by Seller, but does not
include sampling and analysis of the air, land, soil, surface,
subsurface strata, or ground water.
"Remediation" means actions to bring an Environmental Condition into
-----------
compliance with Environmental Law (i) required to be taken pursuant to
Environmental Law or (ii) required by a Governmental Body. All
Remediation shall be performed pursuant to the terms of a Remediation
Plan.
"Remediation Plan" means a written plan that sets forth the actions,
----------------
formulated pursuant to Section 6.4, required to implement a
Remediation.
"Transaction Deductible" means, with respect to Environmental Losses
----------------------
related to Environmental Conditions that were caused or arose prior to
the Closing Date, a deductible in the amount of Three Million Dollars
($3,000,000), provided however, this deductible shall not apply to
Environmental Losses related to the DCA Plume or Tank Waste Disposal.
Section 6.2 Seller's Responsibilities. With respect to Seller's
-------------------------
responsibilities:
(a) Seller's Indemnity. Except as otherwise set forth in this Part
------------------
Six, Seller shall indemnify, defend, and hold harmless Buyer and Buyer's
Affiliates, and respective directors, officers, and employees, from any and
all Environmental Losses in excess of the Transaction Deductible and
Individual Deductible, as applicable, up to Forty Million Dollars
($40,000,000) ("$40 Million Cap") related to Environmental Conditions to the
extent that such Environmental Conditions were caused or arose prior to the
Closing Date.
(b) Limitations. Notwithstanding anything to the
-----------
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contrary herein, Seller and Buyer covenant to each other that Part Six shall
be subject to the following limitations:
(i) Buyer shall pay the Transaction Deductible and the
Individual Deductible and shall provide Seller with the information
outlined in the Environmental Processing and Reimbursement Protocol,
set forth in Schedule 6.7, to evidence Buyer's satisfaction of the
Transaction Deductible and the Individual Deductible.
(ii) Seller shall be responsible only for Environmental Losses
incurred for a period of Eleven (11) Years following the Closing Date
and about which Seller has received notice as set forth in Section
6.4(i), except that Seller shall be responsible for Environmental
Losses, regardless of when incurred, related solely to (x) the DCA
Plume or (y) the disposal, prior to the Closing Date, of soil and
other materials removed from the earthen crude oil storage tanks,
located on the Property, during closure of the tanks, in landfills
adjacent to the Property ("Tank Waste Disposal"). Seller's
responsibility for Tank Waste Disposal shall include any Environmental
Losses resulting from (z) the leaching of contaminants from the
adjacent landfills to the Property or (aa) any portion, if any, of the
landfills that overlaps onto the Property. Environmental Losses
related to Tank Waste Disposal shall not be subject to the $40 Million
Cap.
(iii) Seller's responsibility under this Part Six shall be
limited to Environmental Law as it exists, is in effect, and is
enforceable as of the Closing Date.
(iv) If Environmental Losses relating to Environmental
Conditions that were caused prior to the Closing Date are increased
due to any act or omission by a Person other than Seller or Seller's
agents after the Closing Date, Seller shall not be responsible for any
such increase in Environmental Losses incurred.
(v) Seller shall not be responsible after the Closing Date for
any capital improvements, repairs, or modifications to the structures
or equipment of
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the PO/MTBE Assets to correct any noncompliance or potential
noncompliance with Environmental Law which is a Huntsman's Knowledge
Matter.
(vi) Seller shall not be responsible for any capital
improvements and repairs and modifications to capital improvements
associated with the Property or the PO/MTBE Assets as a consequence of
any Remediation, except to the extent provided in this Section
6.2(b)(vi). If as a direct consequence of a Remediation for which
Seller is responsible pursuant to Section 6.2 structure or equipment
of the PO/MTBE Assets must be repaired, replaced, or rebuilt, Buyer
and Seller shall agree upon the value of such items in their condition
prior to the commencement of Remediation, but without considering any
diminution in value relating solely to such Remediation. In the event
that Buyer and Seller cannot agree, a mutually acceptable independent
appraiser shall determine such value and the fees and expenses of such
appraiser shall be shared equally by Buyer and Seller. In either case,
Seller's responsibility to Buyer for Environmental Losses associated
with such items shall be limited to the value of any such item as so
determined in an amount which is proportional to Seller's contribution
to such Environmental Losses. This Section 6.2(b)(vi) shall not be
construed to make Seller responsible for capital improvements,
repairs, or modifications addressed in Section 6.2(b)(v).
(vii) If Seller is undertaking the performance of its
obligations pursuant to Sections 6.5 or 7.3 of this Agreement, Seller
shall not be responsible under this Part Six for costs associated with
Buyer's oversight of Seller's performance, including the cost of
Buyer's legal counsel, consultants, or employees.
(viii) Seller shall not be responsible under this Part Six for
any Environmental Losses related to land, soil, surface, subsurface
strata, or groundwater contamination caused by or relating to releases
at the Property after April 1, 1994 of propylene oxide or methyl
tertiary butyl ether or any chemical substances or catalysts used by
the Company, Buyer, or any subsequent owner or operator in the
manufacture of propylene oxide or methyl
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tertiary butyl ether at the Port Neches, Texas plant, or degradation
products of propylene oxide or methyl tertiary butyl ether or any
chemical substances or catalysts released at the Property after April
1, 1994 by the Company, Buyer, or any subsequent owner or operator in
the manufacture of propylene oxide or methyl tertiary butyl ether at
the Port Neches, Texas plant. If there is a dispute as to whether a
release occurred before or after April 1, 1994, it shall be Seller's
burden to prove that releases of crude oil or its degradation products
occurred after April 1, 1994, and it will be Buyer's burden to prove
that releases of all other substances described in Section
6.2(b)(viii) occurred prior to April 1, 1994.
(ix) Buyer shall cooperate and not in any way interfere with
efforts to comply with the Corrective Action Directive, issued by the
Texas Natural Resources and Conservation Commission on November 13,
1995 ("CAD"), or any Remediation Plan or remedy entered into by Seller
or any other Person regarding the DCA Plume. To the extent that
obligations under the CAD or any Remediation Plan or remedy entered
into by Seller or any other Person regarding the DCA Plume are
performed, Seller shall be deemed to have fulfilled its obligations to
Buyer under this Part Six with respect to Environmental Claims or
Environmental Conditions related to the DCA Plume. If Environmental
Losses relating to the (x) CAD, (y) any Remediation Plan or remedy
related to the DCA Plume or (z) any order entered by a court or other
Governmental Body are increased as a result of any act or omission of
Buyer occurring after the Closing Date, Buyer shall reimburse Seller
any and all amounts up to the amount of the increase for costs Seller
has actually incurred. Buyer agrees to use its reasonable best efforts
to ensure that the DCA Plume shall continue to be treated in the joint
waste water treatment plant at Port Neches, unless otherwise
prohibited by Environmental Law or the Governmental Body issuing the
permit, and that such treatment of the DCA Plume shall not be
considered an Environmental Loss. Future modifications or amendments
to the joint waste water treatment plant permit shall allow for the
treatment of the DCA Plume unless otherwise prohibited by
Environmental Law or the Governmental Body issuing the permit.
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(x) Seller shall not be responsible under this Part Six for
Environmental Losses related to Supporting Assets, except that Seller
shall be responsible under this Part Six for Environmental Losses
relating to discharges from the PO/MTBE Business to the joint waste
water treatment plant into the Star Lake Outfall Canal prior to the
Closing Date.
(xi) Notwithstanding anything contrary herein, in the event that
the air quality permit for the PO/MTBE Unit, submitted to the Texas
Natural Resources and Conservation Commission on March 13, 1997 (permit
number 20160), is not approved by the Commission prior to the Closing
Date, Buyer shall be solely responsible for any Environmental Losses or
costs relating to such permit application incurred after the Closing
Date, including all costs relating to the preparation and resubmission
of a permit application; provided that, after the Closing Date, Seller
shall reasonably cooperate with Buyer in attempting to obtain the
permit based on the March 13, 1997 application.
Section 6.3 Buyer's Responsibilities. With respect to Buyer's
------------------------
responsibilities:
(a) Buyer's Indemnity.
-----------------
(i) Buyer shall indemnify, defend, and hold harmless Seller and
Seller's Affiliates, and their respective directors, officers, and
employees, from any and all Environmental Losses related to
Environmental Conditions to the extent that the Environmental
Conditions were caused or arose after the Closing Date.
(ii) Except to the extent as set forth in Section 6.2, Buyer
shall indemnify and hold harmless Seller and Seller's Affiliates and
their respective directors, officers, and employees, from any and all
Environmental Losses related to Environmental Conditions to the extent
that the Environmental Conditions were caused or arose prior to the
Closing Date ("Buyer's Pre-Closing Indemnity").
(b) Limitations. Notwithstanding anything to the contrary herein,
-----------
Seller and Buyer covenant to each other
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that Buyer's Pre-Closing Indemnity shall be subject to the following
limitations (except that such limitations shall not apply to (x) any capital
improvements, repairs or modifications described in Section 6.2(b)(v), (y)
any Environmental Condition described in Section 6.2(b)(viii) or (z) any
Environmental Losses related to the Supporting Assets, other than
Environmental Losses arising from or relating to discharges from the PO/MTBE
Business to the joint waste water treatment plant into the Star Lake Outfall
Canal prior to the Closing Date):
(i) Buyer's Pre-Closing Indemnity for Environmental Losses
incurred after the period of Eleven (11) years following the Closing
Date or after the $40 Million Cap is achieved, whichever is earlier
("Seller's Indemnity Period"), shall not exceed Two Hundred Fifty
Thousand Dollars ($250,000) for each Environmental Condition that
causes an Environmental Loss.
(ii) Buyer's Pre-Closing Indemnity for Environmental Losses
incurred after the Seller's Indemnity Period shall not exceed Four
Million Dollars ($4,000,000) in the aggregate for all Environmental
Conditions that cause Environmental Losses.
(iii) on January 1, 1998, and effective January 1 each year
thereafter, the Two Hundred Fifty Thousand Dollar ($250,000) limit
described in Section 6.3(b)(i) shall be adjusted based on the
percentage change in the Producer Price Index , All Commodities
(1982=100), as published by the Bureau of Labor Statistics, U.S.
Department of Labor ("PPI") during each year from the PPI for the prior
year. On January 1, 1998, and effective January 1 each year thereafter,
the amount remaining under the Four Million Dollar ($4 million) cap
described in Section 6.3(b)(ii) shall be adjusted based on the
percentage change in the PPI during each year from the PPI for the
prior year.
(iv) Buyer's Pre-Closing Indemnity shall expire on the 30th
anniversary of the Closing Date.
(c) Changes in Condition. In the event that additional Environmental
--------------------
Losses are incurred in
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fulfilling Seller's responsibilities under Section 6.2(a) due to any Change
related to the Property or the PO/MTBE Business after the Closing Date
caused by Buyer or a subsequent owner, operator, or tenant of the Property,
Buyer shall be responsible for such additional Environmental Losses.
"Change" shall mean the construction of new structures or equipment, a
modification to existing structures or equipment, the excavation or movement
of soil, the sale or closure of all or a portion the Property or the PO/MTBE
Business, or a change in use from the manufacture of PO/MTBE to some other
use.
Section 6.4 Covenant of Cooperation. Buyer and Seller shall cooperate
-----------------------
fully with each other and act in good faith in implementing this Part Six. Buyer
and Seller agree that the performance required by the covenant set forth in the
preceding sentence shall include, but not be limited to:
(i) providing the other Party with timely written notice of any potential
Environmental Claim, Environmental Condition, or Remediation that a Party
believes is covered under this Part Six about which that Party has notice;
(ii) sharing with the other Party in a timely manner all material non-
privileged correspondence received from any third party that is relevant to such
potential Environmental Claim, Environmental Condition, or Remediation;
(iii) affording the other Party with timely access to and an opportunity to
comment on both draft and final versions of any material non-privileged
correspondence to third parties, study protocols and results, drawings, charts,
Remediation Plans or reports, or other documentation relating to such potential
Environmental Claim, Environmental Condition, or Remediation;
(iv) providing the other Party with timely notice of and an opportunity to
attend and participate in any meetings or hearings with Governmental Bodies or
courts relating to any Environmental Claim, Environmental Condition, or
Remediation that a Party believes is covered under this Part Six;
(v) preparing all material strategies and plans in consultation with the
other Party, employing cost-effective technology and clean-up criteria
appropriate for use of property for industrial purposes and using risk-based
clean-up standards whenever permitted by applicable Laws or any involved or
potentially involved Governmental Body;
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(vi) consulting with each other in selecting the most costeffective
Remediation Plan or methodology for resolving an Environmental Condition or
Environmental Claim and performing any work under this Part Six in a prompt,
efficient, workmanlike and cost-effective manner and in compliance with all
applicable Laws (including, but not limited to, applicable Environmental Laws
and safety and health Laws);
(vii) selecting contractors and consultants in consultation with the other
Party;
(viii) taking all reasonable steps in scheduling and performing all work so
as to minimize any costs, disruptions, interference, and inconvenience to each
other. Seller shall make a good faith effort to agree with Buyer on such
measures in advance of any work.
(ix) permitting the other Party upon reasonable advance notice (at the
expense of the inspecting Party and on reasonable terms that are mutually agreed
upon by the Parties) to inspect and test all equipment, monitoring devices,
transportation vehicles and facilities used or to be used or samples taken, and
to observe activities, related to any work under this Part Six; and
(x) following the procedures for "Defense of Action" in Section 7.3 and
"Payments" in Section 7.4 regarding any potential Environmental Claim,
Environmental Condition, or Remediation that a Party believes is covered under
this Part Six.
Section 6.5 Performance of Remedies. Buyer and Seller agree that:
-----------------------
(a) Performance of Work. Seller, at Seller's sole option, may elect
-------------------
to supervise and perform any Remediation or other work for which Seller is
responsible as set forth in Section 6.2. Buyer shall supervise and perform
any Remediation on any property of Buyer or on any property contiguous to a
property of Buyer, except such Remediation as Seller may elect to perform in
accordance with the previous sentence. If Seller elects that Seller shall
perform such Remediation or other work, Seller shall notify Buyer in a
timely manner in writing. If Seller elects to supervise and perform such
Remediation or other work, Seller shall select the means and methods of
effecting such Remediation or other work, so long as the means and
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methods selected conform with applicable Environmental Law and Sections 6.4,
6.5(a) and (b), and 7.3, and, if appropriate, shall seek reimbursement from
Buyer in the manner set forth in Section 6.7. Buyer or Seller's preparation
and performance of a Remediation Plan shall conform with applicable
Environmental Law and Section 6.4 and 6.5. Each Party shall seek
reimbursement from the other as set forth in Section 6.7.
(b) Performance of Remediation. Seller's supervision and performance
--------------------------
of Remediation pursuant to Section 6.5(a) shall be subject to the following:
(i) Buyer shall approve and, at Buyer's option, oversee, supervise and
perform any portion of a Remediation which would be impracticable to perform
separately from other work already supervised and performed by Buyer; (ii)
Buyer shall approve and, at Buyer's option, oversee, supervise and perform
any repair, modification, replacement or rebuilding of any operations,
equipment, fixtures, or facilities of Buyer; (iii) Buyer, may request such
additions, alterations, changes or improvements to the work
("Enhancements"), and, except to the extent prohibited by a Governmental
Body, Seller shall accept and perform such Enhancements, provided that all
costs attributable to any Enhancements, including any additional costs
associated with any delays caused by such Enhancements, shall be paid for by
Buyer; (iv) Seller shall be responsible for any Environmental Losses arising
in connection with Seller's supervision or performance of any Remediation,
except to the extent attributed to negligence, willful misconduct or failure
to comply with Laws by Buyer or a third party (other than Seller's
employees, agents, contractors, subcontractors, representatives and
invitees); (v) during any Remediation on the Property or contiguous to the
Property, Seller shall be solely responsible for compliance by Seller's
employees, agents, contractors, subcontractors, representatives and invitees
with all Laws and professional standards applicable to its work; (vi) Seller
shall require all Seller's employees, agents, contractors, subcontractors,
representatives and invitees entering upon the Property to be bound by
Buyer's reasonable terms and conditions for such persons entering such
properties, notice of which shall be given by Buyer to Seller prior to the
commencement of the Remediation or Enhancements to be performed by Seller;
(vii) Seller shall protect Buyer from any claims for labor or materials
furnished to or for the Property for work to be performed by Seller under
Section 6.5(a),
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which claims may be secured by any mechanic's or materialman's lien against
such property or an interest therein; (viii) except for the use of the joint
waste water treatment facility, as set forth in Section 6.2(b) (viii),
Seller, with the approval of Buyer (which shall not be unreasonably
withheld), may have access to and use of the storage facilities, loading
facilities, docks, rail sidings and other plant equipment or facilities and
waste water treatment plants and similar waste treatment and disposal
systems on the properties of the PO/MTBE Business (but only to the extent
permitted by Buyer's agreements with any co-owners or co-operators with
Buyer of such facilities and systems which agreements Buyer shall make a
good-faith effort to maintain as in effect as of the Closing Date) in
conjunction with any work performed by Seller under Section 6.5(a) for
purposes such as the disposal of well development water and treated ground
water, provided that (x) Seller shall reimburse Buyer for all incremental
out-of-pocket costs of Seller's use of such facilities and systems, (y)
Seller's use of such facilities and systems shall not interfere with or
disrupt Buyer's operation of the PO/MTBE Business or Buyer's use of such
facilities and systems (including by reducing the capacity needed for
Buyer's use) or use of the Property, (z) Seller's use of such facilities and
systems shall not violate any Environmental Laws by Buyer, (aa) Seller shall
be responsible for, and Buyer shall fully cooperate in, obtaining all
incremental approvals required by any Governmental Bodies for such use,
except that Buyer shall be responsible for obtaining all permits or
approvals related to Enhancements, and (bb) Seller shall promptly perform
any cleanup of spills or repair any malfunction or impairment of performance
of such facilities and systems to the extent caused by Seller's use of such
facilities and systems during work performed under this Section.
(c) Seller's Satisfaction of Responsibilities. Seller shall be
-----------------------------------------
responsible under this Part Six only if Buyer asserts a claim pursuant to
Section 6.7. To the extent that Seller performs the activities, incurs the
costs, or makes the reimbursement requested by Buyer and required under this
Part Six, Seller shall be deemed to be relieved of its responsibilities to
Buyer or to any other Person under this Part Six to perform such activities,
incur such costs, or make such reimbursement.
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(d) Access. After the Closing Date, with the prior written consent of
------
Buyer (which consent shall not be unreasonably withheld), Seller and
Seller's agents and representatives shall have the right to enter onto the
Property during normal business hours for the purpose of conducting any
environmental inspection or testing in connection with any Remediation or
for any other purpose necessary for Seller to implement this Part Six.
Section 6.6 Environmental Assessments. With respect to environmental
-------------------------
assessment:
(a) Phase I Environmental Assessment. Prior to the Closing Date,
--------------------------------
subject to advance notice by Buyer to Seller, Buyer may conduct a Phase I
Environmental Assessment of the Property, provided that Buyer promptly
delivers to Seller a copy of all final reports of all Phase I Environmental
Assessments. From and after the Closing Date, Buyer may conduct additional
Phase I Environmental Assessments of the Property provided that Buyer shall
not conduct an assessment or investigation involving sampling of the
Property to determine the existence or scope of pollution, except as
required by Environmental Law, in which case Buyer shall notify Seller and
provide Seller a reasonable opportunity to observe such assessments or
investigations fully and to take split samples, when applicable, and shall
promptly deliver to Seller a copy of all final reports of all such
assessments.
(b) Industry Practice. Notwithstanding any provision in Section
-----------------
6.6(a), Buyer shall have the right to (i) take such emergency response
action with respect to the Property as is consistent with prudent chemical
industry practices, and in compliance with applicable Laws; or (ii) move or
disturb soil in the ordinary course of construction or modification on the
Property provided that prior to commencing such construction or
modification, Buyer has given prior written notice to Seller and has
considered Seller's written comments (which Seller shall promptly submit to
Buyer) regarding the location of placement of the construction or
modification.
Section 6.7 Procedure for Claiming Reimbursement. In the event that a Party
------------------------------------
believes that such Party should receive reimbursement from the other Party
pursuant to this Part Six, such Party shall promptly submit to the other Party a
notice of reimbursement claim, describing and documenting
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the nature and basis of such claim and containing the types of information
outlined in the Environmental Processing and Reimbursement Protocol set forth in
Schedule 6.7. Buyer and Seller agree to follow the process for evaluation and
approval or denial and appeal of reimbursement claims set forth in the
Environmental Processing and Reimbursement Protocol.
Section 6.8 Exclusive Remedies. Except for the procedures in Section 7.3,
------------------
7.4, and Part Ten, which shall apply to matters under this Part Six, the rights
and remedies granted each Party in this Part Six are exclusive rights and
remedies against the other Party related to any matters contained herein
relating to pollution, the protection of the environment, or the release or
disposal of waste materials.
PART SEVEN
INDEMNIFICATION
Section 7.1 Seller's Indemnification. On and after the Closing Date,
------------------------
Seller shall fully and promptly defend, indemnify and hold harmless Buyer and
Buyer's Affiliates, and their respective directors, officers and employees
(collectively, "Buyer Group") from all liabilities, claims, demands, actions or
suits, losses, costs or damages and expenses (including reasonable attorney's
fees) (collectively "Liabilities") made against or incurred by any member of the
Buyer Group arising out of or with respect to (i) any breach of any
representation or warranty made herein by Seller or the Company; (ii) the breach
or nonfulfillment of any covenant, agreement, obligation or undertaking of
Seller or the Company herein; or (iii) the Non-Assumed Liabilities which arise
from or by a Third Party Action (which term for purposes of Section 7.1(iii)
shall not include any claim made by a member of the Buyer Group or Huntsman
Group) provided that Seller shall not be obligated to indemnify Buyer Group for
any Liability relating to breaches of representations and warranties herein
(except breaches of representations and warranties herein contained in Section
3.2(h)) unless the aggregate Liabilities relating to breaches of representations
and warranties herein exceeds One Million Five Hundred Thousand Dollars
($1,500,000), which shall be a deductible.
Section 7.2 Buyer's Indemnification. On and after the Closing Date, Buyer
-----------------------
shall fully and promptly defend, indemnify and hold harmless Seller and Seller's
Affiliates and their respective directors, officers and employees (collectively,
"Seller Group") from all Liabilities made
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against or incurred by any member of the Seller Group arising out of or with
respect to (i) any breach of any representation or warranty made herein by
Buyer; (ii) the breach or non-fulfillment of any covenant, agreement,
obligation, or undertaking of Buyer herein; or (iii) any liability or obligation
of Buyer or its Affiliates to the extent arising out of the operation of Buyer's
PO/MTBE Business after the Closing Date, provided that Buyer shall not be
obligated to indemnify Seller Group for any Liability relating to breaches of
Buyer's representations and warranties unless the aggregate Liabilities relating
to breaches of Buyer's representations and warranties exceeds One Million Five
Hundred Thousand Dollars ($1,500,000), which shall be a deductible.
Section 7.3 Defense of Action. Promptly after receipt by a Party entitled
-----------------
to indemnification pursuant to the Agreement ("Indemnified Party") of notice of
any pending or threatened Third Party Action, such Indemnified Party shall, if a
claim in respect thereof is to be made against a Party providing indemnification
pursuant to the Agreement ("Indemnifying Party") , give notice thereof to the
Indemnifying Party. The Indemnifying Party, at its own expense, may elect to
assume the defense of any such Third Party Action through its own counsel on
behalf of the Indemnified Party (with full right of subrogation to the
Indemnified Party's rights and defenses). The Indemnified Party may employ
separate counsel at its expense in any such Third Party Action and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party and the Indemnifying Party shall at all
times control such defense. All fees and expenses shall be paid periodically as
incurred. The Indemnifying Party shall not be liable for any settlement of any
such Third Party Action effected without its consent unless the Indemnifying
Party shall elect in writing not to assume the defense thereof or fails to
prosecute diligently such defense and fails after written notice from the
Indemnified Party to promptly remedy the same, in which case, the Indemnified
Party without waiving any rights to indemnification hereunder may defend such
Third Party Action and enter into any good faith settlement thereof without the
prior written consent from the Indemnifying Party. The Indemnifying Party shall
not without the prior written consent of the Indemnified Party, effect any
settlement of any such Third Party Action unless such settlement (i)includes an
unconditional release of the Indemnified Party from all liabilities that are the
subject of such Third Party Action and (ii) does not impose any future
obligations on the
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Indemnified Party. The Parties agree to cooperate in any defense or settlement
of any such Third Party Action and to give each other reasonable access to all
information relevant thereto. The Parties will similarly cooperate in the
prosecution of any claim or lawsuit against any third party. If, after the
Indemnifying Party elects to assume the defense of a Third Party Action, it is
determined by arbitration in accordance with Schedule 10.13 that the Indemnified
Party is not entitled to indemnification with respect thereto, the Indemnifying
Party shall discontinue the defense thereof. Seller hereby elects to assume the
defense of all Third Party Actions pending as of the Closing Date, against the
Company or the PO/MTBE Business, which defense shall be governed by the terms of
this Section.
Section 7.4 Payments. With respect to payments, Buyer and Seller agree as
--------
follows:
(a) Indemnity Payments. All indemnity payments made by Buyer or
------------------
Seller under this Part Seven will be treated as adjustments to the Purchase
Price of the Assets. Neither Buyer nor Seller shall at any time file any Tax
Return or other document with any taxing or other regulatory authority or
take any other action (or refrain from taking any action) in a manner that
is inconsistent with the treatment of such payments as Purchase Price
adjustments.
(b) Tax Benefit. If any member of the Buyer Group or Seller Group
-----------
entitled to an indemnity payment in accordance with this Part Seven
("Indemnified Member") receives the benefit of a Tax deduction, Tax credit
or other Tax attribute ("Tax Benefit") by virtue of having paid or accrued
an amount for which an indemnity payment is provided, the amount of such Tax
Benefit will be refunded to the Party making such indemnity payment when, as
and if such Indemnified member realizes a cash Tax savings from such Tax
Benefit.
(c) Additional Indemnity Tax. If, notwithstanding Section 7.4(a), it
------------------------
is finally determined (through a settlement or closing or similar agreement
with the IRS or other taxing authority or a final, non-appealable judgment
of a court of competent jurisdiction) that the Indemnified Member receiving
a payment from the Indemnifying Party pursuant to this Part Seven will be
required to include an amount in gross income other than as a Purchase Price
adjustment, then the Indemnifying Party shall pay to the Indemnified Member
an additional
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amount ("Additional Indemnity Taxes") equal to (x) the Taxes imposed on such
Indemnified Member as a result of the receipt of such payment plus (y) any
Taxes imposed on the Indemnified Member as a result of amounts paid pursuant
to Section 7.4(c)(x) or (y).
PART EIGHT
TAXES
Section 8.1 Sales and Transfer Taxes. The Purchase Price shall not include
------------------------
any sales taxes or other transfer taxes imposed in connection with the sale of
the Assets. Buyer shall pay any sales tax or other transfer taxes, as well as
any applicable conveyance, transfer and recording fees, and real estate transfer
stamps or taxes imposed on the transfer of the Assets pursuant to the Agreement.
Notwithstanding the foregoing, it is the mutual intent and understanding of
Seller and Buyer that the sale of the Assets comprises, in part, a sale of all
of the operating assets of an identifiable business of the Company and that such
sale is exempt from Texas state and local sales taxes pursuant to section
151.304(b) of the Texas Tax Code. Further, in connection with that part of the
sale of the Assets concerning inventory, Buyer shall provide Seller a completed
Texas Resale Certificate in lieu of the payment of Texas state and local taxes
and Seller shall in good faith accept such certificate.
Section 8.2 Tax Proceedings. In the event Buyer or any of Buyer's
---------------
Affiliates receives notice of any examination, claim, adjustment or other
proceeding relating to the liability for Taxes of or with respect to Seller for
any period Seller or its Affiliates is or may be liable, Buyer shall notify
Seller in writing within twenty (20) days of receiving notice thereof. As to any
such Taxes for which Seller or its Affiliates is or may be liable, Seller shall
at Seller's expense control or settle the contest of such examination, claim,
adjustment or other proceeding, and shall indemnify Buyer against all losses in
connection therewith, provided, however, that if any such examination, claim,
adjustment or other proceeding could affect Buyer's liability for Taxes, Seller
shall consult with Buyer, and shall not enter into any settlement without
Buyer's consent, which shall not be unreasonably withheld. The Parties shall
cooperate with each other and with their respective Affiliates in the
negotiations and settlement of any proceeding described in this Section 8.2.
Buyer shall provide, or cause to be provided, to Seller necessary
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authorizations, including powers of attorney, to control any proceeding which
Seller is entitled to control.
Section 8.3 Payment and Apportionment of Real and Personal Property Taxes.
-------------------------------------------------------------
With respect to the payment and apportionment of Real and Personal Property
Taxes:
(a) Real and Personal Property Taxes. All ad valorem taxes, real
--------------------------------
property taxes and personal property taxes ("Real and Personal Property
Taxes") for the year in which the Effective Date occurs shall be apportioned
as of the Effective Date between Seller and Buyer. Seller shall be liable
for the portion of such Real and Personal Property Taxes based upon the
number of days in the year occurring prior to the Effective Date, and Buyer
shall be liable for the portion of the Real and Personal Property Taxes
based upon the number of days in the year occurring on and after the
Effective Date. For any year in which an apportionment is required, Seller
shall file all required reports and returns incident to the Real and
Personal Property Taxes and shall remit to the appropriate taxing
authorities all such Taxes assessed for the year in which the Effective Date
occurs. Subject to Section 8.5(a), Buyer shall pay to Seller, at the time of
Seller's remittance, Buyer's share of the Real and Personal Property Taxes.
(b) Liability and Right to Pursue Claims. Seller shall retain
------------------------------------
liability for all adjustments, examinations or claims relating to Real and
Personal Property Taxes that are paid by Seller and that are allocated to
Seller as set forth in Section 8.3. Seller shall also administer and defend
any examination, claim or adjustments arising in connection with Real and
Personal Property Taxes that are to be paid by Buyer and which are allocated
to Buyer as set forth in Section 8.3, provided, however, that if any such
examination, claim, adjustment or other proceeding could affect Buyer's
liability for Real and Personal Property Taxes, Seller shall consult with
Buyer, and shall not enter into any settlement without Buyer's consent,
which shall not be unreasonably withheld. If and to the extent that any
refund is obtained for any taxable period that includes the Effective Date,
Buyer shall be entitled to its allocable share of such refund, determined in
accordance with the principles of Section 8.3(b).
Section 8.4 Allocation of the Purchase Price. As soon as practicable,
--------------------------------
Buyer shall deliver to Seller an
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allocation statement (the "Allocation Statement") setting forth the allocation
of the Purchase Price payable by Buyer to Seller pursuant to Section 2.2 hereof,
plus any Assumed Liabilities, to the Assets in accordance with their relative
fair market value and in accordance with the requirements of Section 1060 of the
Code; provided, however, that the Parties hereby acknowledge and agree that (i)
One Hundred Fifty Million Dollars ($150,000,000) of the Purchase Price shall be
allocated to technology, (ii) Forty Million Dollars ($40,000,000) shall be
allocated to other intangible assets, (iii) the Closing Working Capital shall be
allocated at book value and the remainder of the Purchase Price shall be
allocated to plant, property and equipment and other tangible personal property
estimated to be Three Hundred Forty Three Million One Hundred Ninety Six
Thousand Forty Eight Dollars ($343,196,048) as at the Closing Date. Each of
Buyer and Seller shall report for federal and state income and all other Tax
purposes (including, without limitation, for purposes of Section 1060 of the
Code) the purchase of the Assets in a manner consistent with the Allocation
Statement and in a manner consistent with all applicable rules and regulations.
Each of Buyer and Seller shall timely file a Form 8594, prepared jointly, in
accordance with the requirements of Section 1060 of the Code and this Section
8.4. Each Party agrees not to assert, in connection with any Return, Tax audit
or similar proceedings, any allocation of the Purchase Price that differs from
that agreed to herein. Each Party shall notify the other Party in the event such
Party believes that any taxing authority is taking or proposing to take a
position inconsistent with such allocation.
Section 8.5 Cooperation. Buyer and Seller agree:
-----------
(a) Real Property Tax Assessment. Seller shall permit Buyer to
----------------------------
participate with Seller in the real property tax assessment proceedings in
respect of the valuation of the Property for 1997, as well as to ensure that
existing real estate tax abatements in respect of the Property remain in
place. Seller shall consult with Buyer in connection therewith and shall not
agree to any valuation or diminution of real estate tax abatements without
the consent of Buyer, which consent shall not be unreasonably withheld.
(b) Access to Tax Documents. Each of Buyer and Seller shall provide
-----------------------
the other with such assistance and documents, without charge, as may be
reasonably requested by either of them in connection with the preparation of
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any Tax return, the conduct of any audit, and any other Tax related matter
that is a subject of the Agreement. Such cooperation and assistance shall be
provided to the requesting Party promptly upon its request.
Section 8.6 Equity. In conformance with the principles of Section 385 (c)
------
and Section 1504 (a) (4) of the Code, each Party acknowledges and agrees that
the Preferred Stock is (i) stock and not indebtedness as interpreted by the Code
and (ii) "Certain Preferred Stock" as defined in Section 1504 (a) (4) of the
Code. Each Party agrees not to assert, in connection with any Return, Tax audit,
or similar proceedings, any different treatment of the Preferred Stock.
Section 8.7 FIRPTA Certificate. At the Closing, Seller shall deliver to
------------------
the Buyer an affidavit of Seller, signed by an officer of Seller, in the form
attached hereto as Exhibit E. Notwithstanding anything to the contrary set forth
in the Agreement, Buyer shall be entitled to withhold the requisite amounts from
the Purchase Price if Seller fails to fulfill all of its obligations under this
Section 8.7.
Section 8.8 Preservation of Tax and Other Records. For a period of ten (10)
-------------------------------------
years after the Closing Date, the party holding such records on the Closing Date
shall (i) preserve and retain the corporate accounting, legal, auditing, Tax,
environmental, operating, maintenance and inspection and other books and records
that relate to the conduct of the PO/MTBE Business prior to the Effective Date
and (ii) make such books and records available (at the then current
administrative headquarters of the PO/MTBE Business or at any other place as
reasonably agreed to by Buyer and Seller) to the other party upon reasonable
notice and at reasonable times it being understood that the other party shall be
entitled to make and retain copies of any such books and records as it shall
deem necessary at the other party's expense. In the event the other party
desires to extend the period referred to in the first sentence of this Section
8.8 beyond ten (10) years, it may do so if (x) the applicable statute of
limitations for the years with respect to which the books and records relate has
not expired and (y) such extension is requested in writing and with a statement
that the statute of limitations has not yet expired. Each such extension shall
not be for more than twelve (12) months. In the event the holding party fails to
maintain such records and as a result of such failure the other party's Tax
liabilities are increased, then such holding party shall indemnify and hold
harmless the other party for any such increase in Taxes or other liabilities.
This Section 8.8
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shall apply to Buyer and its Affiliates with respect to records transferred to
or held by Buyer or its Affiliates hereunder and to Seller and the Company with
respect to records retained by Seller or the Company prior to or after the
Closing Date.
Section 8.9 Conflict. In the event of a conflict relating to Taxes between
--------
the provisions of Part Eight and any other provisions of the Agreement, the
provisions of Part Eight shall control.
PART NINE
CONDITIONS PRECEDENT
Section 9.1 Conditions Precedent of Buyer. The obligations of Buyer to
-----------------------------
consummate the transactions contemplated by the Agreement are subject to the
following conditions:
(a) Representations and Warranties True at Closing. The
----------------------------------------------
representations and warranties of Seller contained in the Agreement or in
any certificate or document delivered pursuant to the provisions hereof, or
in connection with the transactions contemplated hereby were true and
complete when made, and shall be true and complete on and as of the Closing
Date as though such representations and warranties were made at and as of
such date except as otherwise expressly provided herein.
(b) Compliance with Agreement. On and as of the Closing Date, Seller
-------------------------
shall have performed and complied with all, and shall have caused the
Company to perform and comply with all, agreements and conditions required
by the Agreement to be performed and complied with prior to or on the
Closing Date.
(c) Certified Resolutions and Officers' Certificate. Seller shall
-----------------------------------------------
have delivered to Buyer (i) a certificate dated the Closing Date signed by
the Secretary or an Assistant secretary of Seller with respect to the action
of the Seller's Board of Directors authorizing the transactions contemplated
by the Agreement, and (ii) a certificate, dated the Closing Date and signed
by the Chairman, Vice Chairman or a Vice President of Seller certifying in
such detail as Buyer may reasonably request to the fulfillment of the
conditions specified in subparagraphs (a) and (b) of this Section 9.1;
provided
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however, that the certificate required by Section 9.1(c)(ii) shall contain
the following qualification: except for Huntsman's Interim Knowledge Matters
with respect to the representations and warranties of Seller contained in
Sections 3.1 (g)(i), (ii) and (iv), (h) and (1)(ii), Sections 3.2(i) and (j)
and the second sentence of Section 3.2(n).
(d) Approval of Proceedings. All actions, proceedings, instruments
-----------------------
and documents required of Seller and the Company to carry out the Agreement,
or incidental thereto, and all other related legal matters shall have been
approved by Skadden, Arps, Slate, Meagher & Flom LLP, which approval shall
not be unreasonably withheld.
(e) Opinion of Counsel. There shall have been delivered to Buyer the
------------------
opinion of Amy R. Etherington, Esq. or such other counsel designated by
Seller as Buyer may approve, which approval shall not be unreasonably
withheld, all dated the Closing Date as set forth on Exhibit F, which shall
be to substantially the same effect as the opinion of such counsel delivered
to Buyer's financing sources.
(f) Injunction. On the Closing Date, there shall be no injunction,
----------
writ, or preliminary restraining order or any order of any nature issued by
a court or other Governmental Body of competent jurisdiction directing that
the transactions provided for herein or any of them not be consummated as
herein provided or imposing any conditions on the consummation of the
transactions contemplated hereby and no material proceeding or lawsuit shall
have been commenced or threatened by any Governmental Body or other Person
with respect to any of the transactions contemplated by the Agreement.
(g) Consents. All consents, approvals, clearances and authorizations
--------
referred to in or contemplated by Section 4.3(c) (excluding any consents
contemplated by Section 4.2(a)) or in Schedules 3.1(e) and 3.2(e) shall have
been obtained.
(h) Engineering Service Agreements. Seller and Buyer shall have
------------------------------
entered into the engineering service agreement substantially in the form of
Exhibit H ("Engineering Service Agreement").
(i) MTBE Supply Agreement. Seller or TRMI (or any other Affiliate of
---------------------
Seller acceptable to Buyer) and Buyer
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or any of its Affiliates shall have entered into the MTBE Supply Agreement.
Section 9.2 Conditions Precedent of Seller. The obligations of Seller to
------------------------------
consummate the transactions contemplated by the Agreement are subject to the
following conditions:
(a) Representations and Warranties True at Closing. The
----------------------------------------------
representations and warranties of Buyer contained in the Agreement or in
any certificate or document delivered pursuant to the provisions hereof, or
in connection with the transactions contemplated hereby, were true and
complete when made, and shall be true and complete on and as of the Closing
Date as though such representations and warranties were made at and as of
such date except as otherwise expressly provided herein.
(b) Compliance with Agreement. On and as of the Closing Date, Buyer
-------------------------
shall have performed and complied with, and shall have caused Buyer's
Affiliates to perform and comply with, all agreements and conditions
required by the Agreement to be performed and complied with prior to or on
the Closing Date.
(c) Certified Resolutions and Officers' Certificate. Buyer shall have
-----------------------------------------------
delivered to Seller (i) a certificate dated the Closing Date signed by the
Secretary or an Assistant Secretary of Buyer with respect to the action of
Buyer's Board of Directors authorizing the transactions contemplated by the
Agreement, and (ii) a certificate dated the Closing Date and signed by the
President or a Vice President of Buyer certifying in such detail as Seller
and the Company may reasonably request to the fulfillment of the conditions
specified in subparagraphs (a) and (b) of this Section 9.2.
(d) Approval of Proceedings. All actions, proceedings, instruments and
-----------------------
documents required for Buyer to carry out the Agreement, or incidental
thereto, and all other related legal matters shall have been approved by
Amy R. Etherington, Esq. as counsel for Seller and the Company or such
other counsel designated by Seller which approval shall not be unreasonably
withheld.
(e) Opinion of Counsel of Buyer. There shall have been delivered to
---------------------------
Seller an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, or such
other counsel designated by Buyer as Seller may approve, which approval
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<PAGE>
shall not be unreasonably withheld, dated the Closing Date, as set forth on
Exhibit G.
(f) Injunction. On the Closing Date, there shall be no injunction,
----------
writ, or preliminary restraining order or any order of any nature issued by
a court or other Governmental Body of competent jurisdiction directing that
the transactions provided for herein or any of them not be consummated as
herein provided, or imposing any conditions on the consummation of the
transactions contemplated hereby and no material proceeding or lawsuit shall
have been commenced or threatened by any Governmental Body or other Person
with respect to any of the transactions contemplated by the Agreement.
(g) Consents. All consents, approvals, clearances and authorizations
--------
referred to in or contemplated by Section 4.3(c) (excluding any consents
contemplated by Section 4.2(a)) or in Schedule 3.3(e) shall have been
obtained.
(h) Engineering Service Agreement. Buyer and Seller shall have
-----------------------------
entered into the Engineering Service Agreement.
(i) MTBE Supply Agreement. Seller and Buyer or their respective
---------------------
Affiliates shall have entered into the MTBE Supply Agreement.
PART TEN:
MISCELLANEOUS
Section 10.1 Notices. All notices, consents, requests, demands, and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given or delivered if W delivered by hand, (ii) delivered by a recognized
overnight commercial courier (receipt requested), or (iii) sent by telecopier
(with receipt confirmed), provided that a copy is promptly thereafter mailed in
the United States by first-class postage prepaid mail, to the party as follows
(or to such other address as any party shall have last designated by fifteen
(15) days, notice to the other Parties).
If to Seller:
Texaco Inc.
2000 Westchester Avenue
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White Plains, New York 10650
Fax: (914) 253-6342
Phone: (914) 253-6150
Attention: Corporate Secretary
If to Buyer:
Huntsman Specialty Chemicals Corporation
500 Huntsman Way
Salt Lake City, Utah 84108
Fax: (801) 584-5781
Phone: (801) 584-5700
Attention: General Counsel
With a copy to:
C. Kevin Barnette, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue N.W.
Washington, D.C. 20005
Fax: (202) 393-5760
Phone: (202) 371-7000
Section 10.2 Modification. The Agreement, including this Section 10.2 and
------------
the Schedules, shall not be modified except by an instrument in writing signed
by or on behalf of all of the Parties.
Section 10.2 Governing Law. The Agreement shall be governed by and
-------------
construed and enforced in accordance with the internal Laws of the State of New
York without regard to the conflict of laws principles thereof, except that for
purposes of determining whether there has been a breach of any obligation
hereunder as a result of a non-compliance with Laws involving matters of real
property or employment (including employee benefit matters) , reference shall be
made to the relevant local, state, provincial or national Law.
Section 10.4 Assignment. Seller and Buyer covenant with each other with
----------
respect to assignment as follows:
(a) No Assignment. The Agreement shall not be assigned by any Party
-------------
directly or indirectly to any other Person (whether by the sale of stock or
other transfer of ownership interest in a Party, or the sale or transfer by
a Person that has an indirect stock or ownership interest in a Party or
otherwise).
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(b) Assignment Rights. Notwithstanding anything to the contrary
-----------------
herein, Buyer (and, in the case of Section 10.4(b)(i), the holder or
holders, directly or indirectly, of Buyer's capital stock) shall have the
right, subject to Seller's consent which shall not be unreasonably withheld,
(i) to sell the PO/MTBE Business as a whole by means of a sale of the
Buyer's capital stock or its direct or indirect parent corporation's capital
stock, to a Person; or (ii) to sell the PO/MTBE Business as a whole by means
of a sale of all or substantially all of the assets of the Buyer to a
Person, and in connection with such sale to assign to such Person all of
Buyer's rights under the Agreement and to cause such Person to assume all of
Buyer's obligations under the Agreement; or (iii) to sell all or any of the
Assets constituting a facility or a parcel of land no less than Fifty (50)
acres to one or more Persons, and in connection with such sale to assign to
such Person or Persons, Buyer's rights under the Agreement that relate to
the Assets so sold and to cause such Person or Persons to assume Buyer's
obligations under the Agreement that relate to the Assets so sold; provided,
however, that if Buyer assigns any or all of its rights and obligations
under the Agreement in accordance with Section 10.4(b)(i),(ii) or (iii),
then there shall be no right of assignment of the rights and obligations
under the Agreement so assigned thereafter (it being understood and agreed
that if, with the consent of Seller, any of Buyer's rights under the
Agreement are assigned in accordance with any of the foregoing Section
10.4(b)(i),(ii) or (iii), Seller shall continue to perform Seller's
obligations under the Agreement that relate to the rights so assigned).
(c) Related Party Assignment. Notwithstanding anything to the
------------------------
contrary herein, each Party shall have the right to assign all or any part
of its rights and obligations hereunder to one or more wholly owned
subsidiaries of such Party, or in the case of Buyer, to any other entity
controlled directly or indirectly by the Huntsman Group, provided that such
assignment shall not relieve such Party from its obligations under the
Agreement. Notwithstanding anything to the contrary herein, neither the
pledge of all or any part of the capital stock of any Person that has a
direct or indirect stock or ownership interest in Buyer to any lender
providing financing to Huntsman Corporation or any member of the Huntsman
Group nor the transfer of such capital stock by any such Person or any
assignee of such Person shall
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constitute an assignment under the Agreement for any purpose.
(d) Financing. Notwithstanding anything to the contrary herein,
---------
without the prior consent of Seller, Buyer shall have the right to (x) grant
a security interest in or collaterally assign the Agreement, (y) create a
lien, pledge or mortgage on all or any part of the PO/MTBE Business and (z)
pledge all or any part of the capital stock of Buyer in favor of, in each
case, to any Person, providing financing to Buyer for use in the purchase of
the PO/MTBE Business which financing is secured by, or entered into in
connection with, such purchase ("Financing Person"). In the event a
Financing Person sells or transfers, directly or indirectly, all or any part
of the capital stock of Buyer or the PO/MTBE Business, such Financing Person
shall have the assignment rights as set forth in Section 10.4(a), (b) and
(c), provided however, that if a Financing Person assigns any or all of its
rights and obligations under the Agreement in accordance with Section 10.4
(b) (i) , (ii) or (iii) , then there shall be no right of assignment
thereafter unless the PO/MTBE Business as a whole is transferred or sold,
and in such case, there shall be a one time right of assignment by the owner
of the entire PO/MTBE Business without Seller's consent. Assignments by a
Financing Person as set forth in Section 10.4(b)(i) and (ii) and any grants,
pledges or assignments as set forth in Section 10.4(d) shall not be subject
to Seller's consent but, so long as the Preferred Stock is outstanding,
shall be subject to the Intersecurity Agreements and the Series A Preferred
Stockholder Agreement, as applicable. So long as the Preferred Stock is
outstanding, a Financing Person, as a permitted assignee shall enter into,
assume and be made a party to the Intersecurity Agreement by and among BASF
Capital Corporation, the Company, Bankers Trust Co., in its capacity as
agent for the Lenders under Buyer's Senior Credit Agreement and the Agent
for the Lenders under Buyer's Ten Year Term Loan Agreement and any other
similar or related documents.
(e) Structured Sale. Notwithstanding anything in the Agreement to the
---------------
contrary, (i) a public offering or other disposition of the capital stock of
Buyer or any direct or indirect parent corporation of Buyer effected
pursuant to the Securities Act of 1933 (including, without limitation,
broker's transactions as defined under Rule 144 promulgated thereunder) (any
such offering or other disposition, a "Structured Sale") shall under no
circumstances be deemed an assignment of Buyer's rights
81
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or obligations under the Agreement, provided, however, that immediately
following any such Structured Sale, the Huntsman Group collectively owns or
controls, directly or indirectly, capital stock of Buyer representing at
least thirty (30%) percent of the voting power of all outstanding shares of
capital stock of Buyer; and (ii) subject to the Series A Preferred
Stockholder Agreement between Buyer and the Company, a transfer of direct or
indirect ownership of Buyer's capital stock (other than pursuant to a
Structured Sale) shall not be deemed an assignment of Buyer's rights or
obligations under the Agreement provided that immediately following any such
transfer, the Huntsman Group collectively owns or controls, directly or
indirectly, capital stock of Buyer representing at least a majority of the
voting power of all outstanding shares of capital stock of Buyer. In the
event of a Structured Sale or transfer as contemplated by the immediately
preceding sentence, Seller shall continue to perform Seller's obligations
under the Agreement. The "Huntsman Group" shall mean, collectively, Jon M.
Huntsman, his spouse, sibling and direct descendents, and their respective
spouses so long as they remain spouses and any trust for the benefit of any
of the foregoing.
Section 10.5 Counterparts. The Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 10.6 Invalidity. If any of the provisions of the Agreement
----------
including the Schedules is held invalid or unenforceable, such invalidity or
unenforceability shall not affect in any way the validity or enforceability of
any other provision of the Agreement. In the event any provision is held invalid
or unenforceable, the Parties shall attempt to agree on a valid or enforceable
provision which shall be a reasonable substitute for such invalid or
unenforceable provision in light of the tenor of the Agreement and, on so
agreeing, shall incorporate such substitute provision in the Agreement.
Section 10.7 Entire Agreement and Construction. Except for the
---------------------------------
Confidentiality Agreements, the Agreement contains the entire agreement between
the Parties hereto with respect to the agreements and transactions contemplated
herein and all prior understandings and agreements shall merge herein. There are
no additional terms, whether consistent or inconsistent, oral or written, which
are intended to be part of the Parties, understandings which have
82
<PAGE>
not been incorporated into the Agreement and the Schedules. The Parties agree
that they have jointly participated in the drafting and preparation of the
Agreement and that the language of the Agreement shall be construed as a whole
according to its fair meaning and not strictly for or against any of the Parties
hereto.
Section 10.8 Expenses. Except as otherwise expressly provided herein, each
--------
Party shall bear its fees, costs and expenses in connection with the
transactions contemplated herein, including, without limitation, all legal and
accounting fees and disbursements and fees and expenses of other advisors
retained by such Party.
Section 10.9 Waivers and Amendments. All amendments and other modifications
----------------------
hereof shall be in writing and signed by each of the Parties. Any Party may by
written instrument (i) waive any inaccuracies in any of the representations or
warranties made to it by any other Party contained in the Agreement or in any
instruments and documents delivered to it pursuant to the Agreement, or (ii)
waive compliance or performance by any other Party with or of any of the
covenants or agreements made to it by any other Party contained in the
Agreement. The delay or failure on the part of any Party hereto to insist, in
any one instance or more, upon strict performance of any of the terms or
conditions of the Agreement, or to exercise any right or privilege herein
conferred shall not be construed as a waiver of any such terms, conditions,
rights or privileges but the same shall continue and remain in full force and
effect. All rights and remedies are cumulative.
Section 10.10 Survival of Representations and Covenants. All representations
-----------------------------------------
and warranties contained in the Agreement shall survive the Closing and continue
for a period of Fifteen (15) months following the Closing Date; provided, that
(i) the representations and warranties of Seller contained in Section 3.2(h)
shall continue indefinitely and in Section 3.2(m) shall survive for Sixty (60)
days after the expiration of the applicable statute of limitations and (ii) the
representations and warranties of Buyer contained in Sections 3.3 (h) , (i) and
(j) shall survive for the period of time the Preferred Stock remains
outstanding. The covenants and agreements contained in the Agreement shall
survive the Closing and continue in accordance with their respective terms. In
the event Buyer or Buyer's Affiliates transfer, sell, assign or use all or any
part of the PO/MTBE Business for any purpose other than industrial,
manufacturing, chemical or laboratory use, all of
83
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Seller's representations, warranties, covenants, agreements, indemnities and
obligations under Part Six of the Agreement shall expire and terminate with
respect to such part of the PO/MTBE Business. Any right of indemnification
pursuant to Part Seven with respect to a claimed breach of a representation or
warranty shall expire at the date of termination of the representation or
warranty claimed to be breached ("Claim Termination Date"), unless on or prior
to the Claim Termination Date a Claim has been made to an Indemnifying Party. If
a Claim is timely made, it may continue to be asserted beyond the Claim
Termination Date of the representation and warranty to which such Claim relates.
A "Claim" means a written notice asserting a breach of a representation or
warranty specified in the Agreement, which shall reasonably set forth, in light
of the information then known to the Party giving such notice, a description of
and estimate (if then reasonable to make) of the amount involved in such breach.
Section 10.11 Section Headings. The section headings in the Agreement are
----------------
for convenience of reference only and shall not be deemed to alter or affect the
interpretation of any provision thereof.
Section 10.12 Termination. The Agreement may be terminated (i) by mutual
-----------
written consent of the Parties at any time prior to the Closing; (ii) by Buyer
by notice to Seller given on or before the Closing Date, if Buyer shall discover
any material fact or condition existing on the date of such termination which is
at variance with any of the representations and warranties of Seller contained
in the Agreement; (iii) by and at the option of the Seller if the Closing shall
not have occurred on or before the Termination Date; or (iv) by and at the
option of the Buyer if the Closing shall not have occurred on or before the
Termination Date. Upon any termination the Parties shall have no further
obligations under the Agreement; provided, however, Buyer shall hold all
information which it has obtained during the transaction contemplated hereby,
subject to the Confidentiality Agreement, and the provisions of Sections 1.2,
4.3(b), 10.3, 10.8, 10.12 and 10.13 shall remain in full force and effect. The
Parties understand and agree that, from and after the Closing Date, the
Confidentiality Agreements shall be of no further force or effect.
Section 10.13 Dispute Resolution. Seller and Buyer covenant with each other
------------------
as follows:
(a) Generally. Any claim, controversy or dispute
---------
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<PAGE>
arising out of, relating to, or in connection with the Agreement or the
agreements and transactions contemplated hereby, by Buyer, Buyer's
Affiliates, Seller or Seller's Affiliates, including the interpretation,
validity, termination or breach thereof, shall be resolved solely in
accordance with the dispute resolution procedures set forth in Schedule
10.13. The Parties covenant that they shall not resort to court remedies
except as provided for in Schedule 10.13, or for preliminary relief in aid
of arbitration.
(b) Violations. A Party who violates the covenants in Section 10.13
----------
(a) shall pay all the legal costs incurred by the other Parties in
connection with the enforcement thereof. Suits, actions or proceedings in
connection with violations of the covenants in Section 10.13(a) and Schedule
10.13 shall be instituted in the United States District Court for the
Southern District of New York, and pursuant to Title IX of the United States
Code. Each Party waives any option or objection which it may now or
thereafter have to the laying of the venue in any such suit, action or
proceeding and irrevocably submits to the jurisdiction of such court in any
such suit, action or proceeding.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have entered into the Agreement as of
the date first herein above written.
TEXACO INC.
By: /S/ Allen J. Krowe
TEXACO CHEMICAL INC.
By: /s/ Richard L. Masica
HUNTSMAN SPECIALTY CHEMICALS
CORPORATION
By: John M. Huntsman
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have entered into the Agreement as of
the date first herein above written.
TEXACO INC.
By:_____________________________
TEXACO CHEMICAL INC.
By:_____________________________
HUNTSMAN SPECIALTY CHEMICALS
CORPORATION
By:_____________________________
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EXHIBIT 10.3
OPERATING & MAINTENANCE AGREEMENT
by and between
HUNTSMAN SPECIALTY CHEMICALS CORPORATION,
and
HUNTSMAN PETROCHEMICAL CORPORATION
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
Term
1.1 Initial Term.......................................................... 1
ARTICLE II
The Operator
2.1 Appointment and Agreements of Operator................................ 2
2.2 Agreements of Owner................................................... 2
2.3 Duties of Operator.................................................... 4
ARTICLE III
Operator Services
3.1 General............................................................... 9
3.2 Personnel............................................................. 10
3.3 Level of Services..................................................... 10
3.4 Management Services................................................... 11
3.5 Reporting Services.................................................... 14
3.6 Additional Services................................................... 15
3.7 Deletion of Services.................................................. 15
ARTICLE IV
Annual Budget
4.1 Cooperation of the Parties............................................ 16
4.2 Budget Procedures..................................................... 16
ARTICLE V
Fees
5.1 General............................................................... 17
5.2 Definition of Costs................................................... 18
5.3 Changed Conditions, Operator to Receive Costs......................... 20
5.4 Accounting Practices.................................................. 21
5.5 Taxes and Other Charges to be Paid by Owner........................... 22
5.6 Depreciation and Amortization......................................... 23
5.7 Exclusions From Costs................................................. 23
i
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ARTICLE VI
Capital Improvements
6.1 Owner Right to Use Plant Infrastructure............................... 24
6.2 Plant Infrastructure Capital Improvements............................. 24
6.3 PO/MTBE Facility Capital Improvements................................. 25
ARTICLE VII
Payment
7.1 Fees.................................................................. 25
7.2 Payment Dispute....................................................... 25
7.3 Interest.............................................................. 26
ARTICLE VIII
Health, Safety, and Environmental Audits
8.1 Conduct of Audits..................................................... 26
8.2 Audit Recommendations................................................. 27
ARTICLE IX
Insurance
9.1 Insurance Provided by Operator........................................ 27
9.2 Insurance to be Provided by Subcontractors............................ 28
9.3 Insurance Provided by Owner........................................... 30
ARTICLE X
Facility Shutdown
10.1 Owner Right to Shut Down.............................................. 31
10.2 Operator's Right to Shut Down......................................... 31
ARTICLE XI
Suspension Of Production
11.1 Option to Suspend.................................................... 32
11.2 Payment of Costs..................................................... 32
11.3 Standby Condition.................................................... 32
ARTICLE XII
Access To PO/MTBE Facility Information
12.1 Examination at the Plant............................................. 32
12.2 Available Information................................................ 33
12.3 Records Retention.................................................... 33
ii
<PAGE>
ARTICLE XIII
Access To Facilities
13.1 No Access to Plant Facilities........................................ 33
13.2 Access to PO/MTBE Facility........................................... 34
ARTICLE XIV
Accounting Records
14.1 Principles and Procedures............................................ 34
14.2 Audits............................................................... 34
ARTICLE XV
Early Termination
15.1 Insolvency........................................................... 35
ARTICLE XVI
Intellectual Property
16.1 Definition of Field.................................................. 35
16.2 Title to Inventions and Patents...................................... 35
16.3 Paid Up Licenses For Invention and Patents........................... 37
16.4 Title of Technical Information....................................... 38
16.5 Paid Up Licenses For Technical Information........................... 39
16.6 Confidentiality...................................................... 39
ARTICLE XVII
Release, Indemnification and Risk of Loss
17.1 Release and Indemnification.......................................... 40
17.2 Defense of Claims.................................................... 40
17.3 Non-Liability for Defective Performance
Caused by Supplier................................................... 41
17.4 Title and Risk of Loss............................................... 41
ARTICLE XVIII
Limitation Of Liability
18.1 Limitation of Liability.............................................. 42
18.2 Disclaimers of Warranties............................................ 42
18.3 Consequential Damages................................................ 42
iii
<PAGE>
ARTICLE XIX
Assignment
19.1 General.............................................................. 42
19.2 Successors to Facilities............................................. 43
19.3 Obligations.......................................................... 43
ARTICLE XX
Force Majeure
20.1 Defined.............................................................. 43
20.2 Obligation to Diligently Cure Force Majeure.......................... 44
20.3 Effect of Continued Event of Force Majeure........................... 45
ARTICLE XXI
Contract Coordinators
21.1 Appointment.......................................................... 45
21.2 Responsibilities..................................................... 45
21.3 Continuity........................................................... 45
ARTICLE XXII
Governing Law
22.1 Governing Law........................................................ 46
ARTICLE XXIII
Miscellaneous
23.1 Notices.............................................................. 46
23.2 Waiver............................................................... 46
23.3 Interpretation....................................................... 46
23.4 Severability......................................................... 47
23.5 Entire Agreement; Amendments......................................... 47
23.6 Counterparts......................................................... 47
Exhibit A.................................................................. 49
Exhibit B.................................................................. 60
Exhibit C.................................................................. 62
Schedule C-1............................................................... 69
Schedule C-2............................................................... 70
Exhibit D-1................................................................ 71
Exhibit D-2................................................................ 72
Exhibit E.................................................................. 74
Schedule E.2.3.1........................................................... 78
Schedule E.2.3.2........................................................... 80
Schedule E.2.3.3........................................................... 81
iv
<PAGE>
Schedule E.2.3.4........................................................... 84
Schedule E.3............................................................... 86
Exhibit F.................................................................. 88
Exhibit G.................................................................. 90
Exhibit H.................................................................. 92
Exhibit I.................................................................. 94
Exhibit J.................................................................. 99
Exhibit N.................................................................. 100
v
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OPERATING & MAINTENANCE AGREEMENT
---------------------------------
OPERATING & MAINTENANCE AGREEMENT (this "Agreement"), dated as of
March 21, 1997, by and between HUNTSMAN PETROCHEMICAL CORPORATION, a Delaware
corporation with offices at 3040 Post Oak Boulevard, Suite 2200, Houston, Texas
77056 ("Operator"), and HUNTSMAN SPECIALTY CHEMICALS CORPORATION, a Delaware
corporation with offices at 500 Huntsman Way, Salt Lake City, Utah 84108
("Owner"):
WHEREAS, Owner owns a facility to manufacture propylene oxide ("PO")
and methyl tertiary butyl ether ("MTBE") located in Port Neches, Texas (the
"PO/MTBE Facility"); and
WHEREAS, Owner desires that Operator provide the services and supplies
required for the operation and maintenance of the PO/MTBE Facility and Operator
desires to provide such services and supplies pursuant to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
Term
----
1.1 Initial Term. The initial term (the "Initial Term") of this
------------
Agreement shall commence upon the "Closing Date" (as such term is defined in the
Purchase and Sale Agreement dated March 21, 1997, by and among Texaco Inc.
("Texaco"), Texaco Chemical Inc., and Owner(the "Purchase and Sale
Agreement")) (the "Effective Date") and shall extend for a period of fifteen
(15) years therefrom and shall continue for successive one-year terms thereafter
unless terminated by either party written notice of at least two (2) years prior
to the end of the Initial Term or the applicable succeeding two-year term.
<PAGE>
ARTICLE II
The Operator
------------
2.1 Appointment and Agreements of Operator. (a) Owner hereby appoints
--------------------------------------
Operator as the operator of the PO/MTBE Facility (the "Operator") and Operator
accepts such appointment in accordance with the terms set forth herein.
(b) As the Operator, Operator shall operate the PO/MTBE Facility
consistent with (i) the good management practices and prudent operating
techniques Operator employs in the operations of Operator's Oxides and Olefins
and C4 chemical operations located adjacent to the PO/MTBE Facility (the
"Plant"), (ii) the scope and level of Services (as hereinafter defined) as
agreed from time to time and (iii) applicable industry standards.
(c) In the performance of its obligations hereunder, Operator shall
be an independent contractor and nothing in this Agreement shall be construed or
interpreted to imply that Operator, while acting in such capacity, is a partner
or joint venturer with, Owner, and therefore, among other things:
(i) All employees, agents or representatives employed or used by
Operator in the performance of its obligations hereunder shall be the
employees, agents and representatives of Operator and not employees,
agents and representatives of Owner; and
(ii) Neither Operator nor Owner shall represent to third parties,
nor shall Operator or Owner take any action from which third parties could
reasonably infer that Operator, while acting as the Operator, is a partner
or joint venturer with Owner.
2.2 Agreements of Owner. (a) Owner hereby grants Operator all
-------------------
appropriate ingress and egress to the PO/MTBE Facility for the purpose of acting
as Operator hereunder.
(b) Owner shall provide a PO/MTBE Facility that, as of the date of
this Agreement is capable of being operated from time to time in accordance with
all
2
<PAGE>
applicable Federal, state and local permits, laws, rules, regulations and
ordinances and in accordance with all health, safety and environmental programs
and procedures of both Owner and Operator.
(c) Owner represents that the PO/MTBE Facility is in compliance with
all current applicable federal, state or local laws, ordinances, rules and
regulations relating to toxic and hazardous substances, and hazardous wastes, as
such materials are defined in any current applicable federal, state or local
law, ordinance, rule or regulation.
(d) Owner shall procure all permits and licenses, and state and
Federal Environmental Protection Agency ("EPA") identification numbers,
necessary to operate and maintain the PO/MTBE Facility. Owner shall promptly
notify Operator of any changes in, or communications with respect to, such
permits, licenses or EPA numbers received by Owner or any other material
communications with a governmental agency or third party related to such
permits, licenses, numbers or related matters.
(e) Owner shall provide written production, shipping, maintenance
and other operating policies to be followed by Operator hereunder (the
"Operating Policies"), which Operating Policies shall be reasonably acceptable
to Operator.
(f) Owner shall separately arrange for the procurement and delivery
of all natural gas, electricity and feedstocks to be utilized at the PO/MTBE
Facility and shall make all arrangements for the transportation of such
natural gas, electricity and feedstocks to the PO/MTBE Facility.
(g) Owner, or its agent which is designated in writing to Operator
if such person or entity is other than the Contract Coordinator (as hereinafter
defined) hereunder, shall furnish all information as may from time to time be
reasonably requested by Operator, including but not be limited to, information
with respect to:
(i) Owner's PO and MTBE inventory requirements;
3
<PAGE>
(ii) Owner's PO and MTBE production requirements;
(iii) PO and MTBE shipping schedules and detailed
information and instruction for each shipment made on behalf of Owner;
(iv) PO and MTBE forecasting and planning parameters;
and
(v) PO and MTBE unusable inventory instructions.
(h) Owner shall advise Operator promptly of regulatory and
legislative changes affecting the PO/MTBE Facility as Owner becomes aware of
such changes.
(i) Owner shall prepare any accounting and reporting documents that
may be required by governmental authorities outside the ordinary course of
business. Operator shall use all reasonable efforts to provide such
assistance to Owner in connection with the preparation of such documents in
order to comply with such requirements in a timely manner.
(j) Subject to Section 5.5, Owner shall make payment for all
municipal taxes and fees, property, business, sales, use, excise and value-added
taxes, and all other taxes applicable to the operation and maintenance of the
PO/MTBE Facility.
2.3 Duties of Operator. (a) Subject to the terms of this Agreement
------------------
and all other agreements of the parties, Operator shall operate and maintain the
PO/MTBE Facility.
(b) Operator shall supervise, manage, direct and control all aspects
of the day-to-day operations and maintenance of the PO/MTBE Facility,
including the processing, disposal and/or loading of waste materials and by-
products generated by the PO/MTBE Facility.
(c) Operator shall utilize standard operating procedures with respect
to the operation of the PO/MTBE Facility consistent with the Operating Policies
and reasonably acceptable to Owner (the "Operating Procedures"). Operator
shall consult with Owner with respect
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to any material non-emergency deviations and, if time permits, material
emergency deviations from the Operating Procedures that Operator desires to
make.
(d) Operator shall carry out such periodic performance tests of the
PO/MTBE Facility as Operator deems necessary or as Owner may otherwise
reasonably request, and recommend to Owner any remedial action that Operator
considers necessary to correct any operational deficiencies arising from the
analysis of the test results or otherwise revealed during operation of the
PO/MTBE Facility.
(e) Operator shall maintain sufficient numbers of trained and
qualified (and, if required, licensed) personnel to perform the services
required under this Agreement.
(f) Operator shall prepare and maintain daily operating logs and
records regarding the operation and maintenance of the PO/MTBE Facility.
(g) Operator shall provide such information for technical
evaluation of the PO/MTBE Facility as may be reasonably requested by Owner and
as Operator deems reasonably necessary.
(h) Operator shall perform or cause to be performed, or contract for
and oversee the performance of all maintenance, repair and testing services as
shall be required to carry out scheduled inspections, periodic overhauls,
unscheduled maintenance and any major breakdown repairs.
(i) Operator shall cause to be maintained:
(i) all roads, yards, walkways, environmental compliance
equipment and utilities of the PO/MTBE Facility;
(ii) the PO/MTBE Facility's tool room equipment and
instruments pertaining to the PO/MTBE Facility; and
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<PAGE>
(iii) the PO/MTBE Facility's fire protection, health
equipment and safety equipment.
(j) Operator shall carry out the reading, testing and any calibration
of meters owned by Owner, as Operator deems reasonably necessary or as requested
by Owner, and attend and witness the reading, testing and calibration of the
meters carried out by Owner's customers.
(k) Operator shall cause security to be provided for the PO/MTBE
Facility and cause Emergency situations to be responded to promptly.
(l) Operator shall schedule deliveries of fuel and feedstocks,
monitor the sufficiency of fuel, electricity and feedstocks delivered to the
PO/MTBE Facility in terms of quantity and quality and provide forecasts of fuel
and feedstock requirements.
(m) Operator shall implement and supervise a preventive maintenance
program in accordance with the Operating Policies.
(n) In no event shall Operator be obligated to operate the PO/MTBE
Facility in any manner which, in Operator's reasonable judgment, presents a
safety or environmental hazard, nor shall Operator operate the PO/MTBE
Facility in a manner over the objection of Owner, when, in Owner's reasonable
judgment, such manner of operation presents a safety or environmental hazard.
(o) Operator shall comply with all applicable governmental laws,
regulations and rules of any federal, state or local governmental authority
having jurisdiction with respect to the PO/MTBE Facility. Without limiting the
generality of the foregoing, Operator shall be responsible for the preparation
of all applications with respect to, and shall use its best efforts to maintain,
all permits and licenses that are required to be maintained for the operation
and maintenance of the PO/MTBE Facility.
(p) Operator shall cooperate with Owner to identify and implement
process and operational changes which are to correct operational deficiencies in
the
6
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PO/MTBE Facility, and to design and execute maintenance and capital improvement
projects for the PO/MTBE Facility.
(q) Operator shall perform engineering activities with respect to
the management, operation and maintenance of the PO/MTBE Facility; provided,
however, Owner may contract for such engineering services as it deems
appropriate from time to time and Operator shall cooperate in using such
services.
(r) Operator shall confer with and obtain the consent of Owner with
respect to all proposed material agreements that Operator may enter into in
connection with Operator's duties as Operator.
(s) Operator shall keep Owner fully advised with respect to the
negotiation of collective bargaining agreements relating to Operator employees
engaged in the operation, maintenance and support of the PO/MTBE Facility
hereunder; provided, however, the terms and conditions of such collective
bargaining agreements shall not be subject to the approval of Owner.
(t) Operator shall use all reasonable efforts to maintain ISO
9002 registration for the PO/MTBE Facility.
(u) Operator shall use all reasonable efforts to continue the
operation of the PO/MTBE Facility using supervisory personnel in the case of a
work stoppage due to a strike or other labor difficulty.
(v) Operator shall, consistent with the provisions of Article XIV
hereof, maintain accurate books and records with respect to its operation of the
PO/MTBE Facility hereunder and shall maintain and make available to Owner all
such books and records which demonstrate that all fees and charges paid or
payable by Owner hereunder have been computed in accordance with the terms of
this Agreement.
(w) Notwithstanding any provisions contained herein to the
contrary, in the case of any emergency endangering life, property or the
environment ("Emergency"), Operator shall have the right to take all such steps,
including spending such sums which shall be
7
<PAGE>
reasonably necessary in the sole judgment of Operator, to protect such life,
property or the environment; provided, however, that Operator shall use all
reasonable efforts to consult with Owner before taking such steps unless the
nature of such emergency, in the reasonable judgment of Operator, does not
permit sufficient time to consult with Owner, in which case, Operator shall
promptly following such event of emergency notify Owner of the steps taken in
any such event of emergency.
(x) Operator shall handle di-sulfide oil ("DSO") and spent caustic
within the confines of the PO/MTBE Facility and the Plant.
(i) Operator will load Owner's DSO and spent caustic in tank
wagons. If requested by Owner, Operator will (A) arrange for the
delivery on behalf of Owner of such DSO to Operator's unloading facility at
Port Arthur, Texas and (B) unload such DSO at such facility for delivery to
a third party;
(ii) Operator shall not be obligated (A) to deliver Owner's DSO
to any third party under any contract Operator has entered into or may
enter into for the sale of Operator's DSO or (B) to enter into a contract
with any third party for the sale of Owner's DSO; and
(iii) Owner shall indemnify Operator for any loss, claim, damage
or liability arising out of or relating to Operator's handling or loading
of Owner's DSO, except for losses, claims, damages or liabilities in
connection therewith resulting from Operator's (a) gross negligence, (b)
willful misconduct, (c) fraud or (d) intentional breach of this Agreement.
(y) Operator shall advise Owner promptly of regulatory and legislative
changes affecting the PO/MTBE Facility of which Operator may become aware.
(z) Operator shall cause its employees to meet with representatives
of Owner as may be reasonably
8
<PAGE>
requested by Owner at such times and under such circumstances as will not unduly
interrupt the operation of the PO/MTBE Facility or the Plant.
(aa) Operator shall use all reasonable efforts to screen all persons
admitted to the premises of the PO/MTBE Facility for trade secret conflicts.
(ab) Operator shall promptly notify Owner of any changes in, or
communications with respect to, any permits, licenses or EPA identification
numbers related to the PO/MTBE Facility received by Operator or any other
material communications of Operator with a governmental agency or third party
related to such permits, licenses, numbers or related matters.
(ac) Operator shall perform any other tasks reasonably requested by
Owner in connection with the operation and maintenance of the PO/MTBE Facility.
ARTICLE III
Operator Services
-----------------
3.1 General. In connection with Operator's appointment as the
-------
Operator, Operator shall provide certain services as follows:
(a) Management services as set forth in Section 3.4 hereof (the
"Management Services");
(b) Reporting services as set forth in Section 3.5 hereof (the
"Reporting Services");
(c) Miscellaneous Services as set forth in Exhibit B hereto (the
"Miscellaneous Services");
(d) Utility services as set forth in Exhibit C hereto (the
"Utility Services");
(e) Infrastructure services relative to the fixed assets owned by
Operator described in Exhibits D-1 and D-2 hereto (the "Infrastructure
Services");
(f) Methanol system services as set forth in Exhibit E hereto
(the "Methanol Services");
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<PAGE>
(g) Butane services as set forth in Exhibit F hereto (the
"Butane Services");
(h) PO dock services as set forth in Exhibit G hereto (the "PO
Dock Services"); and
(i) Additional Services as set forth in Section 3.6 hereof.
All work and services performed in connection with this Agreement, including but
not limited to Management Services, Reporting Services, Miscellaneous
Services, Utility Services, Infrastructure Services, Methanol Services, Butane
Services, PO Dock Services and Additional Services (as hereinafter defined) are
sometimes hereinafter collectively referred to as the "Services."
3.2 Personnel. Services shall be provided by the following persons
---------
or entities:
(a) Those dedicated personnel who are employees of Operator and spend
substantially all of their working time providing services to the PO/MTBE
Facility ("Dedicated Personnel").
(b) Employees of Operator who spend a portion of their working time
providing services to the PO/MTBE Facility on an "as needed" basis, whose
working hours and the costs associated therewith are accumulated and accounted
for on a regular basis in the ordinary course of business ("Shared Personnel").
(c) Employees of Operator who spend a portion of their working time
providing services to the PO/MTBE Facility and whose working hours and the costs
associated therewith are accumulated in the cost centers set forth in Exhibit A
hereto ("Support Personnel").
(d) Employees of contractors and consultants engaged by Operator to
provide services to the PO/MTBE Facility ("Contract Personnel").
3.3 Level of Services. (a) Operator shall provide Services at the
-----------------
levels required for rated capacity operation of the PO/MTBE Facility
consistent with the Annual Budget (as hereinafter defined) as it may be
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<PAGE>
adjusted by mutual agreement from time to time and, if required, for periods the
PO/MTBE Facility is shut down.
(b) If Services are required during periods other than that which the
PO/MTBE Facility is operating at normal rated capacity or is shut down,
including, but not limited to periods of Emergency, Operator shall use all
reasonable efforts to provide such increased Service requirements.
(c) During any period when Operator's ability to provide Services is
restricted by any Emergency or other non-routine operation of the Plant,
Operator shall have the right temporarily to curtail the supply of any affected
Service consistent with the pre-established Plant shut down and start-up
priorities.
(i) Factors to be considered in establishing such shutdown and
start-up priorities shall include (A) safety, (B) the economic impact of
a shutdown or start-up, (C) the difficulty of shutdown or start-up with
respect to the affected units, (D) inventory levels and requirements and
(E) the immediacy of the impact of any such shutdown or start-up.
(ii) Operator shall reasonably consider Owner's interests on the
same basis as Operator's interests and shall not use Operator's status as
Operator to gain long-term economic advantage in the establishment of such
shutdown and start-up priorities.
(iii) Operator will make all reasonable efforts to cause PO and
MTBE production levels to remain consistent with the PO/MTBE Facility's
agreed level of production consistent with sales and supply arrangements
with respect to PO and MTBE and with the other shutdown and start-up
priorities during any service curtailment set forth in this Section 3.3(c).
3.4 Management Services. Operator shall provide all Management
-------------------
Services necessary for the support of the operation and maintenance of the
PO/MTBE Facility in accordance with the terms of this Agreement, the
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<PAGE>
Operating Policies and the Annual Budget as it may be adjusted from time to
time, including, but not limited to the following:
(a) The services of Dedicated Personnel, Shared Personnel and Support
Personnel to staff, operate and maintain the PO/MTBE Facility including, but not
limited to, the following:
(i) Plant operators and supervisors, utilities operators
and supervisors, laboratory staff and supervisors and tank farm operators
and supervisors;
(ii) Operations support personnel, including order processing
and traffic personnel;
(iii) Receiving and shipping personnel for handling raw materials
and products;
(iv) Maintenance personnel, including labor, supervision and
planning personnel;
(v) Instrument and electrical personnel, including maintenance,
labor, supervision, engineering and communications personnel;
(vi) Purchasing personnel, including purchasing, contracts and
warehousing personnel to perform the functions set forth in paragraph B.1.1
of Exhibit B hereto;
(vii) Engineering and construction personnel, including project
engineering, drafting, estimating, cost control, inspection and
construction personnel;
(viii) Environmental personnel, including personnel for emission
monitoring, permitting, reporting, communicating and interpreting
(including the retention of legal counsel or the consultation with Owner
legal counsel, as appropriate) laws and regulations,
12
<PAGE>
planning and implementing plans for compliance, compliance-assurance
auditing and providing technical support for governmental, administrative
or adverse actions, including support at governmental agency meetings or
hearings;
(ix) Health and safety personnel, including personnel for
industrial hygiene, emergency response, fire brigade, internal and
external inspection and audit, process safety management, incident review
and investigation, security and reporting, communicating and interpreting
(including the retention of legal counsel or the consultation with Owner
legal counsel, as appropriate) laws and regulations, planning and
implementing plans for compliance;
(x) Technical services personnel, including process
engineering, process control, operations planning, quality services,
custody meter proving and computer service personnel;
(xi) Human resources personnel, including medical, training,
mailroom, labor relations, payroll, office services, telephone, copier and
community program personnel;
(xii) Accounting personnel, including accounts payable and
financial reporting personnel; and
(xiii) Plant management personnel, including personnel
responsible for prioritization of resources and operation policy making.
(b) The services of qualified contractors and consultants as required
from time to time in order to perform the Management Services required
hereunder.
(c) The services of Dedicated Personnel, Shared Personnel and Support
Personnel necessary to provide the Miscellaneous Services, Utility Services,
Infrastructure Services, Methanol Services, Butane Services and PO Dock
Services.
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<PAGE>
3.5 Reporting Services. Operator shall prepare the same operating,
------------------
financial and environmental, health and safety ("EH&S") reports that it prepares
with respect to other Plant operations, unless the Parties mutually agree to the
contrary, which are hereinafter referred to as the "Reporting Services." The
Reporting Services to be provided by Operator to Owner are as follows:
(a) Each day, Operator shall provide a report or reports
indicating:
(i) Preliminary production, shipments and closing inventory for
each product; and
(ii) Shipping weights and times and such other information as is
necessary to invoice each shipment of product produced at the PO/MTBE
Facility.
(b) Each month, on or about the seventh business day, Operator shall
provide a product inventory report for the previous month indicating the opening
inventory quantity, production, shipments and closing inventory quantity for
each in-process and finished product.
(c) Each month, on or about the fifteenth business day, Operator
shall provide:
(i) A report for the previous month of all of the transactions
and the end-of-month balances of the PO/MTBE Facility's property, plant and
equipment, if Owner re quests such a report and provides Operator
information that is necessary to prepare such a report;
(ii) A forecast of costs for the current month, current calendar
quarter and current year, if Owner gives Operator the information that is
necessary to prepare such a forecast; and
(iii) A capital spending report for the previous month indicating
spending to
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<PAGE>
date and the end-of-month status of capital projects in progress.
(d) Operator shall promptly provide Owner a copy of any EH&S report
that may be filed by Operator regarding the PO/MTBE Facility with a governmental
agency.
3.6 Additional Services. (a) During the term of this Agreement,
-------------------
Owner may request services in addition to those set forth in this Article III
("Additional Services").
(b) Operator shall use all reasonable efforts to provide any
Additional Services requested pursuant to Section 3.6(a) hereof.
(c) Except with respect to the provisions of Article V hereof, any
Additional Service hereunder shall not affect the remaining Services or the
other terms or conditions of this Agreement.
3.7 Deletion of Services. (a) Upon written notice, Owner shall have
--------------------
the option to delete from the scope of this Agreement any of the Services
provided hereunder.
(b) Except with respect to the provisions of Article V hereof, any
deletion of a Service hereunder shall not affect the remaining Services, terms
or conditions of this Agreement.
(c) In the event any Service provided under this Agreement is deleted
by Owner and, following such deletion, Owner continues to operate the PO/MTBE
Facility, Owner shall offer to employ, or cause any contractor employed by Owner
to provide the deleted service to employ, all affected Dedicated Personnel and
the number of Shared Personnel and Support Personnel (the Support Personnel
positions subject to the provisions of this Section 3.7(c) are set forth in
Exhibit J hereto) equal to the equivalent of the cumulative time that Shared
Personnel and Support Personnel provided such deleted service to the PO/MTBE
Facility hereunder for the calendar year prior to the calendar year in which
such termination occurs. In the event Owner shall not comply with the
provisions of this Section 3.7(c), Owner shall
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<PAGE>
reimburse Operator for all costs resulting from the lay-off or retraining of
Operator personnel in connection with the deletion of any Service in accordance
with established personnel policies. Operator shall use all reasonable efforts
to minimize such costs.
ARTICLE IV
Annual Budget
-------------
4.1 Cooperation of the Parties. Owner and Operator shall cooperate
--------------------------
and assist in the annual budgeting activities that have an effect on the
services provided under this Agreement and in the preparation of an annual
budget (the "Annual Budget"). Such budgeting shall be timely and consistent
with the needs of the budgeting cycles of both parties and any lenders to the
PO/MTBE Facility.
4.2 Budget Procedures. (a) Not later than September 1 of such
-----------------
calendar year, Owner will advise Operator of the parameters under which, and the
level of, Services covered by this Agreement which are to be provided for the
following calendar year.
(b) Not later than November 1 of such calendar year, Operator shall
prepare a proposed Annual Budget for the following calendar year consisting of
an estimate of the direct charges and the manufacturing indirect charges (i.e.
including: assigned direct full time employees, direct hourly charges from the
plant work order system, direct charges for plant engineering personnel,
materials on a cost basis and manufacturing indirect expenses related to the
above direct charges).
(c) Not later than November 15 of each calendar year, Owner and
Operator shall meet to discuss the proposed Annual Budget to the extent and in
sufficient detail necessary to reach an agreement and shall use all reasonable
efforts to reach an agreement on the Annual Budget no later than December 15 of
the applicable preceding calendar year.
(d) In the event no agreement is reached with respect to the Annual
Budget on or prior to December 15 of the applicable preceding calendar year, the
Annual
16
<PAGE>
Budget for the previous year as adjusted for inflation (as set forth below)
shall apply until such time as agreement can be reached with respect to such
Annual Budget. The adjustment for inflation shall be accomplished by
multiplying any dollar amounts included in such previous Annual Budget by the
PPI Index for the previous calendar year. Nonrecurring items, however, shall be
excluded from such budget. "PPI Index" means, with respect to any calendar year,
an amount equal to (i) one (1) plus (if the percentage change referred to in
clause (ii) is an increase) or minus (if the percentage change referred to in
clause (ii) is a decrease) (ii) the percentage change occurring during the
previous year in the Producer Price Index, as published by the United States
Department of Labor, Bureau of Labor Statistics, or any successor index
published by such agency.
ARTICLE V
Fees
----
5.1 General. Operator shall be entitled to a fee for providing
-------
Services hereunder equal to Operator's "Costs" (as defined in Section 5.2
hereof) (the "Fee"). Operator shall provide the Services hereunder at full cost
and, therefore, shall be entitled to receive from Owner all costs and expenses,
whether direct or indirect and howsoever incurred, in providing the Services
hereunder. Notwithstanding any other provisions in this Agreement, it is
the intent of the parties that:
(a) Neither party shall make a profit on the provision of Services
hereunder nor be required to subsidize the other party's operation.
(b) Owner shall not be required to pay for any costs or expenses
hereunder to the extent such costs or expenses relate to services provided under
the Management Services Agreement, dated as of the date hereof, by and between
Owner and Operator.
(c) Operator's full cost shall be exclusive of all interest,
depreciation or amortization with respect to the Owner Percents (as hereinafter
defined) of the Plant Infrastructure.
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<PAGE>
(d) Except as set forth in Section 5.2(b) hereof, in paying
Operator's full cost hereunder, Owner shall not be required to pay for any (i)
overhead or allocation of costs and expenses from the Operator's corporate
offices in Houston, Salt Lake City or other locations, (ii) non-plant expenses
of any of Operator's Affiliates (as hereinafter defined), or (iii) interest
expense incurred by Operator, except as provided in Section 6.2 and Section 7.3
hereof.
5.2 Definition of Costs. For purposes of this Agreement, "Costs"
-------------------
shall mean all costs and expenses incurred by Operator in providing the Services
hereunder, including, but not limited to, the aggregate of the following:
(a) In the case of Dedicated Personnel, the aggregate of, and, in the
case of Shared Personnel, the pro rata portion of (each being determined on the
basis of time sheets and expense reports):
(i) all salaries, wages, employee benefit expenses and
employment taxes paid to, or on behalf of, such Dedicated Personnel or
Shared Personnel, as the case may be, (such salaries, wages, expenses and
taxes to be consistent with amounts paid to, or on behalf of, like
employees of the Plant), and
(ii) all travel and related expenses incurred in the ordinary
course of business;
(b) In the case of the costs of Operator accumulated in the cost
centers set forth in Exhibit A attached hereto (the "Allocated Cost Centers"),
which includes the costs associated with the employment of Support Personnel and
any insurance obtained pursuant to Article IX hereof, the sum of the amounts
which represents the amount accumulated in each such cost center, allocable to
Owner in accordance with this Section 5.2(b) and Exhibit A (the "Management
Fee"); provided, however, Owner and Operator agree that until the date the
-------- -------
Preferred Stock (as defined in the Purchase and Sale Agreement) is redeemed (the
"Redemption Date"), the Management Fee shall be $555,444.00 per month for
calendar year 1997, and for calendar year 1998 and beyond, Owner and Operator
agree that the annual Management Fee shall be determined by multiplying the
annual Management Fee for
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<PAGE>
the immediately preceding year by an escalation factor, such escalation factor
to be determined as follows:
a = good faith budget % increase for exempt personnel salaries;
b = budget % increase for hourly personnel salaries - supportable by
documented labor contract agreements;
c = budget % increase for employee benefits consistent with a and b;
d = the final annual % GDP deflator published by the U. S. Department of
Labor for the most recent twelve-month period.
Then the escalation factor shall be
(a+b+c+d)
1 + 0.7 -------
(4x100)
An example of the escalation factor determination follows:
if a = 4.0%; and b = 1.4%; and c = 2.3%; and d = 3.0%; then the escalation
factor would be
(4.0+1.4+2.3+3.0)
1 + 0.7 ----------------
(4x100)
or 1.0187;
(c) In the case of Contract Personnel, the amount the contractor or
consultant engaged by Operator invoices Operator for the services of such
Contract Personnel, including all incidental expenses and the cost of all
materials and supplies, less any amount, if any, paid against such invoices by
Owner directly;
(d) In the case of any materials or supplies used by Operator
hereunder, the amount the vendor of such materials or supplies invoices Operator
for such materials or supplies, including all freight, taxes (except as
otherwise set forth in this Agreement) or other charges in connection therewith,
less any amount, if any, paid by Owner directly;
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<PAGE>
(e) In the case of transportation services provided under this
Agreement, all amounts the third party provider of transportation services
invoices Operator for such services, less any amount, if any, paid against
such invoices by Owner directly;
(f) In the case of equipment rentals required to be made by Operator,
the amount invoiced to Operator for such equipment rental;
(g) In the case of Utilities Services, the amounts allocable to
Owner pursuant to Exhibit C hereto;
(h) In the case of Methanol Services, the amounts allocable to
Owner pursuant to Exhibit E hereto;
(i) In the case of Butane Services, the amounts allocable to
Owner pursuant to Exhibit F hereto; and
(j) In the case of PO Dock Services, the amounts allocable to
Owner pursuant to Exhibit G hereto.
5.3 Changed Conditions, Operator to Receive Costs. (a) The parties
---------------------------------------------
recognize and agree that it is not practical to predict and provide for all
future changes, circumstances or contingencies affecting this Agreement and the
supply or performance of Services, during the term hereof. Accordingly, subject
to the provisions of Section 5.1 hereof, it is understood and agreed by the
parties that if either (x) Costs as defined, used or applied herein or (y) the
application of generally accepted accounting principles, subject to Section 5.4
hereof, to determine Costs are, at any time or times, incomplete, inaccurate or
insufficient to enable Operator to recover all of its costs and expenses in
providing the Services hereunder, whether direct or indirect and howsoever
incurred, Operator shall nevertheless be entitled to recover from Owner all of
such costs and expenses, notwithstanding such definition, use or application, so
that Operator shall not be subjected to or be required to suffer any economic
loss or penalty at any time.
(i) It is understood and agreed, however, that the foregoing use
of the
20
<PAGE>
phrase "economic loss or penalty" shall not, in any event, be
construed to cover absence or loss of profits or profit opportunity.
(ii) For the purposes of this Agreement, in the case of the costs
described in Section 5.2(b) hereof for all periods prior to the Redemption
Date, no "economic loss or penalty" shall be deemed to have resulted
solely from the establishment of the Management Fee.
(b) If because of changes in or the adoption of new laws, regulations
or accounting principles, or their application, Operator is not, or will not
be, able to recover all of its Costs under this Agreement, Owner agrees to
compensate Operator in some other mutually agreeable manner in order to make
Operator whole for such unrecovered Costs.
(c) The costs of steam as set forth in Exhibit C hereto and as may be
adjusted pursuant to Schedule C.5 thereto, shall be calculated so that the
PO/MTBE Facility is charged at the same rate per unit as the other Oxides and
Olefins facility operations located at the Plant.
5.4 Accounting Practices. All accounting practices employed to
--------------------
determine the Fee hereunder shall be in accordance with generally accepted
accounting principles ("GAAP") applied on a basis consistent with the accounting
principles, practices and procedures employed related to the Plant, except as
otherwise provided in this Agreement. In the event Operator should make any
change to accounting practices in effect as of the Effective Date for the
determination of Costs, Operator and Owner shall negotiate in good faith to
mutually agree on new procedures to administer this Agreement; provided,
however, Owner shall pay the same Fee as would have occurred under this
Agreement prior to such change in accounting practice in the event any such
change in accounting practice does not improve the accuracy of identifying
Services or determining or measuring Costs.
5.5 Taxes and Other Charges to be Paid by Owner. (a) Owner shall
-------------------------------------------
reimburse Operator for all taxes (excluding net income, franchise, excess
profits, and
21
<PAGE>
other taxes based upon or measured by capital or net income), excises (including
environmental taxes), fees, penalties which Operator may be required to pay to
any government (federal, state or local) directly attributable to the Services
provided by Operator to Owner in this Agreement; provided, however, that
Operator shall make all reasonable efforts to purchase all services, materials,
supplies and equipment to be used or incorporated into the PO/MTBE Facility tax
free by use of a Texas Sales Tax Resale Certificate. Owner will accrue and pay
Texas sales tax on all such services, materials, supplies and equipment under
its Texas sales tax direct payment permit. Operator and Owner shall cooperate to
minimize any applicable state and local sales tax burdens.
(b) Owner shall be responsible for the PO/MTBE Facility real and
personal property tax functions including the rendition, negotiation and payment
of property taxes, and Operator shall cooperate with Owner in minimizing such
taxes. This responsibility shall include all inventories including storehouse
stock held in the name of or for the account of Owner. Owner's personnel and
designated representatives shall have access to the PO/MTBE Facility and
warehouse areas containing Owner materials for property tax inspection
purposes.
(c) Owner shall have access to all tax records for taxes Operator
seeks reimbursement from Owner under this Agreement. Operator and Owner agree
to cooperate and provide all information necessary to one another to enable
each party to properly file their respective tax returns and return claims and
to conduct any tax audit, litigation or other tax controversies with any taxing
authority.
(d) Subject to the other provisions of this Section 5.5, Owner shall
pay and shall indemnify and hold Operator harmless from any taxes (including,
without limitation, any gross receipt taxes), levies, imposts, duties, charges
or withholdings of any nature whatsoever imposed upon the PO/MTBE Facility, the
real property or leasehold interest upon which the PO/MTBE Facility of any part
thereof is located, by any Federal, state or local government or taxing
authority.
22
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5.6 Depreciation and Amortization. In addition to depreciation for
-----------------------------
capital improvements described in Section 6.2 hereof, and subject to the other
provisions of this Section 5.6, Operator shall include in the Fee billed to
Owner direct and indirect depreciation related to the Plant Infrastructure
assets according to accounting methods in use as of the Effective Date of the
Agreement.
(a) Beginning as of the Effective Date of the Agreement an amount
(the "Depreciation Credit") shall be deducted from the fees payable by Owner to
Operator equal to the sum of (i) $29,095 per month related to Owner's
entitlement to Plant Infrastructure assets, plus (ii) 0.4167% of assets value
related to Owner's portion of assets that Operator has started to account for
depreciation and which Owner provided capital under the provisions of
Section 6.2, minus (iii) depreciation attributed to Owner's portion of assets
retired from service after March 31, 1994 and, accordingly, removed from the
depreciation account.
(b) Depreciation of all assets associated with Cost Center 5304
(Cogeneration-Steam), and Cost Center 5300 (Boiler House-Fired) shall be charged
as provided in the STEAM STUDY TEAM Final Report dated July 11, 1994.
(c) Owner agrees to pay direct and indirect depreciation for other
Operator assets located at the Plant utilized by Owner that are not Plant Infra
structure assets.
(d) During any period of time when the Management Fee is fixed, a
Depreciation Credit will be fixed contemporaneously with the Management Fee.
The Depreciation Credit calculation, as shown in Exhibit N, will be maintained
by Operator for use during any period of time when a variable Management Fee
which includes depreciation of Operator assets is applicable.
5.7 Exclusions From Costs. (a) Costs as defined herein shall not
---------------------
include any interest expense incurred by Operator, except as provided in Section
6.2 and Section 7.3 hereof.
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(b) Costs as defined herein shall not include any Obligations (as
hereinafter defined) that Operator pays pursuant to Section 18.1.
ARTICLE VI
Capital Improvements
--------------------
6.1 Owner Right to Use Plant Infrastructure. (a) For the
---------------------------------------
purposes of documenting Owner's right to utilize those certain fixed assets
owned by Operator as listed in Exhibits D-1 and D-2 attached hereto (the "Plant
Infrastructure"), and specifically not to provide a basis for determining
Depreciation Credit or Capital Charges (as defined below) for Capital Improve
ments (as defined below) pursuant to Articles VI and VII, Operator and Owner
agree that Owner shall have the right to utilize the capabilities of Plant
Infrastructure assets represented by the Owner Percents of capability as such
Plant Infrastructure exists as of August 22, 1996, as set forth in Exhibit D-1.
The parties specifically agree that Owner's rights to use is to absolute units
of Plant Infrastructure output capability and that such rights to output
capability shall not be changed if the capacity of any component of Plant
Infrastructure is increased or reduced in the future except for Capital
Improvement projects to expand Plant Infrastructure in which Owner provides its
portion of the expansion project capital.
(b) The Owner Percents shall be adjusted from time to time by mutual
agreement of the parties to accommodate any change to Plant Infrastructure
requirement by Owner, such as by expansion of the PO/MTBE Facility.
6.2 Plant Infrastructure Capital Improvements. (a) For all
------------------------------------------
additions to, or improvements in the Plant Infrastructure, Owner shall reimburse
Operator in full for the product of the costs of additions to, or improvements
in, the Plant Infrastructure, multiplied by the percentage applicable to such
addition or improvement as set forth in Exhibit D-2 ("Capital Charges").
(b) Capital improvements to the Plant Infrastructure which the
parties mutually agree are
24
<PAGE>
solely for the benefit of only one of the parties shall be paid by the party
receiving such benefit.
6.3 PO/MTBE Facility Capital Improvements. For all additions to or
-------------------------------------
improvements in the PO/MTBE Facility ("Capital Improvements") installed at
Operator's expense at Owner's direction, Owner shall reimburse Operator for
Operator's full cost of such Capital Improvements.
ARTICLE VII
Payment
-------
7.1 Fees. (a) Operator shall in good faith invoice Owner
----
(substantially in the form of Exhibit H hereto unless otherwise agreed by the
parties from time to time) no later than the eighth (8th) business day of each
month for the estimated Fee, Capital Charges and Capital Improvements for such
month.
(b) Operator shall reconcile the estimated Fee, Capital Charges and
Capital Improvements from the previous month with the actual Fee, Capital
Charges and Capital Improvements for such month and either credit Owner for the
amount overpaid or invoice Owner for the underpaid Fee, Capital Charges and
Capital Improvements in the invoice described in Section 5.1(a).
(c) Owner shall make payment of the monthly estimated Fee, Capital
Charges and Capital Improvements, less any credit due pursuant to Section
5.1(b), plus any underpaid Fees, Capital Charges and Capital Improvements
pursuant to Section 5.1(b), via wire transfer of immediately available funds or
other mutually agreeable means such that Operator receives payment by the
fifteenth day of the month.
7.2 Payment Dispute. Making payment for any Fees, Capital Charges or
---------------
Capital Improvements hereunder shall not constitute a waiver of either party's
right to adjust or dispute any charge after such payment for the balance of the
current calendar year and the succeeding year. Owner shall pay Operator the full
amount of any invoice submitted by Operator in good faith.
25
<PAGE>
7.3 Interest. (a) Interest on any (i) late payments or (ii)
--------
disputed Fees, Capital Charges or Capital Improvements which are reimbursed
hereunder, shall be payable at a rate equal to the lesser of (A) the Interest
Rate or (B) the maximum rate allowed for this purpose pursuant to the laws of
the State of Texas, computed on a daily basis. "Interest Rate" means the prime
rate per annum announced from time to time by Bankers Trust, plus two percent
(2%).
(b) All disputed Fees, Capital Charges or Capital Improvements and
audit adjustments made pursuant to Section 15.2 hereof shall be refunded within
five business days of a final determination of any such amount.
ARTICLE VIII
Health, Safety, and Environmental Audits
----------------------------------------
8.1 Conduct of Audits. (a) Owner, at its own and sole expense, may
-----------------
conduct, or contract for the conduct of, EH&S audits of the PO/MTBE Facility at
any time upon reasonable notice to Operator.
(b) Owner shall use all reasonable efforts to cause any audit
undertaken pursuant to paragraph 8.1(a) hereof to be conducted jointly with any
scheduled Operator assessment of the PO/MTBE Facility.
(c) In the event any audit undertaken pursuant to paragraph 8.1(a)
hereof cannot reasonably be conducted with a scheduled Operator assessment of
the PO/MTBE Facility, Owner shall coordinate the conduct of any such audit with
Operator so as to cause the least amount of disruption with respect to
Operator's operations.
(d) Owner shall be entitled and Operator shall invite Owner to
participate in the investigation of any incident at the PO/MTBE Facility
affecting EH&S matters.
8.2 Audit Recommendations. Operator shall give due consideration to
---------------------
Owner recommendations resulting from any audit conducted pursuant to paragraph
8.1 here-
26
<PAGE>
of; provided, however, that Operator shall not unreasonably refuse to implement
any such recommendation.
ARTICLE IX
Insurance
---------
9.1 Insurance Provided by Operator. (a) Operator shall maintain at
------------------------------
all times while performing Services under this Agreement, the insurance coverage
set forth below with companies satisfactory to Owner with full policy limits
applying, but not less than as follows:
(i) Workers' compensation insurance as required by laws and
regulations applicable to and covering employees of Operator engaged in
the performance of the Services hereunder;
(ii) Employers' liability insurance protecting Operator against
common law liability in the absence of statutory liability, for employee
bodily injury arising out of the master-servant relationship with limits
not less than those in effect for similar insurance maintained by Operator
from time to time with respect to the Plant; and
(iii) Automobile liability insurance including owned, non-owned
and hired vehicle coverage with limits not less than those in effect for
similar insurance maintained by Operator from time to time with respect to
the Plant.
(b) Prior to the commencement of the Services hereunder, a
certificate evidencing the required insurance coverages shall be delivered to
Owner. Such certificate shall provide that any change restricting or reducing
coverage or the cancellation of any policies under which certificates are issued
shall not be valid as respects Owner's interest therein until Owner has
received 30 days written notice of such change or cancellation. Further, the
certificate shall state that the insurance is primary coverage and not
concurrent or
27
<PAGE>
excess over other valid insurance which may be available to Owner. The workers
compensation and employers' liability policies shall be endorsed to provide
waiver of subrogation rights in favor of the Owner Parties (as hereinafter
defined).
(c) In the event Operator fails to keep the required insurance
policies in full force and effect during the term of this Agreement and during
any extensions hereof, Owner shall have the right to procure such insurance
policies if such insurance is available to Owner. Nothing contained in the
provisions of this Article IX relating to insurance coverage and policy amounts
set forth herein shall operate as a limitation of Operator's liability in tort
or contract for claims made under the terms of this Agreement.
(d) Owner will reimburse Operator for the cost of insurance as
specified in this Section 9.1 as it relates to this Agreement at the actual cost
of such insurance or self-insurance (including losses); provided, however that
(i) under no circumstance shall such costs exceed manual rates and (ii) in the
event that the insurance required to be maintained by Operator pursuant to
this Section 9.1 is obtained by Operator as part of an insurance policy covering
activities or property at Operator facilities and the PO/MTBE Facility, the
actual cost of such insurance policy shall be allocated to Owner on a basis
mutually agreed by the parties.
(e) Operator, at its sole discretion, may self-insure all of the
insurance requirements set forth in this Section 9.1 as long as such self-
insurance provides essentially the same protection as would be afforded
under a third-party policy of insurance.
9.2 Insurance to be Provided by Subcontractors. (a) Operator shall
-------------------------------------------
use reasonable efforts to require any subcontractor that it may engage, directly
or indirectly, in the performance of Services under this Agreement to maintain,
at its sole cost, the insurance coverage set forth below with companies
satisfactory to Operator with full policy limits applying, but not less than as
stated:
(i) Workers' compensation insurance as required by laws and
regulations
28
<PAGE>
applicable to and covering employees of contractor engaged in the performance of
the Services;
(ii) Employers' liability insurance protecting against common
law liability in the absence of statutory liability, for employee bodily
injury arising out of the master-servant relationship with a limit of not
less than $1,000,000;
(iii) Commercial general liability insurance including products
liability and completed operations insurance with limits of not less than
$1,000,000 per occurrence and in the aggregate, unless otherwise agreed;
(iv) Automobile liability insurance including owned, non-owned
and hired vehicle coverage with limits of liability of not less than
$1,000,000; and
(v) Excess liability insurance over Automobile Liability,
Commercial General Liability and Employers' Liability coverages afforded by
the primary policies described above with limits as established by
Operator.
(b) The commercial general liability insurance and excess liability
insurance in Section 9.2(a) shall cover the contractual liability assumed under
the provisions set forth in this Agreement.
(c) Prior to commencement of the services, a certificate evidencing
the required coverages shall be delivered by the contractor to Operator, naming
Operator and Owner and their Affiliates (as hereinafter defined) as
additional insureds. Such certificate shall provide that any change restricting
or reducing coverage or the cancellation of any policies under which certifi
cates are issued shall not be valid as respects Operator's or Owner's interest
therein until Operator or Owner has received 30 days written notice of such
change or cancellation. Further, the certificate shall state that the insurance
is primary coverage and not concurrent or excess over other valid insurance
which may be available to Operator or Owner. Each contractor's Workers
29
<PAGE>
Compensation policy shall be endorsed to provide waiver of subrogation rights
in favor of Operator, Owner and all their subsidiaries and Affiliates.
(d) Operator shall provide copies of any subcontractor's
certificates of insurance to Owner upon request.
9.3 Insurance Provided by Owner. (a) Owner shall maintain, at its
---------------------------
sole cost, at all times while this Agreement is in effect commercial general
liability insurance including products liability and completed operations
insurance with limits of not less than $10,000,000 per occurrence and in the
aggregate. Any insurance policy which Owner shall procure pursuant to this
Section 9.3 shall be endorsed to provide a waiver of subrogation rights in favor
of the Operator Parties, except to the extent any claim is made pursuant to any
such policy with respect to Operator's gross negligence, willful misconduct,
fraud or intentional breach of this Agreement. Such insurance shall cover the
contractual liability assumed under the provisions set forth in this Agreement.
(b) Prior to commencement of the Services, a certificate evidencing
the required coverages and specifically quoting the indemnity provisions of this
Agreement shall be delivered by Owner to Operator, naming Operator as additional
insured. Such certificate shall provide that any change restricting or reducing
coverage or the cancellation of any policies under which certificates are
issued shall not be valid as respects Operator's interest therein until
Operator has received 30 days written notice of such change or cancellation.
Further, the certificate shall state that the insurance is primary coverage and
not concurrent or excess over other valid insurance which may be available to
Operator.
(c) Nothing contained in these provisions relating to coverage and
amounts set forth herein shall operate as a limitation of Owner's liability in
tort or contract for claims made under the terms of this Agreement.
30
<PAGE>
ARTICLE X
Facility Shutdown
-----------------
10.1 Owner Right to Shut Down. (a) Owner, at its sole discretion and
------------------------
upon ninety (90) days written notice shall have the right to shut down
permanently the PO/MTBE Facility at any time.
(i) Operator shall use its best efforts to reduce all costs
subsequent to such notice and continuing after such shutdown consistent
with the terms of applicable collective bargaining agreements.
(ii) Within nine months of a permanent cessation of operations
(a "PCO") in connection with any notice received by Operator pursuant to
this Section 10.1(a), Operator shall cease to charge Owner any Fee
hereunder, except as provided in the following clause (iii).
(iii) For any Services that Owner wishes to continue to receive
from Operator subsequent to a PCO, the provisions of Article V hereof shall
apply.
(b) In the event a permanent shutdown of the PO/MTBE Facility results
directly or indirectly in the layoff or retraining of personnel, costs
attributable to any such layoff or retraining shall be paid by Owner.
10.2 Operator's Right to Shut Down. In the event of (a) the failure
-----------------------------
of Owner to perform any material obligation hereunder in accordance with the
terms of this Agreement which Owner has not cured or commenced to cure within
thirty (30) days of notice thereof, (b) any circumstance which, in the judgment
of Operator, constitutes an Emergency which makes the operation of the PO/MTBE
Facility unsafe or (c) the issuance or adoption of any statute, regulation,
ordinance, order, decree or judgment by any court or governmental authority
having jurisdiction over Operator, Owner or the PO/MTBE Facility, which, in the
reasonable judgment of Operator (based on advice of counsel or written opinion
or directive from a governmental agency) prohibits the operation of the PO/MTBE
31
<PAGE>
Facility, Operator shall have the right to shut down the PO/MTBE Facility until
the conclusion or resolution of the applicable condition entitling Operator to
shut down the PO/MTBE Facility.
ARTICLE XI
Suspension Of Production
------------------------
11.1 Option to Suspend. Owner, upon reasonable notice to Operator,
-----------------
shall have the option to suspend or resume the operation of any part of the
PO/MTBE Facility for so long as Owner may elect.
11.2 Payment of Costs. (a) During any period in which any production
----------------
is suspended pursuant to Section 11.1 hereunder Owner shall continue to pay the
Fee to the extent Operator continues to incur Costs hereunder.
(b) During any such period of suspended production, Operator shall
use its best efforts to minimize, and to eliminate where practicable, costs
and charges related to operating and maintaining the PO/MTBE Facility.
11.3 Standby Condition. At the written request of Owner, Operator
-----------------
will place any part of the PO/MTBE Facility for which production has been
suspended in a standby condition and take all reasonable precautions to
protect any such part of the PO/MTBE Facility against damage and deterioration
until such time as Owner advises Operator to resume production and Owner shall
continue to pay all of Operator's Costs hereunder.
ARTICLE XII
Access To PO/MTBE Facility Information
--------------------------------------
12.1 Examination at the Plant. Operator will make available at the
------------------------
Plant for examination by Owner at reasonable times and upon reasonable notice,
information concerning the operation and maintenance of the PO/MTBE Facility.
32
<PAGE>
12.2 Available Information. Information referred to in Section 12.1
---------------------
shall be:
(a) Operating log sheets and production and shipping records
pertaining to the operation of the PO/MTBE Facility;
(b) All information relating to production materials, spare
parts, maintenance materials and supplies for use in the PO/MTBE Facility;
(c) Records involving inventories of production materials, spare
parts, maintenance materials and supplies maintained for use in the PO/MTBE
Facility;
(d) Time reports for personnel whose services are charged to the
operation or maintenance of the PO/MTBE Facility or the handling of products
produced at the PO/MTBE Facility;
(e) Laboratory analysis reports incident to the production of
products at the PO/MTBE Facility;
(f) Hazardous waste training records and manifests; and
(g) Other existing information and records relating to this
Agreement or the PO/MTBE Facility.
12.3 Records Retention. Operator shall maintain all information
-----------------
referred to in Section 12.2 consistent with Operator's records retention
policies in effect from time to time; provided, however, Operator shall maintain
-------- -------
all such information for a period consistent with the audit rights of Texaco
pursuant to Section 4.5(d) of the Purchase and Sale Agreement.
ARTICLE XIII
Access To Facilities
--------------------
13.1 No Access to Plant Facilities. (a) This Agreement shall not be
-----------------------------
construed or interpreted to give Owner any rights of access to or operation of
Plant facilities.
33
<PAGE>
(b) Owner shall have access to the Plant facilities only as
controlled by the permit, pass or other access procedures implemented at the
Plant by Operator.
13.2 Access to PO/MTBE Facility. Owner shall have unrestricted access
--------------------------
to the PO/MTBE Facility, provided that all Owner employees and representatives
comply with Operator's and Owner's site safety and security policies.
ARTICLE XIV
Accounting Records
------------------
14.1 Principles and Procedures. (a) All books and records to be
-------------------------
maintained as required by this Agreement shall be maintained at the PO/MTBE
Facility, the Plant or related administrative facilities or other locations
agreeable to Owner in accordance with GAAP and shall be available at all
reasonable times during normal business hours and upon reasonable notice for
inspection by Owner's representatives or agents.
(b) Operator shall perform a year-end closing of all books and
records maintained hereunder at the end of each calendar year. Owner's
representatives, internal auditors and independent public accountants shall have
the right to confer with Operator's accounting personnel concerning each such
closing of the books and records.
14.2 Audits. (a) For each calendar year, Owner may, upon 60 days
------
notice to Operator to be given within the twelve months following such calendar
year, elect to have an audit performed, at Owner's sole expense, of the
accounts and records relating to the Services performed and the Fees invoiced
hereunder for such year.
(b) Any audit conducted pursuant to this Section 15.2 shall be
conducted during Operator's ordinary business hours and shall be subject to
appropriate provisions protecting confidentiality.
34
<PAGE>
(c) If, in the reasonable written opinion of Owner's independent
auditors, Operator has not properly invoiced Owner for Services provided
hereunder, Operator and Owner shall meet to resolve the matter within thirty
(30) days after both parties have received a final written audit report from
Owner's independent auditors.
ARTICLE XV
Early Termination
-----------------
15.1 Insolvency. Without waiver of any other rights or remedies which
----------
may be available for default under this Agreement, either party may terminate
this Agreement upon sixty (60) days written notice if:
(a) The other party makes an assignment for the benefit of
creditors;
(b) A receiver shall be appointed to take over all or a
substantial part of the other party's business or property and such receivership
shall not have been vacated or stayed within thirty days; or
(c) Either party is adjudicated insolvent or an order for relief
is entered against such party under applicable bankruptcy law.
ARTICLE XVI
Intellectual Property
---------------------
16.1 Definition of Field. For the purposes of this Agreement, "Field"
-------------------
shall mean the manufacture of PO and/or lower alkyl t-butyl ethers solely or
conjointly, including the separation and refining of all products, coproducts or
byproducts; the preparation and recovery of catalysts useful in such
manufacture; and the processes, reactants, reagents and analytical methods in
such manufacture, specifically excluding, however, the manufacture of lower
alkyl t-butyl ethers by reacting an isoalkene feed with a lower alkanol feed
other than t-butanol.
16.2 Title to Inventions and Patents. (a) If any Dedicated
-------------------------------
Personnel, Shared Personnel, or Support
35
<PAGE>
Personnel is an inventor (or co-inventor with a Owner employee), during the term
of this Agreement, of any Invention (as hereinafter defined) useful within the
Field, all patent rights with respect to such Invention (as hereinafter defined)
shall be the property of Owner. As used in this Article XVII, "Invention" shall
mean any subject matter within the scope of 35 U.S.C. Section 101.
(b) If any Dedicated Personnel, Shared Personnel, or Support
Personnel is an inventor (or co-inventor with a Owner employee), during the term
of this Agreement, of any Invention useful outside the Field, all patent rights
with respect to such Invention shall be the property of Operator.
(c) Notwithstanding the provisions of Sections 16.2(a) and (b) above,
if any Dedicated Personnel, Shared Personnel, or Support Personnel is an
inventor (or co-inventor with a Owner employee), during the term of this
Agreement, of any Invention useful both within the Field and outside the Field,
such Invention shall (i) if first actually reduced to practice in the Field, be
the property of Owner, or (ii) if first actually reduced to practice in a
context other than the Field, be the property of Operator. The parties shall
have until termination of this Agreement to determine if an Invention is useful
both within and without the Field and therefore qualifies for licensing rights
under Sections 16.4(a) and (b) below.
(d) Owner, at its own expense, shall be responsible for preparing,
filing, prosecuting, maintaining, and enforcing any and all patent
applications and patents claiming Inventions for which Owner owns all patent
rights under Sections 16.2 (a) or (c) above. Operator shall direct its employees
to cooperate with Owner in executing any papers necessary in connection with the
preparation, filing and prosecution of such patent applications on such
Inventions. Owner shall pay Operator for services rendered by Operator
employees in connection with reviewing and executing such patent applications
and upon execution of each such patent application shall compensate each
Operator employee that is listed as an inventor on such applications according
to the inventor compensation policy then in effect for Operator employees. As
used herein, the term "original application" means any patent application that
is not a
36
<PAGE>
continuation application, divisional application, reissue, or later filed
foreign application corresponding to an earlier filed application under the
International Convention for the Protection of Industrial Property (Paris
Convention).
(e) Operator, at its own expense, shall be responsible for preparing,
filing, prosecuting, maintaining, and enforcing any and all patent
applications and patents claiming Inventions for which Operator owns all patent
rights under paragraph (b) or (c) above. Owner shall direct its employees to
cooperate with Operator in executing any papers necessary in connection with
the preparation, filing, and prosecution of said patent application on such
Inventions. Upon execution of each such patent application, Owner shall
compensate each Owner employee that is listed as an inventor on such
applications according to the inventor compensation policy then in effect for
Owner employees.
16.3 Paid Up Licenses For Invention and Patents. (a) Owner grants
-------------------------------------------
and agrees to grant to Operator irrevocable, transferable, royalty-free, world-
wide licenses, including the right to grant sub-licenses, under all rights to
which Owner obtains title under Section 16.2(c), to make, have made, use, and
sell any processes, machines, articles of manufacture, or compositions of
matter; provided, however, such licenses do not include the right to use within
the Field any processes, machines, articles of manufacture, or compositions of
matter, and do not include the right to knowingly sell any processes, machines,
articles of manufacture, or compositions of matter for use within the Field.
Owner agrees, and will require such agreement from any assignee of any rights to
which Owner obtains title under Section 16.2(c), that it will not grant to any
third party that is not an Affiliate (as hereinafter defined) of Owner any
license under any rights to which Owner obtains title under Section 16.2(c),
unless such license is expressly limited to the use within the Field, or the
manufacture and sale for use within the Field, of any processes, machines,
articles of manufacture, or compositions of matter.
(b) Operator grants and agrees to grant to Owner irrevocable,
transferable, royalty-free, world-wide licenses, including the right to grant
sub-licenses,
37
<PAGE>
under all rights to which Operator obtains title under Section 16.2(c), to use
within the Field, and to make, have made, and sell for use within the Field, any
processes, machines, articles of manufacture, or compositions of matter;
however, such licenses and sub-licenses do not include the right to use in any
context other than within the Field any processes, machines, articles of
manufacture, or compositions of matter, and do not include the right to make,
have made, or knowingly sell any processes, machines, articles of manufacture,
or compositions of matter for use in any context other than within the Field.
Operator agrees, and will require such agreement from any assignee of any
rights to which Operator obtains title under Section 16.2(c), that it will not
grant to any third party that is not an Affiliate of Operator any license under
any rights to which Operator obtains title under Section 16.2(c), unless such
license is expressly limited to the use in a context other than within the
Field, of any processes, machines, articles of manufacture, or composition of
matter.
16.4 Title of Technical Information. (a) Any technical information
------------------------------
generated by any Dedicated Personnel, Shared Personnel, or Support Personnel
during the term of this Agreement, or by any employee of Owner in connection
with this Agreement, that is useful within the Field, shall be the property of
Owner.
(b) Any technical information generated by any Dedicated Personnel,
Shared Personnel, or Support Personnel during the term of this Agreement, or by
any employee of Owner in connection with this Agreement, that is useful outside
the Field, shall be the property of Operator.
(c) Notwithstanding the provisions of Sections 16.4(a) and (b), any
technical information generated by any Dedicated Personnel, Shared Personnel, or
Support Personnel during the term of this Agreement, or by any employee of Owner
in connection with this Agreement, that is useful both within the Field and
outside the Field, shall (i) if first recorded in a context within the Field, be
the property of Owner, or (ii) if first recorded in a context other than within
the Field, be the property of Operator. The parties shall have until
termination of this Agreement to determine if technical information is useful
both within and without
38
<PAGE>
the Field and therefore qualifies for licensing rights under Section 16.5(a) and
(b) below.
16.5 Paid Up Licenses For Technical Information. (a) Owner grants
-------------------------------------------
and agrees to grant to Operator and Operator's Affiliates non-transferable,
irrevocable, royalty-free, world-wide licenses to use (i) in any context other
than within the Field for a period of seventeen (17) years from the date of this
Agreement and (ii) in any context whatsoever (including within the Field)
thereafter, all technical information to which Owner obtains title under Section
16.4(a) or (c) above; such licenses include the right to grant sub-licenses to
use such technical information in any context other than within the Field, which
sub-licenses shall contain restrictions at least as stringent as those
contained in a confidentiality clause which binds Owner and Operator. Upon the
expiration of seventeen (17) years from the date of this Agreement, such
licenses shall become fully transferable.
(b) Operator grants and agrees to grant to Owner a transferable,
irrevocable, royalty-free, world-wide license, including the right to grant sub-
licenses, to use within the Field all technical information to which Operator
obtains title under Section 16.4(c) above; however, such license and sub-
licenses do not include the right to use such technical information in any
context other than within the Field, and which sub-licenses shall contain
restrictions at least as stringent as those contained in a confidentiality
clause which binds Owner and Operator.
16.6 Confidentiality. Owner and Operator agree to comply with the
---------------
terms of the Non-Disclosure Agreement among certain of their Affiliates with
respect to technical information and data of a confidential and proprietary
nature related in any way to the subject matter of this Agreement ("Technical
Information") owned by the other party as of the Effective Date or thereafter;
provided, however, that nothing contained in such agreement shall prohibit a
- -------- -------
party from disclosing such Technical Information to any sublicensees or
transferees to the extent permitted by Section 16.5 of this Agreement, or from
using such Technical Information to the extent permitted by Section 16.5 of this
Agreement.
39
<PAGE>
ARTICLE XVII
Release, Indemnification and Risk of Loss
-----------------------------------------
17.1 Release and Indemnification. Operator shall only be liable to
---------------------------
Owner for any loss, liability, damage, claim, expense, fine, penalty, interest
cost, or other obligation of any nature ("Obligation") to the extent caused by
Operator's, its Affiliates', and their respective directors', officers',
employees', and agents' (the "Operator Parties"), gross negligence, willful
misconduct, fraud, or intentional breach of Operator's obligations under this
Agreement in performing the Services hereunder. The Operator Parties hereby
release Owner, its Affiliates, and their respective directors, officers,
employees and agents (the "Owner Parties") from, and shall indemnify the Owner
Parties against, Obligations claimed or asserted in connection with the Services
under this Agreement by the Operator Parties, the Owner Parties, or any third
party, to the extent caused by the Operator Parties' gross negligence, willful
misconduct, fraud, or intentional breach of Operator's obligations under this
Agreement in performing the Services. The Owner Parties hereby release the
Operator Parties from, and shall indemnify the Operator Parties against,
Obligations claimed or asserted in connection with the Services under this
Agreement by the Owner Parties, the Operator Parties, or any third party
attributable to causes other than the Operator Parties' gross negligence,
willful misconduct, fraud, or intentional breach of Operator's obligations under
this Agreement in performing the Services hereunder. IT IS THE INTENTION OF THE
PARTIES HERETO THAT THE RELEASE BY, AND INDEMNITY OBLIGATIONS OF, OWNER UNDER
THIS PROVISION HOLD THE OPERATOR PARTIES HARMLESS FROM AND AGAINST THE
CONSEAQUENCES OF THEIR OWN ORDINARY NEGLIGENCE TO THE EXTENT SUCH ORDINARY
NEGLIGENCE IS THE SOLE, CONCURRENT, OR JOINT CAUSE OF THE OBLIGATIONS.
17.2 Defense of Claims. Upon the request of any person or party
-----------------
covered and protected by the release and indemnification provided for in Section
17.1, the indemnifying party shall, at its expense, cause any such Obligations
to be defended by counsel reasonably satis-
40
<PAGE>
factory to the indemnified party, and the indemnified party shall have the
right, at the indemnified party's expense, to participate in the investigation,
defense, settlement and/or compromise thereof; it being understood that the
indemnifying party shall have the sole authority to settle and/or compromise any
claim in consultation with the indemnifying party. In the event the
indemnifying party fails to cause such Obligations to be defended by counsel
reasonably satisfactory to the indemnified party, the indemnified party and any
other person or party covered and protected by such indemnification, shall have
the right at the indemnifying party's expense, to retain and be defended by
counsel reasonably satisfactory to the indemnified party. The indemnified party
shall cooperate with and use all reasonable efforts to assist the indemnifying
party in the preparation or defense of a claim.
17.3 Non-Liability for Defective Performance Caused by Supplier.
----------------------------------------------------------
Operator shall not be liable in any way to the Owner Parties for any failure or
defect in the supply or character of any Services furnished hereunder to the
extent that such failure or defect is caused by any requirement, act or omission
of any public utility or other supplier to Operator. Operator will, however,
cooperate with and assist Owner in pursuing any rights or remedies which Owner
or Operator may have against any such utility or supplier to Operator.
17.4 Title and Risk of Loss. Title to and risk of loss of or damage
----------------------
to (i) all raw materials and supplies provided hereunder or otherwise by Owner
to Operator, or for raw materials or supplies contributing part of the Services
provided by Operator to Owner hereunder (following the supply thereof); (ii)
all work in progress and all goods resulting from the performance of Services
hereunder; and (iii) any packaging containers and other materials provided
hereunder by Owner to Operator shall be in Owner at all times; provided,
however, that title and risk of loss of or damages to materials or goods sold
to, or produced for, Operator shall pass to Operator at the time specified in
the contract between Operator and Owner for the sale or production of such
materials or goods.
41
<PAGE>
ARTICLE XVIII
Limitation Of Liability
-----------------------
18.1 Limitation of Liability. Operator's total liability to Owner for
-----------------------
any calendar year on all claims of any kind whatsoever whether based on
contract, indemnity, warranty, tort, strict liability or otherwise, for all
losses or damages arising out of, connected with, or resulting from this
Agreement or from the performance or breach thereof during such calendar year,
or from any Services covered by or furnished during such calendar year, shall in
no case exceed $10 (ten) million.
18.2 Disclaimers of Warranties. All of the warranties and guarantees
-------------------------
made in this Agreement by Operator are in lieu of all other warranties and
guarantees, whether written or oral or implied in fact or in law, and whether
or not based on statute.
18.3 Consequential Damages. Excluding third party claims alleging
---------------------
such damages, in no event shall Operator or Owner be liable for any
consequential, incidental or special damages or any other liabilities not
expressly set forth herein, regardless of legal theory or negligence.
ARTICLE XIX
Assignment
----------
19.1 General. Subject to the provisions of Sections 19.2 and 19.3, no
-------
right or interest in this Agreement shall be assigned by either party without
prior written consent of the other party, which consent shall not be
unreasonably withheld, except that either party shall have the right to assign
this Agreement without obtaining the prior written consent of the other party to
(a) an Affiliate or (b) a lender, financing source or indenture trustee or their
designated successors in connection with any financing arrangements entered into
by either party or its Affiliates. For the purposes of this Agreement
"Affiliate" shall mean, with respect to any specified person or entity, any
other person or entity, directly or indirectly controlling, controlled by or
under direct or indirect common control with such
42
<PAGE>
specified person or entity. For the purposes of this definition, "control"
(including, with correlative meanings, "controlling", "controlled by", and
"under common control with") means the power to direct or cause the direction of
the management and policies of such person or entity, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise
and, it being understood and agreed that, with respect to a corporation or
partnership, control shall mean direct or indirect ownership of fifty percent
(50%) or more of the voting stock or general partnership interest or voting
interest in any such corporation or partnership.
19.2 Successors to Facilities. (a) Owner shall have the right to
------------------------
assign this Agreement to a successor of all or substantially all of the
PO/MTBE Facility, and (b) Operator shall have the right to assign this
Agreement to a successor of all or substantially all of the Plant; provided,
however, in either instance, such successor shall expressly assume by an
instrument in writing all of the obligations and liabilities of the assignor
under this Agreement.
19.3 Obligations. No assignment of this Agreement shall relieve the
-----------
assigning party of its obligations hereunder unless such obligations are
expressly relieved by the non-assigning party.
ARTICLE XX
Force Majeure
-------------
20.1 Defined. No failure or omission to carry out or observe any of
-------
the terms, provisions or conditions of this Agreement shall give rise to any
claim by any party her
43
<PAGE>
eto against any other party hereto, or be deemed to be a default or breach of
this Agreement if the same shall be caused by or arise out of any event of Force
Majeure (as defined below). For the purposes of this Agreement "Force Majeure"
shall include any war, declared or not, hostilities, any act of belligerence,
blockade, revolution, insurrection, riot, public disorder; expropriation,
requisition, confiscation or nationalization, export or import restrictions by
any governmental authorities; closing of harbors, docks, canals, or other ship
ping or navigation facilities; rationing or allocation, whether imposed by law,
decree or regulation by, or by compliance of industry at the insistence of any
governmental authority; or restraint by court order or order of public
authority; or action or non-action by or inability to obtain the necessary
authorizations or approvals from any governmental authority (provided any such
action, non-action or inability was not caused by the party invoking the
provisions of this Article XX); or fire, flood, earthquake, storm, lightening,
tide (other than normal tides), tidal wave, perils of the sea, accidents of
navigation or breakdown or injury of vessels; accidents to harbor, docks,
canals, or other shipping or navigation facilities; epidemic, quarantine,
strikes or combination of workmen, lockouts or other labor disturbances; or the
failure or breakdown of facilities and/or equipment (whether or not resulting
from any cause listed above) or any other event, matter or thing, wherever
occurring, which shall not be within the reasonable control of the party
affected thereby.
20.2 Obligation to Diligently Cure Force Majeure. If either party
-------------------------------------------
shall rely on the occurrence of an event of Force Majeure as a basis for being
excused from performance of its obligations under this Agreement, then the party
relying on the event or condition shall:
(a) provide prompt notice to the other party of the occurrence of
the event or condition giving an estimation of its expected duration and the
probable impact on the performance of its obligations hereunder;
(b) exercise all reasonable efforts to continue to perform its
obligations hereunder;
(c) expeditiously take action to correct or cure the event or
condition excusing performance;
(d) exercise all reasonable efforts to mitigate or limit damages
consistent with the shutdown and start-up priorities established pursuant to
Section 3.3(c) hereof; and
(e) provide prompt notice to the other party of the cessation of
the event or condition giving rise to its excusal from performance.
44
<PAGE>
20.3 Effect of Continued Event of Force Majeure. Notwithstanding
-------------------------------------------
anything herein to the contrary, if an event of Force Majeure continues for a
period of more than five (5) days, Operator shall take all reasonable measures
to mitigate or limit Operator's costs incurred hereunder (including reducing its
work force within permitted statutory time periods) for the duration of the
Force Majeure event. Operator shall consult with Owner with respect to its
plans to mitigate or limit such Costs and shall take such actions as are
reasonably directed by Owner. Owner shall pay Operator the Costs incurred to
provide the Services during the entire period of Force Majeure.
ARTICLE XXI
Contract Coordinators
---------------------
21.1 Appointment. As soon as practicable after the Effective Date,
-----------
Operator and Owner each shall designate a contract coordinator under this
Agreement (each, a "Contract Coordinator").
21.2 Responsibilities. The Contract Coordinators shall be
----------------
responsible for:
(a) the documentation of all communications and notices
required by this Agreement;
(b) the communication of Service needs;
(c) the administration of the terms and conditions of this
Agreement; and
(d) the resolution of issues arising out of the terms and
conditions of this Agreement in accordance with the terms hereof and the
initiation, if necessary, of the procedures set forth in Article XXII hereof.
21.3 Continuity. The parties shall use all reasonable efforts to
----------
maintain continuity in the persons appointed to be Contract Coordinators.
45
<PAGE>
ARTICLE XXII
Governing Law
-------------
22.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAW PRINCIPLES THEREOF, EXCEPT SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW.
ARTICLE XXIII
Miscellaneous
-------------
23.1. Notices. All notices provided herein shall be in writing and
-------
shall be considered as properly given if sent by facsimile and confirmed, or by
delivery by a nationally recognized overnight courier duly addressed to the
parties shown below:
HUNTSMAN SPECIALTY HUNTSMAN PETROCHEMICAL
CHEMICALS CORPORATION CORPORATION
500 Huntsman Way 3040 Post Oak Blvd.
Salt Lake City, Utah 84108 Suite 2200
Attn: Vice President Houston, TX 77056
Attn: Vice President-
Facsimile: (801) 584-5782 General Counsel
Facsimile: (713) 235-6900
23.2 Waiver. No claim or right arising out of a breach of this
------
Agreement may be discharged in whole or in part by a waiver or renunciation of
such claim or right unless the waiver or renunciation is in writing, signed by
the party waiving or renouncing such claim or right. No such waiver or
renunciation shall be deemed to be a waiver of any subsequent breach or
renunciation of any subsequent claim or right. Further, the failure of either
party hereto to enforce any claim or right to seek any remedy arising out of a
breach of this Agreement shall not prejudice or affect the rights or remedies of
either party hereto in the event of any such subsequent breach of this
Agreement.
23.3 Interpretation. The headings contained in this Agreement are
--------------
solely for the purpose of refer-
46
<PAGE>
ence, are not part of this Agreement and shall not affect the meaning or
interpretation of the terms or provisions hereof.
23.4 Severability. If for any reason any provision contained in this
------------
Agreement is held to be invalid, illegal, or otherwise void by a court of
competent jurisdiction, the remaining provisions of this Agreement shall not be
affected and shall continue in full force and effect.
23.5 Entire Agreement; Amendments. This Agreement, including the
----------------------------
Exhibits hereto, embodies the entire agreement and understanding of the parties
hereto with respect to the transactions contemplated hereby. This Agreement may
be altered, amended, or changed in any way only by a written instrument executed
by both parties.
23.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts each of which shall be deemed an original and all of which shall be
deemed one and the same Agreement.
47
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Operating &
Maintenance Agreement the day and year first above written.
HUNTSMAN SPECIALTY CHEMICALS
CORPORATION
By: /s/ J. Kimo Esplin
Title: Vice President
HUNTSMAN PETROCHEMICAL CORPORATION
By: /s/ Jon M. Huntsman
Title: Chairman of the Board and
Chief Executive Officer
48
<PAGE>
EXHIBIT 10.4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
HUNTSMAN ICI CHEMICALS LLC,
as the Borrower
HUNTSMAN ICI HOLDINGS LLC,
as a Guarantor
BANKERS TRUST COMPANY,
as Lead Arranger, Administrative Agent and Sole Book Manager,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Syndication Agent and Co-Arranger,
THE CHASE MANHATTAN BANK AND WARBURG DILLON READ,
as Co-Arrangers and Co-Documentation Agents
and
VARIOUS LENDING INSTITUTIONS
Dated as of June 30, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.............................. 2
1.1 Definitions...................................................... 2
-----------
1.2 Accounting Terms; Financial Statements........................... 56
--------------------------------------
ARTICLE II AMOUNT AND TERMS OF CREDIT................................... 57
2.1 The Commitments.................................................. 57
---------------
2.2 Notes............................................................ 61
-----
2.3 Minimum Amount of Each Borrowing; Maximum Number of Borrowings... 62
--------------------------------------------------------------
2.4 Borrowing Options................................................ 62
-----------------
2.5 Notice of Borrowing.............................................. 63
-------------------
2.6 Conversion or Continuation....................................... 64
--------------------------
2.7 Disbursement of Funds............................................ 65
---------------------
2.8 [INTENTIONALLY DELETED.]......................................... 66
2.9 Pro Rata Borrowings.............................................. 66
-------------------
2.10 Amount and Terms of Letters of Credit............................ 67
-------------------------------------
ARTICLE III INTEREST AND FEES........................................... 78
3.1 Interest......................................................... 78
--------
3.2 Fees............................................................. 79
----
3.3 Computation of Interest and Fees................................. 80
--------------------------------
3.4 Interest Periods................................................. 80
----------------
3.5 Compensation for Funding Losses.................................. 81
-------------------------------
3.6 Increased Costs, Illegality, Etc................................. 82
--------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
3.7 Replacement of Affected Lenders.................................. 85
-------------------------------
ARTICLE IV REDUCTION OF COMMITMENTS; PAYMENTS AND PREPAYMENTS........... 86
4.1 Voluntary Reduction of Commitments............................... 86
----------------------------------
4.2 Mandatory Reductions of Commitments.............................. 87
-----------------------------------
4.3 Voluntary Prepayments............................................ 88
---------------------
4.4 Mandatory Prepayments............................................ 90
---------------------
4.5 Application of Prepayments; Waiver of Certain Prepayments........ 94
---------------------------------------------------------
4.6 Method and Place of Payment...................................... 96
---------------------------
4.7 Net Payments..................................................... 96
------------
ARTICLE V CONDITIONS OF CREDIT.......................................... 99
5.1 Conditions Precedent to the Initial Borrowing.................... 99
---------------------------------------------
5.2 Conditions Precedent to All Credit Events........................ 107
-----------------------------------------
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................... 108
6.1 Corporate Status................................................. 108
----------------
6.2 Corporate Power and Authority.................................... 109
-----------------------------
6.3 No Violation..................................................... 109
------------
6.4 Governmental and Other Approvals................................. 110
--------------------------------
6.5 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities Projections; etc. ................................... 110
----------------------------
6.6 Litigation....................................................... 112
----------
6.7 Disclosure....................................................... 112
----------
6.8 Use of Proceeds; Margin Regulations.............................. 113
-----------------------------------
6.9 Tax Returns and Payments......................................... 114
------------------------
6.10 Compliance With ERISA............................................ 114
---------------------
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
6.11 Ownership of Property............................................ 115
---------------------
6.12 Capitalization of Holdings and the Borrower...................... 115
-------------------------------------------
6.13 Subsidiaries..................................................... 116
------------
6.14 Compliance With Law, Etc. ....................................... 117
------------------------
6.15 Investment Company Act........................................... 117
----------------------
6.16 Public Utility Holding Company Act............................... 117
----------------------------------
6.17 Environmental Matters............................................ 117
---------------------
6.18 Labor Relations.................................................. 118
---------------
6.19 Intellectual Property, Licenses, Franchises and Formulas......... 118
--------------------------------------------------------
6.20 Certain Fees..................................................... 119
------------
6.21 Security Documents............................................... 119
------------------
6.22 Documents........................................................ 120
---------
6.23 Purchase and Supply Contracts.................................... 121
-----------------------------
6.24 Millennium....................................................... 121
----------
6.25 Subordination Provisions......................................... 121
------------------------
6.26 Foreign Intercompany Loan Documents.............................. 121
-----------------------------------
6.27 Supply Arrangement............................................... 121
------------------
ARTICLE VII AFFIRMATIVE COVENANTS....................................... 122
7.1 Financial Statements Furnish, or cause to be furnished, to each
--------------------
Lender:.......................................................... 122
7.2 Certificates; Other Information.................................. 122
-------------------------------
7.3 Notices.......................................................... 124
-------
7.4 Conduct of Business and Maintenance of Existence................. 125
------------------------------------------------
7.5 Payment of Obligations........................................... 127
----------------------
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
7.6 Inspection of Property, Books and Records........................ 128
-----------------------------------------
7.7 ERISA............................................................ 128
-----
7.8 Maintenance of Property, Insurance............................... 130
----------------------------------
7.9 Environmental Laws............................................... 131
------------------
7.10 Use of Proceeds.................................................. 132
---------------
7.11 Interest Rate Protection......................................... 132
------------------------
7.12 Additional Security; Further Assurances.......................... 132
---------------------------------------
7.13 End of Fiscal Years; Fiscal Quarters............................. 134
------------------------------------
7.14 Maintenance of Corporation Separateness.......................... 135
---------------------------------------
7.15 Foreign Subsidiaries Security.................................... 135
-----------------------------
7.16 Y2K.............................................................. 137
---
7.17 Certain Fees Indemnity........................................... 137
----------------------
7.18 Contribution Documents........................................... 137
----------------------
ARTICLE VIII NEGATIVE COVENANTS......................................... 137
8.1 Liens............................................................ 138
-----
8.2 Indebtedness..................................................... 139
------------
8.3 Consolidation, Merger, Purchase or Sale of Assets, etc. ......... 143
------------------------------------------------------
8.4 Dividends or Other Distributions................................. 145
--------------------------------
8.5 Limitation on Certain Restrictions on Subsidiaries............... 146
--------------------------------------------------
8.6 Issuance of Stock................................................ 146
-----------------
8.7 Loans and Investments............................................ 147
---------------------
8.8 Transactions with Affiliates..................................... 150
----------------------------
8.9 Lines of Business................................................ 151
-----------------
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
8.10 Fiscal Year...................................................... 152
-----------
8.11 Limitation on Voluntary Payments and Modifications of
-----------------------------------------------------
Indebtedness; Modifications of Certificate of Incorporation,
------------------------------------------------------------
By-Laws and Certain Other Agreements; Etc. ...................... 152
-----------------------------------------
8.12 Accounting Changes............................................... 153
------------------
ARTICLE IX FINANCIAL COVENANTS........................................... 154
9.1 Capital Expenditures............................................. 154
--------------------
9.2 Maintenance of Consolidated Net Worth............................ 154
-------------------------------------
9.3 Interest Coverage Ratio.......................................... 155
-----------------------
9.4 Leverage Ratio................................................... 155
--------------
ARTICLE X EVENTS OF DEFAULT.............................................. 156
10.1 Events of Default................................................ 156
-----------------
10.2 Rights Not Exclusive............................................. 160
--------------------
ARTICLE XI THE ADMINISTRATIVE AGENT...................................... 160
11.1 Appointment...................................................... 160
-----------
11.2 Nature of Duties................................................. 161
----------------
11.3 Exculpation, Rights Etc. ........................................ 161
-----------------------
11.4 Reliance......................................................... 162
--------
11.5 Indemnification.................................................. 162
---------------
11.6 Administrative Agent In Its Individual Capacity.................. 163
-----------------------------------------------
11.7 Notice of Default................................................ 163
-----------------
11.8 Holders of Obligations........................................... 164
----------------------
11.9 Resignation by Administrative Agent.............................. 164
-----------------------------------
11.10 Administrative Agent as English Trustee.......................... 165
---------------------------------------
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE XII MISCELLANEOUS................................................ 165
12.1 No Waiver; Modifications in Writing.............................. 165
-----------------------------------
12.2 Further Assurances............................................... 168
------------------
12.3 Notices, Etc. ................................................... 168
------------
12.4 Costs, Expenses and Taxes........................................ 168
-------------------------
12.5 Confirmations.................................................... 171
-------------
12.6 Adjustment; Setoff............................................... 171
------------------
12.7 Execution in Counterparts........................................ 172
-------------------------
12.8 Binding Effect; Assignment; Addition and Substitution of Lenders. 172
-----------------------------------------------------------------
12.9 CONSENT TO JURISDICTION; MUTUAL WAIVER OF JURY TRIAL............. 175
----------------------------------------------------
12.10 GOVERNING LAW.................................................... 176
-------------
12.11 Severability of Provisions....................................... 177
--------------------------
12.12 Headings......................................................... 177
--------
12.13 Termination of Agreement......................................... 177
------------------------
12.14 Confidentiality.................................................. 177
---------------
12.15 Concerning the Collateral and the Loan Documents................. 178
------------------------------------------------
12.16 Effectiveness.................................................... 180
-------------
12.17 Registry......................................................... 181
--------
12.18 Limited Recourse................................................. 181
----------------
12.19 Accounts Receivable Securitization............................... 181
----------------------------------
ARTICLE XIII HOLDINGS GUARANTY........................................... 182
13.1 The Guaranty..................................................... 182
------------
13.2 Insolvency....................................................... 183
----------
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
13.3 Nature of Liability.............................................. 183
-------------------
13.4 Independent Obligation........................................... 183
----------------------
13.5 Authorization.................................................... 185
-------------
13.6 Reliance......................................................... 186
--------
13.7 Subordination.................................................... 186
-------------
13.8 Waiver........................................................... 186
------
13.9 Nature of Liability.............................................. 187
-------------------
</TABLE>
vii
<PAGE>
INDEX OF EXHIBITS AND SCHEDULES
Exhibits
--------
Exhibit 1.1(a) Form of UK Holdco Note
Exhibit 1.1(b) Form of Foreign Intercompany Note
Exhibit 1.1(c) Description of Huntsman Agreements
Exhibit 1.1(d) Description of ICI Agreements
Exhibit 2.1(c) Form of Swing Line Loan Participation Certificate
Exhibit 2.2(a)(1) Form of Term A Dollar Note
Exhibit 2.2(a)(2) Form of Term A Euro Note
Exhibit 2.2(a)(3) Form of Term B Note
Exhibit 2.2(a)(4) Form of Term C Note
Exhibit 2.2(a)(5) Form of Revolving Note
Exhibit 2.2(a)(6) Form of Multicurrency Revolving Note
Exhibit 2.2(a)(7) Form of Swing Line Note
Exhibit 2.5 Form of Notice of Borrowing
Exhibit 2.6 Form of Notice of Conversion or Continuation
Exhibit 2.10(b) - 1 Form of Letter of Credit Request
Exhibit 2.10(b) - 2 Form of Letter of Credit Amendment Request
Exhibit 4.7(d) Form of Section 4.7(d)(ii) Certificate
Exhibit 5.1(n) Form of Skadden, Arps, Slate, Meagher & Flom LLP Legal
Opinion
Exhibit 5.1(t) Form of ICI Letter
Exhibit 7.2(b) Form of Officer's Certificate Pursuant to Section 7.2(b)
Exhibit 8.2(p) Form of BASF Promissory Note
Exhibit 8.7(i) Form of Subordination Provisions
Exhibit 12.8(c) Form of Assignment and Assumption Agreement
viii
<PAGE>
Schedules
---------
Schedule 1.1(a) Commitments
Schedule 1.1(b) Calculation of the Mandatory Cost
Schedule 1.1(c) Description of ICI Contributed Business
Schedule 2.10(k) Outstanding Letters of Credit
Schedule 5.1(e)(iii) List of Foreign Intercompany Loan Security Document
Deliveries
Schedule 5.1(s) List of Environmental Reports
Schedule 6.3 Approvals and Consents
Schedule 6.4 Governmental Approval
Schedule 6.5(a) Pro Forma Balance Sheet
Schedule 6.5(c) Existing Liabilities
Schedule 6.5(e) Projections
Schedule 6.12(a) Capitalization of Holdings and the Borrower
Schedule 6.13 List of Subsidiaries
Schedule 6.21(c) Owned and Leased Properties
Schedule 6.23 Material Purchase and Supply Contracts
Schedule 7.8 Insurance Levels
Schedule 8.1(h) Existing Liens
Schedule 8.2(b) Existing Indebtedness
Schedule 8.5(a) Existing Restrictions on Subsidiaries
Schedule 8.7(b) Existing Investments
Schedule 12.3 Notice Information
ix
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of June 30, 1999 and is made by and
among Huntsman ICI Chemicals LLC, a Delaware limited liability company (the
"Borrower"), Huntsman ICI Holdings LLC, a Delaware limited liability company
- ---------
("Holdings"), the undersigned financial institutions, including Bankers Trust
- ----------
Company, in their capacities as lenders hereunder (collectively, the "Lenders,"
-------
and each individually, a "Lender"), Bankers Trust Company, as Lead Arranger,
------
Administrative Agent ("Administrative Agent") for the Lenders and Sole Book
--------------------
Manager, Goldman Sachs Credit Partners L.P., as Syndication Agent and Co-
Arranger and The Chase Manhattan Bank and Warburg Dillon Read (a division of
UBS AG), as Co-Arrangers and as Co-Documentation Agents (collectively, the
"Agents" and each individually, an "Agent").
- ------- -----
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower has requested that the Lenders (i) make term
loans to the Borrower in the aggregate principal amount of $1,670,000,000 and
(ii) provide revolving credit facilities to the Borrower in an aggregate amount
not to exceed $400,000,000 at any time outstanding;
WHEREAS, the proceeds of the term loans described above will be used
by the Borrower to finance the Transactions (as defined below);
WHEREAS, the proceeds of the revolving credit facility described above
will be used by the Borrower to finance, in part, the Transactions and for
ongoing working capital and general corporate purposes; and
WHEREAS, the Lenders are willing to extend commitments to make the
term loans and revolving credit loans to the Borrower for the purposes specified
above and only on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained the parties hereto agree as follows:
1
<PAGE>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions
As used herein, and unless the context requires a different meaning, the
following terms have the meanings indicated:
"Accounts Receivable" means presently existing and hereafter arising
-------------------
or acquired accounts receivable, notes, drafts, acceptances, general
intangibles, choses in action and other forms of obligations and receivables
relating in any way to Inventory or arising from the sale of Inventory or the
rendering of services by the Borrower or its Subsidiaries or howsoever otherwise
arising, including the right to payment of any interest or finance charges with
respect thereto and all proceeds of insurance with respect thereto, together
with all of the Borrower's or its Subsidiaries' rights as an unpaid vendor, all
pledged assets, guaranty claims, liens and security interests held by or granted
to the Borrower or its Subsidiaries to secure payment of any Accounts Receivable
and all books, customer lists, ledgers, records and files (whether written or
stored electronically) relating to any of the foregoing.
"Acquisition" has the meaning assigned to that term in Section 8.7(p).
----------- --------------
"Additional Security Documents" means all mortgages, pledge
-----------------------------
agreements, security agreements and other security documents entered into
pursuant to Section 7.12 with respect to additional Collateral.
------------
"Adjusted Total Domestic Revolving Loan Commitment" shall mean at any
-------------------------------------------------
time the Total Domestic Revolving Commitment less the aggregate Domestic
Revolving Commitments of all Defaulting Lenders.
"Administrative Agent" has the meaning assigned to that term in the
--------------------
introduction to this Agreement and any successor Administrative Agent in such
capacity.
"Affiliate" means, with respect to any Person, any Person or group
---------
acting in concert in respect of the Person in question that, directly or
indirectly, controls (including but not limited to all directors and officers of
such Person) or is controlled by or is under common control with such Person
provided that no Agent nor any Affiliate of an Agent shall be deemed to be an
Affiliate of the Borrower. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with
2
<PAGE>
respect to any Person or group of Persons, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to vote 10% or more of
the securities having ordinary voting power for the election of directors of
such corporation.
"Agreement" means this Credit Agreement, as the same may at any time
---------
be amended, supplemented or otherwise modified in accordance with the terms
hereof and in effect.
"Alternative Currency" means, with respect to (i) Multicurrency
--------------------
Revolving Loans, Euros and Sterling, and (ii) any Domestic Supported Foreign LC,
Multicurrency Letter of Credit or Swing Line Loans, Euros, Sterling and any
currency which is freely transferable and convertible into Dollars.
"Applicable Base Rate Margin" means at any date, (i) with respect to
---------------------------
Domestic Revolving Loans, Multicurrency Revolving Loans denominated in Dollars
and Term A Dollar Loans, the applicable percentage set forth in the following
table under the column Applicable Base Rate Margin for Domestic Revolving Loans,
Multicurrency Revolving Loans and Term A Dollar Loans opposite the Most Recent
Leverage Ratio as of such date, (ii) with respect to Term B Loans, the
applicable percentage set forth under the column Applicable Base Rate Margin for
Term B Loans opposite the Most Recent Leverage Ratio as of such date and (iii)
with respect to Term C Loans, the applicable percentage set forth under the
column Applicable Base Rate Margin for Term C Loans opposite the Most Recent
Leverage Ratio as of such date:
3
<PAGE>
<TABLE>
<CAPTION>
Applicable Base Rate Applicable Applicable
Margin for Domestic Base Rate Base Rate
Most Recent Revolving Loans, Margin For Margin For
Leverage Ratio Multicurrency Term B Loans Term C Loans
- ---------------------------------- Revolving Loans and ------------ ------------
Term A Dollar Loans
-------------------
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than 2.50 to 1 0% 1.25% 1.50%
- -----------------------------------------------------------------------------------------------------
Equal to or greater than 2.50 to 1 .25% 1.50% 1.75%
but less than 3.00 to 1
- -----------------------------------------------------------------------------------------------------
Equal to or greater than 3.00 to .50% 1.50% 1.75%
1 but less than 3.50 to 1
- -----------------------------------------------------------------------------------------------------
Equal to or greater than 3.50 to .75% 1.75% 2.00%
1 but less than 4.00 to 1
- -----------------------------------------------------------------------------------------------------
Equal to or greater than 4.00 to 1.00% 1.75% 2.00%
1 but less than 4.50 to 1
- -----------------------------------------------------------------------------------------------------
Equal to or greater than 4.50 to 1.25% 1.75% 2.00%
1 but less than 5.00 to 1
- -----------------------------------------------------------------------------------------------------
Equal to or greater than 5.00 to 1 1.50% 2.00% 2.25%
- -----------------------------------------------------------------------------------------------------
</TABLE>
"Applicable Commitment Fee Percentage" means at any date, the
------------------------------------
applicable percentage set forth in the following table opposite the Most Recent
Leverage Ratio as of such date:
4
<PAGE>
<TABLE>
<CAPTION>
Most Recent Applicable Commitment
Leverage Ratio Fee Percentage
-------------- --------------
- ----------------------------------------------------------------------------------------
<S> <C>
Less than 2.50 to 1 .250%
- ----------------------------------------------------------------------------------------
Equal to or greater than 2.50 to 1 but .300%
less than 3.00 to 1
- ----------------------------------------------------------------------------------------
Equal to or greater than 3.00 to 1 but .375%
less than 3.50 to 1
- ----------------------------------------------------------------------------------------
Equal to or greater than 3.50 to 1 but .500%
less than 4.00 to 1
- ----------------------------------------------------------------------------------------
Equal to or greater than 4.00 to 1 but .500%
less than 4.50 to 1
- ----------------------------------------------------------------------------------------
Equal to or greater than 4.50 to 1 but .500%
less than 5.00 to 1
- ----------------------------------------------------------------------------------------
Equal to or greater than 5.00 to 1 .500%
- ----------------------------------------------------------------------------------------
</TABLE>
"Applicable Eurocurrency Margin" means at any date, (i) with respect
------------------------------
to Domestic Revolving Loans, Multicurrency Revolving Loans denominated in
Dollars and Term A Dollar Loans, the applicable percentage set forth in the
following table under the column Applicable Eurocurrency Margin for Domestic
Revolving Loans, Multicurrency Revolving Loans and Term A Dollar Loans opposite
the Most Recent Leverage Ratio on such date, (ii) with respect to Term A Euro
Loans and non-Dollar denominated Multicurrency Revolving Loans, the applicable
percentage set forth in the following table under the column Applicable
Eurocurrency Margin for Term A Euro Loans and non-Dollar Multicurrency Revolving
Loans opposite the Most Recent Leverage Ratio on such date, (iii) with respect
to Term B Loans, the applicable percentage set forth in the following table
under the column Applicable Eurocurrency Margin for Term B Loans opposite the
Most Recent Leverage Ratio on such date and (iv) with respect to Term C Loans,
the applicable percentage set forth in the following table under the column
Applicable Eurocurrency Margin for Term C Loans opposite the Most Recent
Leverage Ratio on such date:
5
<PAGE>
<TABLE>
<CAPTION>
Applicable
Eurocurrency Margin Applicable Applicable Applicable
Most Recent for Domestic Eurocurrency Margin Eurocurrency Eurocurrency
Leverage Ratio Revolving Loans, for Term A Euro Loans Margin For Margin For Term
-------------- Multicurrency and non-Dollar Term B Loans C Loans
Revolving Loans Multicurrency ------------ -------
(in Dollars) and Revolving Loans
Term A Dollar Loans ---------------
-------------------
<S> <C> <C> <C> <C>
Less than 2.50 to 1 1.25% 1.25% 2.50% 2.75%
- ----------------------------------------------------------------------------------------------------------------------------
Equal to or greater than 2.50 1.50% 1.50% 2.75% 3.00%
to 1 but less than 3.00 to 1
- ----------------------------------------------------------------------------------------------------------------------------
Equal to or greater than 3.00 1.75% 1.75% 2.75% 3.00%
to 1 but less than 3.50 to 1
- ----------------------------------------------------------------------------------------------------------------------------
Equal to or greater than 3.50 2.00% 2.00% 3.00% 3.25%
to 1 but less than 4.00 to 1
- ----------------------------------------------------------------------------------------------------------------------------
Equal to or greater than 4.00 2.25% 2.25% 3.00% 3.25%
to 1 but less than 4.50 to 1
- ----------------------------------------------------------------------------------------------------------------------------
Equal to or greater than 4.50 2.50% 2.50% 3.00% 3.25%
to 1 but less than 5.00 to 1
- ----------------------------------------------------------------------------------------------------------------------------
Equal to or greater than 2.75% 2.75% 3.25% 3.50%
5.00 to 1
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
"Asset Disposition" means any sale, lease, transfer or other
-----------------
disposition (or series of related sales, leases, transfers or dispositions) of
all or any part of an interest in shares of Capital Stock of a Subsidiary of the
Borrower (other than directors' qualifying shares and similar arrangements
required by Requirements of Law), property or other assets (each referred to for
the purposes of this definition as a "disposition") by the Borrower or any of
its Subsidiaries (other than in connection with a Recovery Event); provided that
-------- ----
a disposition permitted by Section
-------
6
<PAGE>
8.3(a) through 8.3(i) (other than a Sale and Leaseback Transaction involving
- ------ ------
non-operating assets which occurs more than 120 days after the acquisition of
such assets) shall not constitute an Asset Disposition for purposes of this
definition.
"Assigned Dollar Value" shall mean (i) in respect of any Borrowing
---------------------
denominated in Dollars, the amount thereof, (ii) in respect of the undrawn
amount of any Foreign Letter of Credit denominated in an Alternative Currency,
the Dollar Equivalent thereof based upon the applicable Exchange Rate as of (i)
the date of issuance of such Letter of Credit, and (ii) thereafter as of the
first Business Day of each month, (iii) in respect of any Letter of Credit
reimbursement obligations denominated in an Alternative Currency, the Dollar
Equivalent thereof determined based upon the applicable Exchange Rate as of the
date such reimbursement obligation was incurred and (iv) in respect of a
Borrowing denominated in Sterling, Euros or another Alternative Currency, the
Dollar Equivalent thereof based upon the applicable Exchange Rate as of the last
Exchange Rate Determination Date; provided, however, in the case of Borrowings
-------- -------
in Sterling, Euros or another Alternative Currency, if, as of the end of any
Interest Period in respect of such Borrowing, the Dollar Equivalent thereof
determined based upon the applicable Exchange Rate as of the date that is three
Business Days before the end of such Interest Period would be at least 5% more,
or 5% less, than the "Assigned Dollar Value" thereof, then on and after the end
of such Interest Period the "Assigned Dollar Value" of such Borrowing shall be
adjusted to be the Dollar Equivalent thereof determined based upon the Exchange
Rate that gave rise to such adjustment (subject to further adjustment in
accordance with this proviso thereafter), and the Administrative Agent shall
give the Borrower notice of such adjustment; provided, however, that failure to
-------- -------
give such notice shall not affect the Borrower's Obligations hereunder or result
in any liability to the Administrative Agent. The Assigned Dollar Value of a
Loan included in any Borrowing shall equal the pro rata portion of the Assigned
Dollar Value of such Borrowing represented by such Loan.
"Assignee" has the meaning assigned to that term in Section 12.8(c).
-------- ---------------
"Assignment and Assumption Agreement" means an Assignment and
-----------------------------------
Assumption Agreement substantially in the form of Exhibit 12.8(c) annexed hereto
---------------
and made a part hereof by any applicable Lender, as assignor, and such Lender's
assignee in accordance with Section 12.8.
------------
"Attorney Costs" means all reasonable fees and disbursements of any
--------------
law firm or other external counsel and the reasonable allocated cost of internal
legal services, including all reasonable disbursements of internal counsel.
"Attributable Debt" means as of the date of determination thereof with
-----------------
respect to an Operating Financing Lease, the net present value (discounted
according to GAAP at the cost of debt implied in the lease) of the obligations
of the lessee for rental payments during the then remaining term of such
Operating Financing Lease.
7
<PAGE>
"Available Multicurrency Revolving Commitment" means, as to any Lender
--------------------------------------------
at any time an amount equal to the excess, if any, of (i) such Lender's
Multicurrency Revolving Commitment over (ii) the sum of (x) the aggregate
Dollar Equivalent of the principal amount then outstanding of Multicurrency
Revolving Loans made by such Lender and (y) such Lender's Multicurrency Revolver
Pro Rata Share of the Assigned Dollar Value of Multicurrency LC Obligations.
"Available Domestic Revolving Commitment" means, as to any Lender at
---------------------------------------
any time an amount equal to the excess, if any, of (i) such Lender's Domestic
Revolving Commitment over (ii) the sum of (w) the aggregate principal amount
then outstanding of Domestic Revolving Loans made by such Lender, (x) such
Lender's Domestic Revolver Pro Rata Share of the Assigned Dollar Value of
Domestic LC Obligations and the Assigned Dollar Value of Swing Line Loans then
outstanding, (y) such Lender's Domestic Revolver Pro Rata Share of the Overdraft
Reserve, if any, at such time and (z) such Lender's Domestic Revolver Pro Rata
Share of the BPCL Acquisition Reserve, if any.
"Available Unrestricted Subsidiary Investment Basket" means an amount
---------------------------------------------------
equal to the Unrestricted Subsidiary Investment Basket less the sum of the
aggregate outstanding amount of Investments made in Permitted Unconsolidated
Ventures or Unrestricted Subsidiaries pursuant to Section 8.7(l).
--------------
"Bankruptcy Code" means Title I of the Bankruptcy Reform Act of 1978,
---------------
as amended, as set forth in Title 11 of the United States Code, as hereafter
amended.
"Base Rate" means the greater of (i) the rate most recently announced
---------
by BT at its principal office as its "prime rate", which is not necessarily the
lowest rate made available by BT or (ii) the Federal Funds Rate plus 1/2 of 1%
per annum. The "prime rate" announced by BT is evidenced by the recording
thereof after its announcement in such internal publication or publications as
BT may designate. Any change in the interest rate resulting from a change in
such "prime rate" announced by BT shall become effective without prior notice to
the Borrower as of 12:01 a.m. (New York City time) on the Business Day on which
each change in such "prime rate" is announced by BT. BT may make commercial or
other loans to others at rates of interest at, above or below its "prime rate".
"Base Rate Loan" means any Loan which bears interest at a rate
--------------
determined with reference to the Base Rate.
"Benefited Lender" has the meaning assigned to that term in Section
---------------- -------
12.6(a).
- -------
"Board" means the Board of Governors of the Federal Reserve System.
-----
8
<PAGE>
"Borrower" has the meaning assigned to that term in the introduction
--------
to this Agreement.
"Borrowing" means a group of Loans of a single Type made by the
---------
Lenders or the Swing Line Lender, as appropriate, on a single date and in the
case of Eurocurrency Loans, as to which a single Interest Period is in effect,
provided that Base Rate Loans or Eurocurrency Loans incurred pursuant to Section
- -------- -------
3.7 shall be considered part of any related Borrowing of Eurocurrency Loans.
- ---
"BPCL" means BP Chemicals Limited, a company incorporated under the
----
laws of England and Wales.
"BPCL Acquisition" means the acquisition by the Borrower or a Foreign
----------------
Subsidiary of the Borrower of certain of the assets and rights of BPCL in an
olefin facility and related infrastructure located in Northeast England
substantially as provided in the BPCL Memorandum of Understanding or on such
terms as are reasonably satisfactory to the Administrative Agent.
"BPCL Acquisition Reserve" means an amount equal to (i) at any time
------------------------
prior to the date on which the BPCL Acquisition is consummated or abandoned by
the Borrower, the sum of (x) $118,000,000 minus (y) the amount deposited into
-----
the BPCL Cash Collateral Account on the Initial Borrowing Date and (ii) on and
after the date on which the BPCL Acquisition is consummated or abandoned by the
Borrower, Zero.
"BPCL Agreement" means that certain Agreement dated as of April 22,
--------------
1977 between BPCL, ICI and Engineering Services (Wilton) Limited together with
that certain Agreement dated May 11, 1978 between BP and ICI, together with any
amendments, modifications, or supplements thereto and any other agreements
relating thereto.
"BPCL Cash Collateral Account" has the meaning provided to such term
----------------------------
in the BPCL Cash Collateral Agreement.
"BPCL Cash Collateral Agreement" has the meaning assigned to that term
------------------------------
in Section 5.1(w).
--------------
"BPCL Documents" means, collectively, the BPCL Sales Agreement, the
--------------
BPCL Tripartite Agreement and the BPCL Infrastructure Agreement.
"BPCL Infrastructure Agreement" means the agreement between BPCL and a
-----------------------------
Foreign Subsidiary of the Borrower with respect to the Teesside Ethylene
Infrastructure (as defined in the BPCL Memorandum of Understanding) as more
particularly described in Annex 2
9
<PAGE>
to the BPCL Memorandum of Understanding, in form and substance and on terms and
conditions satisfactory to the Administrative Agent.
"BPCL Memorandum of Understanding" means the Memorandum of
--------------------------------
Understanding, dated June 1, 1999, among BPCL, ICI, HSCC and Holdings.
"BPCL Sales Agreement" shall mean the Sales Agreement to be entered
--------------------
into between BPCL and a Foreign Subsidiary of the Borrower relating to the BPCL
Acquisition, in form and substance and on terms and conditions satisfactory to
the Administrative Agent.
"BPCL Transaction Notice" has the meaning assigned to that term in
-----------------------
Section 5.1(w).
- ---------------
"BCPL Tripartite Agreement" means the Tripartite Agreement dated as of
-------------------------
June 30, 1999, among Holdings, the Borrower, ICI, an Affiliate of ICI, BPCL and
HSCC.
"BT" means Bankers Trust Company, a New York banking corporation, and
--
its successors.
"Business Day" (i) as it relates to any payment, determination,
------------
funding or notice to be made or given in connection with any Dollar-denominated
Loan, or otherwise to be made or given to or from the Administrative Agent, a
day other than a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close; provided, however, that
-------- -------
when used in connection with a Eurocurrency Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar deposits
in the London interbank market; and (ii) as it relates to any payment,
determination, funding or notice to be made or given in connection with the Term
A Euro Loan or non-Dollar denominated Multicurrency Revolving Loans, any day (x)
on which dealings in deposits in the relevant Alternative Currency are carried
out in the London interbank market, and (y) on which commercial banks and
foreign exchange markets are open for business in London and New York City. For
purposes of this Agreement (other than for purposes of determining the end of
any applicable Interest Period and other than for purposes of any Loan, Letter
of Credit or action required to be taken outside of the United States),
"Business Day" shall not include Pioneer Day as recognized in the State of Utah
in any year.
"Capital Stock" means, with respect to any Person, any and all shares,
-------------
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, partnership interests, membership interests or
other equivalent interests and any rights (other than debt securities
convertible into or exchangeable for capital stock), warrants or options
exchangeable for or convertible into such capital stock or other interests.
10
<PAGE>
"Capitalized Lease" means, at the time any determination thereof is to
-----------------
be made, any lease of property, real or personal, in respect of which the
present value of the minimum rental commitment is capitalized on the balance
sheet of the lessee in accordance with GAAP.
"Capitalized Lease Obligation" means, at the time any determination
----------------------------
thereof is to be made, the amount of the liability in respect of a Capitalized
Lease which would at such time be required to be capitalized on the balance
sheet of the lessee in accordance with GAAP.
"Cash" means money, currency or the available credit balance in a
----
Deposit Account.
"Cash Equivalents" means any Investment in (i) a marketable
----------------
obligation, maturing within two years after issuance thereof, issued by the
United States of America or any instrumentality or agency thereof, (ii) a
certificate of deposit or banker's acceptance, maturing within one year after
issuance thereof, issued by any Lender, or a national or state bank or trust
company or a European, Canadian or Japanese bank, in each case having capital,
surplus and undivided profits of at least $100 million and whose long-term
unsecured debt has a rating of "A" or better by S&P or "A2" or better by Moody's
or the equivalent rating by any other nationally recognized rating agency
(provided that the aggregate face amount of all Investments in certificates of
deposit or bankers' acceptances issued by the principal offices of or branches
of European or Japanese banks located outside the United States shall not at any
time exceed 33-1/3% of all Investments described in this definition), (iii) open
market commercial paper, maturing within 270 days after issuance thereof, which
has a rating of "A1" or better by S&P or "P1" or better by Moody's, or the
equivalent rating by any other nationally recognized rating agency, (iv)
repurchase agreements and reverse repurchase agreements with a term not in
excess of one year with any financial institution which has been elected a
primary government securities dealer by the Federal Reserve Board or whose
securities are rated "AA-" or better by S&P or "Aa3" or better by Moody's or the
equivalent rating by any other nationally recognized rating agency relating to
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or any agency or instrumentality thereof and backed by the
full faith and credit of the United States of America, (v) "Money Market"
preferred stock maturing within six months after issuance thereof or municipal
bonds issued by a corporation organized under the laws of any state of the
United States, which has a rating of "A" or better by S&P or Moody's or the
equivalent rating by any other nationally recognized rating agency, (vi) tax
exempt floating rate option tender bonds backed by letters of credit issued by a
national or state bank whose long-term unsecured debt has a rating of "AA" or
better by S&P or "Aa2" or better by Moody's or the equivalent rating by any
other nationally recognized rating agency, and (vii) shares of any money market
mutual fund rated at least AAA or the equivalent thereof by S&P or at least Aaa
or the equivalent thereof by Moody's or any other mutual fund holding assets
consisting (except for de minimis amounts) of the type specified in clauses of
(i) through (vi) above.
11
<PAGE>
"Change of Control" means (i) prior to an Initial Public Offering, Mr.
-----------------
Jon M. Huntsman, his spouse, direct descendants, an entity controlled by any of
the foregoing and/or by a trust of the type described hereafter, and/or a trust
for the benefit of any of the foregoing (the "Huntsman Group") shall cease to
--------------
have the power, directly or indirectly, to vote or direct the voting of
securities having at least a majority of the ordinary voting power for the
election of the directors of the Borrower or Huntsman Corporation; and (ii)
after an Initial Public Offering, the occurrence of one or more of the following
events: (x) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than one or more members of the Huntsman
Group, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of 35% or more of the then outstanding Voting Securities
of Huntsman Corporation or any Parent Company; (y) the replacement of a majority
of the Board of Directors of Huntsman Corporation or any Parent Company over a
two-year period from the directors who constituted the Board of Directors of
Huntsman Corporation or any Parent Company, as the case may be, at the beginning
of such period, and such replacement shall not (A) have been approved by a vote
of at least a majority of the Board of Directors of Huntsman Corporation or any
Parent Company, as the case may be, then still in office who either were members
of such Board of Directors at the beginning of such period or whose election as
a member of such Board of Directors was previously so approved or (B) have been
elected or nominated for election by one or more members of the Huntsman Group
or (z) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), except that a person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passing of time), directly or indirectly, of a greater percentage of the
then outstanding Voting Securities of Holdings than that percentage held,
collectively, by one or more members of the Huntsman Group.
"Code" means the Internal Revenue Code of 1986, as from time to time
----
amended, including the regulations proposed or promulgated thereunder, or any
successor statute and the regulations proposed or promulgated thereunder.
"Collateral" means all "Collateral" as defined in each of the Security
----------
Documents.
"Collateral Security Agreement" has the meaning assigned to that term
-----------------------------
in Section 5.1(b).
--------------
"Collateral Agent" means Bankers Trust Company in its capacity as
----------------
Collateral Agent under the Collateral Security Agreement or any successor
Collateral Agent.
12
<PAGE>
"Commercial Letter of Credit" means any letter of credit or similar
---------------------------
instrument issued for the account of the Borrower pursuant to this Agreement for
the purpose of supporting trade obligations of the Borrower or any of its
Subsidiaries in the ordinary course of business.
"Commitment" means, with respect to each Lender, the aggregate of the
----------
Domestic Revolving Commitment, the Multicurrency Revolving Commitment, the Term
A Dollar Commitment, the Term A Euro Commitment, the Term B Commitment and the
Term C Commitment of such Lender and "Commitments" means such commitments of all
-----------
of the Lenders collectively.
"Commitment Fee" has the meaning assigned to that term in Section 3.2.
-------------- -----------
"Commitment Period" means, the period from and including the date
-----------------
hereof to but not including the Revolver Termination Date or, in the case of the
Swing Line Commitment, five (5) Business Days prior to the Revolver Termination
Date.
"Consolidated Capital Expenditures" shall mean, for the Borrower and
---------------------------------
its Subsidiaries, for any period, the aggregate of all expenditures (whether
paid in cash or accrued as liabilities and including in all events all
Capitalized Lease Obligations) by the Borrower and its Subsidiaries during that
period that, in conformity with GAAP, are or are required to be included in the
property, plant or equipment reflected in the consolidated balance sheet of the
Borrower, and Investments in LPC and Rubicon pursuant to Section 8.7(o).
--------------
"Consolidated Cash Interest Expense" means, for any period, (i)
----------------------------------
Consolidated Interest Expense, but excluding, however, interest expense not
payable in cash, amortization of discount and deferred financing costs, plus or
minus, as the case may be (ii) net amounts paid or received under Interest Rate
Agreements (with cap payments amortized over the life of the cap) and minus
-----
interest income received in Cash or Cash Equivalents in respect of Investments
permitted hereunder.
"Consolidated Debt" means, at any time, all Indebtedness for borrowed
-----------------
money of the Borrower and its Subsidiaries determined on a consolidated basis in
accordance with GAAP and other Indebtedness under Operating Financing Leases
incurred pursuant to Section 8.2(d), less cash, Cash Equivalents and Foreign
--------------
Cash Equivalents freely available and not subject to any Lien (other than a Lien
in favor of the Administrative Agent and/or the Collateral Agent) or transfer
restriction.
"Consolidated EBITDA" means, for any applicable period, the
-------------------
Consolidated Net Income or Consolidated Net Loss of the Borrower and its
Subsidiaries for such period, plus, to the extent deducted in determining the
foregoing (i) Consolidated Interest Expense for such period, (ii) the provision
for taxes based on income and foreign withholding taxes for such period
13
<PAGE>
(including, without limitation, Tax Distributions) and (iii) depreciation and
amortization expense and non-cash expenses related to the Supply Arrangement to
the extent a cash reserve is not required to be created in accordance with GAAP,
for such period and without giving effect to any extraordinary gains or losses
(in accordance with GAAP) for such period or gains or losses from the
disposition of assets other than in the ordinary course of business.
"Consolidated Interest Expense" means, for any period, the sum of
-----------------------------
total interest expense (including that attributable to Capitalized Leases in
accordance with GAAP) of the Borrower and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, all as determined on a consolidated basis for the Borrower
and its Subsidiaries in accordance with GAAP.
"Consolidated Net Income" and "Consolidated Net Loss" mean,
----------------------- ---------------------
respectively, with respect to any period, the aggregate of the net income (loss)
of the Person in question for such period, determined in accordance with GAAP on
a consolidated basis, provided that (i) there shall be excluded the income (or
loss) of a Person that is not a consolidated Subsidiary, except to the extent of
the amount of dividends or other distributions actually paid to the Borrower or
any of its Wholly-Owned Subsidiaries by such Person during such period, (ii) the
net income (loss) of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded, (iii) to
the extent not otherwise included in net income of such Person, the amount of
any cash distribution in excess of net income of LPC received from LPC derived
from operating cash flow of LPC (without giving effect to gains on asset
dispositions, extraordinary items or liquidation) shall be added to net income,
and (iv) notwithstanding anything to the contrary, there shall be included the
income (or loss) of Tioxide Southern Africa (Proprietary) Ltd. attributable to
minority interests therein such that, for purposes of this definition, Tioxide
Southern Africa (Proprietary) Ltd. shall be treated as if it were a consolidated
Subsidiary which is a Wholly-Owned Subsidiary.
"Consolidated Net Worth" of a Person means total equityholders' equity
----------------------
(including, without limitation, preferred stock and other preferred equity
interests) of such Person and its Subsidiaries on a consolidated basis in
accordance with GAAP, plus an amount equal to the aggregate amount of Tax
----
Distributions made by the Borrower to Holdings after the Initial Borrowing Date.
"Consolidated Total Assets" means, with respect to any Person, the
-------------------------
book value, determined on a consolidated basis in accordance with GAAP, of all
assets of such Persons and its Subsidiaries.
14
<PAGE>
"Contaminant" means any material with respect to which any
-----------
Environmental Law imposes a duty, obligation or standard of conduct, including
without limitation any pollutant contaminant (as those terms are defined in 42
U.S.C. (S)9601(33)), toxic pollutant (as that term is defined in 33 U.S.C.
(S)1362(13)), hazardous substance (as that term is defined in 42 U.S.C.
(S)9601(14)), hazardous chemical (as that term is defined by 29 CFR
(S)1910.1200(c)), hazardous waste (as that term is defined in 42 U.S.C.
(S)6903(5)), or any state or local equivalent of such laws and regulations,
including, without limitation, radioactive material, special waste,
polychlorinated biphenyls, asbestos, petroleum, including crude oil or any
petroleum-derived substance, (or any fraction thereof), waste, or breakdown or
decomposition product thereof, or any constituent of any such substance or
waste, including but not limited to polychlorinated biphenyls and asbestos.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
Securities issued by such Person or of any indenture or credit agreement or any
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound or to which such property may be
subject.
"Contribution Agreement" means the Contribution Agreement, dated April
----------------------
15, 1999 and as amended and restated as of June 4, 1999, among ICI, Holdings,
the Borrower and HSCC, as the same may be amended, supplemented or otherwise
modified from time in accordance with the terms hereof and thereof.
"Contribution Documents" means the Contribution Agreement, the
----------------------
Ancillary Agreements (as defined in the Contribution Agreement), the Limited
Liability Company Agreement of Holdings, the Supply Arrangement Agreements, the
Disclosure Letter (as defined in the Contribution Agreement), any material joint
venture agreement relating to a joint venture interest subject to the
Contribution Agreement and any material agreement, document, instrument and
certificate executed and/or delivered on or after the date hereof pursuant to
the terms thereof.
"Credit Exposure" has the meaning assigned to that term in Section
--------------- -------
12.8(b).
- -------
"Credit Event" means the making of any Loan or the issuance of any
------------
Letter of Credit.
"Credit Party" means the Borrower, Holdings and any guarantor which
------------
may hereafter enter into a Guaranty with respect to the Obligations.
15
<PAGE>
"Customary Permitted Liens" means:
-------------------------
(i) Liens for taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently pursued, provided
that (x) any proceedings commenced for the enforcement of such Liens shall have
been stayed or suspended within 30 days of the commencement thereof and (y)
provision for the payment of all such taxes known to such Person has been made
on the books of such Person to the extent required by GAAP;
(ii) mechanics', processor's, materialmen's, carriers', warehouse-
men's, landlord's and similar Liens arising by operation of law and arising in
the ordinary course of business and securing obligations of such Person that are
not overdue for a period of more than 30 days or are being contested in good
faith by appropriate proceedings diligently pursued, provided that (x) any
proceedings commenced for the enforcement of such Liens shall have been stayed
or suspended within 30 days of the commencement thereof and (y) provision for
the payment of such Liens has been made on the books of such Person to the
extent required by GAAP;
(iii) Liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits which are
not overdue or are being contested in good faith by appropriate proceedings
diligently pursued, provided that (A) any proceedings commenced for the
enforcement of such Liens shall have been stayed or suspended within 30 days of
the commencement thereof and (B) provision for the payment of such Liens has
been made on the books of such Person to the extent required by GAAP;
(iv) (x) Liens incurred or deposits made in the ordinary course of
business to secure the performance of bids, tenders, statutory obligations, fee
and expense arrangements with trustees and fiscal agents (exclusive of
obligations incurred in connection with the borrowing of money or the payment of
the deferred purchase price of property) and customary deposits granted in the
ordinary course of business under Operating Leases and (y) Liens securing
surety, indemnity, performance, appeal and release bonds, provided that full
provision for the payment of all such obligations has been made on the books of
such Person to the extent required by GAAP;
(v) Permitted Real Property Encumbrances;
(vi) attachment, judgment or other similar Liens arising in connection
with court or arbitration proceedings involving individually and in the
aggregate liability of $10,000,000 or less at any one time, provided the same
are discharged, or that execution or enforcement thereof is stayed pending
appeal, within 60 days or, in the case of any stay of
16
<PAGE>
execution or enforcement pending appeal, within such lesser time during which
such appeal may be taken;
(vii) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its Subsidiaries
and any interest or title of a lessor under any lease permitted by this
Agreement or the Security Documents;
(viii) customary rights of set off, revocation, refund or chargeback
under deposit agreements or under the UCC of banks or other financial
institutions where Holdings or any of its Subsidiaries maintains deposits in the
ordinary course of business permitted by this Agreement; and
(ix) Environmental Liens, to the extent that (x) any proceedings
commenced for the enforcement of such Liens shall have been suspended or are
being contested in good faith, (y) provision for all liability and damages that
are the subject of said Environmental Liens has been made on the books of such
Person to the extent required by GAAP and (z) such Liens do not relate to
obligations exceeding $5,000,000 in the aggregate at any one time.
"Default Rate" means a variable rate per annum which shall be two
------------
percent (2%) per annum plus either (i) the then applicable interest rate
----
hereunder in respect of the amount on which the Default Rate is being assessed
or (ii) if there is no such applicable interest rate, the Base Rate plus the
Applicable Base Rate Margin, but in no event in excess of that permitted by
applicable law.
"Defaulting Lender" means any Lender with respect to which a Lender
-----------------
Default is in effect.
"Deposit Account" means a demand, time, savings, passbook or like
---------------
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Documents" means the Loan Documents and the Transaction Documents.
---------
"Dollar" and "$" means the lawful currency of the United States of
------ -
America.
"Dollar Equivalent" means, at any time, (i) as to any amount
-----------------
denominated in Dollars, the amount thereof at such time, and (ii) as to any
amount denominated in any Alternative Currency, the equivalent amount in Dollars
as determined by the Administrative Agent at such time on the basis of the Spot
Rate.
17
<PAGE>
"Domestic Collateral Account" has the meaning assigned to that term in
---------------------------
Section 4.4(a).
- --------------
"Domestic LC Obligations" means, at any time, an amount equal to the
-----------------------
sum of (a) the sum of the aggregate Stated Amount of the then outstanding
Domestic Letters of Credit plus the aggregate Stated Amount of the then
outstanding Domestic Supported Foreign LCs and (b) the sum of the Assigned
Dollar Value of the aggregate amount of drawings under Domestic Letters of
Credit plus the Assigned Dollar Value of the aggregate amount of drawings under
Domestic Supported Foreign LCs, in each case, which have not then been
reimbursed pursuant to Section 2.10(c). The Domestic LC Obligations of any
---------------
Domestic Revolving Lender at any time shall mean its Domestic Revolver Pro Rata
Share of the aggregate Domestic LC Obligations outstanding at such time.
"Domestic Letter of Credit" means any Letter of Credit issued pursuant
-------------------------
to Section 2.10(a)(i).
------------------
"Domestic Revolver Pro Rata Share" means, when used with reference to
--------------------------------
any Domestic Revolving Lender and any described aggregate or total amount, an
amount equal to the result obtained by multiplying such described aggregate or
total amount by a fraction the numerator of which shall be such Domestic
Revolving Lender's Domestic Revolving Commitment or, if the Revolver Termination
Date has occurred, such Domestic Revolving Lender's then outstanding Domestic
Revolving Loans and the denominator of which shall be the Domestic Revolving
Commitments or, if the Revolver Termination Date has occurred, all then
outstanding Domestic Revolving Loans.
"Domestic Revolving Commitment" means, with respect to any Domestic
-----------------------------
Revolving Lender, the obligation of such Domestic Revolving Lender to make
Domestic Revolving Loans and to participate in Domestic Letters of Credit,
Domestic Supported Foreign LCs and Swing Line Loans, as such commitment may be
adjusted from time to time pursuant to this Agreement, which commitment as of
the date hereof is the amount set forth opposite such lender's name on Schedule
--------
1.1(a) hereto under the caption "Amount of Domestic Revolving Commitment" as the
- ------
same may be adjusted from time to time pursuant to the terms hereof and
"Domestic Revolving Commitments" means such commitments collectively, which
- -------------------------------
commitments equal $325,000,000 in the aggregate as of the date hereof.
"Domestic Revolving Facility" means the credit facility under this
---------------------------
Agreement evidenced by the Domestic Revolving Commitments and the Domestic
Revolving Loans.
"Domestic Revolving Lender" means any Lender which has a Domestic
-------------------------
Revolving Commitment or is owed a Domestic Revolving Loan (or a portion
thereof).
18
<PAGE>
"Domestic Revolving Loan" and "Domestic Revolving Loans" have the
----------------------- ------------------------
meanings given in Section 2.1(d)(i).
-----------------
"Domestic Supported Foreign LC" has the meaning assigned to that term
-----------------------------
in Section 2.10(j).
---------------
"Domestic Subsidiary" means any Subsidiary other than a Foreign
-------------------
Subsidiary not a party to the Subsidiary Guaranty or a guaranty delivered
pursuant to Section 7.15(c).
---------------
"Dutch Mixer" means Huntsman ICI Investments (Netherlands) B.V., a
-----------
direct Wholly-Owned Subsidiary of UK Holdco 2 organized under the laws of the
Netherlands.
"Effective Date" has the meaning assigned to that term in Section
-------------- -------
12.16.
- -----
"Eligible Assignee" means a commercial bank, investment company,
-----------------
financial institution, financial company, fund (whether a corporation,
partnership, trust or other entity) or insurance company in each case, together
with its Affiliates or funds with the same investment advisor or that have an
Affiliate of such investment advisor as their investment advisor, which extends
credit or buys loans in the ordinary course of its business or any other Person
approved by the Administrative Agent and the Borrower, such approval not to be
unreasonably withheld.
"Employee Benefit Plan" means an "employee benefit plan" as defined in
---------------------
Section 3(3) of ERISA, which is or has been established or maintained, or to
which contributions are or have been made, by the Borrower or any of its ERISA
Affiliates, any Subsidiary of the Borrower or ERISA Affiliates of such
Subsidiary.
"Environmental Claim" means any notice of violation, claim, suit,
-------------------
demand, abatement order, or other order or direction (conditional or otherwise)
by any Governmental Authority or any Person for any damage, personal injury
(including sickness, disease or death), tangible or intangible property damage,
contribution, cost recovery, or any other common law claims, indemnity,
indirect or consequential damages, damage to the environment, nuisance, cost
recovery, or any other common law claims, pollution, contamination or other
adverse effects on the environment, human health, or natural resources, or for
fines, penalties, restrictions or injunctive relief, resulting from or based
upon (i) the occurrence or existence of a Release or substantial threat of a
material Release (whether sudden or non-sudden or accidental or non-accidental)
of, or exposure to, any Contaminant in, into or onto the environment at, in, by,
from or related to any real estate owned, leased or operated at any time by the
Borrower or any of its Subsidiaries (the "Premises"), (ii) the use, handling,
generation, transportation, storage, treatment or disposal of Contaminants in
connection with the operation of any Premises, or (iii) the violation, or
alleged violation, of any Environmental Laws relating to environmental matters
connected with the Borrower's operations or any Premises.
19
<PAGE>
"Environmental Laws" means any and all applicable foreign, federal,
------------------
state or local laws, statutes, ordinances, codes, rules, regulations, orders,
decrees, judgments, directives, or Environmental Permits and cleanup or action
standards, levels or objectives imposing liability or standards of conduct for
or relating to the protection of health, safety or the environment, including,
but not limited to, the following statutes as now written and hereafter amended:
the Water Pollution Control Act, as codified in 33 U.S.C. (S)1251 et seq., the
------
Clean Air Act, as codified in 42 U.S.C. (S)7401 et seq., the Toxic Substances
------
Control Act, as codified in 15 U.S.C. (S)2601 et seq., the Solid Waste Disposal
------
Act, as codified in 42 U.S.C. (S)6901 et seq., the Comprehensive Environmental
------
Response, Compensation and Liability Act, as codified in 42 U.S.C. (S)9601 et
--
seq., the Emergency Planning and Community Right-to-Know Act of 1986, as
- ---
codified in 42 U.S.C. (S)11001 et seq., and the Safe Drinking Water Act, as
------
codified in 42 U.S.C. (S)300f et seq., and any related regulations, as well as
------
all state and local equivalents.
"Environmental Lien" means a Lien in favor of any Governmental
------------------
Authority for (i) any liability under Environmental Laws, or licenses,
authorizations, or directions of any Government Authority or court, or (ii)
damages relating to, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of a Contaminant into the
environment.
"Environmental Permits" means any and all permits, licenses,
---------------------
certificates, authorizations or approvals of any Governmental Authority required
by Environmental Laws or necessary or reasonably required for the business of
the Borrower or any Subsidiary of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
from time to time amended.
"ERISA Affiliate" means, with respect to any Person, any trade or
---------------
business (whether or not incorporated) which, together with such Person, is
under common control as described in Section 414(c) of the Code, is a member of
a "controlled group", as defined in Section 414(b) of the Code, or is a member
of an "affiliated service group", as defined in Section 414(m) of the Code which
includes such Person. Unless otherwise qualified, all references to an "ERISA
Affiliate" in this Agreement shall refer to an ERISA Affiliate of the Borrower
or any Subsidiary.
"Euro" means the single currency of participating member states of the
----
European Monetary Union.
"Euro Equivalent" means, at any time, (i) as to any amount denominated
---------------
in Euros, the amount thereof at such time, and (ii) as to any amount denominated
in Dollars or any other
20
<PAGE>
currency, the equivalent in Euros as determined by the Administrative Agent at
such time on the basis of the Spot Rate.
"Eurocurrency Loan" means any Loan bearing interest at a rate
-----------------
determined by reference to the Eurocurrency Rate.
"Eurocurrency Rate" means (i) in the case of Dollar-denominated Loans,
-----------------
the arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of
1%) of the offered quotation, if any, to first class banks in the New York
interbank market by the Administrative Agent for non-U.S. deposits in Dollars of
amounts in immediately available funds comparable to the principal amount of the
applicable Eurocurrency Loan of the Administrative Agent for which the
Eurocurrency Rate is being determined with maturities comparable to the Interest
Period for which such Eurocurrency Rate will apply as of approximately 10:00
a.m. (New York City time) on the applicable Interest Rate Determination Date and
(ii) in the case of Euro and Sterling denominated Loans, the arithmetic average
(rounded upwards, if necessary, to the nearest 1/16 of 1%) of the offered
quotation, if any, to first class banks in the London interbank market by the
Administrative Agent for non-U.S. deposits in Euro or Sterling, as the case may
be, of amounts in immediately available funds comparable to the principal amount
of the applicable Eurocurrency Loan of the Administrative Agent for which the
Eurocurrency Rate is being determined with maturities comparable to the Interest
Period for which such Eurocurrency Rate will apply as of approximately 11:00
A.M. (London time) on the applicable Interest Rate Determination Date. In the
case of Eurocurrency Loans and Swing Line Loans maintained at the Quoted Rate,
the cost of the Lenders of complying with any Mandatory Costs will be added to
the interest rate computed in the manner set forth in Schedule 1(b).
-------------
"Eurocurrency Reserve Rate" means, with respect to each day during
-------------------------
each Interest Period pertaining to a Eurocurrency Loan, a rate per annum
determined for such day in accordance with the following formula (rounded
upwards, if necessary, to the nearest 1/100th of 1%):
Eurocurrency Rate
-----------------
1.00 - Eurocurrency Reserve Requirements
"Eurocurrency Reserve Requirements" means, for any day as applied to a
---------------------------------
Eurocurrency Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for Eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of the Board).
21
<PAGE>
"Event of Default" has the meaning assigned to that term in Section
---------------- -------
10.1.
- ----
"Excess Cash Flow" means, for any Fiscal Year (commencing with the
----------------
Fiscal Year ending December 31, 2000), an amount not less than zero calculated
as of the close of business on November 30 of each year, equal to (i) the sum of
(x) the average daily aggregate Total Available Domestic Revolving Commitment
and Total Available Multicurrency Revolving Commitment during the period of
October 1 through and including November 30 of such year plus (y) the average
----
daily balance of cash, Cash Equivalents and the Dollar Equivalent as of November
30 of Foreign Cash Equivalents, held during the period October 1 through and
including November 30 of such year, less (ii) the sum of (w) the Dollar
----
Equivalent of the then Scheduled Term A Repayment, if any, due in December of
such year plus (x) the aggregate amount of Net Sale Proceeds from Asset
----
Dispositions during such Fiscal Year to the extent not reinvested prior to
November 30 of such Fiscal Year, plus (y) the aggregate amount of cash proceeds
----
from Recovery Events received by the Borrower or any of its Subsidiaries during
such Fiscal Year to the extent not reinvested prior to November 30 of such
Fiscal Year, plus (z) $450,000,000.
----
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
and as codified in 15 U.S.C. (S)78a et seq. and as hereafter amended.
-------
"Exchange Rate" shall mean, on any day, (i) with respect to any
-------------
Alternative Currency, the Spot Rate at which Dollars are offered on such day by
the Administrative Agent in London or New York (as selected by the
Administrative Agent) for such Alternative Currency at approximately 11:00 A.M.
(London time or New York time, as applicable), and (ii) with respect to Dollars
in relation to any specified Alternative Currency, the Spot Rate at which such
specified Alternative Currency is offered on such day by the Administrative
Agent in London or New York for Dollars at approximately 11:00 A.M. (London time
or New York time, as applicable). The Administrative Agent shall provided the
Borrower with the then current Exchange Rate from time to time upon the
Borrower's request therefor.
"Exchange Rate Determination Date" means (i) for purposes of the
--------------------------------
determination of the Exchange Rate of any stated amount on any Business Day in
relation to any Borrowing of Multicurrency Revolving Loans or Swing Line Loans
in an Alternative Currency, the date which is three Business Days prior to such
Borrowing, (ii) for purposes of the determination of the Exchange Rate of any
Stated Amount in relation to any issuance of any Letter of Credit, on the date
of such issuance and (iii) for the purpose of determining the Exchange Rate to
make determinations pursuant to Section 4.4(a), the last Business Day of each
---------------
calendar month.
"Facility" means any of the credit facilities established under this
--------
Agreement, i.e., the Term A Dollar Facility, the Term A Euro Facility, the Term
----
B Facility, the Term C Facility, the Domestic Revolving Facility or the
Multicurrency Revolving Facility.
22
<PAGE>
"Facing Agent" means each of BT and any other Lender agreed to by such
------------
Lender, the Borrower and the Administrative Agent.
"Federal Funds Rate" means on any one day, the rate per annum equal to
------------------
the weighted average (rounded upwards, if necessary, to the nearest 1/100th of
1%) of the rate on overnight federal funds transactions with members of the
Federal Reserve System only arranged by federal funds brokers, as published as
of such day by the Federal Reserve Bank of New York, or, if such rate is not so
published, the average of the quotations for such day on such transactions
received by BT from three federal funds brokers of recognized standing selected
by BT.
"Fiscal Quarter" has the meaning assigned to that term in Section
-------------- -------
7.13.
- ----
"Fiscal Year" has the meaning assigned to that term in Section 7.13.
----------- ------------
"Foreign Cash Equivalents" means (i) debt securities with a maturity
------------------------
of 365 days or less issued by any member nation of the European Union,
Switzerland or any other country whose debt securities are rated by S&P and
Moody's A-1 or P-1, or the equivalent thereof (if a short-term debt rating is
provided by either) or at least AA or Aa2, or the equivalent thereof (if a long-
term unsecured debt rating is provided by either)(each such jurisdiction, an
"Approved Jurisdiction"), or any agency or instrumentality of an Approved
- -----------------------
Jurisdiction, provided that the full faith and credit of the Approved
Jurisdiction is pledged in support of such debt securities or such debt
securities constitute a general obligation of the Approved Jurisdiction and (ii)
debt securities in an aggregate principal amount not to exceed the Dollar
Equivalent of $20,000,000 with a maturity of 365 days or less issued by any
nation in which the Borrower or its Subsidiaries has cash which is the subject
of restrictions on export or any agency or instrumentality of such nation,
provided that the full faith and credit of such nation is pledged in support of
such debt securities or such debt securities constitute a general obligation of
such nation.
"Foreign Intercompany Loan Documents" means the Foreign Intercompany
-----------------------------------
Notes and the Foreign Intercompany Loan Security Documents.
"Foreign Intercompany Loan Security Documents" means each security
--------------------------------------------
agreement, mortgage, agreement, assignment, security agreement, instrument,
document, guarantee, pledge agreement, collateral assignment, subordination
agreement and other collateral documents in the nature of any of the foregoing,
each in form and substance reasonably satisfactory to the Administrative Agent,
entered into by a Foreign Subsidiary of the Borrower in favor of UK Holdco 1.
"Foreign Intercompany Note" means a demand promissory note (or a
-------------------------
promissory note payable on a date reasonably satisfactory to the Administrative
Agent) issued by a Foreign
23
<PAGE>
Subsidiary directly to UK Holdco 1 substantially in the form of Exhibit 1.1(b)
--------------
or such other form or payee that is satisfactory to the Administrative Agent.
"Foreign Pension Plan" means any plan, fund (including, without
---------------------
limitation, any super-annuation fund) or other similar program established or
maintained outside of the United States of America by Holdings or one or more of
its Subsidiaries or its Affiliates primarily for the benefit of employees of
Holdings or such Subsidiaries or its Affiliates residing outside the United
States of America, which plan, fund, or similar program provides or results in,
retirement income, a deferral of income in contemplation of retirement or
payments to be made upon termination of employment, and which is not subject to
ERISA or the Code.
"Foreign Subsidiary" means any Subsidiary that is organized under the
------------------
laws of a jurisdiction other than the United States of America or any state
thereof or the District of Columbia and that is not a Subsidiary Guarantor.
"GAAP" means generally accepted accounting principles in the U.S. as
----
in effect from time to time.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of government.
"Guarantee Obligations" means, as to any Person, without duplication,
---------------------
any direct or indirect obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, Capitalized Lease or Operating Financing Lease,
dividend or other obligation ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent:
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor; (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation, or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor; (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; or (iv) otherwise to assure or hold harmless the owner
of such primary obligation against loss in respect thereof; provided, however,
-------- -------
that the term Guarantee Obligations shall not include any endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation at any time shall be deemed to be an amount
equal to the lesser at such time of (x) the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is made or (y)
the maximum amount for which such Person may be liable pursuant to the terms of
the instrument embodying such Guarantee
24
<PAGE>
Obligation; or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.
"Guaranteed Creditors" means and includes (i) the Administrative Agent
--------------------
and the Lenders and (ii) each Person (other than any Credit Party) which is a
party to an Interest Rate Agreement or Other Hedging Agreement or an Overdraft
Facility, in each case to the extent such Person constitutes a Secured Party.
"Guaranteed Obligations" means (i) the full and prompt payment when
----------------------
due (whether at the stated maturity, by acceleration or otherwise) of the
principal and interest (whether such interest is allowed as a claim in a
bankruptcy proceeding with respect to the Borrower or otherwise) on each Note
issued by the Borrower to each Lender, and Loans made under this Agreement and
all reimbursement obligations and Unpaid Drawings with respect to Letters of
Credit, together with all other obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities (including, without limitation, indemnities, fees and
interest thereon) of the Borrower to such Lender now existing or hereafter
incurred under, arising out of or in connection with this Agreement or any other
Loan Documents and the due performance and compliance with all terms, conditions
and agreements contained in the Loan Documents by the Borrower and (ii) the full
and prompt payment when due (whether by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) of the Borrower (or, if
permitted by Section 8.2, its Subsidiaries)owing under any Interest Rate
-----------
Agreement or Other Hedging Agreement or any Overdraft Facility entered into by
the Borrower or any of its Subsidiaries with any Lender or any Affiliate thereof
(even if such Lender subsequently ceases to be a Lender under this Agreement for
any reason) so long as such Lender or Affiliate participates in such Interest
Rate Agreement or Other Hedging Agreement or Overdraft Facility, as the case may
be, and their subsequent assigns, if any, whether or not in existence or
hereafter arising, and the due performance and compliance with all terms,
conditions and agreements contained therein.
"Guaranty" means, collectively, (i) the Subsidiary Guaranty, (ii) the
--------
guaranty of Holdings contained in Article XIII and (iii) each guaranty delivered
------------
by a Foreign Subsidiary pursuant to Section 7.15, in each case as the same may
------------
be amended, supplemented or otherwise modified from time to time.
"Hazardous Materials" means (i) any petrochemical or petroleum
-------------------
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls and
radon gas; (ii) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous
25
<PAGE>
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar meaning and regulatory effect; or (iii) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any Governmental Authority.
"Holdings" has the meaning assigned to that term in the introduction
--------
to this Agreement.
"Holdings Zero Coupon Note Documents" means, collectively, the
-----------------------------------
indenture and/or promissory note under which the Holdings Zero Coupon Notes are
issued and all other documents evidencing or otherwise governing the terms of
the Holdings Zero Coupon Notes.
"Holdings Zero Coupon Notes" means, collectively, the Senior Discount
--------------------------
Notes due 2009 and the Subordinated Discount Notes due 2009 to be issued by
Holdings pursuant to the Holdings Coupon Zero Note Documents and any notes into
which any such Holdings Zero Coupon Notes may be exchanged or replaced pursuant
to the terms of the indenture pursuant to which such Holdings Zero Coupon Notes
are issued.
"HSCC" means Huntsman Specialty Chemicals Corporation, a Utah
----
corporation.
"Huntsman Agreements" means, collectively, (i) each agreement listed
-------------------
on Exhibit 1.1(c) and (ii) each other agreement, subject to Section 7.18,
-------------- ------------
entered into between Holdings and/or the Borrower and any of their respective
Subsidiaries on the one hand and any Huntsman Affiliate on the other hand and
contemplated by Schedule 5 of the Contribution Agreement so long as (x) the
costs associated with such agreement have been reflected in the Projections, (y)
such agreements are consistent with the past practices of each such Person and
(z) such agreements are not material to the business of the Borrower.
"Huntsman Affiliate" means Huntsman Corporation or any of its
------------------
Affiliates (other than Holdings and its Subsidiaries).
"Huntsman Corporation" means Huntsman Corporation, a Utah corporation.
--------------------
"Huntsman ICI Finco" means Huntsman ICI Financial LLC, a direct
------------------
Wholly-Owned Subsidiary of the Borrower that is a limited liability company
formed under the laws of Delaware.
"ICI" means Imperial Chemical Industries PLC, a company incorporated
---
under the laws of England and Wales.
"ICI Affiliate" means ICI or any of its Affiliates (other than
-------------
Holdings and its Subsidiaries).
26
<PAGE>
"ICI Agreements" means, collectively, (i) each agreement listed on
--------------
Exhibit 1.1(d) and (ii) each other agreement, subject to Section 7.18, entered
- -------------- ------------
into between Holdings or the Borrower and any of their respective Subsidiaries
on the one hand and any Affiliate of ICI on the other hand and contemplated by
Schedule 5 of the Contribution Agreement, so long as (x) the costs associated
with such agreement have been reflected in the Projections, (y) such agreements
are consistent with the past practices of each such Person and (z) such
agreements are not material to the business of the Borrower.
"ICI Contributed Business" means the business as described in Schedule
------------------------ --------
1.1(c).
- ------
"ICI Holland" means ICI Holland B.V., a company organized under the
-----------
laws of The Netherlands.
"Indebtedness" means, as applied to any Person (without duplication):
------------
(i) all obligations of such Person for borrowed money;
(ii) the deferred and unpaid balance of the purchase price of
assets or services (other than trade payables and other accrued liabilities
incurred in the ordinary course of business that are not overdue by more
than 90 days unless being contested in good faith) which purchase price is
(x) due more than six months from the date of incurrence of the obligation
in respect thereof or (y) evidenced by a note or a similar written
instrument;
(iii) all Capitalized Lease Obligations;
(iv) all indebtedness secured by any Lien (other than Customary
Permitted Liens) on any property owned by such Person, whether or not such
indebtedness has been assumed by such Person or is nonrecourse to such
Person;
(v) notes payable and drafts accepted representing extensions
of credit whether or not representing obligations for borrowed money (other
than such notes or drafts for the deferred purchase price of assets or
services which does not constitute Indebtedness pursuant to clause (ii)
above);
(vi) indebtedness or obligations of such Person, in each case,
evidenced by bonds, notes or similar written instruments;
(vii) the face amount of all letters of credit and bankers'
acceptances issued for the account of such Person, and without duplication, all
drafts drawn thereunder other than, in each case, commercial or standby letters
of credit or the
27
<PAGE>
functional equivalent thereof issued in connection with performance, bid or
advance payment obligations incurred in the ordinary course of business,
including, without limitation, performance requirements under workers
compensation or similar laws;
(viii) all obligations of such Person under Interest Rate
Agreements or Other Hedging Agreements;
(ix) Guarantee Obligations of such Person;
(x) the aggregate outstanding amount of Receivables Facility
Attributed Indebtedness or the gross proceeds from any similar transaction,
regardless of whether such transaction is effected without recourse to such
Person or in a manner that would not otherwise be reflected as a liability
on a balance sheet of such Person in accordance with GAAP; and
(xi) the Attributable Debt of any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product to which such Person is a party, where such
transaction is considered borrowed money indebtedness for tax purposes but
is classified as an operating lease in accordance with GAAP;
provided, however, notwithstanding the foregoing, "Indebtedness" shall not
- -------- -------
include deferred taxes or unsecured indebtedness of the Borrower and/or its
Subsidiaries incurred to finance insurance premiums in a principal amount not in
excess of the casualty and other insurance premiums to be paid by the Borrower
and/or its Subsidiaries for a three-year period beginning on the date of any
incurrence of such indebtedness.
"Indebtedness to Remain Outstanding" shall have the meaning assigned
----------------------------------
to that term in Section 6.5(d).
--------------
"Indemnified Party" has the meaning assigned to that term in Section
----------------- -------
12.4(a).
- -------
"Independent Financial Advisor" means an accounting, appraisal,
-----------------------------
investment banking or consulting firm of nationally recognized standing that is,
in the reasonable and good faith judgment of the board of directors of the
Borrower, qualified to perform the task for which such firm has been engaged and
disinterested and independent with respect to the Borrower and its Affiliates.
"Initial Borrowing" means the first Borrowing by the Borrower under
-----------------
this Agreement.
"Initial Borrowing Date" means the date of the Initial Borrowing.
----------------------
28
<PAGE>
"Initial Loan" means the first Loan made by the Lenders under this
------------
Agreement.
"Initial Public Offering" means an initial public offering of Huntsman
-----------------------
Corporation or Holdings.
"Intellectual Property" has the meaning assigned to that term in
----------------------
Section 6.19.
- -------------
"Intercompany Loan" has the meaning assigned to that term in Section
----------------- -------
8.7(i);
- ------
"Intercompany Note" means either (i) the UK Holdco Note or (ii) a
-----------------
Foreign Intercompany Note.
"Interest Coverage Ratio" means, for any period, the ratio of
-----------------------
Consolidated EBITDA to Consolidated Cash Interest Expense for such period.
"Interest Payment Date" means (i) as to any Base Rate Loan, each
---------------------
Quarterly Payment Date to occur while such Loan is outstanding, (ii) as to any
Eurocurrency Loan, the last day of the Interest Period applicable thereto and
(iii) as to any Eurocurrency Loan having an Interest Period longer than three
months, each three (3) month anniversary of the first day of the Interest Period
applicable thereto and the last day of the Interest Period applicable thereto;
provided, however, that, in addition to the foregoing, each of (A) the date upon
- -------- -------
which both the Domestic Revolving Commitments and the Multicurrency Revolving
Commitments have been terminated and the Domestic Revolving Loans and the
Multicurrency Revolving Loans have been paid in full and (B) the Term A Loan
Maturity Date, the Term B Loan Maturity Date and the Term C Loan Maturity Date
shall be deemed to be an "Interest Payment Date" with respect to any interest
which is then accrued hereunder for such Loan.
"Interest Period" has the meaning assigned to that term in Section
--------------- -------
3.4.
- ---
"Interest Rate Agreement" means any interest rate swap agreement,
-----------------------
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate option contract or other similar agreement or
arrangement to which the Borrower or any Subsidiary is a party.
"Interest Rate Determination Date" means the date for calculating the
--------------------------------
Eurocurrency Rate for an Interest Period, which date shall be (i) in the case of
any Eurocurrency Loan in Dollars, the second Business Day prior to the first day
of the related Interest Period for such Loan or (ii) in the case of any
Eurocurrency Loan in Euros, the date on which quotations would ordinarily be
given by prime banks in the London interbank market for deposits in Euro for
value on the first day of the related Interest Period for such Eurocurrency
Loan.
29
<PAGE>
"Interim Maturity Date" means the last day of any Interest Period.
---------------------
"Inventory" means, inclusively, all inventory as defined in the
---------
Uniform Commercial Code in effect in the State of New York from time to time and
all goods, merchandise and other personal property wherever located, now owned
or hereafter acquired by the Borrower or any of its Subsidiaries of every kind
or description which are held for sale or lease or are furnished or to be
furnished under a contract of service or are raw materials, work-in-process or
materials used or consumed or to be used or consumed in the Borrower's or any of
its Subsidiaries' business.
"Investment" means, as applied to any Person, (i) any direct or
----------
indirect purchase or other acquisition by that Person of, or a beneficial
interest in, Securities of any other Person, or a capital contribution by that
Person to any other Person, (ii) any direct or indirect loan or advance to any
other Person (other than prepaid expenses or Accounts Receivable created or
acquired in the ordinary course of business), including all Indebtedness to such
Person arising from a sale of property by such person other than in the ordinary
course of its business or (iii) any purchase by that Person of all or a
significant part of the assets of a business conducted by another Person. The
amount of any Investment by any Person on any date of determination shall be the
sum of the acquisition price of the gross assets acquired by such Person
(including the amount of any liability assumed in connection with the
acquisition by such Person to the extent such liability would be reflected on a
balance sheet prepared in accordance with GAAP) plus all additional capital
----
contributions or purchase price paid in respect thereof, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment minus the amount of all cash returns of
-----
principal or capital thereon, cash dividends thereon and other cash returns on
investment thereon or liabilities expressly assumed by another Person (other
than the Borrower or another Subsidiary of the Borrower) in connection with the
sale of such Investment. Whenever the term "outstanding" is used in this
Agreement with reference to an Investment, it shall take into account the
matters referred to in the preceding sentence.
"Investment Agreement" means the Subscription Agreement, dated as of
June 3, 1999, among Holdings, BT Capital Investors, L.P., Chase Equity
Associates, L.P. and Goldman Sachs Group, Inc.
"IRS" means the United States Internal Revenue Service, or any
---
successor or analogous organization.
"Issuer" means the issuer under, and as defined in, the relevant
------
Receivables Documents.
30
<PAGE>
"Joint Venture" means any corporation, partnership, limited liability
-------------
company, joint venture or other similar legal arrangement (whether created by
contract or conducted through a separate legal entity) now or hereafter formed
by the Borrower or any of its Subsidiaries with another Person in order to
conduct a common venture or enterprise with such Person.
"LC Commission" has the meaning assigned to that term in Section
------------- -------
2.10(e)(ii).
- -----------
"LC Obligations" means, collectively, the Domestic LC Obligations and
--------------
the Multicurrency LC Obligations.
"Lender" and "Lenders" have the respective meanings assigned to those
------ -------
terms in the introduction to this Agreement and shall include any Person that
becomes a "Lender" as contemplated by Section 12.8.
------------
"Lender Default" means (i) the refusal (which has not been retracted)
--------------
of a Lender to make available its portion of any Borrowing when the conditions
precedent thereto, in the determination of the Administrative Agent, have been
met or to fund its portion of any unreimbursed payment under Section 2.10(d) or
---------------
(ii) a Lender having notified in writing the Borrower and/or the Administrative
Agent that it does not intend to comply with its obligations under Section 2.1
-----------
or Section 2.10(d), as a result of any takeover of such Lender by any regulatory
---------------
authority or agency.
"Letters of Credit" means, collectively, all Commercial Letters of
-----------------
Credit, Standby Letters of Credit and, in the case of a Letter of Credit to be
designated as a Multicurrency Letter of Credit, bank guarantees, in each case as
issued pursuant to this Agreement, and "Letter of Credit" means any one of such
----------------
Letters of Credit.
"Letter of Credit Amendment Request" has the meaning assigned to that
----------------------------------
term in Section 2.10(b).
---------------
"Letter of Credit Payment" means, as applicable (i) all payments made
------------------------
by Facing Agent pursuant to either a draft or demand for payment under a Letter
of Credit or (ii) all payments by Domestic Revolving Lenders or Multicurrency
Revolving Lenders, as the case may be, to a Facing Agent in respect thereof
(whether or not in accordance with their Domestic Revolver Pro Rata Share or
Multicurrency Revolver Pro Rata Share, as the case may be).
"Letter of Credit Request" has the meaning assigned to that term in
------------------------
Section 2.10(b).
- ---------------
31
<PAGE>
"Leverage Ratio" means, for any Test Period, the ratio of Consolidated
--------------
Debt as of the last day of such Test Period to Consolidated EBITDA for such Test
Period; provided, that for the purpose of determining the Applicable Base Rate
--------
Margin, the Applicable Commitment Fee Percentage, the Applicable Eurocurrency
Margin and compliance with Section 9.4, Consolidated EBITDA for any Test Period
-----------
containing the Fiscal Quarters ended (i) March 31, 1999 shall be deemed to be
$117,600,000 with respect to such Fiscal Quarter and (ii) June 30, 1999 shall be
deemed to be the higher of (x) $120,000,000 and (y) actual Consolidated EBITDA,
with respect to such Fiscal Quarter.
"Lien" means (i) any judgment lien or execution, attachment, levy,
----
distraint or similar legal process and (ii) any mortgages , pledge,
hypothecation, collateral assignment, security interest, encumbrance, lien,
charge or deposit arrangement (other than a deposit to a Deposit Account in the
ordinary course of business and not intended as security) of any kind
(including, without limitation, any conditional sale or other title retention
agreement or lease in the nature thereof, any agreement to give any of the
foregoing, any filing or agreement to file a financing statement as debtor under
the UCC or any similar statute (other than filings for which an agreement to
release such statement has been obtained and delivered to the Administrative
Agent) other than to reflect ownership by a third party of property leased or
consigned to the Borrower or any of its Subsidiaries under a lease or
consignment agreement which is not in the nature of a conditional sale or title
retention agreement, any subordination arrangement in favor of another Person or
any sale of receivables with recourse against the seller or any Affiliate of the
seller).
"Loan" means any Term A Dollar Loan, Term A Euro Loan, Term B Loan,
----
Term C Loan, Domestic Revolving Loan, Swing Line Loan or Multicurrency Revolving
Loan and "Loans" means all such Loans collectively.
"Loan Documents" means, collectively, this Agreement, the Notes, each
--------------
Letter of Credit, each Security Document and all other agreements, instruments
and documents executed in connection (other than the Foreign Intercompany Loan
Documents), in each case as the same may at any time be amended, supplemented,
restated or otherwise modified and in effect.
"LPC" mean Louisiana Pigment Company, and its successors and assigns.
---
"Majority Lenders" of any Facility means those Non-Defaulting Lenders
----------------
which would constitute the Required Lenders under, and as defined in, this
Agreement if all outstanding Obligations of other Facilities under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
"Mandatory Cost" means the cost imputed to the Lender(s) of compliance
--------------
with:
32
<PAGE>
(a) the Mandatory Liquid Assets requirements of the Bank of England
and/or the banking supervision or other costs of the Financial Services
Authority as determined in accordance with Schedule 1(b); and
-------------
(b) any other applicable regulatory or central bank requirement
relating to any Loan made through a branch in the jurisdiction of the currency
of that Loan.
"Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
business, condition (financial or otherwise), assets, liabilities, property,
operations or prospects of the Borrower and its Subsidiaries taken as a whole,
(ii) the ability of Holdings or any Subsidiary of Holdings to perform its
respective obligations under any Loan Document to which it is a party, or (iii)
the validity or enforceability of this Agreement or any of the Security
Documents or the rights or remedies of the Administrative Agent and the Lenders
hereunder or thereunder.
"Material Agreement" means (i) any Contractual Obligation of Holdings
------------------
or any of its Subsidiaries, the breach of which or the failure to maintain would
be reasonably likely to result in a Material Adverse Effect, (ii) the Senior
Subordinated Notes, (iii) the UK Holdco Note, (iv) the Foreign Intercompany Loan
Documents, (v) the Huntsman Agreements listed on Exhibit 1.1(c) and the ICI
--------------
Agreements listed on Exhibit 1.1(d), (vi) the agreements identified in Schedule
-------------- --------
6.23 and (vii) any material Contractual Obligation entered into in connection
- ----
with an Acquisition.
"Material Subsidiary" means any Subsidiary of the Borrower, the
-------------------
Consolidated Total Assets of which were more than 2% of the Borrower's
Consolidated Total Assets as of the end of the most recently completed Fiscal
Year of the Borrower for which audited financial statements are available;
provided that, in the event the aggregate of the Consolidated Total Assets of
- --------
all Subsidiaries that do not constitute Material Subsidiaries exceeds 5% of the
Borrower's Consolidated Total Assets as of such date, the Borrower (or the
Administrative Agent, in the event the Borrower has failed to do so within 10
days of request therefor by The Administrative Agent) shall, to the extent
necessary, designate sufficient Subsidiaries to be deemed to be "Material
Subsidiaries" to eliminate such excess, and such designated Subsidiaries shall
thereafter constitute Material Subsidiaries. Assets of Foreign Subsidiaries
shall be converted into Dollars at the rates used for purposes of preparing the
consolidated balance sheet of the Borrower included in such audited financial
statements.
"Maximum Commitment" means, when used with reference to any Lender,
------------------
the aggregate of such Lender's Term A Dollar Commitment, the Dollar Equivalent
(calculated as of the Initial Borrowing Date) of the Term A Euro Commitment, its
Term B Commitment, its Term C Commitment, its Domestic Revolving Commitment and
its Multicurrency Revolving Commitment in the amounts not to exceed those set
forth opposite the name of such Lender on
33
<PAGE>
Schedule 1.1(a) hereto, subject toreduction from time to time in accordance
---------------
with the terms of this Agreement.
"Minimum Borrowing Amount" means, with respect to (i) Base Rate Loans,
------------------------
$3,000,000, (ii) with respect to Eurocurrency Loans, $5,000,000, in the case of
a Borrowing in Dollars, (Pounds)2,000,000, in the case of a Borrowing in
Sterling, and 3,000,000 Euros, in the case of a Borrowing in Euros and (iii)
with respect to Swing Line Loans, $500,000 (or such other amount as the Swing
Line Lender may agree.)
"Moody's" means Moody's Investors Service, Inc. or any successor to
-------
the rating agency business thereof.
"Mortgage" has the meaning assigned to that term in Section 5.1(c) and
-------- --------------
shall also include any mortgage or similar documents executed pursuant to
Section 7.12.
- ------------
"Mortgage Policies" has the meaning assigned to that term in Section
----------------- -------
5.1(c)
- ------
"Mortgaged Property" means the owned or leased real property subject
------------------
to a US Mortgage as indicated on Schedule 6.21(c) and shall also include any
----------------
owned or leased real property subject to a Mortgage pursuant to Section 7.12.
------------
"Most Recent Leverage Ratio" means, at any date, the Leverage Ratio
--------------------------
for the Test Period ending as of the most recently ended Fiscal Quarter for
which financial statements have been delivered to the Lenders pursuant to
Section 7.1; provided, however, that if the Borrower fails to deliver such
- ----------- --------- ------
financial statements as required by Section 7.1 and further fails to remedy such
-----------
default within five days of notice thereof from the Administrative Agent, then,
without prejudice to any other rights of any Lender hereunder, the Most Recent
Leverage Ratio shall be deemed to be the highest level as of the date such
financial statements were required to be delivered under Section 7.1.
-----------
Notwithstanding the foregoing or the provisions of the last sentence of Section
-------
3.3, from the date hereof to and including the date upon which the financial
- ---
statements with respect to the Fiscal Year of the Borrower ended December 31,
1999 are (or should have been) delivered under Section 7.1, the Most Recent
-----------
Leverage Ratio shall be deemed to be 4.50 to 1.0.
"Multicurrency LC Obligations" means, at any time, an amount equal to
----------------------------
the sum of (i) the Assigned Dollar Value of the aggregate Stated Amount of the
then outstanding Multicurrency Letters of Credit and (ii) the Assigned Dollar
Value of the aggregate amount of drawings under Multicurrency Letters of Credit
which have not then been reimbursed pursuant to Section 2.10(c). The
---------------
Multicurrency LC Obligation of any Multicurrency Revolving Lender at any time
shall mean the Dollar Equivalent of its Multicurrency Revolver Pro Rata Share of
the Assigned Dollar Value of the aggregate Multicurrency LC Obligations
outstanding at such time.
34
<PAGE>
"Multicurrency Letter of Credit" means any Letter of Credit issued
------------------------------
pursuant to Section 2.10(a)(ii).
-------------------
"Multicurrency Revolver Pro Rata Share" means, when used with
-------------------------------------
reference to any Multicurrency Revolving Lender and any described aggregate or
total amount, an amount equal to the result obtained by multiplying such
described aggregate or total amount by a fraction the numerator of which shall
be such Multicurrency Revolving Lender's Multicurrency Revolving Commitment or,
if the Revolver Termination Date has occurred, such Multicurrency Revolving
Lender's then outstanding Multicurrency Revolving Loans and the denominator of
which shall be the Multicurrency Revolving Commitments or, if the Revolver
Termination Date has occurred, all then outstanding Multicurrency Revolving
Loans.
"Multicurrency Revolving Commitment" means, with respect to any
----------------------------------
Multicurrency Revolving Lender, the obligation of such Multicurrency Revolving
Lender to make Multicurrency Revolving Loans and participate in Multicurrency
Letters of Credit, as such commitment may be adjusted from time to time pursuant
to this Agreement, which commitment as of the date hereof is the amount set
forth opposite such Lender's name on Schedule 1.1(a) hereto under the caption
---------------
"Amount of Multicurrency Revolving Commitment" as the same may be adjusted from
time to time pursuant to the terms hereof and "Multicurrency Revolving
-----------------------
Commitments" means such commitments collectively, which commitments equal
- -----------
$75,000,000 in the aggregate as of the date hereof.
"Multicurrency Revolving Facility" means the credit facility under
--------------------------------
this Agreement evidenced by the Multicurrency Revolving Commitments and the
Multicurrency Revolving Loans.
"Multicurrency Revolving Lender" means any Lender which has a
------------------------------
Multicurrency Revolving Commitment or is owed a Multicurrency Revolving Loan (or
a portion thereof).
"Multicurrency Revolving Loan" and "Multicurrency Revolving Loans"
---------------------------- -----------------------------
have the meanings given in Section 2.1(d)(ii).
------------------
"Multicurrency Revolving Note" has the meaning assigned to that term
----------------------------
in Section 2.2(a).
--------------
"Multiemployer Plan" means any plan described in Section 4001(a)(3) of
------------------
ERISA to which contributions are or have, within the preceding six years, been
made, or are or were, within the preceding six years, required to be made, by
the Borrower or any of its ERISA Affiliates or any Subsidiary of the Borrower or
ERISA Affiliates of such Subsidiary.
35
<PAGE>
"Net Offering Proceeds" means the proceeds received from the issuance
---------------------
of any Capital Stock net of the actual liabilities for reasonably anticipated
cash taxes in connection with such issuance or incurrence, if any, any
underwriting, brokerage and other customary selling commissions incurred in
connection with such issuance or incurrence, and reasonable legal, advisory and
other fees and expenses, incurred in connection with such issuance or
incurrence.
"Net Sale Proceeds" means, with respect to any Asset Disposition, the
-----------------
sum of the aggregate cash payments received by the Borrower or any Subsidiary of
the Borrower from such Asset Disposition (including, without limitation, cash
received by way of deferred payment pursuant to a note receivable, conversion of
non-cash consideration, cash payments in respect of purchase price adjustments
or otherwise, but only as and when such cash is received) minus the direct costs
-----
and expenses incurred in connection therewith (including in the case of any
Asset Disposition, the payment of the outstanding principal amount of, premium,
if any, and interest on any Indebtedness (other than hereunder) required to be
repaid as a result of such Asset Disposition) and minus any provision for taxes
-----
in respect thereof made in accordance with GAAP. Any proceeds received in a
currency other than Dollars shall, for purposes of the calculation of the amount
of Net Sale Proceeds, be in an amount equal to the Dollar equivalent thereof as
of the date of receipt thereof by the Borrower or any Subsidiary of the
Borrower.
"Non-Defaulting Lender" means each Lender which is not a Defaulting
---------------------
Lender.
"Note" means any of the Revolving Notes, the Swing Line Note, the
----
Multicurrency Revolving Notes or the Term Notes and "Notes" means all of such
-----
Notes collectively.
"Notice of Borrowing" has the meaning assigned to that term in Section
------------------- -------
2.5.
- ---
"Notice of Conversion or Continuation" has the meaning assigned to
------------------------------------
that term in Section 2.6.
-----------
"Notice Office" means the office of the Administrative Agent located
-------------
at One Bankers Trust Plaza, New York, New York 10006, or such other office as
the Administrative Agent may designate to Holdings, the Borrower and the Lenders
from time to time.
"Obligations" means all liabilities and obligations of Holdings and
-----------
its Subsidiaries now or hereafter arising under this Agreement and all of the
other Loan Documents, whether for principal, interest, fees, expenses,
indemnities or otherwise, and whether primary, secondary, direct, indirect,
contingent, fixed or otherwise (including obligations of performance).
"Operating Financing Lease" means a lease of the type described in
-------------------------
clause (xi) of the definition of "Indebtedness".
- ----------- ------------
36
<PAGE>
"Organizational Documents" means, with respect to any Person, such
------------------------
Person's memorandum, articles or certificate of incorporation, bylaws,
partnership agreement, limited liability company agreement, joint venture
agreement or other similar governing documents and any document setting forth
the designation, amount and/or relative rights, limitations and preferences of
any class or series of such Person's Capital Stock.
"Overdraft Facility" has the meaning assigned to that term in Section
------------------ -------
8.2(o).
- ------
"Other Hedging Agreement" means any foreign exchange contract,
-----------------------
currency swap agreement, futures contract, commodity agreements, option
contract, synthetic cap or other similar agreement other than an Interest Rate
Agreement to which the Borrower or any Subsidiary is a party.
"Overdraft Reserve" shall mean an amount, if any, equal to the amount
-----------------
by which Indebtedness incurred by the Borrower or any of its Subsidiaries
pursuant to Section 8.2(o) exceeds $50,000,000 (or the Dollar Equivalent
--------------
thereof).
"Parent Company" means each Person which owns, directly or indirectly,
--------------
at least a majority of the voting interest under ordinary circumstances of
Huntsman Corporation.
"Participants" has the meaning assigned to that term in Section
------------ -------
12.8(b).
- -------
"Participating Subsidiary" means any Subsidiary of the Borrower that
------------------------
is a participant in a Permitted Accounts Receivable Securitization.
"Payment Office" means (i) with respect to the Administrative Agent or
--------------
Swing Line Lender, for payments with respect to Dollar-denominated Loans, One
Bankers Trust Plaza, 130 Liberty Street, New York, New York, 10006, or such
other address as the Administrative Agent or Swing Line Lender, as the case may
be, may from time to time specify in accordance with Section 12.3 or (ii) with
------------
respect to the Administrative Agent or Swing Line Lender, for payments in an
Alternative Currency or with respect to a Domestic Supported Foreign LC and a
Multicurrency Letter of Credit, such account at such bank or office in London
(or such other location) as the Administrative Agent or Swing Line Lender, as
the case may be, shall designate by notice to the Person required to make the
relevant payment.
"PBGC" means the Pension Benefit Guaranty Corporation created by
----
Section 4002(a) of ERISA.
"Permitted Accounts Receivable Securitization" means any receivables
--------------------------------------------
financing program providing for the sale of Receivables Facility Assets by the
Borrower and its Participating Subsidiaries to the Receivables Subsidiary in
transactions purporting to be sales
37
<PAGE>
(and treated as sales for GAAP purposes), which Receivables Subsidiary shall
finance the purchase of such Receivables Facility Assets by the sale, transfer,
conveyance, lien or pledge of such Receivables Facility Assets to one or more
limited purpose financing companies, special purpose entities and/or other
financial institutions, in each case, on a limited recourse basis as to the
Borrower and the Participating Subsidiaries; provided that any such transaction
--------
shall be consummated pursuant to documentation in form and substance reasonably
satisfactory to the Administrative Agent, as evidenced by its written approval
thereof.
"Permitted Foreign Technology Licenses" has the meaning assigned to
-------------------------------------
that term in Section 8.3(g).
--------------
"Permitted Liens" has the meaning assigned to that term in Section
--------------- -------
8.1.
- ---
"Permitted Real Property Encumbrances" means (i) those liens,
------------------------------------
encumbrances and other matters affecting title to any Mortgaged Property listed
in the applicable title policy in respect thereof (or any update thereto) and
found, on the date of delivery of such title policy to the Administrative Agent
in accordance with the terms hereof, reasonably acceptable by the Administrative
Agent, (ii) as to any particular real property at any time, such easements,
encroachments, covenants, restrictions, rights of way, minor defects,
irregularities or encumbrances on title which do not, in the reasonable opinion
of the Administrative Agent, materially impair such real property for the
purpose for which it is held by the mortgagor or owner, as the case may be,
thereof, or the Lien held by the Administrative Agent, (iii) municipal and
zoning laws, regulations, codes and ordinances, which are not violated in any
material respect by the existing improvements and the present use made by the
mortgagor or owner, as the case may be, of such real property, (iv) general real
estate taxes and assessments not yet delinquent, and (v) such other items as the
Administrative Agent may consent to.
"Permitted Unconsolidated Ventures" means an Investment in a Person
---------------------------------
not constituting a Subsidiary of the Borrower which Person is not engaged in any
business other than that permitted under Section 8.9 for the Borrower and its
-----------
Subsidiaries.
"Person" means an individual or a corporation, partnership, limited
------
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Plan" means any plan described in Section 4021(a) of ERISA and not
----
excluded pursuant to Section 4021(b) thereof, which is or has, within the
preceding six years, been established or maintained, or to which contributions
are or have, within the preceding six years, been made, by the Borrower or any
of its ERISA Affiliates or any Subsidiary of the Borrower or any ERISA
Affiliates of such Subsidiary, but not including any Multiemployer Plan.
38
<PAGE>
"Plan Administrator" has the meaning assigned to the term
------------------
"administrator" in Section 3(16)(A) of ERISA.
"Plan Sponsor" has the meaning assigned to the term "plan sponsor" in
------------
Section 3(16)(B) of ERISA.
"Pledged Receivables Subsidiary Notes" means the subordinated notes of
------------------------------------
the Receivables Subsidiary, if any, issued to the Borrower or any Participating
Subsidiary in connection with a Permitted Accounts Receivable Securitization,
which subordinated notes are pledged pursuant to the Receivables Subsidiary
Pledge Agreement.
"Pledged Receivables Subsidiary Stock" means all the issued and
------------------------------------
outstanding shares of capital stock of the Receivables Subsidiary, which shares
are pledged pursuant to the Receivables Subsidiary Pledge Agreement.
"Pledged Securities" means, collectively, "Pledged Securities" as
------------------
defined in the Collateral Security Agreement or any other pledged securities
under any Security Document
"Pro Forma Balance Sheet" has the meaning assigned to that term in
-----------------------
Section 6.5(a).
- --------------
"Projections" has the meaning assigned to that term in Section 6.5(e).
----------- --------------
"Quarterly Payment Date" means each March 31, June 30, September 30
----------------------
and December 31 of each year.
"Quoted Rate" means the rate of interest per annum with respect to a
------------
Swing Line Loan denominated in an Alternative Currency as determined by the
Swing Line Lender at the time such Swing Line Loan is made to the Borrower.
"Receivables Documents" shall mean all documentation relating to any
---------------------
Permitted Accounts Receivable Securitization.
"Receivables Facility Assets" shall mean all Accounts Receivable
---------------------------
(whether now existing or arising in the future) of the Borrower or any of its
Subsidiaries which are transferred to the Receivables Subsidiary pursuant to a
Permitted Accounts Receivable Securitization, and any assets related thereto,
including without limitation (i) all collateral given by the respective account
debtor or on its behalf (but not by the Borrower or any of its Subsidiaries)
securing such Accounts Receivable, (ii) all contracts and all guarantees (but
not by the Borrower or any of its Subsidiaries) or other obligations directly
related to such Accounts Receivable, (iii) other related
39
<PAGE>
assets including those set forth in the Receivables Documents, and (iv) proceeds
of all of the foregoing.
"Receivables Facility Attributed Indebtedness" at any time shall mean
--------------------------------------------
the aggregate net outstanding amount theretofore paid to the Receivables
Subsidiary in respect of the Receivables Facilities Assets sold or transferred
by it in connection with a Permitted Accounts Receivable Securitization (it
being the intent of the parties that the amount of Receivables Facility
Attributed Indebtedness at any time outstanding approximate as closely as
possible the principal amount of Indebtedness which would be outstanding at such
time under the Permitted Accounts Receivable Securitization if the same were
structured as a secured lending agreement rather than a purchase agreement).
"Receivables Subsidiary Pledge Agreement" means the Collateral
---------------------------------------
Security Agreement or such other pledge or security agreement in form
satisfactory to the Administrative Agent pursuant to which the Borrower or a
Participating Subsidiary pledges the Pledged Receivables Subsidiary Stock and
the Pledged Receivables Subsidiary Notes to the Collateral Agent for the benefit
of the Lenders to secure the "Secured Obligations" described in the Collateral
Security Agreement, as such agreement may at any time be amended or modified in
accordance with the terms thereof and in effect.
"Receivables Subsidiary" means a special purpose, bankruptcy remote
----------------------
Wholly-Owned Subsidiary of the Borrower which may be formed for the sole and
exclusive purpose of engaging in activities in connection with the purchase,
sale and financing of Accounts Receivable in connection with and pursuant to a
Permitted Accounts Receivable Securitization.
"Recovery Event" means the receipt by the Borrower or any of its
--------------
Subsidiaries of any insurance or condemnation proceeds payable (i) by reason of
any theft, physical destruction or damage or any other similar event with
respect to any properties or assets of the Borrower or any of its Subsidiaries,
(ii) by reason of any condemnation, taking, seizing or similar event with
respect to any properties or assets of the Borrower or any of its Subsidiaries
and (iii) under any policy of insurance required to be maintained under Section
-------
7.8 provided, however, that in no event shall payments made under business
- --- -------- -------
interruption insurance constitute a Recovery Event.
"Refunded Swing Line Loans" has the meaning assigned to that term in
-------------------------
Section 2.1(e)(ii).
- ------------------
"Regulation D" means Regulation D of the Board as from time to time in
------------
effect and any successor to all or a portion thereof establishing reserve
requirements.
"Release" means any release, spill, emission, leaking, pumping,
-------
pouring, emptying, dumping, injection, deposit, disposal, discharge, dispersal,
escape, leaching or
40
<PAGE>
migration into the indoor or outdoor environment or into or out of any property
of the Borrower or its Subsidiaries, or at any other location, including any
location to which the Borrower or any Subsidiary has transported or arranged for
the transportation of any Contaminant, including the movement of Contaminants
through or in the air, soil, surface water, groundwater or property of the
Borrower or its Subsidiaries or at any other location, including any location to
which the Borrower or any Subsidiary has transported or arranged for the
transportation of any Contaminant.
"Remedial Action" means actions required to (i) clean up, remove,
---------------
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent, minimize or otherwise address the Release or
substantial threat of a material Release of Contaminants so they do not migrate
or endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; or (iii) perform pre-response or post-response studies and
investigations and post-response monitoring and care or any other studies,
reports or investigations relating to Contaminants.
"Replaced Lender" has the meaning assigned to that term in Section
--------------- -------
3.7.
"Replacement Lender" has the meaning assigned to that term in Section
------------------ -------
3.7.
- ---
"Reportable Event" means a "reportable event" described in Section
----------------
4043(c) of ERISA or in the regulations thereunder with respect to a Plan other
than a reportable event for which the 30 day notice requirement to the PBGC has
been waived, any event requiring disclosure under Section 4063(a) or 4062(e) of
ERISA, receipt of a notice of withdrawal liability with respect to a
Multiemployer Plan pursuant to Section 4202 of ERISA or receipt of a notice of
reorganization or insolvency with respect to a Multiemployer Plan pursuant to
Section 4242 or 4245 of ERISA.
"Required Lenders" means Non-Defaulting Lenders the sum of whose
----------------
outstanding Term Loans (with any portion of such Term Loans denominated in Euros
calculated on a Dollar Equivalent basis), Domestic Revolving Commitments (or,
after the Total Domestic Revolving Commitment has been terminated, outstanding
Domestic Revolving Loans and Domestic Revolver Pro Rata Share of the Assigned
Dollar Value of outstanding Swing Line Loans and the Assigned Dollar Value of
Domestic LC Obligations) and Multicurrency Revolving Commitments (or, after the
Total Multicurrency Revolving Commitment has been terminated, the Assigned
Dollar Value of outstanding Multicurrency Revolving Loans and the Assigned
Dollar Value of Multicurrency LC Obligations) constitute greater than 50% of the
sum of (i) the total outstanding Dollar Equivalent amount of Term Loans of Non-
Defaulting Lenders, (ii) the Total Domestic Revolving Commitment less the
aggregate Domestic Revolving Commitments of Defaulting Lenders (or, after the
Total Domestic Revolving Commitment has been terminated, the total outstanding
Domestic Revolving Loans of Non-Defaulting Lenders and the aggregate
41
<PAGE>
Domestic Revolver Pro Rata Share of all Non-Defaulting Lenders of the total
Assigned Dollar Value of outstanding Swing Line Loans and the Assigned Dollar
Value of Domestic LC Obligations at such time) and (iii) the Total Multicurrency
Revolving Commitment less the aggregate Multicurrency Revolving Commitments of
Defaulting Lenders (or, after the Total Multicurrency Commitment has been
terminated, the total Assigned Dollar Value of outstanding Multicurrency
Revolving Loans of Non-Defaulting Lenders and the aggregate Multicurrency
Revolver Pro Rata Share of all Non-Defaulting Lenders of the total Assigned
Dollar Value of outstanding Multicurrency LC Obligations at such time).
"Requirement of Law" means, as to any Person, any law (including
------------------
common law), treaty, rule or regulation or judgment, decree, determination or
award of an arbitrator or a court or other Governmental Authority, including
without limitation, any Environmental Law, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Responsible Financial Officer" means, as to any Person, the chief
-----------------------------
financial officer, principal accounting officer, a financial vice president,
controller, manager (in the case of a limited liability company) having
responsibility for financial matters, treasurer or assistant treasurer of such
Person.
"Responsible Officer" means, as to any Person, any of the chairman or
-------------------
vice chairman of the board of directors, the president, any executive vice
president, the vice president-controller, any vice president, manager (in the
case of a limited liability company) or any Responsible Financial Officer of
such Person.
"Returns" has the meaning assigned to that term in Section 6.9.
------- -----------
"Revolver Termination Date" means June 30, 2005 or such earlier date
-------------------------
as the Domestic Revolving Commitments and the Multicurrency Revolving
Commitments shall have been terminated or otherwise reduced to $0 pursuant to
this Agreement.
"Revolving Note" has the meaning assigned to that term in Section
-------------- -------
2.2(a).
- ------
"Rubicon" means Rubicon Inc., and its successors and assigns.
-------
"Sale and Leaseback Transaction" means any arrangement, directly or
------------------------------
indirectly, whereby a seller or transferor shall sell or otherwise transfer any
real or personal property and then or thereafter lease, or repurchase under an
extended purchase contract, conditional sales or other title retention
agreement, the same or similar property.
42
<PAGE>
"Scheduled Repayments" means a Scheduled Term A Repayment, Scheduled
--------------------
Term B Repayment or a Scheduled Term C Repayment.
"Scheduled Term A Dollar Repayments" means, with respect to the
----------------------------------
principal payments on the Term A Dollar Loans for each date set forth below, the
Dollar amount set forth opposite thereto, as reduced from time to time pursuant
to Sections 4.3 and 4.4:
--------------------
<TABLE>
<CAPTION>
Scheduled Term A Dollar Repayments
Date Repayment
---- ---------
<S> <C>
December 31, 2000 $11,112,000
June 30, 2001 $11,112,000
December 31, 2001 $22,224,000
June 30, 2002 $22,224,000
December 31, 2002 $26,664,000
June 30, 2003 $26,664,000
December 31, 2003 $28,896,000
June 30, 2004 $28,896,000
December 31, 2004 $31,104,000
June 30, 2005 $31,104,000
</TABLE>
"Scheduled Term A Euro Repayments" means, with respect to the
--------------------------------
principal payments on the Term A Euro Loans for each date set forth below, the
amount equal to the percentage of Term A Euro Loans made on the Initial
Borrowing Date set forth opposite thereto, as reduced from time to time pursuant
to Sections 4.3 and 4.4:
--------------------
Scheduled Term A Euro Repayments
Date Repayment
---- ---------
December 31, 2000 13,397,000 Euros
June 30, 2001 13,397,000 Euros
December 31, 2001 26,794,000 Euros
43
<PAGE>
June 30, 2002 26,794,000 Euros
December 31, 2002 32,147,000 Euros
June 30, 2003 32,147,000 Euros
December 31, 2003 34,838,000 Euros
June 30, 2004 34,838,000 Euros
December 31, 2004 37,500,000 Euros
June 30, 2005 37,499,851.85 Euros
"Scheduled Term A Repayments" means, collectively, the Scheduled Term
---------------------------
A Dollar Repayments and the Scheduled Term A Euro Repayments.
"Scheduled Term B Repayments" means, with respect to the principal
---------------------------
payments on the Term B Loans for each date set forth below, the Dollar amount
set forth opposite thereto, as reduced from time to time pursuant to Sections
--------
4.3 and 4.4:
- -----------
Scheduled Term B Repayments
<TABLE>
<CAPTION>
Date Repayment
---- ------------
<S> <C>
June 30, 2000 $ 5,650,000
June 30, 2001 $ 5,650,000
June 30, 2002 $ 5,650,000
June 30, 2003 $ 5,650,000
June 30, 2004 $ 5,650,000
June 30, 2005 $ 5,650,000
June 30, 2006 $ 5,650,000
June 30, 2007 $525,450,000
</TABLE>
"Scheduled Term C Repayments" means, with respect to the principal
---------------------------
payments on the Term C Loans for each date set forth below, the Dollar amount
set forth opposite thereto, as reduced from time to time pursuant to Sections
--------
4.3 and 4.4:
- -----------
44
<PAGE>
Scheduled Term C Repayments
<TABLE>
<CAPTION>
Date Repayment
---- ---------
<S> <C>
June 30, 2000 $ 5,650,000
June 30, 2001 $ 5,650,000
June 30, 2002 $ 5,650,000
June 30, 2003 $ 5,650,000
June 30, 2004 $ 5,650,000
June 30, 2005 $ 5,650,000
June 30, 2006 $ 5,650,000
June 30, 2007 $ 5,650,000
June 30, 2008 $519,800,000
</TABLE>
"SEC" means the Securities and Exchange Commission or any successor
---
thereto.
"Secured Parties" has the meaning provided in the respective Security
---------------
Documents to the extent defined therein and shall include any Person who is
granted a security interest pursuant to any Loan Document.
"Securities" means any stock, shares, voting trust certificates,
----------
bonds, debentures, options, warrants, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Security Documents" means, collectively the Collateral Security
------------------
Agreement, the Mortgages and all other agreements, assignments, security
agreements, instruments and documents executed in connection therewith, in each
case as the same may at any time be amended, supplemented, restated or otherwise
modified and in effect. For purposes of this Agreement, "Security Documents"
shall also include all guaranties, mortgagees, pledge agreements, collateral
assignments, subordination agreements and other collateral documents in the
nature thereof entered into by Holdings or any Subsidiary of Holdings on and
after the date of this Agreement in favor of the Collateral Agent for the
benefit of the Secured Parties in
45
<PAGE>
satisfaction of the requirements of this Agreement, but shall exclude any
Foreign Intercompany Loan Security Documents.
"Senior Subordinated Note Documents" means the Senior Subordinated
----------------------------------
Notes, the indenture under which the Senior Subordinated Notes are issued and
all other documents evidencing, guaranteeing or otherwise governing the terms of
the Senior Subordinated Notes.
"Senior Subordinated Notes" means the 10% Senior Subordinated Notes
-------------------------
due 2009 in an aggregate principal amount of $600,000,000 and 200,000,000 Euros
issued by the Borrower in a Rule 144A offering (the "Initial Notes") and any
-------------
senior subordinated notes with substantially identical terms to the Initial
Notes which are issued in exchange for the Initial Notes following the issuance
of the Initial Notes as contemplated by the Senior Subordinated Note Documents.
"Solvency Opinion" means the opinion, and documents upon which such
----------------
opinion is based, that the Borrower is Solvent, prepared by Valuation Research,
Inc. or such other firm as the Administrative Agent shall select.
"Solvent" means, when used with respect to (i) any Person (other than
-------
subject to clause (ii)), that (x) the fair saleable value of its assets is in
excess of the total amount of its liabilities (including for purposes of this
definition all liabilities, whether or not reflected on a balance sheet prepared
in accordance with GAAP, and whether direct or indirect, fixed or contingent,
disputed or undisputed), (y) it is able to pay its debts or obligations in the
ordinary course as they mature and (z) it has capital sufficient to carry on its
business and all business in which it is about to engage and (ii) for any Person
other than a Domestic Subsidiary, such Person has the ability to pay its debts
as and when they fall due and could not be deemed to be insolvent for the
purposes of the law of such Person's jurisdiction of formation. For purposes of
Section 6.5(b) "debt" means any liability on a claim, and "claim" means (A) any
- --------------
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured (including all obligations,
if any, under any Plan or the equivalent for unfunded past service liability,
and any other unfunded medical and death benefits) or (B) any right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. In computing the amount of contingent or unliquidated liabilities
at any time, such liabilities will be computed at the amount which, in light of
all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
"Spanish Opco" means Huntsman ICI Espana, S.L., a company is organized
------------
under the laws of Spain.
46
<PAGE>
"Spot Rate" means, for any currency at any date, the rate quoted by BT
----------
as the spot rate for the purchase by BT of such currency with another currency
through its foreign exchange trading office or such other rate which the
Administrative Agent may select based on reasonable commercial practices.
"S&P" means Standard & Poor's Ratings Service, a division of the
---
McGraw-Hill Companies, Inc., or any successor to the rating agency business
thereof.
"Standby Letters of Credit" means any of the irrevocable standby
-------------------------
letters of credit issued for the account of the Borrower pursuant to this
Agreement, in form acceptable to the Facing Bank, together with any increases or
decreases in the Stated Amount thereof and any renewals, amendments and/or
extensions thereof.
"Stated Amount" or "Stated Amounts" means, (i) with respect to any
------------- --------------
Letter of Credit issued in Dollars, the stated or face amount of such Letter of
Credit to the extent available at the time for drawing (subject to presentment
of all requisite documents), and (ii) with respect to any Letter of Credit
issued in any currency other than Dollars, the Assigned Dollar Value of the
stated or face amount of such Letter of Credit to the extent available at the
time for drawing (subject to presentment of all requisite documents), in either
case, as the same may be increased or decreased from time to time in accordance
with the terms of such Letter of Credit. For purposes of calculating the Stated
Amount of any Letter of Credit at any time:
(A) any increase in the Stated Amount of any Letter of Credit by
reason of any amendment to any Letter of Credit shall be deemed effective
under this Agreement as of the date Facing Agent actually issues an
amendment purporting to increase the Stated Amount of such Letter of
Credit, whether or not Facing Agent receives the consent of the Letter of
Credit beneficiary or beneficiaries to the amendment, except that if the
Borrower has required that the increase in Stated Amount be given effect as
of an earlier date and Facing Agent issues an amendment to that effect,
then such increase in Stated Amount shall be deemed effective under this
Agreement as of such earlier date requested by the Borrower; and
(B) any reduction in the Stated Amount of any Letter of Credit
by reason of any amendment to any Letter of Credit shall be deemed
effective under this Agreement as of the later of (x) the date Facing Agent
actually issues an amendment purporting to reduce the Stated Amount of such
Letter of Credit, whether or not the amendment provides that the reduction
be given effect as of an earlier date, or (y) the date Facing Agent
receives the written consent (including by authenticated telex, cable,
SWIFT messages or facsimile transmission (with, in the case of a facsimile
transmission, a follow-up original hard copy)) of the Letter
47
<PAGE>
of Credit beneficiary or beneficiaries to such reduction, whether written
consent must be dated on or after the date of the amendment issued by
Facing Agent purporting to effect such reduction.
"Sterling" means the lawful currency of the United Kingdom.
--------
"Subsidiary" of any Person means any corporation, partnership (limited
----------
or general), limited liability company, trust or other entity of which a
majority of the stock (or equivalent ownership or controlling interest) having
voting power to elect a majority of the board of directors (if a corporation) or
to select the trustee or equivalent controlling interest, shall, at the time
such reference becomes operative, be directly or indirectly owned or controlled
by such Person or one or more of the other subsidiaries of such Person or any
combination thereof. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower. Unless otherwise expressly provided, an
Unrestricted Subsidiary shall not be considered a "Subsidiary" for purposes of
this Agreement.
"Subsidiary Guaranty" means a guaranty executed by the Subsidiary
-------------------
Guarantors, in form and substance satisfactory to the Administrative Agent, as
the same may be amended, supplemented or otherwise modified from time to time.
"Subsidiary Guarantor" means each Domestic Subsidiary of the Borrower
--------------------
(other than the Thai Holding Companies), TG, TAI and any Subsidiary of the
Borrower that becomes a party to the Subsidiary Guaranty or delivers a guaranty
pursuant to Section 7.12 or 7.15.
------------ ----
"Supply Arrangement" means the contractual arrangements evidenced by
------------------
(i) the Supply Arrangement Agreements entered into between the Borrower or its
Affiliates and ICI or its Affiliates pursuant to which the Borrower is provided
the economic equivalent of ownership of the olefin plant and a butadiene plant
at Wilton Works jointly owned by BPCL and ICI and (ii) the BP Agreement.
"Supply Arrangement Agreements" means, collectively, (i) the Co-
-----------------------------
Operation Agreement to be entered into between the Borrower and ICI, (ii) the
Utilities Agreement to be entered into between the Borrower or an Affiliate of
the Borrower and ICI or an Affiliate of ICI, (iii) the Product Supply Agreement
to be entered into between the Borrower or an Affiliate of the Borrower and ICI
or an Affiliate of ICI, (iv) the Ethylene and Co-Products Supply Agreement to be
entered into between the Borrower or an Affiliate of the Borrower and ICI or an
Affiliate of ICI and (v) the Feedstock Supply Agreement to be entered into
between the Borrower or an Affiliate of the Borrower and ICI or an Affiliate of
ICI, in each case substantially in accordance with the principles agreed in
respect thereof in the Contribution Agreement.
48
<PAGE>
"Swing Line Commitment" means, with respect to the Swing Line Lender
---------------------
at any date, the obligation of the Swing Line Lender to make Swing Line Loans
pursuant to Section 2.1(e) in the amount referred to therein.
--------------
"Swing Line Lender" means BT in such capacity.
-----------------
"Swing Line Loans" has the meaning assigned to that term in Section
---------------- -------
2.1(e).
- ------
"Swing Line Loan Participation Certificate" means a certificate,
-----------------------------------------
substantially in the form of Exhibit 2.1(e).
--------------
"Swing Line Note" has the meaning assigned to that term in Section
--------------- -------
2.2(a).
- ------
"TAI" means Tioxide Americas Inc., a direct Wholly-Owned Subsidiary of
---
TG that is a Cayman Island corporation.
"Tax Distributions" has the meaning provided in Section 8.4.
----------------- -----------
"Taxes" has the meaning assigned to that term in Section 4.7(a).
----- --------------
"Term A Dollar Commitment" means, with respect to any Term A Lender,
------------------------
the principal amount set forth opposite such Lender's name on Schedule 1.1(a)
---------------
hereto or in any Assignment and Assumption Agreement under the caption "Amount
of Term A Dollar Commitment", as such commitment may be adjusted from time to
time pursuant to this Agreement, and "Term A Dollar Commitments" means such
-------------------------
commitments collectively, which commitments equal $240,000,000 the aggregate as
of the date hereof.
"Term A Dollar Facility" means the credit facility under this
----------------------
Agreement evidenced by the Term A Dollar Commitments and the Term A Dollar
Loans.
"Term A Dollar Lender" means any Lender which has a Term A Dollar
--------------------
Commitment or is owed a Term A Dollar Loan (or a portion thereof).
"Term A Dollar Loan" and "Term A Dollar Loans" have the meanings
------------------ -------------------
assigned to those terms in Section 2.1(a).
--------------
"Term A Dollar Note" and "Term A Dollar Notes" have the meanings
------------------ -------------------
assigned to those terms in Section 2.2(a).
--------------
"Term A Dollar Percentage" means, at any time, a fraction (expressed
------------------------
as a percentage) the numerator of which is equal to the aggregate principal
amount of all Term A
49
<PAGE>
Dollar Loans outstanding at such time and the denominator of which is equal to
the aggregate principal amount of all Term Loans outstanding at such time.
"Term A Dollar Pro Rata Share" means, when used with reference to any
----------------------------
Term A Dollar Lender and any described aggregate or total amount, an amount
equal to the result obtained by multiplying such described aggregate or total
amount by a fraction the numerator of which shall be such Term A Dollar Lender's
then outstanding Term A Dollar Loan and the denominator of which shall be all
then outstanding Term A Dollar Loans.
"Term A Euro Commitment" means, with respect to any Term A Lender, the
----------------------
principal amount set forth opposite such Lender's name on Schedule 1.1(a) hereto
---------------
or in any Assignment and Assumption Agreement under the caption "Amount of Term
A Euro Commitment", as such commitment may be adjusted from time to time
pursuant to this Agreement, and "Term A Euro Commitments" means such commitments
-----------------------
collectively, which commitments equal 289,351,851.85 Euros in the aggregate as
of the date hereof.
"Term A Euro Facility" means the credit facility under this Agreement
--------------------
evidenced by the Term A Euro Commitments and the Term A Euro Loans.
"Term A Euro Lender" means any Lender which has a Term A Euro
------------------
Commitment or is owed a Term A Euro Loan (or a portion thereof).
"Term A Euro Loan" and "Term A Euro Loans" have the meanings assigned
---------------- -----------------
to those terms in Section 2.1(a).
--------------
"Term A Euro Note" and "Term A Euro Notes" have the meanings assigned
---------------- -----------------
to those terms in Section 2.2(a).
--------------
"Term A Euro Percentage" means, at any time, a fraction (expressed as
----------------------
a percentage) the numerator of which is equal to the aggregate principal amount
of all Term A Euro Loans outstanding at such time and the denominator of which
is equal to the aggregate principal amount of all Term Loans outstanding at such
time.
"Term A Euro Pro Rata Share" means, when used with reference to any
--------------------------
Term A Euro Lender and any described aggregate or total amount, an amount equal
to the result obtained by multiplying such described aggregate or total amount
by a fraction the numerator of which shall be such Term A Euro Lender's then
outstanding Term A Euro Loan and the denominator of which shall be all then
outstanding Term A Euro Loans.
"Term A Loan Maturity Date" means June 30, 2005.
-------------------------
50
<PAGE>
"Term A Loans" means the Term A Dollar Loans and the Term A Euro
------------
Loans.
"Term A Lenders" means the Term A Dollar Lenders and the Term A Euro
--------------
Lenders.
"Term B Commitment" means, with respect to any Lender, the principal
-----------------
amount set forth opposite such Lender's name on Schedule 1.1(a) hereto or in any
---------------
Assignment and Assumption Agreement under the caption "Amount of Term B
Commitment", as such commitment may be adjusted from time to time pursuant to
this Agreement, and "Term B Commitments" means such commitments collectively,
------------------
which commitments equal $565,000,000 in the aggregate as of the date hereof.
"Term B Facility" means the credit facility under this Agreement
---------------
evidenced by the Term B Commitments and the Term B Loans.
"Term B Lender" means any Lender which has a Term B Commitment or is
-------------
owed a Term B Loan (or a portion thereof).
"Term B Loan" and "Term B Loans" have the meanings assigned to those
----------- ------------
terms in Section 2.1(b).
--------------
"Term B Loan Maturity Date" means June 30, 2007.
-------------------------
"Term B Note" and "Term B Notes" have the meanings assigned to those
----------- ------------
terms in Section 2.2(a).
--------------
"Term B Percentage" means, at any time, a fraction (expressed as a
-----------------
percentage) the numerator of which is equal to the aggregate principal amount of
all Term B Loans outstanding at such time and the denominator of which is equal
to the aggregate principal amount of all Term Loans outstanding at such time.
"Term B Pro Rata Share" means, when used with reference to any Term B
---------------------
Lender and any described aggregate or total amount, an amount equal to the
result obtained by multiplying such described aggregate or total amount by a
fraction the numerator of which shall be such Term B Lender's then outstanding
Term B Loan and the denominator of which shall be all then outstanding Term B
Loans.
"Term C Commitment" means, with respect to any Lender, the principal
-----------------
amount set forth opposite such Lender's name on Schedule 1.1(a) hereto under the
---------------
caption "Amount of Term C Commitment", as such commitment may be adjusted from
time to time pursuant to this in
51
<PAGE>
Agreement, and "Term C Commitments" means such commitments collectively, which
------------------
commitments equal $565,000,000 in the aggregate as of the date hereof.
"Term C Facility" means the credit facility under this Agreement
---------------
evidenced by the Term C Commitments and the Term C Loans.
"Term C Lender" means any Lender which has a Term C Commitment or is
-------------
owed a Term C Loan (or a portion thereof).
"Term C Loan" and "Term C Loans" have the meanings assigned to those
----------- ------------
terms in Section 2.1(c).
--------------
"Term C Loan Maturity Date" means June 30, 2008.
-------------------------
"Term C Note" and "Term C Notes" have the meanings assigned to those
----------- ------------
terms in Section 2.2(a).
--------------
"Term C Percentage" means, at any time, a fraction (expressed as a
-----------------
percentage) the numerator of which is equal to the aggregate principal amount of
all Term C Loans outstanding at such time and the denominator of which is equal
to the aggregate principal amount of all Term Loans outstanding at such time.
"Term C Pro Rata Share" means, when used with reference to any Term C
---------------------
Lender and any described aggregate or total amount, an amount equal to the
result obtained by multiplying such described aggregate or total amount by a
fraction the numerator of which shall be such Term C Lender's then outstanding
Term C Loan and the denominator of which shall be all then outstanding Term C
Loans.
"Term Loans" means the Term A Loans, Term B Loans and the Term C
----------
Loans, collectively.
"Test Period" means, at any time the four Fiscal Quarters of the
-----------
Borrower then last ended; provided, that for the purpose of Section 9.3 Test
-------- -----------
Period means (i) for any determination made on December 31, 1999, the period
from the Initial Borrowing Date to December 31, 1999, (ii) for any determination
made on March 31, 2000, the period from the Initial Borrowing Date to March 31,
2000 and (iii) for any determination made thereafter, the four Fiscal Quarters
of the Borrower last ended for which financial statements described in Section
-------
7.01(a) and (b) are, or should have been, available.
- ------- ---
"TG" means Tioxide Group, a direct Subsidiary of the Borrower that is
--
a private unlimited company incorporated under the laws of England and Wales.
52
<PAGE>
"Thai Holding Companies" means the Domestic Subsidiaries of the
----------------------
Borrower whose sole asset is an ownership interest in Huntsman ICI (Thailand)
Ltd., a corporation organized under the laws of Thailand, and identified as such
on Schedule 6.13.
-------------
"Tioxide UK" means Tioxide Europe Ltd., a direct Wholly-Owned
----------
Subsidiary of UK Holdco 1 that is a private limited company incorporated under
the laws of England and Wales.
"Total Available Domestic Revolving Commitment" means, at the time of
---------------------------------------------
any determination thereof is made, the sum of the respective Available Domestic
Revolving Commitments of the Lenders at such time.
"Total Available Multicurrency Revolving Commitment" means, at the
--------------------------------------------------
time of any determination thereof is made, the sum of the respective Available
Multicurrency Revolving Commitments of the Lenders at such time.
"Total Commitment" means, at the time any determination thereof is
----------------
made, the sum of the Term A Commitments, Term B Commitments, Term C Commitments,
the Domestic Revolving Commitments and the Multicurrency Revolving Commitments
at such time.
"Total Consolidated Indebtedness" means the total of all Indebtedness
-------------------------------
of the Borrower and its Subsidiaries.
"Total Domestic Revolving Commitment" means, at any time, the sum of
-----------------------------------
the Domestic Revolving Commitments of each of the Lenders at such time.
"Total Multicurrency Revolving Commitment" means, at any time, the sum
----------------------------------------
of the Multicurrency Revolving Commitments of each of the Lenders at such time.
"Transaction" means and includes (i) each of the Credit Events
-----------
occurring on the Initial Borrowing Date, (ii) the consummation of the
Contribution Agreement, (iii) the consummation of the BPCL Sales Agreement
and/or the Supply Arrangement, (iv) the issuance of the Senior Subordinated
Notes, (v) the issuance of the Holding Zero Coupon Notes, (vi) the cash equity
contribution to Holdings by BT Capital Investors, L.P., Chase Equity Associates,
L.P. and Goldman Sachs Group, Inc., pursuant to the Investment Agreement, (vii)
such other transactions as are contemplated by and in accordance with the
Documents and (viii) the payment of fees and expenses in connection with the
foregoing.
"Transaction Documents" means, collectively, the Contribution
---------------------
Documents, the BPCL Documents, and/or the Supply Arrangement Agreements, the
Loan Documents, the Senior Subordinated Note Documents the Holdings Zero Coupon
Notes, the Investment Agreement, the Foreign Intercompany Loan Documents, and
including any agreement, document, instrument and
53
<PAGE>
certificate executed and/or delivered on or after the date hereof pursuant to
the terms of, or in connection with, any of the foregoing.
"Transferee" has the meaning assigned to that term in Section 12.8(d).
---------- ---------------
"Type" means any type of Loan, namely, a Base Rate Loan or a
----
Eurocurrency Loan.
"UCC" means the Uniform Commercial Code as in effect from time to time
---
in the relevant jurisdiction.
"UK GAAP" means generally accepted accounting principles in the UK as
-------
in effect from time to time.
"UK Holdco Note" means that certain unsecured promissory note issued
--------------
by UK Holdco 1 in favor of Huntsman ICI Finco in the form attached hereto as
Exhibit 1.1(a) pursuant to which on the Initial Borrowing Date, Huntsman ICI
- --------------
Finco will loan not less than $950,000,000 (or $1,065,000,000 in the event that
the BPCL Transaction is consummated) to UK Holdco 1.
"UK Holdco 1" means Huntsman ICI (Holdings) UK, a direct Wholly-Owned
-----------
Subsidiary of TG that is a private unlimited company incorporated under the laws
of England and Wales.
"UK Holdco 2" means Huntsman ICI (UK) Limited, a direct Wholly-owned
-----------
Subsidiary of UK Holdco 1 that is a private limited company incorporated under
the laws of England and Wales.
"UK PU" means Huntsman ICI Polyurethanes (UK) Limited, a direct
-----
Wholly-Owned Subsidiary of UK Holdco 1 that is a private limited company
incorporated under the laws of England and Wales.
"UK Petrochem" means Huntsman ICI Petrochemicals (UK) Limited, a
------------
direct Wholly-Owned Subsidiary of UK Holdco 1 that is a private limited company
incorporated under the laws of England and Wales.
"Unmatured Event of Default" means an event, act or occurrence which
--------------------------
with the giving of notice or the lapse of time (or both) would become an Event
of Default.
"Unpaid Drawing" has the meaning set forth in Section 2.9(d).
-------------- --------------
54
<PAGE>
"Unrestricted Subsidiary" means (i) any Subsidiary of the Borrower
-----------------------
that at or prior to the time of formation or acquisition thereof shall be
designated an Unrestricted Subsidiary in an officers' certificate signed by two
Responsible Financial Officers of the Borrower and (ii) any Subsidiary of an
Unrestricted Subsidiary created at or after the designation of its parent
company as an Unrestricted Subsidiary pursuant to clause (i) above; provided,
--------
however, that no Receivables Subsidiary may be an Unrestricted Subsidiary.
- -------
"Unrestricted Subsidiary Investment Basket" means, as of any date of
-----------------------------------------
determination, an amount equal to the sum of (i) $75 million plus (ii) the
----
aggregate amount of Excess Cash Flow for each Fiscal Year ending on or after
December 31, 2000 not required to be applied to prepay Term Loans pursuant to
Section 4.4(f) plus (iii) after-tax amount of any cash returns of principal or
- --------------
capital on Investments made pursuant to Section 8.7(l), cash dividends thereon
--------------
and other cash returns on investment thereon, as the case may be.
"Voting Securities" means any class of Capital Stock of a Person
-----------------
pursuant to which the holders thereof have, at the time of determination, the
general voting power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (irrespective
of whether or not at the time any other class or classes will have or might have
voting power by reason of the happening of any contingency).
"Waivable Prepayment" has the meaning assigned to that term in Section
------------------- -------
4.5(c).
- ------
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (i) the then
outstanding principal amount of such Indebtedness into (ii) the total of the
product obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
"Whitewash Companies" shall mean, collectively, each of TG, UK Holdco
-------------------
1, UK Holdco 2, UK PU, UK Petrochem and Tioxide UK.
"Wholly-Owned Subsidiary" means, with respect to any Person, any
-----------------------
Subsidiary of such Person, all of the outstanding shares of capital stock of
which (other than qualifying shares required to be owned by directors, or
similar de minimis issuances of capital stock to comply with Requirements of
Law) are at the time owned directly or indirectly by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person; provided, that each of UK Holdco
--------
1, TG and Tioxide Southern Africa (Proprietary) Ltd. shall be deemed to be a
Wholly-Owned Subsidiary.
55
<PAGE>
"written" or "in writing" means any form of written communication or a
-----------------------
communication by means of telecopier device or authenticated telex, telegraph or
cable.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. The words "herein," "hereof"
and words of similar import as used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision in this Agreement.
References to "Articles", "Sections", "paragraphs", "Exhibits" and "Schedules"
in this Agreement shall refer to Articles, Sections, paragraphs, Exhibits and
Schedules of this Agreement unless otherwise expressly provided; references to
Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
1.2 Accounting Terms; Financial Statements
--------------------------------------
All accounting terms used herein but not expressly defined in this Agreement
shall have respective meanings given to them in accordance with GAAP in effect
on the date hereof in the United States of America. Except as otherwise
expressly provided herein (including without limitation, any modification to the
terms hereof pursuant to Section 8.12), all computations and determinations for
------------
purposes of determining compliance with the financial requirements of this
Agreement shall be made in accordance with GAAP in effect in the United States
of America on the date hereof and on a basis consistent with the presentation of
the financial statements and projections delivered pursuant to, or otherwise
referred to in, Sections 6.5(a) and 6.5(e). Notwithstanding the foregoing
--------------- ------
sentence, the financial statements required to be delivered pursuant to Section
-------
7.1 shall be prepared in accordance with GAAP in the United States of America as
- ---
in effect on the respective dates of their preparation. Unless otherwise
provided for herein (including, without limitation, the definition of Wholly-
Owned Subsidiary), wherever any computation is to be made with respect to any
Person and its Subsidiaries, such computation shall be made so as to exclude all
items of income, assets and liabilities attributable to any Person which is not
a Subsidiary of such Person. For purposes of the financial terms set forth
herein, whenever a reference is made to a determination which is required to be
made on a consolidated basis (whether in accordance with GAAP or otherwise) for
the Borrower and its Subsidiaries, such determination shall be made as if each
Unrestricted Subsidiary were wholly-owned by a Person not an Affiliate of the
Borrower.
56
<PAGE>
ARTICLE II
AMOUNT AND TERMS OF CREDIT
2.1 The Commitments
---------------
(a) Term A Loans
------------
(i) Term A Dollar Loans. Each Term A Dollar Lender, severally
-------------------
and for itself alone, hereby agrees, on the terms and subject to the conditions
hereinafter set forth and in reliance upon the representations and warranties
set forth herein and in the other Loan Documents, to make a loan (each such
loan, a "Term A Dollar Loan" and collectively, the "Term A Dollar Loans") to the
------------------ -------------------
Borrower on the Initial Borrowing Date in an aggregate principal amount equal to
the Term A Dollar Commitment of such Term A Dollar Lender. The Term A Dollar
Loans (1) shall be incurred by the Borrower pursuant to a single drawing, which
shall be on the Initial Borrowing Date, (2) shall be denominated in Dollars, (3)
shall be made as Base Rate Loans and, except as hereinafter provided, may, at
the option of the Borrower, be maintained as and/or converted into Base Rate
Loans or Eurocurrency Loans, provided, that all Term A Dollar Loans made by the
--------
Term A Dollar Lenders pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Term A Dollar Loans of the
same Type and (4) shall not exceed for any Lender at the time of incurrence
thereof on the Initial Borrowing Date the Term A Dollar Commitment, if any, of
such Lender at such time. Each Term A Dollar Lender's Term A Dollar Commitment
shall expire immediately and without further action on the Initial Borrowing
Date if the Term A Dollar Loans are not made on the Initial Borrowing Date. No
amount of a Term A Dollar Loan which is repaid or prepaid by the Borrower may be
reborrowed hereunder.
(ii) Term A Euro Loans. Each Term A Euro Lender, severally and
-----------------
for itself alone, hereby agrees, on the terms and subject to the conditions
hereinafter set forth and in reliance upon the representations and warranties
set forth herein and in the other Loan Documents, to make a loan (each such
loan, a "Term A Euro Loan" and collectively, the "Term A Euro Loans") to the
---------------- -----------------
Borrower on the Initial Borrowing Date in an aggregate principal amount equal to
the Term A Euro Commitment of such Term A Euro Lender. The Term A Euro Loans
(1) shall be incurred by the Borrower pursuant to a single drawing, which shall
be on the Initial Borrowing Date, (2) shall be denominated in Euro , (3) shall
be made as Eurocurrency Loans, provided, that all Term A Euro Loans made by the
--------
Term A Euro Lenders pursuant to the same Borrowing shall, unless otherwise
specifically provided herein, consist entirely of Term A Euro Loans of the same
Type and (4) shall not exceed for any Lender at the time of incurrence thereof
on the Initial Borrowing Date the Term A Euro Commitment, if any, of such Lender
at such time. Each Term A Euro Lender's Term A Euro Commitment shall expire
immediately and without further action on the Initial Borrowing Date if the Term
A Euro Loans are not made on
57
<PAGE>
the Initial Borrowing Date. No amount of a Term A Euro Loan which is repaid or
prepaid by the Borrower may be reborrowed hereunder.
(b) Term B Loans. Each Term B Lender, severally and for itself alone,
-------------
hereby agrees, on the terms and subject to the conditions hereinafter set forth
and in reliance upon the representations and warranties set forth herein and in
the other Loan Documents, to make a loan (each such loan, a "Term B Loan" and
-----------
collectively, the "Term B Loans") to the Borrower on the Initial Borrowing Date
------------
in an aggregate principal amount equal to the Term B Commitment of such Term B
Lender. The Term B Loans (i) shall be incurred by the Borrower pursuant to a
single drawing, which shall be on the Initial Borrowing Date, (ii) shall be
denominated in Dollars, (iii) shall be made as Base Rate Loans and, except as
hereinafter provided, may, at the option of the Borrower, be maintained as
and/or converted into Base Rate Loans or Eurocurrency Loans, provided, that all
--------
Term B Loans made by the Term B Lenders pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, consist entirely of Term B Loans
of the same Type and (iv) shall not exceed for any Lender at the time of
incurrence thereof on the Initial Borrowing Date the Term B Commitment, if any,
of such Lender at such time. Each Term B Lender's Term B Commitment shall
expire immediately and without further action on the Initial Borrowing Date if
the Term B Loans are not made on the Initial Borrowing Date. No amount of a
Term B Loan which is repaid or prepaid by the Borrower may be reborrowed
hereunder.
(c) Term C Loans. Each Term C Lender, severally and for itself alone,
------------
hereby agrees, on the terms and subject to the conditions hereinafter set forth
and in reliance upon the representations and warranties set forth herein and in
the other Loan Documents, to make a loan (each such loan, a "Term C Loan" and
-----------
collectively, the "Term C Loans") to the Borrower on the Initial Borrowing Date
------------
in an aggregate principal amount equal to the Term C Commitment of such Term C
Lender. The Term C Loans (i) shall be incurred by the Borrower pursuant to a
single drawing, which shall be on the Initial Borrowing Date, (ii) shall be
denominated in Dollars, (iii) shall be made as Base Rate Loans and, except as
hereinafter provided, may, at the option of the Borrower, be maintained as
and/or converted into Base Rate Loans or Eurocurrency Loans, provided, that all
--------
Term C Loans made by the Term C Lenders pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, consist entirely of Term C Loans
of the same Type and (iv) shall not exceed for any Lender at the time of
incurrence thereof on the Initial Borrowing Date the Term C Commitment, if any,
of such Lender at such time. Each Term C Lender's Term C Commitment shall
expire immediately and without further action on the Initial Borrowing Date if
the Term C Loans are not made on the Initial Borrowing Date. No amount of a
Term C Loan which is repaid or prepaid by the Borrower may be reborrowed
hereunder.
(d) Domestic Revolving Loans; Multicurrency Revolving Loans. (i)
-------------------------------------------------------
Domestic Revolving Loans. Each Domestic Revolving Lender, severally and for
- ------------------------
itself alone, hereby
58
<PAGE>
agrees, on the terms and subject to the conditions hereinafter set forth and in
reliance upon the representations and warranties set forth herein and in the
other Loan Documents, to make loans to the Borrower denominated in Dollars on a
revolving basis from time to time during the Commitment Period, in an amount not
to exceed its Domestic Revolver Pro Rata Share of the Total Available Domestic
Revolving Commitment (each such loan by any Lender, a "Domestic Revolving Loan"
-----------------------
and collectively, the "Domestic Revolving Loans"). All Domestic Revolving
------------------------
Loans comprising the same Borrowing hereunder shall be made by the Domestic
Revolving Lenders simultaneously and in proportion to their respective Domestic
Revolving Commitments. Prior to the Revolver Termination Date, Domestic
Revolving Loans may be repaid and reborrowed by the Borrower in accordance with
the provisions hereof and, except as otherwise specifically provided in Section
-------
3.6, all Domestic Revolving Loans comprising the same Borrowing shall at all
- ---
times be of the same Type.
(ii) Multicurrency Revolving Loans. Each Multicurrency Revolving
-----------------------------
Lender, severally and for itself alone, hereby agrees, on the terms and subject
to the conditions hereinafter set forth and in reliance upon the representations
and warranties set forth herein and in the other Loan Documents, to make loans
to the Borrower denominated in Dollars, Sterling or Euros on a revolving basis
from time to time during the Commitment Period, in an amount not to exceed its
Multicurrency Revolver Pro Rata Share of the Total Available Multicurrency
Revolving Commitment (each such loan by any Multicurrency Lender, a
"Multicurrency Revolving Loan" and collectively, the "Multicurrency Revolving
- ----------------------------- -----------------------
Loans"). All Multicurrency Revolving Loans comprising the same Borrowing
- -----
hereunder shall be made by the Multicurrency Revolving Lenders simultaneously
and in proportion to their respective Multicurrency Revolving Commitments.
Prior to the Multicurrency Revolver Termination Date, Multicurrency Revolving
Loans may be repaid and reborrowed by the Borrower in accordance with the
provisions hereof and, except as otherwise specifically provided in Section 3.6,
-----------
all Multicurrency Revolving Loans comprising the same Borrowing shall at all
times be of the same Type.
(e) Swing Line Loans
----------------
(i) Swing Line Commitment. Subject to the terms and conditions
---------------------
hereof, the Swing Line Lender in its individual capacity agrees to make swing
line loans in Dollars, Euros or Sterling (or, at the option of the Swing Line
Lender, any other Alternative Currency) ("Swing Line Loans") to the Borrower on
----------------
any Business Day from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed the Dollar Equivalent
of $25,000,000; provided, however, that in no event may the amount of any
-------- -------
Borrowing of Swing Line Loans (A) exceed the Total Available Domestic Revolving
Commitment immediately prior to such Borrowing (after giving effect to the use
of proceeds thereof) or (B) cause the outstanding Domestic Revolving Loans of
any Lender, when added to such Lender's Domestic Revolver Pro Rata Share of the
then outstanding Swing Line Loans and Domestic Revolver Pro Rata Share of the
aggregate LC Obligations (exclusive of
59
<PAGE>
Unpaid Drawings relating to LC Obligations which are repaid with the proceeds
of, and simultaneously with the incurrence of, Domestic Revolving Loans or Swing
Line Loans) to exceed such Lender's Domestic Revolving Commitment. Amounts
borrowed by the Borrower under this Section 2.1(e)(i) may be repaid and, to but
-----------------
excluding the Revolver Termination Date, reborrowed. Swing Line Loans (x) made
in Dollars shall be maintained as Base Rate Loans and (y) made in an Alternative
Currency shall be maintained at the applicable Quoted Rate, and, notwithstanding
Section 2.6, in each case shall not be entitled to be converted into any other
- -----------
Type of Loan.
(ii) Refunding of Swing Line Loans. The Swing Line Lender, at any
-----------------------------
time in its sole and absolute discretion, may on behalf of the Borrower (which
hereby irrevocably directs the Swing Line Lender to so act on its behalf) notify
each Domestic Revolving Lender (including the Swing Line Lender) to make a
Domestic Revolving Loan in an amount equal to such Lender's Domestic Revolver
Pro Rata Share of the Dollar Equivalent of the principal amount of the Swing
Line Loans (the "Refunded Swing Line Loans") outstanding on the date such notice
-------------------------
is given, provided, however, that such notice shall be deemed to have
-------- -------
automatically been given upon the occurrence of an Event of Default under
Sections 10.1(e) or 10.1(f) or upon the occurrence of a Change of Control.
- ---------------- -------
Unless any of the events described in Sections 10.1(e) or 10.1(f) shall have
---------------- -------
occurred (in which event the procedures of Section 2.1(e)(iii) shall apply) and
-------------------
regardless of whether the conditions precedent set forth in this Agreement to
the making of a Domestic Revolving Loan are then satisfied, each Lender shall
make the proceeds of its Domestic Revolving Loan available to the Swing Line
Lender at the Payment Office prior to 11:00 a.m., New York City time, in funds
immediately available on the Business Day next succeeding the date such notice
is given. The proceeds of such Domestic Revolving Loans shall be immediately
applied to repay the Refunded Swing Line Loans.
(iii) Participation in Swing Line Loans. If, prior to refunding a
---------------------------------
Swing Line Loan with a Domestic Revolving Loan pursuant to Section 2.1(e)(ii),
------------------
one of the events described in Sections 10.1(e) or 10.1(f) shall have occurred,
---------------- -------
or if for any other reason a Domestic Revolving Loan cannot be made pursuant to
Section 2.1(e)(ii), then, subject to the provisions of Section 2.1(e)(iv) below,
- ------------------ ------------------
each Lender will, on the date such Domestic Revolving Loan was to have been
made, purchase (without recourse or warranty) from the Swing Line Lender an
undivided participation interest in the Swing Line Loan in an amount equal to
its Domestic Revolver Pro Rata Share of the Dollar Equivalent of such Swing Line
Loan. Upon request, each Lender will immediately transfer to the Swing Line
Lender, in immediately available funds, the amount of its participation and upon
receipt thereof the Swing Line Lender will deliver to such Lender a Swing Line
Loan Participation Certificate dated the date of receipt of such funds and in
such amount.
(iv) Lenders' Obligations Unconditional. Each Lender's obligation to
----------------------------------
make Domestic Revolving Loans in accordance with Section 2.1(e)(ii) and to
------------------
purchase
60
<PAGE>
participating interests in accordance with Section 2.1(e)(iii) above shall be
-------------------
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (A) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against the Swing Line Lender,
the Borrower or any other Person for any reason whatsoever; (B) the occurrence
or continuance of any Event of Default or Unmatured Event of Default; (C) any
adverse change in the condition (financial or otherwise) of the Borrower or any
other Person; (D) any breach of this Agreement by the Borrower or any other
Person; (E) any inability of the Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon which such participating
interest is to be purchased or (F) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. If any Lender does
not make available to the Swing Line Lender the amount required pursuant to
Section 2.1(e)(ii) or (iii) above, as the case may be, the Swing Line Lender
- ------------------ -----
shall be entitled to recover such amount on demand from such Lender, together
with interest thereon for each day from the date of non-payment until such
amount is paid in full at the Federal Funds Rate for the first two Business Days
and at the Base Rate thereafter. Notwithstanding the foregoing provisions of
this Section 2.1(e)(iv), no Lender shall be required to make a Domestic
------------------
Revolving Loan to the Borrower for the purpose of refunding a Swing Line Loan
pursuant to Section 2.1(e)(ii) above or to purchase a participating interest in
------------------
a Swing Line Loan pursuant to Section 2.1(e)(iii) if an Event of Default or
-------------------
Unmatured Event of Default has occurred and is continuing and, prior to the
making by the Swing Line Lender of such Swing Line Loan, the Swing Line Lender
has received written notice from such Lender specifying that such Event of
Default or Unmatured Event of Default has occurred and is continuing, describing
the nature thereof and stating that, as a result thereof, such Lender shall
cease to make such Refunded Swing Line Loans and purchase such participating
interests, as the case may be; provided, however, that the obligation of such
-------- -------
Lender to make such Refunded Swing Line Loans and to purchase such participating
interests shall be reinstated upon the earlier to occur of (y) the date upon
which such Lender notifies the Swing Line Lender that its prior notice has been
withdrawn and (z) the date upon which the Event of Default or Unmatured Event of
Default specified in such notice no longer is continuing.
2.2 Notes
-----
(a) Evidence of Indebtedness. The Borrower's obligation to pay the
------------------------
principal of and interest on all the Loans made to it by each Lender shall, if
requested by a Lender, be evidenced, (1) if Term A Dollar Loans, by a promissory
note (each, a "Term A Dollar Note" and, collectively, the "Term A Dollar Notes")
------------------ -------------------
duly executed and delivered by the Borrower substantially in the form of Exhibit
-------
2.2(a)(1) hereto, with blanks appropriately completed in conformity herewith,
- ---------
(2) if Term A Euro Loans, by a promissory note (each, a "Term A Euro Note" and,
----------------
collectively, the "Term A Euro Notes") duly executed and delivered by the
-----------------
Borrower substantially in the form of Exhibit 2.2(a)(2) hereto, with blanks
-----------------
appropriately completed in conformity herewith, (3) if Term B Loans, by a
promissory note (each, a "Term B Note" and, collectively, the "Term B Notes")
----------- ------------
duly executed and delivered by the Borrower substantially in
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<PAGE>
the form of Exhibit 2.2(a)(3) hereto, with blanks appropriately completed in
-----------------
conformity herewith, (4) if Term C Loans, by a promissory note (each, a "Term C
------
Note" and,collectively, the "Term C Notes") duly executed and delivered by the
- ---- ------------
Borrower substantially in the form of Exhibit 2.2(a)(4) hereto, with blanks
-----------------
appropriately completed in conformity herewith, (5) if Domestic Revolving Loans,
by a promissory note (each, a "Revolving Note" and, collectively, the "Revolving
-------------- ---------
Notes") duly executed and delivered by the Borrower substantially in the form of
- -----
Exhibit 2.2(a)(5) hereto, with blanks appropriately completed in conformity
- -----------------
herewith (6) if Multicurrency Revolving Loans, by a promissory note (each, a
-
"Multicurrency Revolving Note" and, collectively, the "Multicurrency Revolving
- ----------------------------- -----------------------
Notes") duly executed and delivered by the Borrower substantially in the form of
- -----
Exhibit 2.2(a)(6) hereto, with blanks appropriately completed in conformity
- -----------------
herewith and (7) if Swing Line Loans, by a promissory note (each, a "Swing Line
----------
Note" and, collectively, the "Swing Line Notes") duly executed and delivered by
- ---- ----------------
the Borrower substantially in the form of Exhibit 2.2(a)(7) hereto, with blanks
-----------------
appropriately completed in conformity herewith.
(b) Notation of Payments. Each Lender will note on its internal
--------------------
records the amount of each Loan made by it, and each payment in respect thereof
and will, prior to any transfer of any of its Notes, endorse on the reverse side
thereof the outstanding principal amount of Loans evidenced thereby. Failure to
make any such notation, or any error in any such notation, shall not affect the
Borrower's or any guarantor's obligations hereunder or under the other
applicable Loan Documents in respect of such Loans.
2.3 Minimum Amount of Each Borrowing; Maximum Number of Borrowings
--------------------------------------------------------------
The aggregate principal amount of each Borrowing (other than with respect to
Swing Line Loans) by the Borrower hereunder shall be not less than the Minimum
Borrowing Amount and, if greater, shall be in integral multiples of (i) in the
case of a Borrowing in Dollars, $1,000,000, (ii) in the case of a Borrowing in
Sterling, (Pounds)750,000, or (iii) in the case of a Borrowing in Euros,
1,000,000 Euros, above such minimum (or, if less, the then Total Available
Domestic Revolving Commitment or the Total Available Multicurrency Revolving
Commitment, as the case may be). More than one Borrowing may be incurred on any
date; provided that at no time shall there be outstanding more than six
--------
Borrowings of Eurocurrency Loans for any Facility.
2.4 Borrowing Options
-----------------
The Term Loans, the Domestic Revolving Loans and the Multicurrency Revolving
Loans shall, at the option of the Borrower except as otherwise provided in this
Agreement, be (i) Base Rate Loans, (ii) Eurocurrency Loans, or (iii) part Base
Rate Loans and part Eurocurrency Loans; provided, that Term A Euro Loans and
--------
non-Dollar denominated Multicurrency Revolving Loans may only be made as
Eurocurrency Loans. As to any Eurocurrency Loan, any Lender may, if it so
elects, fulfill its commitment by causing a foreign branch or affiliate to make
or continue such
62
<PAGE>
Loan, provided that in such event that Lender's Loan shall, for the purposes of
this Agreement, be considered to have been made by that Lender and the
obligation of the Borrower to repay that Lender's Loan shall nevertheless be to
that Lender and shall be deemed held by that Lender, for the account of such
branch or affiliate.
2.5 Notice of Borrowing
-------------------
Whenever the Borrower desires to make a Borrowing of any Loan hereunder, it
shall give the Administrative Agent at its office located at One Bankers Trust
Plaza, 130 Liberty Street, New York, New York 10006 (or such other address as
the Administrative Agent may hereafter designate in writing to the parties
hereto) (the "Notice Address") at least one Business Day's prior written notice
--------------
(or telephonic notice promptly confirmed in writing), given not later than 12:00
p.m. (New York City time) of each Base Rate Loan, and at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing),
given not later than 12:00 p.m. (New York City time), of each Dollar denominated
Eurocurrency Loan to be made hereunder and at least four Business Days prior
written notice (or telephone notice promptly confirmed in writing) given not
later than 12:00 p.m. (New York time), of each Loan denominated in an
Alternative Currency; provided, however, that a Notice of Borrowing with respect
-------- -------
to Borrowings to be made on the date hereof may, at the discretion of the
Administrative Agent, be delivered later than the time specified above.
Whenever the Borrower desires that Swing Line Lender make a Swing Line Loan
under Section 2.1(e), it shall deliver to Swing Line Lender prior to 12:00 p.m.
--------------
(New York City time) on the date of Borrowing written notice (or telephonic
notice promptly confirmed in writing). Each such notice (each a "Notice of
---------
Borrowing"), which shall be in the form of Exhibit 2.5 hereto, shall be
- --------- -----------
irrevocable, shall be deemed a representation by the Borrower that all
conditions precedent to such Borrowing have been satisfied and shall specify (i)
the aggregate principal amount of the Loans to be made pursuant to such
Borrowing, (ii) the date of Borrowing (which shall be a Business Day), (iii)
whether the Loans being made pursuant to such Borrowing are to be Base Rate
Loans or Eurocurrency Loans and, with respect to Eurocurrency Loans, the
Interest Period to be applicable thereto and (iv) with respect to a Borrowing of
Domestic Revolving Loans, the amount of the Overdraft Reserve at such time. The
Administrative Agent shall as promptly as practicable give each Lender written
or telephonic notice (promptly confirmed in writing) of each proposed Borrowing,
of such Lender's Domestic Revolver Pro Rata Share thereof or Multicurrency
Revolver Pro Rata Share, as the case may be, thereof and of the other matters
covered by the Notice of Borrowing. Without in any way limiting the Borrower's
obligation to confirm in writing any telephonic notice, the Administrative Agent
or the Swing Line Lender (in the case of Swing Line Loans) or the respective
Facing Agent (in the case of Letters of Credit) may act without liability upon
the basis of telephonic notice believed by the Administrative Agent in good
faith to be from a Responsible Officer of the Borrower prior to receipt of
written confirmation. The Administrative Agent's records shall, absent manifest
error, be final,
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<PAGE>
conclusive and binding on the Borrower with respect to evidence of the terms of
such telephonic Notice of Borrowing.
2.6 Conversion or Continuation
--------------------------
With respect to Dollar denominated Loans, the Borrower may elect (i) on any
Business Day at any time after the seventh Business Day following the Initial
Borrowing Date to convert Base Rate Loans or any portion thereof to Eurocurrency
Loans and (ii) at the end of any Interest Period with respect thereto, to
convert Eurocurrency Loans or any portion thereof into Base Rate Loans or to
continue such Eurocurrency Loans or any portion thereof for an additional
Interest Period; provided, however, that the aggregate principal amount of the
-------- -------
Eurocurrency Loans for each Interest Period therefor must be in an aggregate
principal amount equal to the Minimum Borrowing Amount for Eurocurrency Loans or
an integral multiple of (i) in the case of a Borrowing in Dollars, $1,000,000,
(ii) in the case of a Borrowing in Sterling, (Pounds)750,000, or (iii) in the
case of a Borrowing in Euros, 1,000,000 Euros, in each case in excess thereof.
With respect to Euro or Sterling denominated Loans, the Borrower may elect to
continue such Eurocurrency Loans or any portion thereof for an additional
Interest Period. Each conversion or continuation of Term A Dollar Loans shall
be allocated among the Term A Dollar Loans of the Term A Dollar Lenders in
accordance with their respective Term A Dollar Pro Rata Shares. Each conversion
or continuation of Term B Loans shall be allocated among the Term B Loans of the
Term B Lenders in accordance with their respective Term B Pro Rata Shares. Each
conversion or continuation of Term C Loans shall be allocated among the Term C
Loans of the Term C Lenders in accordance with their respective Term C Pro Rata
Shares. Each conversion or continuation of Domestic Revolving Loans shall be
allocated among the Domestic Revolving Loans of the Lenders in accordance with
their respective Domestic Revolver Pro Rata Shares. Each conversion or
continuation of Multicurrency Revolving Loans shall be allocated among the
Multicurrency Revolving Loans of the Lenders in accordance with their respective
Multicurrency Revolver Pro Rata Shares. Each such election shall be in
substantially the form of Exhibit 2.6 hereto (a "Notice of Conversion or
----------- -----------------------
Continuation") and shall be made by giving the Administrative Agent at least
- ------------
three Business Days' (or one Business Day in the case of a conversion into Base
Rate Loans or four Business Days' in the case of continuation of a Term A Euro
Loan or non-Dollar denominated Multicurrency Revolving Loan) prior written
notice thereof to the Notice Address given not later than 12:00 p.m. (New York
City time) specifying (i) the amount and type of conversion or continuation,
(ii) in the case of a conversion to or a continuation of Eurocurrency Loans, the
Interest Period therefor, and (iii) in the case of a conversion, the date of
conversion (which date shall be a Business Day and, if a conversion from
Eurocurrency Loans, shall also be the last day of the Interest Period therefor).
Notwithstanding the foregoing, no conversion in whole or in part of Base Rate
Loans to Eurocurrency Loans, and no continuation in whole or in part of Dollar
denominated Eurocurrency Loans upon the expiration of any Interest Period
therefor, shall be permitted at any time at which an Unmatured Event of Default
or an Event of Default shall have occurred and be continuing. The Borrower
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<PAGE>
shall not be entitled to specify an Interest Period in excess of 30 days for any
Term A Euro Loan or non-Dollar denominated Multicurrency Revolving Loan, as the
case may be, if an Unmatured Event of Default or an Event of Default has
occurred and is continuing. If, within the time period required under the terms
of this Section 2.6, the Administrative Agent does not receive a Notice of
-----------
Conversion or Continuation from the Borrower containing a permitted election to
continue any Eurocurrency Loans for an additional Interest Period or to convert
any such Loans, then, upon the expiration of the Interest Period therefor, such
Loans will be automatically converted to Base Rate Loans or, in the case of Term
A Euro Loans and non-Dollar denominated Multicurrency Revolving Loans,
Eurocurrency Loans with an Interest Period of one month. Each Notice of
Conversion or Continuation shall be irrevocable.
2.7 Disbursement of Funds
---------------------
No later than 1:00 p.m. (local time at the place of funding) on the date
specified in each Notice of Borrowing, each Lender will make available its Term
A Dollar Pro Rata Share of Term A Dollar Loans, Term A Euro Pro Rata Share of
Term A Euro Loans, Term B Pro Rata Share of Term B Loans, Term C Pro Rata Share
of Term C Loans, Domestic Revolver Pro Rata Share of Domestic Revolving Loans
and Multicurrency Revolver Pro Rata Share of Multicurrency Revolving Loans, as
the case may be, of the Borrowing requested to be made on such date in Dollars,
Euro or Sterling, as the case may be, and in immediately available funds, at the
Payment Office (for the account of such non-U.S. office of the Administrative
Agent as the Administrative Agent may direct in the case of Eurocurrency Loans)
and the Administrative Agent will make available to the Borrower at its Payment
Office the aggregate of the amounts so made available by the Lenders not later
than 2:00 p.m. (local time in the place of payment). Unless the Administrative
Agent shall have been notified by any Lender at least one Business Day prior to
the date of Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of the Borrowing to be made on such
date, the Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on such date of Borrowing and the
Administrative Agent may, but shall not be required to, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender on the date of Borrowing, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and, if so notified, the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover from the Borrower interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to the rate for Base Rate Loans or Eurocurrency Loans, as
the case may be, applicable during the period in question, provided, however,
-------- -------
that any
65
<PAGE>
interest paid to the Administrative Agent in respect of such corresponding
amount shall be credited against interest payable by the Borrower to such lender
under Section 3.1 in respect of such corresponding amount. Any amount due
-----------
hereunder to the Administrative Agent from any Lender which is not paid when due
shall bear interest payable by such Lender, from the date due until the date
paid, at the Federal Funds Rate for amounts in Dollars (and at the
Administrative Agent's cost of funds for amounts in Euros or Sterling or any
other Alternative Currency) for the first three days after the date such amount
is due and thereafter at the Federal Funds Rate (or such cost of funds rate)
plus 1%, together with the Administrative Agent's standard interbank processing
fee. Further, such Lender shall be deemed to have assigned any and all payments
made of principal and interest on its Loans, amounts due with respect to its
Letters of Credit (or its participations therein) and any other amounts due to
it hereunder first to the Administrative Agent to fund any outstanding Loans
made available on behalf of such Lender by the Administrative Agent pursuant to
this Section 2.7 until such Loans have been funded (as a result of such
-----------
assignment or otherwise) and then to fund Loans of all Lenders other than such
Lender until each Lender has outstanding Loans equal to its Term A Dollar Pro
Rata Share of all Term A Dollar Loans, its Term A Euro Pro Rata Share of all
Term A Euro Loans, its Term B Pro Rata Share of all Term B Loans, its Term C Pro
Rata Share of all Term C Loans, its Domestic Revolver Pro Rata Share of all
Domestic Revolving Loans and its Multicurrency Revolver Pro Rata Share of all
Multicurrency Revolving Loans (as a result of such assignment or otherwise).
Such Lender shall not have recourse against the Borrower with respect to any
amounts paid to the Administrative Agent or any Lender with respect to the
preceding sentence; provided, that such Lender shall have full recourse against
the Borrower to the extent of the amount of such loans it has so been deemed to
have made. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights which
the Borrower may have against the Lender as a result of any default by such
Lender hereunder.
2.8 [INTENTIONALLY DELETED.]
2.9 Pro Rata Borrowings
-------------------
All Borrowings of Term A Dollar Loans, Term A Euro Loans, Term B Loans, Term C
Loans, Domestic Revolving Loans and Multicurrency Revolving Loans under this
Agreement shall be loaned by the Lenders pro rata on the basis of their Term A
Dollar Commitments, Term A Euro Commitments, Term B Commitments, Term C
Commitments, Domestic Revolving Commitments or Multicurrency Revolving
Commitments, as the case may be. No Lender shall be responsible for any default
by any other Lender in its obligation to make Loans hereunder and each Lender
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fulfill its Commitments
hereunder.
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<PAGE>
2.10 Amount and Terms of Letters of Credit
-------------------------------------
(a) Letter of Credit Commitments, Terms of Letters of Credit.
--------------------------------------------------------
(i) Subject to and upon the terms and conditions herein set forth,
at any time and from time to time on or after the Initial Borrowing Date and to
but not including a date which is thirty (30) days prior to the Revolver
Termination Date, each Facing Agent agrees, severally not jointly, to issue each
in its own name, but for the ratable account of all Domestic Revolving Lenders
(including the applicable Facing Agent), one or more Domestic Letters of Credit,
each having a Stated Amount in Dollars, for the account of the Borrower in a
Stated Amount which together with the aggregate Stated Amount of other Domestic
Letters of Credit then outstanding does not exceed Fifty Million Dollars
($50,000,000); provided, however, that a Facing Agent shall not issue or extend
-------- -------
the expiration of any Domestic Letter of Credit if, immediately after giving
effect to such issuance or extension, (A) the aggregate LC Obligations at such
time would exceed One Hundred Million Dollars ($100,000,000), or (B) the sum of
the Domestic Revolving Loans, the Assigned Dollar Value of Swing Line Loans and
the Domestic LC Obligations would exceed the Total Domestic Revolving
Commitment. Each Domestic Revolving Lender, severally, but not jointly, agrees
to participate in each such Domestic Letter of Credit issued by the applicable
Facing Agent in an amount equal to its Domestic Revolver Pro Rata Share, and to
make available to the applicable Facing Agent such Lender's Domestic Revolver
Pro Rata Share of any payment made to the beneficiary of such Domestic Letter of
Credit to the extent not reimbursed by the Borrower; provided, however, that no
-------- -------
Domestic Revolving Lender shall be required to participate in any Domestic
Letter of Credit to the extent that such participation therein would exceed such
Domestic Revolving Lender's Available Domestic Revolving Commitment then in
effect. No Domestic Revolving Lender's obligation to participate in any
Domestic Letter of Credit or to make available to the applicable Facing Agent
such Domestic Revolving Lender's Domestic Revolver Pro Rata Share of any Letter
of Credit Payment made by the applicable Facing Agent shall be affected by any
other Domestic Revolving Lender's failure to participate in the same or any
other Domestic Revolving Letter of Credit or by any other Domestic Lender's
failure to make available to the applicable Facing Agent such other Domestic
Revolving Lender's Domestic Revolver Pro Rata Share of any Letter of Credit
Payment.
(ii) Subject to and upon the terms and conditions herein set forth, at
any time and from time to time on or after the Initial Borrowing Date and to but
not including a date which is thirty (30) days prior to the Revolver Termination
Date, each Facing Agent agrees, severally not jointly, to issue each in its own
name, but for the ratable account of all Multicurrency Revolving Lenders
(including the applicable Facing Agent), one or more Letters of Credit,
denominated in Dollars or an Alternative Currency, for the account of the
Borrower in a Stated Amount which together with the aggregate Stated Amount of
all other Multicurrency Letters of Credit then outstanding does not exceed Fifty
Million Dollars ($50,000,000); provided,
--------
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<PAGE>
however, that a Facing Agent shall notissue or extend the expiration of any
- -------
Multicurrency Letter of Credit if, immediately after giving effect to such
issuance or extension, (A) the aggregate LC Obligations at such time would
exceed the Dollar Equivalent of One Hundred Million Dollars ($100,000,000) or
(B) the sum of the Assigned Dollar Value of the Multicurrency Loans and the
Multicurrency LC Obligations would exceed the Total Multicurrency Revolving
Commitment. Each Multicurrency Revolving Lender severally, but not jointly,
agrees to participate in each such Multicurrency Letter of Credit issued by the
applicable Facing Agent in an amount equal to its Multicurrency Revolver Pro
Rata Share and to make available to the applicable Facing Agent such Lender's
Multicurrency Revolver Pro Rata Share of any payment made to the beneficiary of
such Multicurrency Letter of Credit to the extent not reimbursed by the
Borrower; provided, however, that no Multicurrency Revolving Lender shall be
-------- -------
required to participate in any Multicurrency Letter of Credit to the extent that
such participation therein would exceed such Multicurrency Revolving Lender's
Available Multicurrency Revolving Commitment then in effect. No Lender's
obligation to participate in any Multicurrency Letter of Credit or to make
available to the applicable Facing Agent such Multicurrency Revolving Lender's
Multicurrency Revolver Pro Rata Share of any Letter of Credit Payment made by
the applicable Facing Agent shall be affected by any other Multicurrency
Revolving Lender's failure to participate in the same or any other Multicurrency
Letter of Credit or by any other Multicurrency Revolving Lender's failure to
make available to the applicable Facing Agent such other Multicurrency Lender's
Multicurrency Revolver Pro Rata Share of any Letter of Credit Payment.
(iii) Each Letter of Credit issued or to be issued hereunder shall be
issued on a sight basis, and shall have an expiration date of one (1) year or
less from the issuance date thereof; provided, however, that each Standby Letter
-------- -------
of Credit may provide by its terms that it will be automatically extended for
additional successive periods of up to one (1) year unless the applicable Facing
Agent shall have given notice to the applicable beneficiary (with a copy to the
Borrower) of the election by the applicable Facing Agent (such election to be in
the sole and absolute discretion of the applicable Facing Agent) not to extend
such Letter of Credit, such notice to be given prior to the then current
expiration date of such Letter of Credit; provided, further, that no Standby
-------- -------
Letter of Credit or extension thereof shall be stated to expire later than the
Revolver Termination Date and no Commercial Letter of Credit or extension
thereof shall be stated to expire later than the day thirty (30) days prior to
the Revolver Termination Date.
(b) Procedure for Issuance and Amendment of Letters of Credit. Whenever
---------------------------------------------------------
the Borrower desires the issuance of a Letter of Credit hereunder, it shall
give the Administrative Agent and the applicable Facing Agent at least three (3)
Business Days' prior written notice (or such shorter period as may be agreed to
by the Borrower, the Administrative Agent and the applicable Facing Agent)
specifying the day of issuance thereof (which day shall be a Business Day), such
notice to be given prior to 12:00 p.m. (London time, in the case of
Multicurrency Letters of Credit, and New York time in the case of Domestic
Supported Foreign LCs and Domestic Letters of Credit) on the date specified for
the giving of such notice. Each such notice
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<PAGE>
(each, a "Letter of Credit Request") shall be in the form of Exhibit 2.10(b)-1
------------------------ -----------------
hereto and shall specify (A) the proposed issuance date and expiration date, (B)
the name(s) of each obligor with respect to such Letter of Credit, (C) the
Borrower as the account party, (D) the name and address of the beneficiary, (E)
the Stated Amount of such proposed Letter of Credit, (F) the currency in which
such proposed Letter of Credit is to be issued and whether such proposed Letter
of Credit will be designated a Domestic Letter of Credit, a Domestic Supported
Foreign LC or a Multicurrency Letter of Credit and (G) such other information as
Facing Agent may reasonably request. In addition, each Letter of Credit Request
shall contain a description of the terms and conditions to be included in such
proposed Letter of Credit (all of which terms and conditions shall be acceptable
in form to the applicable Facing Agent). Promptly after issuance or extension of
any Letter of Credit, the applicable Facing Agent shall notify the
Administrative Agent of such issuance or extension and such notice of a Standby
Letter of Credit shall be accompanied by a copy of the Standby Letter of Credit.
Unless otherwise specified, all Letters of Credit will be governed by the
"Uniform Customs and Practice for Documentary Credits" or, in the case of a
Multicurrency Letter of Credit that is a bank guarantee, the "Uniform Rules for
Demand Guarantees" or applicable English law, in each case as in effect on the
date of issuance of such Letter of Credit. On the Business Day specified by the
Borrower and upon confirmation from the Administrative Agent that the applicable
conditions set forth in Article V have been fulfilled or waived, the applicable
---------
Facing Agent will issue the requested Letter of Credit to the applicable
beneficiary. From time to time while a Letter of Credit is outstanding and
prior to the Revolver Termination Date, the applicable Facing Agent will, upon
the written request of the Borrower received by the Facing Agent (with a copy
sent by the Borrower to the Administrative Agent) at least three days (or such
shorter time as the Facing Agent and the Administrative Agent may agree in a
particular instance in their sole discretion) prior to the proposed date of
amendment, amend any Letter of Credit issued by it. Each such request for
amendment of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, made in the form of Exhibit 2.10(b)-2 hereto
-----------------
(each a "Letter of Credit Amendment Request") and shall specify in form and
----------------------------------
detail satisfactory to the Facing Agent: (i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature of the proposed amendment; and (iv) such other
matters as the Facing Agent may require. The Facing Agent shall be under no
obligation to amend any Letter of Credit if: (A) the Facing Agent would have no
obligation at such time to issue such Letter of Credit in its amended form under
the terms of this Agreement, or (B) the beneficiary of any such Letter of Credit
does not accept the proposed amendment to the Letter of Credit. The Facing
Agent will provide a copy of any amendment to the Administrative Agent and the
Administrative Agent will promptly notify the Lenders of the receipt by it of
any amendment to a Letter of Credit. In the event that the Facing Agent is
other than the Administrative Agent, such Facing Agent will send by facsimile
transmission to the Administrative Agent, promptly on the first Business Day of
each week its daily maximum Dollar Equivalent amount available to be drawn under
the Commercial Letters of Credit issued by such Facing Agent for the previous
week. The Administrative Agent shall deliver to each Lender upon such calendar
month end, and upon each commercial letter of credit
69
<PAGE>
fee payment, a report setting forth the daily maximum Dollar Equivalent amount
available to be drawn for all Facing Agents during such Period.
(c) Draws upon Letters of Credit; Reimbursement Obligation. In the
------------------------------------------------------
event of any drawing under any Letter of Credit by the beneficiary thereof, the
applicable Facing Agent shall give telephonic notice to the Borrower and the
Administrative Agent (x) confirming such drawing and (y) of the date on or
before which such Facing Agent intends to honor such drawing, and the Borrower
shall reimburse the applicable Facing Agent on the day on which such drawing is
honored in an amount in same day funds equal to the amount of such drawing;
provided, however, that, anything contained in this Agreement to the contrary
- -------- -------
notwithstanding, (i) unless the Borrower shall have notified the Administrative
Agent and the applicable Facing Agent prior to 10:00 a.m. (New York City time)
on the Business Day the applicable Facing Agent intends to honor such drawing
that the Borrower intends to reimburse the applicable Facing Agent for the
amount of such drawing with funds other than the proceeds of Domestic Revolving
Loans (in the case of a Domestic LC Obligation) or Multicurrency Revolving Loans
(in the case of a Multicurrency LC Obligation), the Borrower shall be deemed to
have timely given a Notice of Borrowing to the Administrative Agent requesting
each Domestic Revolving Lender or Multicurrency Revolving Lender, as the case
may be, to make Domestic Revolving Loans or Multicurrency Revolving Loans, as
the case may be, which are Base Rate Loans on the date on which such drawing is
honored in an amount equal to the Dollar Equivalent of the amount of such
drawing and the Administrative Agent shall, if such Notice of Borrowing is
deemed given, promptly notify the Lenders thereof and (ii) unless any of the
events described in Section 10.1(e) or 10.1(f) shall have occurred (in which
--------------- -------
event the procedures of Section 2.10(d) shall apply), each such Lender shall, on
---------------
the date such drawing is honored, make Domestic Revolving Loans or Multicurrency
Revolving Loans, as the case may be, which are Base Rate Loans in the amount of
its Domestic Revolver Pro Rata Share or Multicurrency Revolving Loans in the
amount of its Multicurrency Revolver Pro Rata Share, as the case may be, of the
Dollar Equivalent of such drawing, the proceeds of which shall be applied
directly by the Administrative Agent to reimburse the applicable Facing Agent
for the amount of such drawing; and provided, further, that, if for any reason,
-------- -------
proceeds of Domestic Revolving Loans or Multicurrency Revolving Loans, as the
case may be, are not received by the applicable Facing Agent on such date in an
amount equal to the amount of the Dollar Equivalent of such drawing, the
Borrower shall reimburse the applicable Facing Agent, on the Business Day
immediately following the date such drawing is honored, in an amount in same day
funds equal to the excess of the amount of the Dollar Equivalent of such drawing
over the Dollar Equivalent of the amount of such Domestic Revolving Loans, if
any, which are so received, plus accrued interest on such amount at the rate set
forth in Section 3.1(a).
--------------
(d) Lenders' Participation in Letters of Credit. In the event that
-------------------------------------------
the Borrower shall fail to reimburse the applicable Facing Agent as provided in
Section 2.10(c) in an amount equal to the amount of any drawing honored by the
- ---------------
applicable Facing Agent under a Letter of
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<PAGE>
Credit issued by it in accordance with the terms hereof, the applicable Facing
Agent shall promptly notify the Administrative Agent and the Administrative
Agent shall promptly notify each Domestic Revolving Lender (in the case of a
Domestic LC Obligation) or each Multicurrency Revolving Lender (in the case of a
Multicurrency LC Obligation), of the unreimbursed amount of such drawing and of
such Lender's respective participation therein. Each such (x) Domestic Revolving
Lender shall purchase a participation interest in such Domestic LC Obligation
and shall make available to the applicable Facing Agent an amount equal to its
Domestic Revolver Pro Rata Share of the Dollar Equivalent of such drawing in
same day funds, at the office of the applicable Facing Agent specified in such
notice, and (y) Multicurrency Revolving Lender shall purchase a participation
interest in such Multicurrency LC Obligation and shall make available to the
applicable Facing Agent the Dollar Equivalent of an amount equal to its
Multicurrency Revolver Pro Rata Share of such drawing in same day funds, at the
office of the applicable Facing Agent specified in such notice, in each case not
later than 1:00 p.m. (New York City time) on the Business Day after the date
such Lender is notified by the Administrative Agent. In the event that any such
Lender fails to make available to the applicable Facing Agent the amount of such
Lender's participation in such Letter of Credit as provided in this Section
-------
2.10(d), the applicable Facing Agent shall be entitled to recover such amount on
- -------
demand from such Lender together with interest at the Federal Funds Rate for two
Business Days and thereafter at the Base Rate. Nothing in this Section 2.10(d)
---------------
shall be deemed to prejudice the right of any Lender to recover from the
applicable Facing Agent any amounts made available by such Lender to the
applicable Facing Agent pursuant to this Section 2.10(d) in the event that it is
---------------
determined by a court of competent jurisdiction that the payment with respect to
a Letter of Credit by the applicable Facing Agent in respect of which payment
was made by such Lender constituted gross negligence or willful misconduct on
the part of the applicable Facing Agent. The applicable Facing Agent shall
distribute to each other Lender which has paid all amounts payable by it under
this Section 2.10(d) with respect to any Letter of Credit issued by the
---------------
applicable Facing Agent such other Domestic Revolving Lender's Domestic Revolver
Pro Rata Share (in the case of a Domestic LC Obligation) or Multicurrency
Revolving Lender's Multicurrency Revolver Pro Rata Share (in the case of a
Multicurrency LC Obligation) of all payments received by the applicable Facing
Agent from the Borrower in reimbursement of drawings honored by the applicable
Facing Agent under such Letter of Credit when such payments are received. Each
Lender's obligation to make Domestic Revolving Loans or Multicurrency Revolving
Loans, as the case may be, pursuant to Section 2.10(c) or to purchase
---------------
participations pursuant to this Section 2.10(d) as a result of a drawing under a
---------------
Letter of Credit shall be absolute and unconditional and without recourse to the
applicable Facing Agent and shall not be affected by any circumstance, including
(i) any set-off, counterclaim, recoupment, defense or other right which such
Lender may have against the Facing Agent, the Borrower or any other Person for
any reason whatsoever; (ii) the occurrence or continuance of an Event of Default
or a Material Adverse Effect; or (iii) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; provided,
--------
however, that each
- -------
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<PAGE>
Lender's obligation to make Domestic Revolving Loans or Multicurrency Revolving
Loans, as the case may be, under Section 2.10(c) is subject to the conditions
---------------
set forth in Section 5.2.
-----------
(e) Fees for Letters of Credit.
--------------------------
(i) Facing Agent Fees. The Borrower agrees to pay the following
-----------------
amount to the applicable Facing Agent with respect to the Letters of Credit
issued by it for the account of the Borrower:
(A) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by Facing Agent
in respect of each such drawing from the date a drawing is
honored up to (but not including) the date such amount is
reimbursed by the Borrower (including any such reimbursement out
of the proceeds of Domestic Revolving Loans or Multicurrency
Revolving Loans, as the case may be, pursuant to Section 2.10(c))
---------------
at a rate which is at all times equal to 2% per annum in excess
of the Base Rate;
(B) with respect to the issuance or amendment of each Letter of
Credit and each payment made thereunder, documentary and
processing charges in accordance with the applicable Facing
Agent's standard schedule for such charges in effect at the time
of such issuance, amendment, transfer or payment, as the case may
be; and
(C) a facing fee as agreed from time to time by the Borrower and the
applicable Facing Agent for the applicable Letter of Credit or,
with respect to BT as Facing Agent, a facing fee equal to 1/8th
of 1% per annum of outstanding LC Obligations and unless
otherwise agreed, shall be payable with respect to the maximum
Stated Amount under such outstanding Letters of Credit payable in
arrears on each Quarterly Payment Date, on the Revolver
Termination Date and thereafter, on demand together with
customary issuance and payment charges payable pursuant to clause
(B) above; provided, however, if calculation of the facing fee in
-------- -------
the manner set forth above would result in a facing fee of less
than $500 per year per Letter of Credit issued by BT, the
Borrower shall be obligated to pay such additional amount to BT
so as to provide for a minimum facing fee of $500 per year per
Letter of Credit.
(ii) Participating Lender Fees. The Borrower agrees to pay to the
-------------------------
Administrative Agent for distribution to each participating Domestic
Revolving Lender (with respect to Domestic Letters of Credit and Domestic
Supported Foreign LCs) and
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Multicurrency Revolving Lender (with respect to Multicurrency Letters of
Credit) in respect of all Letters of Credit outstanding such Domestic
Revolving Lender's Domestic Revolver Pro Rata Share or Multicurrency
Revolving Lender's Multicurrency Revolving Pro Rata Share of a commission
equal to the then Applicable Eurocurrency Margin for Term A Loans per annum
with respect to the maximum Stated Amount under such outstanding Letters of
Credit (the "LC Commission"), payable in arrears on each Quarterly Payment
-------------
Date, on the Revolver Termination Date and thereafter, on demand. The LC
Commission shall be computed from the first day of issuance of each Letter
of Credit and on the basis of the actual number of days elapsed over a year
of 360 days.
Promptly upon receipt by a Facing Agent or the Administrative Agent of
any amount described in clause (i)(A) or (ii) of this Section 2.10(e), the
---------------
applicable Facing Agent or the Administrative Agent shall distribute to each
Domestic Revolving Lender or Multicurrency Revolving Lender, as the case may be,
its Domestic Revolver Pro Rata Share or Multicurrency Revolver Pro Rata Share,
as the case may be, of such amount as long as, in the case of amounts described
in clause (i)(A), such Lender has reimbursed the applicable Facing Agent in
accordance with Section 2.10(c). Amounts payable under clause (i)(B) and (C) of
---------------
this Section 2.10(c) shall be paid directly to the applicable Facing Agent.
---------------
(f) LC Obligations Unconditional. The obligation of the Borrower to
----------------------------
reimburse a Facing Agent (or any Lender that has purchased a participation from
or made a Loan to enable the Borrower to reimburse the applicable Facing Agent)
for drawings made under any Letter of Credit issued by it and the obligations of
each Lender under Section 2.10(d) with respect thereto shall be unconditional
---------------
and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of such Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower or any of its Affiliates may have at any time against a
beneficiary or any transferee of such Letter of Credit (or any persons or
entities for which any such beneficiary or transferee may be acting), the
applicable Facing Agent, any Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between the
Borrower or one of its Subsidiaries and the beneficiary of such Letter of
Credit);
(iii) any draft, demand, certificate or any other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
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(iv) payment by the applicable Facing Agent under such Letter of
Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit;
(v) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(vi) the fact that an Event of Default or an Unmatured Event of
Default shall have occurred and be continuing.
Notwithstanding the foregoing, neither the Borrower nor the Lenders (other than
the applicable Facing Agent in its capacity as such) shall be liable for any
obligation resulting from the gross negligence or willful misconduct of the
applicable Facing Agent, as determined by a court of competent jurisdiction,
with respect to any Letter of Credit.
(g) Indemnification. In addition to amounts payable as elsewhere
---------------
provided in this Agreement, the Borrower hereby agrees to protect, indemnify,
pay and save the applicable Facing Agent and the Lenders harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including Attorney Costs) (other than for Taxes, which
shall be covered by Section 4.7) which the applicable Facing Agent and the
-----------
Lenders may incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of the Letters of Credit, other than as a result of the gross
negligence or willful misconduct of the applicable Facing Agent, as determined
by a court of competent jurisdiction, or (ii) the failure of the applicable
Facing Agent to honor a drawing under any Letter of Credit as a result of any
act or omissions, whether rightful or wrongful, of any present or future de jure
or de facto Governmental Authority (all such acts or omissions herein called
"Government Acts") other than arising out of the gross negligence or willful
- ----------------
misconduct, as determined by a court of competent jurisdiction, of the
applicable Facing Agent. As between the Borrower on the one hand, and the
applicable Facing Agent and the Lenders, on the other hand, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued by the applicable Facing Agent by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing,
neither the applicable Facing Agent nor any of the Lenders shall be responsible:
(i) for the form, validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the application for
and issuance of or any drawing under such Letters of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) for
failure of the beneficiary of any such Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by
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<PAGE>
mail, cable, telegraph, telex, or otherwise, whether or not they be in cipher;
(v) for errors in interpretation of technical terms; (vi) for any loss or delay
in the transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof; (vii) for
the misapplication by the beneficiary of any such Letter of Credit of the
proceeds of any drawing under such Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of the applicable Facing
Agent, including, without limitation, any Government Acts. None of the above
shall effect, impair, or prevent the vesting of any of the applicable Facing
Agent's or any Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the applicable
Facing Agent under or in connection with the Letters of Credit issued by it or
the related certificates, if taken or omitted in good faith, shall not put the
applicable Facing Agent under any resulting liability to the Borrower.
Notwithstanding anything to the contrary contained in this Agreement, the
Borrower shall have no obligation to indemnify or hold harmless the applicable
Facing Agent in respect of any claims, demands, liabilities, damages, losses,
costs, charges or expenses (including Attorney Costs) incurred by the applicable
Facing Agent to the extent arising out of the gross negligence or willful
misconduct of the applicable Facing Agent, as determined by a court of
competent jurisdiction. The right of indemnification in the first paragraph of
this Section 2.10(g) shall not prejudice any rights that the Borrower may
---------------
otherwise have against the applicable Facing Agent with respect to a Letter of
Credit issued hereunder.
(h) Stated Amount. The Stated Amount of each Letter of Credit shall
-------------
not be less than the Dollar Equivalent of One Hundred Thousand Dollars
($100,000) or such lesser amount as the applicable Facing Agent has agreed to.
(i) Increased Costs. Subject to Section 4.7, if any time after the
--------------- -----------
date hereof any Facing Agent or any Lender determines that the introduction of
or any change in any applicable law, rule, regulation, order, guideline or
request or in the interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration thereof, or
compliance by the applicable Facing Agent or such Lender with any request or
directive by any such authority (whether or not having the force of law), shall
either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against letters of credit issued by the
applicable Facing Agent or participated in by any Lender, or (ii) impose on the
applicable Facing Agent or any Lender any other conditions relating, directly or
indirectly, to the provisions of this Agreement relating to Letters of Credit or
any Letter of Credit; and the result of any of the foregoing is to increase the
cost to the applicable Facing Agent or any Lender of issuing, maintaining or
participating in any Letter of Credit, or reduce the amount of any sum received
or receivable by the applicable Facing Agent or any Lender hereunder or reduce
the rate of return on its capital with respect to Letters of Credit, then, upon
demand to the Borrower by the applicable Facing Agent or any Lender (a copy of
which
75
<PAGE>
demand shall be sent by the applicable Facing Agent or such Lender to the
Administrative Agent), the Borrower shall pay to the applicable Facing Agent or
such Lender, as the case may be, such additional amount or amounts as will
compensate the applicable Facing Agent or such Lender for such increased cost or
reduction in the amount receivable or reduction on the rate of return on its
capital. In determining such additional amounts pursuant to the preceding
sentence, the applicable Facing Agent or such Lender will act reasonably and in
good faith and will, to the extent the increased costs or reductions in amounts
receivable or reductions in rates of return relate to Facing Agent's or such
Lender's letters of credit in general and are not specifically attributable to
the Letters of Credit hereunder, use averaging and attribution methods which are
reasonable and which cover all letters of credit similar to the Letters of
Credit issued by or participated in by the applicable Facing Agent or such
Lender whether or not the documentation for such other Letters of Credit permit
the applicable Facing Agent or such Lender to receive amounts of the type
described in this Section 2.10(i). The applicable Facing Agent or any Lender,
---------------
upon determining that any additional amounts will be payable pursuant to this
Section 2.10(i), will give prompt written notice thereof to the Borrower, which
- ---------------
notice shall include a certificate submitted to the Borrower by the applicable
Facing Agent or such Lender (a copy of which certificate shall be sent by the
applicable Facing Agent or such Lender to the Administrative Agent), setting
forth in reasonable detail the basis for the calculation of such additional
amount or amounts necessary to compensate the applicable Facing Agent or such
Lender, although failure to give any such notice shall not release or diminish
the Borrower's obligations to pay additional amounts pursuant to this Section
-------
2.10(i); provided, however, if the applicable Facing Agent or such Lender, as
- ------- -------- -------
applicable, has intentionally withheld or delayed such notice, the applicable
Facing Agent or such Lender, as the case may be, shall not be entitled to
receive additional amounts pursuant to this Section 2.10(i) for periods
---------------
occurring prior to the 180th day before the giving of such notice. The
certificate required to be delivered pursuant to this Section 2.10(i) shall,
---------------
absent manifest error, be final, conclusive and binding on the Borrower.
(j) Domestic Supported Foreign LCs. At the request of the Borrower,
------------------------------
any Facing Agent having a Domestic Revolving Commitment may in its sole
discretion agree to issue for the ratable benefit of all Domestic Revolving
Lenders (including the applicable Facing Agent) one or more Letters of Credit
denominated in an Alternative Currency (each a "Domestic Supported Foreign LC")
-----------------------------
otherwise on terms and subject to the provisions of this Agreement; provided,
--------
however, that in the event of any notification of a drawing under any Domestic
- -------
Support Foreign LC, the Borrower shall reimburse the applicable Facing Agent in
the applicable Alternative Currency on the applicable date such drawing is
honored relating to such payment (which shall be determined by the applicable
Facing Agent in accordance with standard practices for transactions in such
currency), whereupon such reimbursement shall be due on the date such drawing is
honored. In the event that the Borrower shall fail to so reimburse the
applicable Facing Agent, then the applicable Facing Agent shall be entitled to
be reimbursed hereunder in
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<PAGE>
an amount equal to the Assigned Dollar Value for such Letter of Credit Payment
on the date such drawing is honored, and:
(i) the Borrower shall be deemed to have timely given a Notice of
Borrowing to the Administrative Agent requesting the Domestic Revolving
Lenders to make Domestic Revolving Loans which are Base Rate Loans on the
date on which such Domestic Support Foreign LC drawing is honored in an
amount equal to the Dollar Equivalent of the amount drawn on such Domestic
Supported Foreign LC; and
(ii) unless any of the events described in Sections 10.1(e) or 10.1(f)
---------------- -------
shall have occurred (in which event the procedures of Section 2.8(d) shall
--------------
apply), the Domestic Revolving Lenders shall, on the date such drawing is
honored, make Domestic Revolving Loans which are Base Rate Loans in the
Dollar Equivalent amount of the amount drawn on such Domestic Support
Foreign LC, the proceeds of which shall be applied directly by the
Administrative Agent to reimburse the applicable Facing Agent for the
amount of such drawing; provided, however, that if for any reason, proceeds
-------- -------
of Domestic Revolving Loans are not received by the applicable Facing
Agent on such date in an amount equal to such Dollar Equivalent amount, the
Borrower shall reimburse the applicable Facing Agent, on the Business Day
immediately following the date of such drawing, in an amount in same day
funds equal to the excess of the Dollar Equivalent amount of such Domestic
Supported Foreign LC drawing over the amount of such Domestic Revolving
Loans, if any, which are so received, plus accrued interest on such amount
at the rate set forth in Section 3.1(a).
--------------
(k) Outstanding Letters of Credit. The letters of credit set forth
-----------------------------
under the caption "Letters of Credit outstanding on the Effective Date" on
Schedule 2.10(k) were issued prior to the Effective Date and which will remain
- ----------------
outstanding as of the Initial Borrowing Date (the "Outstanding Letters of
----------------------
Credit"). The Borrower, each Facing Agent and each of the Lenders hereby agree
- ------
with respect to the Outstanding Letters of Credit that each such Outstanding
Letters of Credit, for all purposes under this Agreement, shall be deemed to be
Letters of Credit governed by the terms and conditions of this Agreement
(provided, that the Borrower shall use its commercially reasonable efforts to
- ---------
conform each such Outstanding Letter of Credit to the terms of this Agreement).
Each Domestic Revolving Lender (with respect to Outstanding Letters of Credit
denominated in Dollars) and Multicurrency Revolving Lender (with respect to
Outstanding Lenders of Credit denominated in an Alternative Currency) further
agrees to participate in each such Outstanding Letter of Credit issued by any
Facing Agent in an amount equal to its Domestic Revolver Pro Rata Share or
Multicurrency Revolver Pro Rata Share, as the case may be, of the Stated Amount
of such Outstanding Letter of Credit.
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ARTICLE III
INTEREST AND FEES
3.1 Interest
--------
(a) Base Rate Loans. The Borrower agrees to pay interest in respect
---------------
of the unpaid principal amount of each Base Rate Loan at a rate per annum equal
to the Base Rate plus the Applicable Base Rate Margin from the date the proceeds
thereof are made available to the Borrower (or, if such Base Rate Loan was
converted from a Eurocurrency Loan, the date of such conversion) until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such Base
Rate Loan or (ii) the conversion of such Base Rate Loan to a Eurocurrency Loan
pursuant to Section 2.6; provided, however, that from the Initial Borrowing Date
----------- -------- -------
to and including the seventh Business Day following the Initial Borrowing Date,
interest in respect of the unpaid principal amount of (x) Revolving Loans,
Multicurrency Revolving Loans, Swing Line Loans and Term A Dollar Loans shall be
7.8125% per annum, (y) Term B Loans shall be 8.3125% per annum and (z) Term C
Loans shall be 8.5625% per annum.
(b) Eurocurrency Loans. The Borrower agrees to pay interest in
------------------
respect of the unpaid principal amount of each Eurocurrency Loan from the date
the proceeds thereof are made available to the Borrower (or, if such
Eurocurrency Loan was converted from a Base Rate Loan, the date of such
conversion) until the earlier of (i) the maturity (whether by acceleration or
otherwise) of such Eurocurrency Loan or (ii) the conversion of such Eurocurrency
Loan to a Base Rate Loan pursuant to Section 2.6 at a rate per annum equal to
-----------
the relevant Eurocurrency Rate plus the Applicable Eurocurrency Margin.
(c) Payment of Interest. Interest on each Loan shall be payable in
-------------------
arrears on each Interest Payment Date; provided, however, that interest accruing
-------- -------
pursuant to Section 3.1(e) and as otherwise set forth in the last sentence of
--------------
this Section 3.1(c) shall be payable from time to time on demand. Interest
--------------
shall also be payable on all then outstanding Domestic Revolving Loans on the
Revolver Termination Date and on all Loans and Multicurrency Revolving Loans on
the date of repayment (including prepayment) thereof (except that voluntary
prepayments of Swingline Loans, Domestic Revolving Loans and Multicurrency
Revolving Loans that are Base Rate Loans made pursuant to Section 4.3 on any day
-----------
other than a Quarterly Payment Date or the Revolver Termination Date need not be
made with accrued interest from the most recent Quarterly Payment Date, provided
such accrued interest is paid on the next Quarterly Payment Date) and on the
date of maturity (by acceleration or otherwise) of such Loans. During the
existence of any Event of Default, interest on any Loan shall be payable on
demand. Interest to be paid with respect to Loans denominated in (x) Dollars
shall be paid in Dollars and (y) in an Alternative Currency shall be in such
Alternative Currency.
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<PAGE>
(d) Notification of Rate. The Administrative Agent, upon determining
--------------------
the interest rate for any Borrowing of Eurocurrency Loans for any Interest
Period, shall promptly notify the Borrower and the Lenders thereof. Such
determination shall, absent manifest error and subject to Section 3.6, be final,
-----------
conclusive and binding upon all parties hereto.
(e) Default Interest. Notwithstanding the rates of interest specified
----------------
herein, effective on the date of the occurrence of any Event of Default and for
so long thereafter as any such Event of Default shall be continuing, and
effective immediately upon any failure to pay any Obligations or any other
amounts due under any of the Loan Documents when due, whether by acceleration or
otherwise, the principal balance of each Loan then outstanding and, to the
extent permitted by applicable law, any interest payment on each Loan not paid
when due or other amounts then due and payable shall bear interest payable on
demand, after as well as before judgment, at a rate per annum equal to the
Default Rate.
(f) Maximum Interest. If any interest payment or other charge or fee
----------------
payable hereunder exceeds the maximum amount then permitted by applicable law,
the Borrower shall be obligated to pay the maximum amount then permitted by
applicable law and the Borrower shall continue to pay the maximum amount from
time to time permitted by applicable law until all such interest payments and
other charges and fees otherwise due hereunder (in the absence of such restraint
imposed by applicable law) have been paid in full.
3.2 Fees
----
(a) Commitment Fees. The Borrower shall pay to the Administrative
---------------
Agent for pro rata distribution to each Non-Defaulting Lender having a Domestic
Revolving Commitment (based on its Domestic Revolver Pro Rata Share) and/or a
Multicurrency Revolving Commitment (based on its Multicurrency Revolver Pro Rata
Share) a commitment fee (the "Commitment Fee") for the period commencing on the
--------------
Effective Date to and including the Revolver Termination Date or the earlier
termination of the Domestic Revolving Commitments and the Multicurrency
Revolving Commitments (and, in either case, repayment in full of the Domestic
Revolving Loans and/or the Multicurrency Revolving Loans and payment in full, or
cash collateralization by the deposit of cash into the Domestic Collateral
Account in amounts and pursuant to arrangements reasonably satisfactory to the
Administrative Agent, of the LC Obligations), computed at a rate equal to the
Applicable Commitment Fee Percentage per annum on the average daily Total
Available Domestic Revolving Commitment (with the Available Domestic Revolving
Commitment of each Lender determined without reduction for such Lender's
Domestic Revolver Pro Rata Share of the Overdraft Reserve, the BPCL Acquisition
Reserve and the Assigned Dollar Value of Swing Line Loans outstanding) and the
daily Total Available Multicurrency Revolving Commitment, as the case may be.
Unless otherwise specified, accrued Commitment Fees shall be due and payable (i)
on each Quarterly Payment Date occurring after the Initial Borrowing Date, (ii)
on the Revolver Termination Date and (iii)
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upon any reduction or termination in whole or in part of the Domestic Revolving
Commitments and/or the Multicurrency Revolving Commitments, as the case may be
(but only, in the case of a reduction, on the portion of the Domestic Revolving
Commitments and/or the Multicurrency Revolving Commitments, as the case may be,
then being reduced).
(b) Agency Fees. The Borrower shall pay to the Administrative Agent
-----------
for its own account, agency and other Loan fees in the amount and at the times
set forth in the letter agreement between the Borrower and the Administrative
Agent.
3.3 Computation of Interest and Fees
--------------------------------
Interest on all Loans and fees payable hereunder shall be computed on the basis
of the actual number of days elapsed over a year of 360 days; provided that
--------
interest on all Base Rate Loans shall be computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be. Each
determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error. The Administrative Agent shall,
at any time and from time to time upon request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate applicable to Domestic Revolving Loans pursuant to
this Agreement. Each change in the Applicable Base Rate Margin or Applicable
Eurodollar Margin or the Applicable Commitment Fee Percentage or any change in
the LC Commission as a result of a change in the Borrower's Most Recent Leverage
Ratio shall become effective on the date upon which such change in such ratio
occurs.
3.4 Interest Periods
----------------
At the time it gives any Notice of Borrowing or a Notice of Conversion or
Continuation with respect to Eurocurrency Loans, the Borrower shall elect, by
giving the Administrative Agent written notice, the interest period (each an
"Interest Period") which Interest Period shall, at the option of the Borrower,
---------------
be one, two, three or six months or, if available or otherwise satisfactory to
each of the applicable Lenders (as determined by each such applicable Lender in
its sole discretion) a nine or twelve month period, provided that:
(i) all Eurocurrency Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurocurrency Loan shall
commence on the date of such Borrowing of such Eurocurrency Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurocurrency Loan shall
commence on the last day of the immediately preceding Interest Period;
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(iii) if any Interest Period relating to a Eurocurrency Loan begins
on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end on the
last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, however, that if any Interest Period for a Eurocurrency
-------- -------
Loan would otherwise expire on a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period (a) with respect to any Loan (other than a
Term A Euro Loan and non-Dollar denominated Multicurrency Revolving Loans) may
be selected at any time when an Unmatured Event of Default or Event of Default
is then in existence and (b) with respect to any Term A Euro Loan and non-Dollar
denominated Multicurrency Revolving Loan in excess of one month may be selected
at any time when an Unmatured Event of Default or Event of Default is then in
existence;
(vi) no Interest Period shall extend beyond the Term A Loan Maturity
Date for any Term A Loan, the Term B Loan Maturity Date for any Term B Loan, the
Term C Loan Maturity Date for any Term C Loan or the Revolver Termination Date
for any Domestic Revolving Loan or any Multicurrency Revolving Loan; and
(vii) no Interest Period in respect to any Borrowing of Term A Loans,
Term B Loans or Term C Loans, as the case may be, shall be selected which
extends beyond any date upon which a mandatory repayment of such Term Loans will
be required to be made under Section 4.4(b), (c) or (d) as the case may be, if
-------------- ---
the aggregate principal amount of Term A Loans, Term B Loans or Term C Loans, as
the case may be, which have Interest Periods which will expire after such date
will be in excess of the aggregate principal amount of Term A Loans, Term B
Loans or Term C Loans, as the case may be, then outstanding less the aggregate
amount of such required prepayment.
Notwithstanding anything to the contrary herein, the Borrower may only have Base
Rate Loans and Eurocurrency Loans with a one month Interest Period for the first
90 days after the Initial Borrowing Date or, if earlier, the date on which the
Administrative Agent informs the Borrower of the completion of the syndication
of the Commitments and Loans.
3.5 Compensation for Funding Losses
-------------------------------
The Borrower shall compensate each Lender, upon its written request (which
request shall set forth the basis for requesting such amounts, showing the
calculation thereof in reasonable detail), for all losses, expenses and
liabilities (including, without limitation, any interest paid by such
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Lender to lenders of funds borrowed by it to make or carry its Eurocurrency
Loans to the extent not recovered by the Lender in connection with the
liquidation or re-employment of such funds and including the compensation
payable by such Lender to a Participant) and any loss sustained by such Lender
in connection with the liquidation or re-employment of such funds (including,
without limitation, a return on such liquidation or re-employment that would
result in such Lender receiving less than it would have received had such
Eurocurrency Loan remained outstanding until the last day of the Interest Period
applicable to such Eurocurrency Loans) which such Lender may sustain as a result
of: (i) for any reason (other than a default by such Lender or the
Administrative Agent) a continuation or Borrowing of, or conversion from or
into, Eurocurrency Loans does not occur on a date specified therefor in a Notice
of Borrowing or Notice of Conversion or Continuation (whether or not withdrawn);
(ii) any payment, prepayment or conversion or continuation of any of its
Eurocurrency Loans occurring for any reason whatsoever on a date which is not
the last day of an Interest Period applicable thereto; (iii) any repayment of
any of its Eurocurrency Loans not being made on the date specified in a notice
of payment given by the Borrower; or (iv) (A) any other failure by the Borrower
to repay its Eurocurrency Loans when required by the terms of this Agreement or
(B) an election made by the Borrower pursuant to Section 3.7. A written notice
-----------
as to additional amounts owed such Lender under this Section 3.5 and delivered
-----------
to the Borrower and the Administrative Agent by such Lender shall be delivered
within 30 days of such event and shall, absent manifest error, be final,
conclusive and binding for all purposes. Calculation of all amounts payable to a
Lender under this Section 3.5 shall be made as though that Lender had actually
-----------
funded its relevant Eurocurrency Loan through the purchase of a Eurocurrency
deposit bearing interest at the Eurocurrency Rate in an amount equal to the
amount of that Loan, having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurocurrency deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; provided, however, that each Lender may fund each of its
-------- -------
Eurocurrency Loans in any manner it sees fit and the foregoing assumption shall
be utilized only for the calculation of amounts payable under this Section 3.5.
-----------
3.6 Increased Costs, Illegality, Etc.
---------------------------------
(a) Generally. Except as provided in Section 4.7, in the event that
--------- -----------
any Lender shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto but, with
respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Rate Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurocurrency market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Eurocurrency Rate; or
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(ii) at any time that any Lender shall incur increased costs or
reduction in the amounts received or receivable hereunder with respect to
any Eurocurrency Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation of payments to any Lender of the principal of or interest on the
Notes or any other amounts payable hereunder (except for taxes described in
Sections 4.7(a)(i) through (iv)) or (B) a change in official reserve
------------------ -----
requirements (but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the Eurocurrency
Rate) and/or (y) other circumstances since the date of this Agreement
affecting such Lender or the interbank Eurocurrency market or the position
of such Lender in such market (excluding, however, differences in a
Lender's cost of funds from those of the Administrative Agent which are
solely the result of credit differences between such Lender and the
Administrative Agent); or
(iii) at any time that the making or continuance of any Eurocurrency
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Lender in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurocurrency
market;
then, and in any such event, such Lender (or the Administrative Agent, in the
case of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in
the case of clause (i) above, Eurocurrency Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice by the Administrative
Agent no longer exist, and any Notice of Borrowing or Notice of Conversion or
Continuation given by the Borrower with respect to Eurocurrency Loans (other
than with respect to conversions to Base Rate Loans) which have not yet been
incurred (including by way of conversion) shall be deemed rescinded by the
Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such
Lender, upon written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as such Lender in its sole discretion shall determine) as shall be required to
compensate such Lender for such increased costs or reductions in amounts
received or receivable hereunder (a written notice as to the additional amounts
owed to such Lender, showing the basis for the calculation thereof, submitted to
the Borrower by such Lender shall, absent manifest error, be final and
conclusive and binding on all the parties hereto;
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however the failure to give any such notice (unless the respective Lender has
intentionally withheld or delayed such notice, in which case the respective
Lender shall not be entitled to receive additional amounts pursuant to this
Section 3.6 (a)(y) for periods occurring prior to the 180th day before the
- ------------------
giving of such notice) shall not release or diminish the Borrower's obligations
to pay additional amounts pursuant to this Section 3.6 (a)(y) and (z) in the
------------------
case of clause (iii) above, the Borrower shall take one of the actions specified
in Section 3.6(b) as promptly as possible and, in any event, within the time
--------------
period required by law. In determining such additional amounts pursuant to
clause (y) of the immediately preceding sentence, each Lender shall act
reasonably and in good faith and will, to the extent the increased costs or
reductions in amounts receivable relate to such Lender's loans in general and
are not specifically attributable to a Loan hereunder, use averaging and
attribution methods which are reasonable and which cover all loans similar to
the Loans made by such Lender whether or not the loan documentation for such
other loans permits the Lender to receive increased costs of the type described
in this Section 3.6(a).
--------------
(b) Eurocurrency Loans. At any time that any Eurocurrency Loan is
------------------
affected by the circumstances described in Section 3.6(a)(ii) or (iii), the
------------------ -----
Borrower may (and, in the case of a Eurocurrency Loan affected by the
circumstances described in Section 3.6(a)(iii), shall) either (i) if the
--------------------
affected Eurocurrency Loan is then being made initially or pursuant to a
conversion, by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Lender
or the Administrative Agent pursuant to Section 3.6(a)(ii) or (iii), cancel the
------------------ -----
respective Borrowing, or (ii) if the affected Eurocurrency Loan is then
outstanding, upon at least three Business Days' written notice to Administrative
Agent, require the affected Lender to convert such Eurocurrency Loan into a Base
Rate Loan, provided, that if more than one Lender is affected at any time, then
--------
all affected Lenders must be treated the same pursuant to this Section 3.6(b).
--------------
(c) Capital Requirements. If any Lender determines that the
--------------------
introduction of or any change in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the force of law)
concerning capital adequacy, or any change in (after the date of this Agreement)
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender based on the existence of such Lender's Commitments
hereunder or its obligations hereunder, then the Borrower shall pay to such
Lender, upon its written notice as hereafter described, such additional amounts
as shall be required to compensate such Lender or such other corporation for the
increased cost to such Lender or such other corporation or the reduction in the
rate of return to such Lender or such other corporation as a result of such
increase of capital. In determining such additional amounts, each Lender will
act reasonably and in good faith and will use averaging and attribution methods
which are reasonable and which will, to the extent the increased costs or
reduction in the rate of return relates to such Lender's commitments or
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<PAGE>
obligations in general and are not specifically attributable to the Commitments
and obligations hereunder, cover all commitments and obligations similar to the
Commitments and obligations of such Lender hereunder whether or not the loan
documentation for such other commitments or obligations permits the Lender to
make the determination specified in this Section 3.6(c), and such Lender's
--------------
determination of compensation owing under this Section 3.6(c) shall, absent
--------------
manifest error, be final and conclusive and binding on all the parties hereto.
Each Lender, upon determining that any additional amounts will be payable
pursuant to this Section 3.6(c), will give prompt written notice thereof to the
--------------
Borrower, which notice shall show the basis for calculation of such additional
amounts, although the failure to give any such notice (unless the respective
Lender has intentionally withheld or delayed such notice, in which case the
respective Lender shall not be entitled to receive additional amounts pursuant
to this Section 3.6(c) for periods occurring prior to the 180th day before the
--------------
giving of such notice) shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this Section 3.6(c).
--------------
(d) Change of Lending Office. Each Lender which is or will be owed
------------------------
compensation pursuant to Section 3.6(a) or (c) or 4.7 will, if requested by the
-------------- ---
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to cause a different branch or Affiliate to make or continue a Loan
or Letter of Credit if such designation will avoid the need for, or materially
reduce the amount of, such compensation to such Lender and will not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender. Nothing
in this Section 3.6(d) shall affect or postpone any of the obligations of the
--------------
Borrower or the right of any Lender provided for herein.
3.7 Replacement of Affected Lenders
-------------------------------
(x) If any Domestic Revolving Lender or Multicurrency Revolving Lender
becomes a Defaulting Lender or otherwise defaults in its Obligations to make
Loans or fund Unpaid Drawings, (y) if any Lender (or in the case of Section
-------
2.10(i), Facing Agent) is owed increased costs under Section 2.10(i), Section
- ------- --------------- -------
3.6(a)(ii) or (iii), or Section 3.6(c), or the Borrower is required to make any
- ---------- ----- --------------
payments under Section 4.7(c) to any Lender materially in excess of those to the
--------------
other Lenders or (z) as provided in Section 12.1(b) in the case of certain
---------------
refusals by a Lender to consent to certain proposed amendments, changes,
supplements, waivers, discharges or terminations with respect to this Agreement
which have been approved by the Required Lenders, the Borrower shall have the
right, if no Event of Default or Unmatured Event of Default then exists, to
replace such Lender (the "Replaced Lender") with one or more other Eligible
---------------
Assignees, none of whom shall constitute a Defaulting Lender at the time of such
replacement (collectively, the "Replacement Lender") acceptable to the
------------------
Administrative Agent, provided that (i) at the time of any replacement pursuant
--------
to this Section 3.7, the Replaced Lender and Replacement Lender shall enter into
-----------
one or more assignment agreements, in form and substance satisfactory to such
parties and the Administrative Agent, pursuant to which the Replacement Lender
shall acquire all of the Commitments and outstanding Loans of, and participation
in
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<PAGE>
Letters of Credit by, the Replaced Lender and (ii) all obligations of the
Borrower owing to the Replaced Lender (including, without limitation, such
increased costs and excluding those specifically described in clause (i) above
in respect of which the assignment purchase price has been, or is concurrently
being paid) shall be paid in full to such Replaced Lender concurrently with such
replacement. Upon the execution of the respective assignment documentation, the
payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Lender, delivery to the Replacement Lender of the
appropriate Note or Notes executed by the Borrower, the Replacement Lender shall
become a Lender hereunder and, unless the Replaced Lender continues to have
outstanding Loans hereunder, the Replaced Lender shall cease to constitute a
Lender hereunder, except with respect to indemnification provisions under this
Agreement, which shall survive as to such Replaced Lender. Notwithstanding
anything to the contrary contained above, no Lender that acts as a Facing Agent
may be replaced hereunder at any time during which it has Letters of Credit
outstanding hereunder unless arrangements satisfactory to, such Facing Agent
(including the furnishing of a standby letter of credit in form and substance,
and issued by an issuer satisfactory to such Facing Agent or the depositing of
cash collateral into the Domestic Collateral Account in amounts and pursuant to
arrangements satisfactory to such Facing Agent) have been made with respect to
such outstanding Letters of Credit. The Replaced Lender shall be required to
deliver for cancellation its applicable Notes to be canceled on the date of
replacement, or if any such Note is lost or unavailable, such other assurances
or indemnification therefor as the Borrower may reasonably request.
ARTICLE IV
REDUCTION OF COMMITMENTS; PAYMENTS AND PREPAYMENTS
4.1 Voluntary Reduction of Commitments
----------------------------------
(a) Upon at least three Business Days' prior written notice (or
telephonic notice confirmed in writing) to the Administrative Agent at the
Notice Office (which notice the Administrative Agent shall promptly transmit to
each Lender), the Borrower shall have the right, without premium or penalty, to
terminate the unutilized portion of the Domestic Revolving Commitments, the
Multicurrency Revolving Commitments and/or, the Swing Line Commitment, as the
case may be, in part or in whole; provided that (w) any such voluntary
--------
termination of the Domestic Revolving Commitments and/or Multicurrency Revolving
Commitments, as the case may be, shall apply to proportionately and permanently
reduce the Domestic Revolving Commitment and/or Multicurrency Revolving
Commitments, as the case may be, of each Domestic Revolving Lender or
Multicurrency Revolving Lender, as the case may be, (x) any partial voluntary
reduction pursuant to this Section 4.1 shall be in the amount of at least
-----------
$10,000,000 and integral multiples of $5,000,000 in excess of that amount (y)
any such voluntary termination of the Domestic Revolving Commitments shall occur
simultaneously with a voluntary prepayment, pursuant to Section 4.3 such that
-----------
the total of the Domestic Revolving
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<PAGE>
Commitments shall not be reduced below the aggregate principal amount of
outstanding Domestic Revolving Loans plus the Assigned Dollar Value of the
aggregate Domestic LC Obligations and the Assigned Dollar Value of the Swing
Line Loans and (z) any such voluntary termination of the Multicurrency Revolving
Commitment shall occur simultaneously with a voluntary prepayment, pursuant to
Section 4.3 such that the total of the Multicurrency Revolving Commitments shall
- -----------
not be reduced below the Assigned Dollar Value of the aggregate principal amount
of outstanding Multicurrency Revolving Loans plus the aggregate Assigned Dollar
Value of the Multicurrency LC Obligations.
(b) In the event of certain refusals by a Lender to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Lenders as provided in
Section 12.1(b), the Borrower shall have the right, upon five (5) Business Days'
- ---------------
prior written notice to the Administrative Agent (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), to
terminate the entire Domestic Revolving Commitment and/or Multicurrency
Revolving Commitment of such Lender, so long as all Loans, together with accrued
and unpaid interest, fees and all other amounts, due and owing to such Lender
are repaid concurrently with the effectiveness of such termination at which time
Schedule 1.1 shall be deemed modified to reflect such changed amounts pursuant
- ------------
to Section 4.3(b) and the Borrower cash collateralizes such Lender's Domestic
--------------
Revolver Pro Rata Share of the Domestic LC Obligations and such Lender's
Multicurrency Revolver Pro Rata Share of the Multicurrency LC Obligations (in
the manner set forth in Section 4.4(a)) then outstanding. At such time, such
--------------
Lender shall no longer constitute a "Lender" for purposes of this Agreement,
except with respect to indemnifications in favor of such Lender under this
Agreement which shall survive as to such repaid Lender.
4.2 Mandatory Reductions of Commitments
-----------------------------------
(a) Reduction of Domestic Revolving Commitment and Multicurrency
------------------------------------------------------------
Revolving Commitments. The Domestic Revolving Commitments and Multicurrency
- ---------------------
Revolving Commitments shall be reduced at the time and in the amounts required
to be reduced pursuant to Section 4.4(e).
--------------
(b) Reduction of Term A Commitments, Term B Commitments and Term C
--------------------------------------------------------------
Commitments. The Term A Commitments, Term B Commitments and Term C Commitments
- -----------
shall terminate on the Initial Borrowing Date, after giving effect to the
Borrowing of the Term A Loans, Term B Loans and Term C Loans on such date.
(c) Reduction of Purchase Price. If, prior to the Initial Borrowing
----------------------------
Date, as a result of the operation of the provisions of the Contribution
Agreement, the cash purchase price for any of the stock and/or assets is reduced
below the aggregate consideration described in Section 3 of the Contribution
Agreement, the Term A Dollar Commitments and the Term A Euro
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<PAGE>
Commitments shall be reduced on a ratable basis by the Dollar Equivalent or Euro
Equivalent, as the case may be, of the amount of such purchase price reduction.
Any such reduction shall be applied to the Scheduled Term A Dollar Repayments
and the Scheduled Term A Euro Repayments on a pro-rata basis with Dollar
Equivalent or Euro Equivalent, as the case may be, of the amount of such
reduction.
(d) Proportionate Reductions. Except as provided in Section 4.2(c),
------------------------ ---------------
each reduction or adjustment to the Term Commitments or the Domestic Revolving
Commitments pursuant to this Section 4.2 shall apply proportionately to the Term
-----------
A Dollar Commitment, the Term B Euro Commitment, the Term B Commitment, the Term
C Commitment, the Domestic Revolving Commitment or the Multicurrency Revolving
Commitment, as the case may be, of each Lender.
(e) Reduction of Commitments. The Commitments will terminate in their
------------------------
entirety on October 31, 1999 unless the Initial Borrowing Date has occurred on
or before such date.
4.3 Voluntary Prepayments
---------------------
(a) The Borrower shall have the right to prepay the Loans in whole or
in part, from time to time, without premium or penalty, on the following terms
and conditions: (i) the Borrower shall give the Administrative Agent irrevocable
written notice at its Notice Office (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, whether such Loans are Term Loans,
Domestic Revolving Loans, Multicurrency Revolving Loans or Swing Line Loans, the
amount of such prepayment and the specific Borrowings to which such prepayment
is to be applied, which notice shall be given by the Borrower to the
Administrative Agent by 12:00 p.m. (New York City time) at least three Business
Days prior in the case of Eurocurrency Loans and at least one Business Day prior
in the case of Base Rate Loans to the date of such prepayment and which notice
shall (except in the case of Swing Line Loans) promptly be transmitted by the
Administrative Agent to each of the applicable Lenders; (ii) each partial
prepayment of any Borrowing (other than a Borrowing of Swing Line Loans) shall
be in an aggregate Dollar Equivalent principal amount of at least $5,000,000 and
each partial prepayment of a Swing Line Loan shall be in an aggregate principal
amount of at least $500,000; provided, that no partial prepayment of
--------
Eurocurrency Loans made pursuant to a single Borrowing shall reduce the
aggregate principal amount of the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) Eurocurrency Loans may only be prepaid pursuant to this Section
-------
4.3 on the last day of an Interest Period applicable thereto or on any other day
- ---
subject to Section 3.5; (iv) each prepayment in respect of any Borrowing shall
-----------
be applied pro rata among the Loans comprising such Borrowing; provided, that
--------
such prepayment shall not be applied to (I) any Domestic Revolving Loans of a
Defaulting Lender at any time when the aggregate amount of Domestic
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<PAGE>
Revolving Loans of any Non-Defaulting Lender exceeds such Non-Defaulting
Lender's Domestic Revolver Pro Rata Share of all Domestic Revolving Loans then
outstanding and (II) any Multicurrency Revolving Loans of a Defaulting Lender at
any time when the aggregate amount of Multicurrency Loans of any Non-Defaulting
Lender exceeds such Non-Defaulting Lender's Multicurrency Revolver Pro Rata
Share of all Multicurrency Loans then outstanding; (v) subject to Section
4.5(c), each voluntary prepayment of Term Loans shall be applied first to the
Scheduled Term A Dollar Repayments, the Euro Equivalent amount of the Scheduled
Term A Euro Repayments, the Scheduled Term B Repayments and the Scheduled Term C
Repayments due within the 12 month period following the date of such prepayment
in direct order of maturity and, thereafter, subject to Section 4.5(c) shall be
applied in proportional amounts equal to the Term A Dollar Percentage, the Term
A Euro Percentage, Term B Percentage and Term C Percentage (in each case, after
giving effect to the prepayments made to the Scheduled Term A Dollar Repayments,
the Scheduled Term A Euro Repayments, Scheduled Term B Repayments and Scheduled
Term C Repayments due within such twelve month period as specified above), as
the case may be, of such remaining prepayment, if any, and within each Term
Loan, shall be applied to reduce the remaining Scheduled Term A Repayments,
Scheduled Term B Repayments and Scheduled Term C Repayments on a pro rata basis
(based upon the then remaining principal amount of such Scheduled Term A Dollar
Repayments, Scheduled Term A Euro Repayments, Scheduled Term B Repayments and
Scheduled Term C Repayments, respectively). Unless otherwise specified by the
Borrower, such prepayment shall be applied first to the payment of Base Rate
Loans and second to the payment of such Eurocurrency Loans as the Borrower shall
request (and in the absence of such request, as the Administrative Agent shall
determine). In the event that any Term B Lender or Term C Lender waives all or
part of its right to receive its portion of a voluntary prepayment pursuant to
Section 4.5(c), the Administrative Agent shall apply one hundred percent (100%)
- --------------
of the amount so waived, if any, by such Term B Lender or Term C Lender pro-rata
to the Term A Dollar Loans and Term A Euro Loans in accordance with this Section
-------
4.3(a). The notice provisions, the provisions with respect to the minimum amount
- ------
of any prepayment, and the provisions requiring prepayments in integral
multiples above such minimum amount of this Section 4.3 are for the benefit of
-----------
the Administrative Agent and may be waived unilaterally by the Administrative
Agent.
(b) In the event of certain refusals by a Lender to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Lenders as provided in
Section 12.1(b), the Borrower shall have the right, upon five (5) Business Days'
- ---------------
prior written notice to the Administrative Agent (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), to repay
all Loans, together with accrued and unpaid interest, fees and all other
amounts due and owing to such Lender in accordance with said Section 12.1(b), so
---------------
long as (A) in the case of the repayment of Domestic Revolving Loans of any
Domestic Revolving Lender pursuant to this clause (b), the Domestic Revolving
Commitment of such Domestic Revolving Lender is terminated concurrently with
such repayment pursuant to Section 4.1(b), (B) in the case of the repayment of
--------------
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<PAGE>
Multicurrency Revolving Loans of any Multicurrency Revolving Lender pursuant to
this clause (b), the Multicurrency Revolving Commitment of such Multicurrency
Revolving Lender is terminated concurrently with such repayment pursuant to
Section 4.1(b) and (c) and (C) in the case of the repayment of Loans of any
- -------------- - -
Lender, the consents required by Section 12.1(b) in connection with the
---------------
repayment pursuant to this clause (b) shall have been obtained.
4.4 Mandatory Prepayments
---------------------
(a) Prepayment Upon Overadvance. (i) Prepayment of Domestic
--------------------------- ----------------------
Revolving Loans Upon Overadvance. The Borrower shall prepay the outstanding
- --------------------------------
principal amount of the Domestic Revolving Loans and Swing Line Loans on any
date on which the aggregate outstanding principal amount of such Loans together
with the aggregate Domestic LC Obligations (after giving effect to any other
repayments or prepayments on such day) exceeds the Total Domestic Revolving
Commitments in the amount of such excess. If, after giving effect to the
prepayment of all outstanding Domestic Revolving Loans and Swing Line Loans, the
aggregate Domestic LC Obligations exceeds the Total Domestic Revolving
Commitment then in effect, the Borrower shall cash collateralize Domestic LC
Obligations by depositing, pursuant to a cash collateral agreement to be entered
into in form and substance reasonably satisfactory to the Administrative Agent,
cash with Administrative Agent in an amount equal to the difference between the
Assigned Dollar Value of such Domestic LC Obligations and the Total Domestic
Revolving Commitment then in effect. The Administrative Agent shall establish
in its name for the benefit of the Domestic Revolving Lenders a cash collateral
account (the "Domestic Collateral Account") into which it shall deposit such
---------------------------
cash to hold as collateral security for the Domestic LC Obligations.
(ii) Prepayment of Multicurrency Revolving Loans Upon Overadvance.
------------------------------------------------------------
The Borrower shall prepay the outstanding principal amount of Multicurrency
Revolving Loans on any date on which the Assigned Dollar Value of all
Multicurrency Loans outstanding together with the aggregate Assigned Dollar
Value of the aggregate Multicurrency LC Obligations ( after giving effect to any
other repayments or prepayments on such day) exceeds the Total Multicurrency
Revolving Commitment then in effect (including, without limitation, solely as a
result of fluctuation in Exchange Rates), in the amount of such excess and in
the applicable currency; provided, however, that if such excess is solely as a
-------- -------
result of fluctuation in Exchange Rates, such repayment shall not be required to
be made until four Business Days after notice from the Administrative Agent and
the Borrower shall not be obligated to pay such amount unless such excess is
greater than the Dollar Equivalent of an amount equal to 2% of the Total
Multicurrency Revolving Commitment. If, after giving effect to the prepayment
of all outstanding Multicurrency Revolving Loans, the aggregate Assigned Dollar
Value of Multicurrency LC Obligations exceeds the Total Multicurrency Revolving
Commitment then in effect, the Borrower shall cash collateralize such
Multicurrency LC Obligations by depositing, pursuant to a cash collateral
agreement to be entered into in form and substance reasonably
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satisfactory to the Administrative Agent, cash with the Administrative Agent in
an amount equal to the difference between the Assigned Dollar Value of such
Multicurrency LC Obligations and the Total Multicurrency Revolving Commitment
then in effect. The Administrative Agent shall establish in its name for the
benefit of the Multicurrency Revolving Lenders a collateral account into which
it shall deposit such cash to hold as collateral security for the Multicurrency
LC Obligations.
(b) Scheduled Term A Repayments. The Borrower shall cause to be paid
---------------------------
Scheduled Term A Repayments on the Term A Loans until the Term A Loans are paid
in full in the amounts and currencies and at the times specified in the
definition of Scheduled Term A Repayments to the extent that prepayments have
not previously been applied to such Scheduled Term A Repayments (and such
Scheduled Term A Repayments have not otherwise been reduced) pursuant to the
terms hereof. Payments to be made pursuant to this Section 4.4(a) with respect
--------------
to (i) Term A Dollar Loans shall be paid in Dollars and (ii) Term A Euro Loans
shall be paid in Euros.
(c) Scheduled Term B Repayments. The Borrower shall cause to be paid
---------------------------
Scheduled Term B Repayments on the Term B Loans until the Term B Loans are paid
in full in the amounts and at the times specified in the definition of Scheduled
Term B Repayments to the extent that prepayments have not previously been
applied to such Scheduled Term B Repayments (and such Scheduled Term B
Repayments have not otherwise been reduced) pursuant to the terms hereof.
(d) Scheduled Term C Repayments. The Borrower shall cause to be paid
---------------------------
Scheduled Term C Repayments on the Term C Loans until the Term C Loans are paid
in full in the amounts and at the times specified in the definition of Scheduled
Term C Repayments to the extent that prepayments have not previously been
applied to such Scheduled Term C Repayments (and such Scheduled Term C
Repayments have not otherwise been reduced) pursuant to the terms hereof.
(e) Mandatory Prepayment Upon Asset Disposition. On the first
-------------------------------------------
Business Day (or, in the case of an Asset Disposition by a Foreign Subsidiary of
the Borrower, such later date (but in any event not later than the 180th day) in
the event that such mandatory repayment would result in the provisions of
Sections 151 et seq. of the Companies Act 1985 of England being breached or in
any Foreign Subsidiary breaching any similar applicable law in its country of
incorporation) after the date of receipt thereof by Holdings, the Borrower
and/or any of their Subsidiaries of Net Sale Proceeds from any Asset Disposition
(other than in connection with a Sale and Leaseback Transaction), an amount
equal to 100% of the Net Sale Proceeds from such Asset Disposition shall be
applied as a mandatory repayment of principal of the Term Loans pursuant to the
terms of Section 4.5(a) (in each case subject to modification of such
--------------
application as set forth in Section 4.5(c)), provided, that with respect to no
--------------
more than $30,000,000 in the
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aggregate of such Net Sale Proceeds in any Fiscal Year of the Borrower, the Net
Sale Proceeds therefrom shall not be required to be so applied on such date to
the extent that no Event of Default or Unmatured Event of Default then exists
and the Borrower delivers a certificate to the Administrative Agent on or prior
to such date stating that such Net Sale Proceeds are expected to be used to
purchase assets used or to be used in the businesses referred to in Section 8.9
-----------
within 180 days following the date of such Asset Disposition (which certificate
shall set forth the estimates of the proceeds to be so expended), provided,
--------
further, that (1) if all or any portion of such Net Sale Proceeds not so applied
- -------
to the repayment of Term Loans are not so used (or contractually committed to be
used) within such 180 day period as provided above, such remaining portion shall
be applied on the last day of the period as a mandatory repayment of principal
of outstanding Term Loans as provided above in this Section 4.4(e) and (2) if
--------------
all or any portion of such Net Sale Proceeds are a result of an Asset
Disposition involving the sale of Collateral owned by the Borrower or a Domestic
Subsidiary (other than the Capital Stock of a Foreign Subsidiary), then such Net
Sale Proceeds shall be required to be reinvested in assets located in the United
States constituting Collateral. After the prepayment in full of all Term Loans,
the Borrower shall repay Domestic Revolving Loans and/or Multicurrency Revolving
Loans, pro rata, and thereafter, cash collateralize LC Obligations on the date
of receipt of such proceeds by an amount equal to the lesser of (y) the amount
of Domestic Revolving Loans and LC Obligations then outstanding or (z) the
remaining portion of such Net Sale Proceeds not used to repay Term Loans, and
the Domestic Revolving Commitments and Multicurrency Revolving Commitments shall
be permanently reduced, pro rata, by that portion of Net Sale Proceeds not used
to repay Term Loans.
(f) Mandatory Prepayment With Excess Cash Flow. On December 31st of
------------------------------------------
each year, an amount equal to 75% of Excess Cash Flow of the Borrower and its
Subsidiaries for the Fiscal Year ended on such date shall be applied as a
mandatory repayment of principal of the Term Loans pursuant to the terms of
Section 4.5(a) (in each case subject to modification of such application as set
- --------------
forth in Section 4.5(c)); provided, that so long as no Event of Default or
-------------- --------
Unmatured Event of Default then exists, if the Most Recent Leverage Ratio is
less than 4.0 to 1.0, then, instead of 75%, an amount equal to 50% of Excess
Cash Flow of the Borrower and its Subsidiaries for such Fiscal Year shall be
applied as a mandatory repayment of Term Loans as provided above in this Section
-------
4.4(f).
- ------
(g) Mandatory Payment With Proceeds of Capital Stock. On the first
------------------------------------------------
Business Day after receipt thereof by Holdings, the Borrower and/or any of their
Subsidiaries, an amount equal to 50% of the Net Offering Proceeds of the sale or
issuance of Capital Stock of (or cash capital contributions to) Holdings, the
Borrower or any of their Subsidiaries (other than (i) equity contributions to
(x) Holdings by a Huntsman Affiliate, an ICI Affiliate or any member of Holdings
that is a member of Holdings on the Initial Borrowing Date (or any assignee
Affiliate of such member) or (y) the Borrower or any of its Subsidiaries made by
Holdings or any of its Subsidiaries and (ii) dividends paid in kind), shall be
applied as a mandatory repayment of
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<PAGE>
principal of the Term Loans pursuant to the terms of Section 4.5(a) (in each
--------------
case subject to modification of such application as set forth in Section
-------
4.5(c)); provided, that so long as no Event of Default or Unmatured Event of
- -------
Default then exists, if the Most Recent Leverage Ratio is less than 3.0:1.0,
then, no mandatory repayment of Term Loans as provided above shall be required.
(h) Mandatory Payment With Proceeds of Sale and Leaseback Transaction.
----------------------------------------------------------------
On the Business Day of receipt thereof by Holdings, the Borrower and/or any of
their Subsidiaries, an amount equal to 100% of net cash proceeds from a Sale and
Leaseback Transaction by Holdings, the Borrower or any of their Subsidiaries
shall be applied as a mandatory repayment of principal of the Term Loans
pursuant to the terms of Section 4.5(a) (in each case subject to modification of
--------------
such application as set forth in Section 4.5(c)).
---------------
(i) Mandatory Prepayment Upon Additional Issuance of Senior
-------------------------------------------------------
Subordinated Debt and other Indebtedness. On the Business Day of receipt
- ----------------------------------------
thereof by the Borrower, an amount equal to 100% of the Net Offering Proceeds of
any subordinated Indebtedness permitted by Section 8.2(u) hereof shall be
--------------
applied as a mandatory repayment of principal of the Term Loans pursuant to the
terms of Section 4.5(a).
--------------
(j) Mandatory Prepayment Upon Subsequent Purchase Price Adjustment. On
--------------------------------------------------------------
the Business Day following receipt of the net cash proceeds of any payment by
ICI to the Borrower pursuant to any Contribution Document with respect to any
Delayed Asset, Delayed Business or Delayed Company (as each such term is defined
in the Contribution Agreement), an amount equal to 100% of such payment shall be
applied as a mandatory repayment of principal of the Loans pursuant to the terms
of Section 4.5(a), subject to modification of such application as set forth in
--------------
Section 4.5(c)).
- --------------
(k) Mandatory Payment With Proceeds of a Permitted Accounts Receivable
------------------------------------------------------------------
Securitization. On the first Business Day after receipt thereof by the Borrower
- --------------
and/or any of its Subsidiaries, an amount equal to 100% of the initial net cash
proceeds of any Permitted Accounts Receivable Securitization, and the initial
net cash proceeds thereafter resulting from any additional receivable pools, by
the Borrower or any of its Subsidiaries shall be applied as a mandatory
repayment of principal of the Loans pursuant to terms of Section 4.5(a) (in each
--------------
case subject to modification of such application as set forth in Section
-------
4.5(c)).
- -------
(l) BPCL Acquisition. In the event that the BPCL Acquisition is not
----------------
consummated on or prior to the 365th day following the Initial Borrowing Date or
the Borrower notifies the Administrative Agent that if does not intend to
consummate the BPCL Acquisition, the Borrower, on either such date, shall repay
Term A Dollar Loans, Term A Euro Loans, Term B Loans and Term C Loans in an
aggregate principal amount of $118,000,000 to be applied pursuant to the terms
of Section 4.5(a) (in each case subject to modification of such application as
--------------
set forth in Section 4.5(c)).
--------------
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<PAGE>
4.5 Application of Prepayments; Waiver of Certain Prepayments.
---------------------------------------------------------
(a) Prepayments. Except as expressly provided in this Agreement, all
-----------
prepayments of principal made by the Borrower pursuant to Section 4.4 shall be
-----------
applied (i) first, to the payment of the unpaid principal amount of the Term
------
Loans (with, except as provided in the next succeeding sentence, the Term A
Dollar Percentage of such repayment to be applied as a repayment of Term A
Dollar Loans, the Term A Euro Percentage of such repayment applied as a
repayment of Term A Euro Loans, the Term B Percentage of such repayment to be
applied as a repayment of Term B Loans, the Term C Percentage of such repayment
to be applied as a repayment of Term C Loans), second, to the prepayment of the
-------
then outstanding balance of Swing Line Loans, third, to the payment, pro rata,
-----
of the then outstanding balance of the Domestic Revolving Loans and
Multicurrency Revolving Loans, and fourth, to the cash collateralization of LC
------
Obligations; (ii) within each of the foregoing Loans, first to the payment of
Base Rate Loans and second to the payment of Eurocurrency Loans; and (iii) with
respect to Eurocurrency Loans, in such order as the Borrower shall request (and
in the absence of such request, as the Administrative Agent shall determine).
Each prepayment of Term Loans made pursuant to Section 4.4(e), (f), (g), (h) and
-------------- ---- ---- ---
(k) shall be allocated first to the Term Loans based on the aggregate principal
-----
amount of the Scheduled Term A Dollar Repayments, the Dollar Equivalent amount
of the Scheduled Term A Euro Repayments, Scheduled Term B Repayments and
Scheduled Term C Repayments due within the twelve month period following the
date of such prepayment in direct order of maturity, and, thereafter, shall be
allocated second to the Term Loans in proportional amounts equal to the Term A
------
Dollar Percentage, the Term A Euro Percentage, Term B Percentage and Term C
Percentage (in each case, after giving effect to the prepayments made to the
Scheduled Term A Dollar Repayments, the Scheduled Term A Euro Repayments,
Scheduled Term B Repayments and Scheduled Term C Repayments due within such
twelve month period as specified above), as the case may be, of such remaining
prepayment, if any, and, within each Term Loan, shall be applied to reduce the
remaining Scheduled Term A Dollar Repayments, Schedule Term A Euro Repayments,
Scheduled Term B Repayments and Scheduled Term C Repayments on a pro rata basis
(based upon the then remaining principal amount of such Scheduled Term A Dollar
Repayments, Scheduled Term A Euro Repayments, Scheduled Term B Repayments and
Scheduled Term C Repayments, respectively). Any prepayment of Term Loans
pursuant to Section 4.4(i), (j) and (l) shall be applied pro rata to each of the
-------------- --- ---
Scheduled Repayments. If any prepayment of Eurocurrency Loans made pursuant to
a single Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount, such Borrowing
shall immediately be converted into Base Rate Loans, in the case of Loans
denominated in Dollars, or into Loans with one month Interest Periods, in the
case of Loans denominated in an Alternative Currency. All prepayments shall
include payment of accrued interest on the principal amount so prepaid, shall be
applied to the payment of interest before application to principal and shall
include amounts payable, if any, under Section 3.5. All payments received in
-----------
Dollars which are
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<PAGE>
required to be applied in Euros and/or Sterling shall be converted to Euros or
Sterling, as the case may be, at the Spot Rate on the date of such prepayment.
(b) Payments. All Scheduled Repayments shall be applied (i) first to
--------
the payment of Base Rate Loans, if any, and second to the payment of
Eurocurrency Loans and (ii) with respect to Eurocurrency Loans, in such order as
the Borrower shall request (and in the absence of such request, as the
Administrative Agent shall determine). All payments shall include payment of
accrued interest on the principal amount so paid, shall be applied to the
payment of interest before application to principal and shall include amounts
payable, if any, under Section 3.5.
-----------
(c) Waiver of Certain Prepayments by Term B Lenders and Term C
----------------------------------------------------------
Lenders. Notwithstanding anything to the contrary contained in this Section 4.5
-----------
or elsewhere in this Agreement (including, without limitation, in Section 12.1),
------------
the Borrower shall have the option, in its sole discretion, to give the Term B
Lenders with outstanding Term B Loans and the Term C Lenders with outstanding
Term C Loans the option to waive a voluntary prepayment or mandatory prepayment
of such Term B Loans or Term C Loans pursuant to Section 4.3, 4.4(e), (f), (g),
------------------- --- ---
(h), (i), (j), (k), and (l) (each such repayment, a "Waivable Prepayment") upon
- --------------------------- -------------------
the terms and provisions set forth in this Section 4.5(c). If the Borrower
--------------
elects to exercise the option referred to in the preceding sentence, the
Borrower shall give to the Administrative Agent written notice of its intention
to give the Term B Lenders or the Term C Lenders the right to waive a Waivable
Prepayment at least five (5) Business Days prior to such repayment, which notice
the Administrative Agent shall promptly forward to all Term B Lenders or Term C
Lenders (indicating in such notice the amount of such repayment to be applied to
each such Term B Lender's or Term C Lender's outstanding Term Loans under such
Term B Facility or Term C Facility, as the case may be). The Borrower's offer
to permit the Term B Lenders and or Term C Lenders to waive any such Waivable
Prepayment may apply to all or part of such repayment; provided, that any offer
--------
to waive part of such repayment must be made ratably to the Term B Lenders on
the basis of their Term B Pro Rata Share of outstanding Term B Loans and/or
ratably to the Term C Lenders on the basis of their Term C Pro Rata Share of
outstanding Term C Loans. In the event any such Term B Lender or Term C Lender
desires to waive such Lender's right to receive any such Waivable Prepayment in
whole or in part, such Lender shall so advise the Administrative Agent no later
than the close of business two (2) Business Days after the date of such notice
from the Administrative Agent, which notice shall also include the amount such
Lender desires to receive in respect of such prepayment. If any Term B Lender
or Term C Lender does not reply to the Administrative Agent within the two (2)
Business Days after the date of such notice from the Administrative Agent, it
will be deemed not to have waived any part of such prepayment. If any Term B
Lender or Term C Lender does not specify an amount it wishes to receive, it will
be deemed to have accepted one hundred percent (100%) of the total payment. In
the event that any such Term B Lender or Term C Lender waives all or part of
such right to receive any such Waivable Prepayment, the Administrative Agent
shall apply one
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<PAGE>
hundred percent (100%) of the amount so waived, if any, by such Term B Lender or
Term C Lender to the Term A Loans in accordance with Section 4.3(a)(v) or this
-----------------
Section 4.5, as the case may be.
- ------- ---
4.6 Method and Place of Payment
---------------------------
(a) Except as otherwise specifically provided herein, all payments
under this Agreement shall be made to the Administrative Agent, for the ratable
account of the Lenders entitled thereto, not later than 1:00 p.m. (New York City
time) on the date when due and shall be made in immediately available funds and
in each case to the account specified therefor for the Administrative Agent or
if no account has been so specified at the Payment Office. The Administrative
Agent will thereafter cause to be distributed on the same day (if payment was
actually received by the Administrative Agent prior to 1:00 p.m. (New York City
time) on such day) like funds relating to the payment of principal or interest
or fees ratably to the Lenders entitled to receive any such payment in
accordance with the terms of this Agreement. If and to the extent that any such
distribution shall not be so made by the Administrative Agent in full on the
same day (if payment was actually received by the Administrative Agent prior to
1:00 p.m. (New York City time) on such day), the Administrative Agent shall pay
to each Lender its ratable amount thereof and each such Lender shall be entitled
to receive from the Administrative Agent, upon demand, interest on such amount
at the overnight Federal Funds Rate (or the applicable cost of funds with
respect to amounts denominated in Euros or Sterling) for each day from the date
such amount is paid to the Administrative Agent until the date the
Administrative Agent pays such amount to such Lender.
(b) Any payments under this Agreement which are made by the Borrower
later than 1:00 p.m. (New York City time) shall, for the purpose of calculation
of interest, be deemed to have been made on the next succeeding Business Day.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
shall be payable during such extension at the applicable rate in effect
immediately prior to such extension, except that with respect to Eurocurrency
Loans, if such next succeeding applicable Business Day is not in the same month
as the date on which such payment would otherwise be due hereunder or under any
Note, the due date with respect thereto shall be the next preceding Business
Day.
4.7 Net Payments
------------
(a) All payments made by the Borrower hereunder or under any Loan
Document will be made without setoff, counterclaim or other defense. Except as
provided in Section 4.7(d), all payments hereunder and under any of the Loan
--------------
Documents (including, without limitation, payments on account of principal and
interest and fees) shall be made by the Borrower
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<PAGE>
free and clear of and without deduction or withholding for or on account of any
present or future tax, duty, levy, impost, assessment or other charge of
whatever nature now or hereafter imposed by any Governmental Authority, but
excluding therefrom (i) a tax imposed on or measured by the overall net income
(including a franchise tax based on net income) of the lending office of the
Lender in respect of which the payment is made by the jurisdiction in which the
Lender is incorporated or the jurisdiction (or political subdivision or taxing
authority thereof) in which its lending office is located, (ii) in the case of
any Lender organized under the laws of any jurisdiction other than the United
States or any state thereof (including the District of Columbia), any taxes
imposed by the United States by means of withholding at the source unless such
withholding results from a change in applicable law, treaty or regulations or
the interpretation or administration thereof (including, without limitation, any
guideline or policy not having the force of law) by any authority charged with
the administration thereof subsequent to the date such Lender becomes a Lender
with respect to the Loan or portion thereof affected by such change, (iii) any
taxes to which the Lender is subject (to the extent of the tax rate then in
effect) on the date this Agreement is executed or to which such Lender would be
subject on such date if a payment hereunder had been received by the Lender on
such date and with respect to any Lender that becomes a party hereto after the
date hereof, any taxes to which such Lender is subject on the date it becomes a
party hereto (other than taxes which each of the other Lenders is entitled to
reimbursements for pursuant to the terms of this Agreement) and (iv) taxes to
which the Lender becomes subject subsequent to the date referred to in clause
(iii) above as a result of a change in the residence, place of incorporation, or
principal place of business of the Lender, a change in the branch or lending
office of the Lender participating in the transactions set forth herein or other
similar circumstances or as a result of the recognition by the Lender of gain on
the sale, assignment or participation by the Lender of the participating
interests in its creditor positions hereunder (such tax or taxes, other than the
tax or taxes described in Sections 4.7(a)(i) through (iv), being herein referred
------------------ ----
to as "Tax" or "Taxes"). If the Borrower is required by law to make any
--- -----
deduction or withholding of any Taxes from any payment due hereunder or under
any of the Loan Documents, then the amount payable will be increased to such
amount which, after deduction from such increased amount of all such Taxes
required to be withheld or deducted therefrom, will not be less than the amount
due and payable hereunder had no such deduction or withholding been required. A
certificate as to any additional amounts payable to a Lender under this Section
-------
4.7 submitted to the Borrower by such Lender shall show in reasonable detail the
- ---
amount payable and the calculations used to determine in good faith such amount
and shall, absent manifest error, be final, conclusive and binding upon all
parties hereto.
(b) If the Borrower makes any payment hereunder or under any of the
Loan Documents in respect of which it is required by law to make any deduction
or withholding of any Taxes, it shall pay the full amount to be deducted or
withheld to the relevant taxation or other authority within the time allowed for
such payment under applicable law and shall deliver to the Lenders within 30
days after it has made such payment to the applicable authority a receipt
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<PAGE>
issued by such authority evidencing the payment to such authority of all amounts
so required to be deducted or withheld from such payment.
(c) Without prejudice to the other provisions of Section 4.7, if any
-----------
Lender, or the Administrative Agent on its behalf, is required by law to make
any payment on account of Taxes on or in relation to any amount received or
receivable hereunder or under any of the Loan Documents by such Lender, or the
Administrative Agent on its behalf, or any liability for Tax in respect of any
such payment is imposed, levied or assessed against any Lender or the
Administrative Agent on its behalf, the Borrower will promptly, following
receipt of the certificate described in the immediately following sentence,
indemnify such person against such Tax payment or liability, together with any
interest, penalties and expenses (including reasonable counsel fees and
expenses) payable or incurred in connection therewith, including any tax of any
Lender arising by virtue of payments under this Section 4.7(c), computed in a
--------------
manner consistent with this Section 4.7(c). A certificate as to the amount of
--------------
such payment by such Lender, or the Administrative Agent on its behalf, showing
calculations thereof in reasonable detail, absent manifest error, shall be
final, conclusive and binding upon all parties hereto for all purposes.
(d) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Initial Borrowing Date, or in
the case of a Lender that is an Assignee of an interest under this Agreement
pursuant to Section 3.7 or 12.8 (unless the respective Lender was already a
----------- ----
Lender hereunder immediately prior to such assignment), on the date of such
assignment to such Lender, (i) two accurate and complete original signed copies
of IRS Form 4224 or 1001 (or successor forms) certifying to such Lender's
entitlement to a complete exemption from or reduced rate of United States
withholding tax on interest payments to be made under this Agreement and under
any Note, or (ii) if the Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either IRS Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit 4.7(d) (any such certificate, a "Section 4.7(d)(ii) Certificate") and
- -------------- ------------------------------
(y) two accurate and complete original signed copies of IRS Form W-8 (or
successor form) certifying to such Lender's entitlement to a complete exemption
from United States withholding tax on payments of interest to be made under this
Agreement and under any Note; provided, however, that no Lender shall be
-------- -------
required to deliver a Form 4224, 1001 or W-8 under this Section 4.7(d) to the
--------------
extent that the delivery of such form is not authorized by law. In addition,
each Lender agrees that from time to time after the Initial Borrowing Date, when
a lapse in time or change in circumstances renders the previous certification
obsolete or inaccurate in any material respect, such Lender will deliver to the
Borrower and the Administrative Agent two new accurate and complete original
signed copies of IRS Form 4224 or 1001, or Form W-8 and a Section 4.7(d)(ii)
Certificate, as the case may be, and such other forms as may be required in
order to confirm or establish the entitlement of such Lender to a continued
exemption from or reduction in United States withholding tax on interest
payments under this Agreement and any Note, or it shall immediately notify the
Borrower and
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<PAGE>
the Administrative Agent of its inability to deliver any such form or
certificate; provided, however, that no Lender shall be required to deliver a
-------- -------
Form 4224, 1001 or W-8 under this Section 4.7(d) to the extent that the delivery
--------------
of such form is not authorized by law. Notwithstanding anything to the contrary
contained in Section 4.7(a), but subject to Section 12.8(c) any Lender that has
-------------- ---------------
not provided to the Borrower the IRS Forms required to be provided to the
Borrower pursuant to this Section 4.7(d) shall not be entitled to
--------------
indemnification under this Section 4.7 or otherwise with respect to any
-----------
deduction or withholding which would not have been required if such Lender had
provided such forms.
(e) Each Lender agrees that, as promptly as practicable after it
becomes aware of the occurrence of any event or the existence of any condition
that would cause the Borrower to make a payment in respect of any Taxes to such
Lender pursuant to Section 4.7(a) or a payment in indemnification for any Taxes
--------------
pursuant to Section 4.7(c), it will use reasonable efforts to make, fund or
--------------
maintain the Loan (or portion thereof) of such Lender with respect to which the
aforementioned payment is or would be made through another lending office of
such Lender if as a result thereof the additional amounts which would otherwise
be required to be paid by such the Borrower in respect of such Loans (or
portions thereof) or participation in Letters of Credit pursuant to Section
-------
4.7(a) or Section 4.7(c) would be materially reduced, and if, as determined by
- ------ --------------
such Lender, in its reasonable discretion, the making, funding or maintaining of
such Loans or participation in Letters of Credit (or portions thereof) through
such other lending office would not otherwise materially adversely affect such
Loans or such Lender. The Borrower agrees to pay all reasonable expenses
incurred by any Lender in utilizing another lending office of such Lender
pursuant to this Section 4.7(e).
--------------
ARTICLE V
CONDITIONS OF CREDIT
5.1 Conditions Precedent to the Initial Borrowing
---------------------------------------------
The obligation of the Lenders to make the Initial Loan and the obligation of the
Facing Agent to issue and the Lenders to participate in Letters of Credit under
this Agreement shall be subject to the fulfillment, on or prior to the Initial
Borrowing Date, of each of the following conditions:
(a) Credit Agreement and Notes. Holdings and the Borrower shall have
--------------------------
duly executed and delivered to the Administrative Agent, with a signed
counterpart for each Lender, this Agreement (including all schedules and
exhibits), and the Borrower shall have duly executed and delivered to the
Administrative Agent the Notes payable to the order of each applicable Lender
which has requested a Note in the amount of their respective Commitments and all
other Loan Documents shall have been duly executed and delivered by the
appropriate Credit Party to Agent, all of which shall be in full force and
effect;
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(b) Collateral Security Agreement. The Borrower, Holdings and each
-----------------------------
Subsidiary Guarantor shall have duly authorised, executed and delivered a
Collateral Security Agreement in form and substance satisfactory to the
Administrative Agent (as modified, supplemented or amended from time to time,
the "Collateral Security Agreement") and shall have delivered to Collateral
-----------------------------
Agent all the Pledged Securities referred to therein then owned, if any, by such
Credit Party, (y) endorsed in blank in the case of promissory notes constituting
Pledged Securities referred to therein then owned, if any, by such Credit Party,
and (z) together with executed and undated stock powers, in the case of capital
stock constituting Pledged Securities and the other documents and instruments
required to be delivered under the Collateral Security Agreement together with:
(i) proper financing statements (Form UCC-1 or such other financing
statements or similar notices as shall be required by local law) fully
executed for filing under the UCC or other appropriate filing offices of
each jurisdiction as may be necessary or, in the opinion of Agent,
desirable to perfect the security interests purported to be created by the
Collateral Security Agreement;
(ii) certified copies of Requests for Information or Copies (Form
UCC-7), or equivalent reports, listing all effective financing statements
or similar notices that name the Borrower or its Subsidiaries (by its
actual name or any trade name, fictitious name or similar name), or any
division or other operating unit thereof, as debtor and that are filed in
the jurisdiction referred to in said clause (i), together with copies of
such other financing statements (none of which shall cover the Collateral
except to the extent evidencing Permitted Liens or for which the
Administrative Agent shall have received termination statements (Form UCC-3
or such other termination statements as shall be required by local law)
fully executed for filing);
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Collateral Security Agreement and all other
actions as may be necessary or, in the opinion of the Administrative Agent,
desirable to perfect the security interests intended to be created by the
Collateral Security Agreement or any other Security Document; and
(iv) evidence that all other actions necessary, or in the reasonable
opinion of Agent, desirable to perfect the security interests purported to
be taken by the Collateral Security Agreement have been taken;
(c) Mortgages; Mortgage Policies; Surveys. The Administrative Agent
-------------------------------------
shall have received:
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<PAGE>
(i) fully executed counterparts of a deed of trust, all in form and
substance satisfactory to the Administrative Agent (the "Mortgage"), which
--------
Mortgage shall cover the Real Property of the Borrower or a Domestic
Subsidiary listed on Schedule 6.21(c) and identified as a mortgaged
----------------
property (each, a "Mortgaged Property"), together with a recording
------------------
instruction letter from Skadden, Arps, Slate, Meagher & Flom LLP, addressed
to and accepted by the relevant title insurance company under which such
title insurance company accepts delivery of executed counterparts of the
applicable Mortgage to be promptly delivered to the appropriate recorder's
office for recording in all places to the extent necessary or desirable, in
the judgment of the Administrative Agent, to create a valid and enforceable
first priority lien on the applicable Mortgaged Property, subject only to
Permitted Liens, in favor of Collateral Agent (or such other trustee as may
be required or desired under local law) for the benefit of the Secured
Parties;
(ii) mortgagee title insurance policies issued by title insurance
companies satisfactory to the Administrative Agent (the "Mortgage
--------
Policies") with respect to the Mortgaged Properties in amounts satisfactory
--------
to the Administrative Agent assuring the Administrative Agent that the
Mortgages with respect to such Mortgaged Properties are valid and
enforceable first priority mortgage liens on the respective Mortgaged
Properties, free and clear of all defects, encumbrances and other Liens
except Permitted Liens, and the Mortgage Policies shall be in form and
substance satisfactory to the Administrative Agent and shall include, as
appropriate, an endorsement for future advances under this Agreement and
the Notes and for any other matter that the Administrative Agent in its
discretion may request, shall not include an exception for mechanics'
liens, and shall provide for affirmative insurance and such reinsurance as
the Administrative Agent in its discretion may request; and
(iii) a survey, in form and substance satisfactory to the
Administrative Agent, of each Mortgaged Property located in Jefferson
County, Texas, dated a date acceptable to the Administrative Agent,
certified by a licensed professional surveyor in a manner satisfactory to
the Administrative Agent;
(d) Contribution Documents. Each of the Contribution Agreement and the
----------------------
Disclosure Letter (as defined in the Contribution Agreement) shall have been
executed by each party thereto, and each such agreement or letter shall be in
full force and effect;
(e) Documents. Each of the following shall have been executed by each
---------
Person party thereto, and each such document shall be in full force and effect:
(i) the UK Holdco Note, substantially in the form of Exhibit
-------
1.1(a), executed by UK Holdco 1 payable to Huntsman ICI Finco;
------
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<PAGE>
(ii) Foreign Intercompany Notes, substantially in the form of
Exhibit 1.1(b), executed by each Foreign Subsidiary receiving an
---------------
Intercompany Loan from UK Holdco 1 on the Initial Borrowing Date;
(iii) Foreign Intercompany Loan Security Documents, in form and
substance acceptable to the Administrative Agent, executed by each Foreign
Subsidiary listed on Schedule 5.1(e)(iii);
-------- -----------
(iv) Collateral Assignment of Representations, Warranties and
Indemnities in Contribution Agreement, in form and substance acceptable to
the Administrative Agent, executed by the Borrower, and the Administrative
Agent;
(v) the agreements listed on Schedule 5 of the Contribution
Agreement scheduled to be executed and delivered on the Initial Borrowing
Date, each in form and substance reasonably acceptable to the
Administrative Agent as provided in Section 7.18;
------------
(vi) Charge Over Shares, dated the Initial Borrowing Date,
executed by G.I. Services, Ltd. with respect to shares of TGL owned by G.I.
Services, Ltd.;
(f) Corporate Proceedings. (i) The Administrative Agent shall have
---------------------
received from each Credit Party a certificate, dated the Initial Borrowing Date,
signed by a Responsible Officer of such Person, and attested to by the secretary
or any assistant secretary, or equivalent officer, or any manager (in the case
of a limited liability company) of such Person with appropriate insertions,
together with copies of such Person's Organizational Documents and the consents
of the members of such Person referred to in such certificate and all of the
foregoing (including each such Organizational Document and consent) shall be
satisfactory to the Administrative Agent; and
(ii) All corporate and/or limited liability company and legal
proceedings and all instruments and agreements to be executed by each
Credit Party in connection with the transactions contemplated by this
Agreement and the Loan Documents shall be reasonably satisfactory in form
and substance to the Administrative Agent, and the Administrative Agent
shall have received all information and copies of all certificates,
documents and papers, including good standing certificates, bring-down
certificates and any other records of corporate and/or limited liability
company proceedings and governmental approvals, if any, which the
Administrative Agent reasonably may have requested in connection therewith,
such documents and papers, where appropriate, to be certified by proper
corporate or governmental authorities;
(iii) The ownership and capital structure (including without
limitation, the terms of any capital stock, options, warrants or other
securities issued by Holdings or
102
<PAGE>
any of its Subsidiaries) of the Borrower and its Subsidiaries shall be in
form and substance reasonably satisfactory to the Administrative Agent and
the Lenders;
(g) Foreign Intercompany Loan Corporate Proceedings. The
-----------------------------------------------
Administrative Agent shall have received from each Foreign Subsidiary of the
Borrower party to a Foreign Intercompany Loan Security Document, a copy
(certified as being a true, complete and up to date copy by the secretary of
such Person) of such Person's Organizational Documents.
(h) Incumbency. The Administrative Agent shall have received a
----------
certificate of the secretary or assistant secretary, or equivalent officer, or
any manager (in the case of a limited liability company) of each Credit Party,
dated the Initial Borrowing Date, as to the incumbency and signature of the
officers of each such Person executing any document (in form and substance
satisfactory to the Administrative Agent) and any certificate or other document
or instrument to be delivered pursuant hereto or thereto by or on behalf of such
Person, together with evidence of the incumbency of such secretary, assistant
secretary, or equivalent officer or any manager (in the case of a limited
liability company);
(i) Tax and Accounting Aspects of Transactions. The Borrower shall
------------------------------------------
have delivered to the Administrative Agent and each Lender the financial
statements as provided in Section 6.5(a)(i), (ii), (iii) and (iv) in form and
----------------- -- --- --
substance satisfactory to the Administrative Agent and the Required Lenders;
(j) Sufficient Funds. The Borrower shall have demonstrated to the
----------------
satisfaction of the Administrative Agent and the Lenders that a cash equity
contribution has been made by Holdings (which amount shall include 100% of the
gross proceeds received by Holdings pursuant to the Investment Agreement) and
that such equity contribution together with the sum of (i) the maximum principal
amount of Loans that the Borrower may incur hereunder on the Initial Borrowing
Date to finance its obligations under the Contribution Agreement and the BPCL
Sales Agreement and to pay fees and expenses in connection therewith (whether
paid on or after the Initial Borrowing Date) and (ii) the net cash proceeds
received by the Borrower from the Senior Subordinated Notes, is sufficient to
effect in full its obligations under the Contribution Agreement and the BPCL
Sales Agreement and to pay all fees and expenses in connection with the
Transaction (whether paid on or after the Initial Borrowing Date);
(k) Approvals. All necessary governmental (domestic and foreign) and
---------
third party approvals in connection with the Transaction and otherwise referred
to herein shall have been obtained and remain in effect, and all applicable
waiting periods shall have expired without any action being taken by any
competent authority which restrains, prevents or imposes materially adverse
conditions upon the consummation of all or any part of the Transaction and
otherwise referred to herein except for those approvals of non-Governmental
Authorities under contracts which are not material and which are not required to
be delivered at the closing thereof.
103
<PAGE>
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing material adverse
conditions upon all or any part of the Transaction, or the making of the Loans
or the issuance of Letters of Credit;
(l) Litigation. No litigation by any entity (private or governmental)
----------
shall be pending or, to the best knowledge of the Borrower, threatened with
respect to this Agreement, any other Loan Document or any documentation executed
in connection herewith, or with respect to any of the Indebtedness to Remain
Outstanding, or any other pending or threatened litigation which the
Administrative Agent or the Required Lenders shall determine could reasonably be
expected to have a Material Adverse Effect;
(m) Pro Forma Balance Sheet. The Administrative Agent shall have
-----------------------
received the Pro Forma Balance Sheet in form and substance satisfactory to the
Administrative Agent and the Required Lenders;
(n) Opinions of Counsel. The Administrative Agent shall have received
--------------------
from (i) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the
Borrower, an opinion addressed to the Administrative Agent and each of the
Lenders and dated the Initial Borrowing Date, which shall be in substantially
the form of Exhibit 5.1(n) and (ii) local counsel (in the United States and in
--------------
England) an opinion addressed to the Administrative Agent and each of the
Lenders and dated the Initial Borrowing Date, in form and substance satisfactory
to the Administrative Agent, covering the perfection of the security interests
granted pursuant to the Security Documents;
(o) Fees. The Borrower shall have paid to the Agents and the Lenders
-----
all costs, fees and expenses (including, without limitation, legal fees and
expenses) payable to the Agents and the Lenders to the extent then due;
(p) Solvency. The Administrative Agent shall have received a solvency
---------
opinion from Valuation Research, addressed to the Administrative Agent and each
of the Lenders and dated the Initial Borrowing Date and supporting the
conclusions, that, after giving effect to the Transaction and the incurrence of
all financing contemplated herein, the Borrower is not insolvent and will not be
rendered insolvent by the indebtedness incurred in connection herewith, will not
be left with unreasonably small capital with which to engage in its respective
businesses and will not have incurred debts beyond its ability to pay such debts
in the ordinary course as they mature and become due;
(q) Officer's Certificate. The Administrative Agent shall have
----------------------
received a certificate executed by a Responsible Officer on behalf of the
Borrower, dated the Initial Borrowing Date and in the form and substance
satisfactory to the Administrative Agent;
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<PAGE>
(r) Whitewash Procedures. The Administrative Agent shall be satisfied
--------------------
that each element of the whitewash procedures with respect to the Whitewash
Companies have been completed;
(s) Environmental Reports. The Administrative Agent shall have
---------------------
received Phase 1 environmental assessments for each plant listed on Schedule
--------
5.1(s) to be operated by the Borrower or any of its Subsidiaries on and after
- ------
the Initial Borrowing Date;
(t) ICI Letter. The Administrative Agent shall have received a letter
----------
executed by an officer of ICI, dated the Initial Borrowing Date, in the form of
Exhibit 5.1(t), delivered to the Administrative Agent, the Lenders and their
- ----------------
respective successors and assigns as to the matters contained in Section 1.1 and
1.2 of Schedule 9 to the Contribution Agreement as they relate to ICI and its
Subsidiaries;
(u) Existing Indebtedness. (i) After giving effect to the Transaction
---------------------
and the other transactions contemplated hereby, Holdings and its Subsidiaries
shall not have any Indebtedness outstanding except for the Loans, the Senior
Subordinated Notes, the Holdings Zero Coupon Notes and the Indebtedness to
Remain Outstanding, and the Indebtedness to Remain Outstanding shall not be
incurred in connection with, or in contemplation of, the Transaction and the
terms and conditions of the Indebtedness to Remain Outstanding shall be
satisfactory to the Administrative Agent; and
(ii) the Administrative Agent shall be satisfied that the
creditors under any financing arrangement to be repaid in connection with
the Transaction have terminated and released all security interests and
Liens on the assets owned by the Borrower and its Subsidiaries, and shall
have received such releases of security interest in and Liens on the assets
owned by the Borrower and its Subsidiaries or agreements to release the
foregoing and /or proper termination statements (Form UCC-3 or the
appropriate equivalent) as may have been requested by the Administrative
Agent, which releases shall be in form and substance satisfactory to the
Administrative Agent;
(v) Consummation of Contribution Agreement, Etc. The transactions
--------------------------------------------
contemplated by the Contribution Agreement shall have been consummated without
the waiver of any conditions precedent thereto required to be performed on or
prior to the consummation of the transactions contemplated thereby which are for
the benefit of the Borrower and the waiver of which, in the reasonable judgment
of the Administrative Agent, could reasonably be expected to have a Material
Adverse Effect, and the Administrative Agent shall have received such evidence
of the consummation of such transactions as it may request; all representations
and warranties of the Borrower and the other parties thereto contained in the
Transaction Documents shall be true and correct in all material respects; and
all notifications, consents and approvals required pursuant to the Transaction
Documents shall have been given or obtained, as the case may be;
105
<PAGE>
(w) BPCL Transaction, Etc.
---------------------
(i) The Administrative Agent shall have received a notice executed
by a Responsible Officer of the Borrower and dated the Initial Borrowing
Date informing the Lenders of the Borrower's intention to either (x)
consummate the BPCL Acquisition or (y) enter into the Supply Arrangement
(the "BPCL Transaction Notice").
-----------------------
(ii) In the event that the BPCL Transaction Notice provides for the
consummation of the BPCL Acquisition, then:
(x) each of the BPCL Documents (in each case together with all
exhibits, annexes and schedules thereto) shall have been executed by
each party thereto, and each such agreement shall be in full force and
effect; and
(y) the transactions contemplated by the BPCL Sales Agreement
shall have been consummated without the waiver of any conditions
precedent thereto required to be performed on or prior to the
consummation of the transactions contemplated thereby which are for
the benefit of the Borrower and the waiver of which in the reasonable
judgment of the Administrative Agent, could reasonably be expected to
have a Material Adverse Effect, and the Administrative Agent shall
have received such evidence of the consummation of such transactions
as it may request; all representations and warranties of the Borrower
and the other parties thereto contained in the BPCL Documents shall be
true and correct in all material respects; and all notifications,
consents and approvals required pursuant to the BPCL Documents shall
have been given or obtained, as the case may be.
(iii) In the event that the BPCL Transaction Notice provides for the
entering into of the Supply Arrangement, then:
(w) each Supply Arrangement Agreement (together with all
exhibits, annexes and schedules thereto) shall have been executed by
each party thereto, and each such agreement shall be in full force and
effect;
(x) the Borrower and the Collateral Agent shall have entered
into a cash collateral agreement (the "BPCL Cash Collateral
--------------------
Agreement"), in form and substance satisfactory to the Administrative
---------
Agent, and the Borrower shall have deposited not less than $88,000,000
into the BPCL Cash Collateral Account;
(y) the BPCL Transaction Notice shall state the amount of the
BPCL Reserve (which shall be an amount which, when added to the amount
deposited into BPCL Cash Collateral Account, shall be equal to
$118,000,000); and
106
<PAGE>
(z) the Borrower shall have delivered to the Administrative Agent
a certified copy of the BPCL Memorandum of Understanding.
(x) Post-Closing Agreement. The Administrative Agent shall have
----------------------
received a post-closing agreement executed by the Borrower and in form and
substance satisfactory to the Administrative Agent; and
(y) Other Matters. All corporate and other proceedings taken in
-------------
connection with the Transaction at or prior to the date of this Agreement, and
all documents incident thereto will be reasonably satisfactory in form and
substance to the Administrative Agent; and the Administrative Agent shall have
received such other instruments and documents as the Administrative Agent shall
reasonably request in connection with the execution of this Agreement, and all
such instruments and documents shall be reasonably satisfactory in form and
substance to the Administrative Agent.
5.2 Conditions Precedent to All Credit Events
-----------------------------------------
The obligation of each Lender to make Loans (including Loans made on the
Initial Borrowing Date) and the obligation of any Facing Agent to issue or any
Lender to participate in any Letter of Credit hereunder in each case shall be
subject to the fulfillment at or prior to the time of each such Credit Event of
each of the following conditions:
(a) Representations and Warranties. The representations and
-------------------------------
warranties contained in this Agreement and the other Loan Documents shall each
be true and correct in all material respects at and as of such time, as though
made on and as of such time, except to the extent such representations and
warranties are expressly made as of a specified date in which event such
representation and warranties shall be true and correct as of such specified
date;
(b) No Default. No Event of Default or Unmatured Event of Default
-----------
shall have occurred and shall then be continuing on such date or will occur
after giving effect to such Credit Event;
(c) Notice of Borrowing; Letter of Credit Request.
----------------------------------------------
(i) Prior to the making of each Loan, the Administrative Agent shall
have received a Notice of Borrowing meeting the requirements of Section 2.5.
-----------
(ii) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Facing Agent shall have received a
Letter of Credit Request meeting the requirements of Section 2.10(b);
---------------
107
<PAGE>
(d) Adverse Change. At the time of each such Credit Event and after
---------------
giving effect thereto, since the Effective Date, nothing shall have occurred
(and the Lender shall not have become aware of any facts or conditions
previously unknown) which has, or is reasonably likely to have, a Material
Adverse Effect;
(e) Other Information. The Administrative Agent shall have received
------------------
such other instruments, documents and opinions as it may reasonably request in
connection with such Credit Event, and all such instruments and documents shall
be reasonably satisfactory in form and substance to the Administrative Agent.
The acceptance of the benefits of each such Credit Event by the
Borrower shall be deemed to constitute a representation and warranty by it to
the effect of paragraphs (a), (b), (c) and (d) of this Section 5.2 (except that
-----------
no opinion need be expressed as to any Agent's or Required Lenders' satisfaction
with any document, instrument or other matter).
Each Lender hereby agrees that by its execution and delivery of its
signature page hereto and by the funding of its Loan to be made on the Initial
Borrowing Date, such Lender approves of and consents to each of the matters set
forth in Section 5.1, and Section 5.2 which must be approved by, or which must
----------- -----------
be satisfactory to, the Agents or the Required Lenders or Lenders, as the case
may be; provided that, in the case of any agreement or document which must be
--------
approved by, or which must be satisfactory to, the Required Lenders, the
Administrative Agent or the Borrower shall have delivered a copy of such
agreement or document to such Lender on or prior to the Initial Borrowing Date
if requested.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Loans, and issue (or participate in) the Letters of Credit as provided
herein, Holdings and the Borrower make the following representations and
warranties as of the Initial Borrowing Date (after giving effect to the
consummation of the Transaction) and as of the date of each subsequent Credit
Event, all of which shall survive the execution and delivery of this Agreement
and the Notes and the making of the Loans and issuance of the Letters of Credit:
6.1 Corporate Status
----------------
Holdings and each of its Subsidiaries (i) is a duly organized and validly
existing corporation, partnership or limited liability company or other entity
in good standing (if applicable under applicable law) under the laws of the
jurisdiction of its organization, (ii) has the requisite power and authority to
own its property and assets and to transact the business in which it is engaged
108
<PAGE>
and presently proposed to engage in and (iii) is duly qualified and is
authorized to do business and is in good standing ((where relevant) in (y) its
jurisdiction of organization and (z) in each other jurisdiction where the
ownership, leasing or operation of property or the conduct of its business
requires such qualification, except for such failure to be so qualified which,
in the aggregate, would not have a Material Adverse Effect.
6.2 Corporate Power and Authority
-----------------------------
Holdings and each of its Subsidiaries has the applicable power and authority to
execute, deliver and perform the terms and provisions of each of the Documents
to which it is a party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it of each of such Documents. As of
the Initial Borrowing Date (or such later date as a Document is to be executed
and delivered in accordance with the terms hereof) Holdings and each of its
Subsidiaries has duly executed and delivered each of the Documents to which it
is a party, and each of such Documents constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
6.3 No Violation
------------
Neither the execution, delivery or performance by the Borrower and each of its
Subsidiaries of the Documents to which it is a party (including, without
limitation, the granting of Liens pursuant to the Security Documents or the
Foreign Intercompany Loan Security Documents), nor compliance by it with the
terms and provisions thereof, nor the consummation of the transactions
contemplated therein (i) will contravene any provision of any Requirement of Law
applicable to Holdings and each of its Subsidiaries, (ii) will conflict with or
result in any breach of or constitute a tortious interference with any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien (except pursuant to the Security Documents) upon any of the property or
assets of Holdings and each of its Subsidiaries pursuant to the terms of any
material Contractual Obligation to which Holdings and each of its Subsidiaries
is a party or by which it or any of its property or assets is bound or to which
it may be subject, (iii) will violate any provision of any Organizational
Document of Holdings and each of its Subsidiaries or (iv) require any approval
of stockholders or any approval or consent of any Person (other than a
Governmental Authority) except as have been obtained on or prior to the Initial
Borrowing Date or as set forth on Schedule 6.3.
------------
109
<PAGE>
6.4 Governmental and Other Approvals
--------------------------------
Except as set forth on Schedule 6.4 hereto and except for the recording of the
------------
Mortgages and filings (in respect of certain Security Documents) and actions
with appropriate Governmental Authorities which shall be recorded and filed,
respectively, on, or as soon as practicable after, the Initial Borrowing Date,
no order, consent, approval, license, authorization or validation of, or filing,
recording or registration with (except as have been obtained or made on or prior
to the Initial Borrowing Date), or exemption by, any Governmental Authority, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Document or (ii) the legality, validity, binding
effect or enforceability of any such Document.
6.5 Financial Statements; Financial Condition; Undisclosed Liabilities
------------------------------------------------------------------
Projections; etc.
------------------------------------------------------------------
(a) Financial Statements
--------------------
(i) The balance sheet of HSCC at December 31, 1996, December 31,
1997 and December 31, 1998 and the related statements of operations, cash
flows and shareholders' equity of HSCC for the fiscal year ended on such
dates (with respect to the period ended December 31, 1996 and December 31,
1998 and for the ten month period with respect to the period ended December
31, 1997) fairly present in all material respects the financial condition
and results of operations and cash flows of HSCC and its consolidated
subsidiaries as of such dates and for such periods in accordance with GAAP.
Copies of such statements have been furnished to the Lenders prior to the
Effective Date and such statements have been examined by Deloitte & Touche,
independent certified public accountants with respect to the periods ended
December 31, 1997 and December 31, 1998 and Arthur Andersen, independent
public accountants, with respect to the period ended December 31, 1996,
each of whom delivered unqualified opinions in respect thereto. As of the
Effective Date, there has been no material adverse change in such
consolidated financial condition since December 31, 1998.
(ii) The non-statutory combined special purpose accounts prepared
with respect to the ICI Contributed Businesses for each of the three years
ended December 31, 1996, 1997 and 1998, respectively prepared by KPMG
present fairly, in all material respects, in accordance with the basis of
preparation set out therein, the financial position of the ICI Contributed
Businesses as at December 31, 1996, 1997 and 1998 and the results of its
operations for each such year then ended in accordance with UK GAAP, save
as disclosed therein. Copies of such statements have been furnished to the
Lenders prior to the Effective Date. As of the Effective Date, there has
been no material adverse change in such financial condition since December
31, 1998.
110
<PAGE>
(iii) The unaudited combined income statements of HSCC and the
ICI Contributed Business for the years ended December 31, 1996, December
31, 1997 and December 31, 1998 present fairly in all material respects the
results thereof for such periods.
(iv) The pro forma (after giving effect to the Transaction and
--- -----
the related financing thereof) unaudited balance sheet of the Borrower
attached hereto as Schedule 6.5(a) (the "Pro Forma Balance Sheet") presents
--------------- -----------------------
a good faith estimate of the pro forma financial condition of the Borrower
--- -----
(after giving effect to the Transaction and the related financing thereof
at the date thereof). The Pro Forma Balance Sheet has been prepared in
accordance with Regulation S-X (except as may be indicated in the notes
thereto).
(b) Solvency. On and as of the Initial Borrowing Date, after giving
--------
effect to the Transaction and to all Indebtedness (including the Loans) being
incurred, and to be incurred (and the use of proceeds thereof), and Liens
created, and to be created, by Holdings and its Subsidiaries in connection with
the transactions contemplated hereby, Holdings and each of its Material
Subsidiaries are Solvent.
(c) No Undisclosed Liabilities. Except as fully reflected in the
--------------------------
financial statements and the notes related thereto delivered pursuant to Section
-------
6.5(a) and set forth on Schedule 6.5(c) there were as of the Initial Borrowing
- ------ ----------------
Date (and after giving effect to the Transaction and the other transactions
contemplated hereby) no liabilities or obligations other than in the ordinary
course of business consistent with past practices (with respect to the Borrower
and its Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
aggregate, would be material to Holdings and its Subsidiaries, taken as a whole.
As of the Initial Borrowing Date (and after giving effect to the Transaction and
the other transactions contemplated hereby), neither Holdings nor the Borrower
knows of any basis for the assertion against Holdings or any of its Subsidiaries
of any such liability or obligation of any nature whatsoever that is not fully
reflected in the financial statements or the notes related thereto delivered
pursuant to Section 6.5(a) or set forth on Schedule 6.5(c) (other than, as to
-------------- ---------------
Holdings, the Holdings Zero Coupon Notes) which, either individually or in the
aggregate, could be material to Holdings and its Subsidiaries, taken as a whole.
(d) Indebtedness. Schedule 8.2(b) sets forth a true and complete
------------ ---------------
list of all Indebtedness (other than the Loans, the Letters of Credit, the
Senior Subordinated Notes and the Holdings Zero Coupon Notes) of Holdings, the
Borrower and its Subsidiaries as of the Initial Borrowing Date and which is to
remain outstanding after giving effect to the Transaction, to the extent that,
in each case, such Indebtedness is in excess of $250,000 (provided, that the
aggregate principal amount of Indebtedness not so listed does not exceed the
Dollar Equivalent (as determined on the Initial Borrowing Date) of $2,500,000)
(the "Indebtedness to Remain
----------------------
111
<PAGE>
Outstanding"), in each case showing the aggregate principal amount thereof (and
- -----------
the aggregate amount of any undrawn commitments with respect thereto) and the
name of the respective obligor and any other entity which directly or indirectly
guaranteed such debt. No Indebtedness to Remain Outstanding has been incurred in
connection with, or in contemplation of, the Transaction or the other
transactions contemplated hereby. The Borrower has delivered or caused to be
delivered to the Administrative Agent a true and complete copy of the form of
each instrument evidencing Indebtedness for money borrowed listed on Schedule
--------
8.2(b) and of each instrument pursuant to which such Indebtedness for money
- ------
borrowed was issued, in each case, other than Indebtedness of the type described
in Section 8.2(o) or (s).
-------------- ---
(e) Projections. On and as of the Initial Borrowing Date, the
-----------
financial projections, attached hereto as Schedule 6.5(e) (the "Projections")
--------------- -----------
and each of the Projections delivered after the Initial Borrowing Date pursuant
to Section 7.2(e) are, or will be at the time made, based on good faith
--------------
estimates and assumptions made by the management of the Borrower, and there are
no statements or conclusions in any of the Projections which, at the time made,
are based upon or include information known to the Borrower to be misleading or
which fail to take into account material information regarding the matters
reported therein. On and as of the Initial Borrowing Date, the Borrower
believes that the Projections are reasonable and attainable, it being understood
that uncertainty is inherent in any forecasts or projections and that no
assurance can be given that the results set forth in the Projections will
actually be obtained.
(f) No Material Adverse Change. As of the Initial Borrowing Date and
--------------------------
at any time thereafter, there has been no material adverse change in the
business, condition (financial or otherwise), assets, liabilities, property,
operations or prospects of Holdings and its Subsidiaries (taken as a whole)
since December 31, 1998 based on the financial statements delivered pursuant to
Section 6.5(a)(iii).
- -------------------
6.6 Litigation
----------
There are no actions, suits or proceedings pending or, to the best knowledge of
Holdings or any of its Subsidiaries, threatened in writing against Holdings or
any of its Subsidiaries (i) with respect to any Loan Document or (ii) that are
reasonably likely to have a Material Adverse Effect.
6.7 Disclosure
----------
All factual information (taken as a whole) heretofore or contemporaneously
furnished by or on behalf of Holdings, the Borrower or any of their Subsidiaries
in writing to any Lender (including, without limitation, all information
contained in the Documents) (other than the Projections as to which Section
-------
6.5(e) applies and the Disclosure Letter (as defined in the Contribution
- ------
Agreement) which fairly discloses the matters therein in good faith in
accordance with applicable
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<PAGE>
law)) for purposes of or in connection with this Agreement or any transaction
contemplated herein is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of Holdings, the Borrower or any of
their Subsidiaries in writing to any Lender for purposes of or in connection
with this Agreement or any transaction contemplated herein are and will be true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided. As of the Initial Borrowing Date, the Borrower has disclosed to
the Lenders on or before the Initial Borrowing Date, all agreements, instruments
and corporate or other restrictions to which Holdings or any of its Subsidiaries
is or will be subject as of the or the Initial Borrowing Date, and all other
matters known to any of them, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
6.8 Use of Proceeds; Margin Regulations
-----------------------------------
(a) Term Loan Proceeds. All proceeds of the Term Loans incurred on
------------------
the Initial Borrowing Date shall be used by the Borrower (x) to finance, in
part, the Transaction and (y) to pay fees and expenses in connection with the
Transaction.
(b) Domestic Revolving Loan Proceeds. All proceeds of the Domestic
--------------------------------
Revolving Loans incurred hereunder shall be used by the Borrower for ongoing
working capital needs and general corporate purposes (other than to voluntarily
prepay Term Loans); provided, however, that (x) in the event that the BPCL
------------------
Acquisition is not consummated on the Initial Borrowing Date, no Domestic
Revolving Loans may be requested by the Borrower on the Initial Borrowing Date
and (y) in the event that the BPCL Acquisition is consummated on the Initial
Borrowing Date, no more than $40,000,000 of Domestic Revolving Loans may be
requested by the Borrower on the Initial Borrowing Date.
(c) Multicurrency Revolving Loan Proceeds. All proceeds of the
-------------------------------------
Multicurrency Revolving Loans incurred hereunder shall be used by the Borrower
for ongoing working capital needs and general corporate purposes (other than to
voluntarily prepay Term Loans); provided, however, that no Multicurrency
-------- -------
Revolving Loans may be requested by the Borrower on the Initial Borrowing Date.
(d) Swing Line Loans. All proceeds of the Swing Line Loans incurred
----------------
hereunder shall be used by the Borrower for ongoing working capital needs and
general corporate purposes (other than to voluntarily prepay Term Loans);
provided, however, that no Swing Line Loans may be requested by the Borrower on
- -------- -------
the Initial Borrowing Date.
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(e) Margin Regulations. No part of the proceeds of any Loan will be
------------------
used to purchase or carry any margin stock (as defined in Regulation U of the
Board), directly or indirectly, or to extend credit for the purpose of
purchasing or carrying any such margin stock for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the loans or
extensions of credit under this Agreement to be considered a "purpose credit"
within the meaning of Regulation T, U or X of the Board.
6.9 Tax Returns and Payments
------------------------
Holdings and each of the its Subsidiaries have timely filed or caused to be
filed all tax returns which are required to be filed, except where failure to
file any such returns would not reasonably be expected to have a Material
Adverse Effect, and have paid or caused to be paid all taxes shown to be due and
payable on said returns or on any assessments made against them or any of their
respective material properties and all other material taxes, fees or other
charges imposed on them or any of their respective properties by any
Governmental Authority (other than those the amount or validity of which is
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of Holdings or
any such Subsidiary, as the case may be), except where failure to take any such
action could not reasonably be expected to have a Material Adverse Effect; and
no tax liens have been filed and no claims are being asserted with respect to
any such taxes, fees or other charges (other than such liens or claims, the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP (or prior to the Initial Borrowing Date, applicable accounting practice)
have been provided) which could be reasonably expected to have a Material
Adverse Effect.
6.10 Compliance With ERISA
---------------------
Each Plan has been operated and administered in a manner so as not to result in
any material liability of Holdings or any of its Subsidiaries for failure to
comply with the applicable provisions of ERISA and the Code; no Reportable Event
which could reasonably be expected to result in the termination of any Plan has
occurred with respect to a Plan; to the best knowledge of Holdings and the
Borrower, no Multiemployer Plan is insolvent or in reorganization; the
aggregate fair market value of the assets of each Plan equals or exceeds the
aggregate present value of the accrued benefits under such Plan (using the
actuarial funding assumptions then in effect for such Plan); no Plan has an
accumulated or waived funding deficiency, has permitted decreases in its funding
standard account or has applied for an extension of any amortization period
within the meaning of Section 412 of the Code; neither Holdings nor any of its
Subsidiaries nor any ERISA Affiliate has incurred any material liability to or
on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code; no
proceedings have been instituted to terminate
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any Plan; using actuarial assumptions and computation methods consistent with
subpart 1 of Subtitle E of Title IV of ERISA, and its Subsidiaries and its ERISA
Affiliates would not have any material liability to all Plans which are
Multiemployer Plans in the event of a complete withdrawal therefrom, as of the
close of the most recent Fiscal Year of each such Plan ending prior to the date
of any Credit Event; no Lien imposed under the Code or ERISA on the assets of
Holdings or any of its Subsidiaries or any ERISA Affiliate exists or is likely
to arise on account of any Plan; and Holdings and its Subsidiaries do not
maintain or contribute to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to retired employees (other than
as required by Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA), the ongoing annual obligations with respect
to either of which could reasonably be expected to have a Material Adverse
Effect.
6.11 Ownership of Property
---------------------
Holdings and each of its Subsidiaries has good and marketable title or, with
respect to real property, valid fee simple title (or in each case, the relevant
foreign equivalent, if any) to, or a subsisting leasehold interest in, or a
valid contractual agreement or other valid right to use, all such Person's
material real property, and good title (or relevant foreign equivalent) to, a
valid leasehold interest in, or valid contractual rights or other valid right to
(or an agreement for the acquisition of same) use all such Person's other
material property (but excluding Intellectual Property), and, in each case, none
of such property is subject to any Lien except for Permitted Liens. The items
of real and personal property (but excluding Intellectual Property) owned by,
leased to or used by Holdings and each of its Subsidiaries constitute all of the
assets used in the conduct of such Person's business as presently conducted, and
neither this Agreement nor any other Documents, nor any transaction contemplated
under any such agreement, will affect any right, title or interest of Holdings
or any of its Subsidiaries in and to any of such assets in a manner that would
have or is reasonably likely to have a Material Adverse Effect. As of the
Initial Borrowing Date, the Borrower and its Domestic Subsidiaries have granted
Mortgages to secure the Obligations on all parcels of real estate identified on
Schedule 6.21(c) as Mortgaged Properties.
- ----------------
6.12 Capitalization of Holdings and the Borrower
-------------------------------------------
On the Initial Borrowing Date after giving effect to the Transaction, the
capitalization of Holdings and the Borrower will be as set forth on Schedule
--------
6.12(a) hereto. The Capital Stock of Holdings and the Borrower have been duly
- -------
authorized and validly issued. Except as set forth on Schedule 6.12(a), no
----------------
authorized but unissued or treasury shares of Capital Stock of Holdings and the
Borrower are subject to any option, warrant, right to call or commitment of any
kind or character. A complete and correct copy of each of the operating
agreements of Holdings and the Borrower in effect on the Initial Borrowing Date
has been delivered to the Administrative Agent. Except pursuant to the
Transaction Documents, neither Holdings nor the Borrower has any
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<PAGE>
outstanding stock or securities convertible into or exchangeable for any shares
of its Capital Stock, or any rights issued to any Person (either preemptive or
other) to subscribe for or to purchase, or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims or any character relating to any of its Capital
Stock or any stock or securities convertible into or exchangeable for any of its
Capital Stock (other than as set forth in the certificate of incorporation of
the Borrower). Neither Holdings, the Borrower nor any of their Subsidiaries is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its Capital Stock or any convertible securities,
rights or options of the type described in the preceding sentence. As of the
Initial Borrowing Date, all of the issued and outstanding shares of Capital
Stock of Holdings and the Borrower are owned of record by the stockholders as
set forth on Schedule 6.12(a) hereto.
----------------
6.13 Subsidiaries
------------
(a) Organization. Schedule 6.13 sets forth as of the Initial Borrowing
------------ -------------
Date a true, complete and correct list of each Subsidiary of the Borrower (after
giving effect to the Transaction) and indicates for each such Subsidiary (i) its
jurisdiction of organization and (ii) its ownership (by holder and percentage
interest). Holdings has no Subsidiaries except for Subsidiaries permitted to be
created pursuant to this Agreement, the Borrower and those Subsidiaries listed
as on Schedule 6.13.
-------------
(b) Capitalization. All of the issued and outstanding Capital Stock
--------------
of each Subsidiary of the Borrower is owned as set forth on Schedule 6.13. All
-------------
of the Capital Stock of each Subsidiary of the Borrower has been duly authorized
and validly issued, is fully paid and non-assessable and is owned as set forth
on Schedule 6.13, free and clear of all Liens except for Permitted Liens. No
-------------
authorized but unissued or treasury shares of Capital Stock of any Subsidiary of
the Borrower are subject to any option, warrant, right to call or commitment of
any kind or character except pursuant to the Transaction Documents. On and
after the relevant date of formation, the Borrower directly owns 100% of the
Capital Stock of each Receivables Subsidiary owned directly by the Borrower, and
the Borrower has pledged (and delivered for pledge) the Capital Stock of each
such Receivables Subsidiary (and any promissory notes received by the Borrower
or any other Credit Party from such Receivables Subsidiary) to the Collateral
Agent pursuant to the Collateral Security Agreement.
(c) Restrictions on or Relating to Subsidiaries. There does not exist
-------------------------------------------
any consensual encumbrance or restriction on the ability of (i) any Subsidiary
of the Borrower to pay dividends or make any other distributions on its capital
stock or any other interest or participation in its profits owned by the
Borrower or any Subsidiary of the Borrower, , or to pay any Indebtedness owed to
the Borrower or a Subsidiary of the Borrower, (ii) any Subsidiary of the
Borrower to make loans or advances to the Borrower or any of the Borrower's
Subsidiaries or (iii) the Borrower or any of its Subsidiaries to transfer any of
its properties or assets to the
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<PAGE>
Borrower or any of its Subsidiaries, except, in each case, for such encumbrances
or restrictions permitted under Section 8.5.
-----------
6.14 Compliance With Law, Etc.
-------------------------
Neither Holdings, the Borrower nor any of their Subsidiaries is in default under
or in violation of any Requirement of Law or material Contractual Obligation or
under its Organizational Documents, as the case may be, in each case the
consequences of which default or violation, either in any one case or in the
aggregate, would have a Material Adverse Effect.
6.15 Investment Company Act
----------------------
Neither Holdings, the Borrower nor any of their Subsidiaries is an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
6.16 Public Utility Holding Company Act
----------------------------------
Neither Holdings, the Borrower nor any of their Subsidiaries is a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
6.17 Environmental Matters
---------------------
(i) The operations of and the real property owned or operated by
Holdings and each of its Subsidiaries are in compliance with all applicable
Environmental Laws except where the failure to be in compliance, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect; (ii) Holdings and each of its Subsidiaries has obtained and will
continue to maintain all Environmental Permits, and all such Environmental
Permits are in good standing and Holdings and its Subsidiaries are in compliance
with all terms and conditions of such Environmental Permits, except where
failure to so obtain, maintain or comply, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect; (iii)
neither Holdings nor any of its Subsidiaries nor any of their present or past
properties or operations (whether owned or leased) is subject to: (A) any
Environmental Claim or other written claim, request for information, judgment,
order, decree or agreement from or with any Governmental Authority or private
party related to any material violation of or material non-compliance with
Environmental Laws or Environmental Permits to the extent any of the foregoing
could reasonably be expected to have a Material Adverse Effect, (B) any pending
or, to the knowledge of the Holdings or the Borrower, threatened judicial or
administrative proceeding, action, suit or investigation related to any
Environmental Laws or Environmental Permits which
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<PAGE>
could reasonably be expected to have a Material Adverse Effect, (C) any Remedial
Action which if not taken could reasonably be expected to have a Material
Adverse Effect or (D) any liabilities, obligations or costs arising from the
Release or substantial threat of a material Release of a Contaminant into the
environment regardless of whether the Release or substantial threat of a
material Release is occurring on Holdings' or any of its Subsidiaries' present
or past properties or at any other location, in each case where such Release or
substantial threat of a material Release could reasonably be expected to have a
Material Adverse Effect; (iv) neither Holdings nor any of its Subsidiaries has
received any written notice or claim to the effect that Holdings or any of its
Subsidiaries is or may be liable to any Person as a result of the Release or
substantial threat of a material Release of a Contaminant into the environment,
which notice or claim could reasonably be expected to result in a Material
Adverse Effect, and (v) no Environmental Lien has attached to any property
(whether owned or leased) of the Borrower or of any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect, nor are there
any facts or circumstances currently known to Holdings or any of its
Subsidiaries that may reasonably be expected to give rise to such an
Environmental Lien.
6.18 Labor Relations
---------------
Neither Holdings, the Borrower nor any of their Material Subsidiaries is engaged
in any unfair labor practice that could reasonably be expected to have a
Material Adverse Effect. There is (i) no significant unfair labor practice
complaint pending against Holdings or any of its Subsidiaries or, to the best
knowledge of Holdings and the Borrower, threatened against any of them before
the National Labor Relations Board or appropriate national court or other forum,
and no significant grievance or significant arbitration proceeding arising out
of or under any collective bargaining agreement is so pending against Holdings
or any of its Subsidiaries or, to the best knowledge of Holdings and the
Borrower, threatened against any of them and (ii) no significant strike, labor
dispute, slowdown or stoppage is pending against Holdings or any of its
Subsidiaries or, to the best knowledge of Holdings and the Borrower, threatened
against Holdings or any of its Subsidiaries (with respect to any matter
specified in clause (i) or (ii) above, either individually or in the aggregate)
such as could reasonably be expected to have a Material Adverse Effect.
6.19 Intellectual Property, Licenses, Franchises and Formulas
--------------------------------------------------------
Each of Holdings and its Subsidiaries owns or holds licenses or other rights to
or under all of the patents, patent applications, trademarks, service marks,
trademark and service mark registrations and applications therefor, trade names,
copyrights, copyright registrations and applications therefor, trade secrets,
proprietary information, computer programs or data bases (collectively,
"Intellectual Property") except where the failure to own or hold such
- ----------------------
Intellectual Property could not reasonably be expected to result in a Material
Adverse Effect, and has obtained assignments of all franchises, licenses and
other rights of whatever nature, regarding Intellectual Property necessary for
the present conduct of its business, without any known conflict with the rights
of
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others, except such conflicts which could not reasonably be expected to have
a Material Adverse Effect. Neither Holdings nor any of its Subsidiaries has
knowledge of any existing or threatened claim by any Person contesting the
validity, enforceability, use or ownership of the Intellectual Property which
could reasonably be expected to have a Material Adverse Effect, or of any
existing state of facts that would support a claim that use by Holdings or any
of its Subsidiaries of any such Intellectual Property has infringed or otherwise
violated any proprietary rights of any other Person which could reasonably be
expected to have a Material Adverse Effect.
6.20 Certain Fees
------------
Except as disclosed to the Agents prior to the Effective Date, no broker's or
finder's fees or commissions or any similar fees or commissions will be payable
by Holdings, the Borrower or any of their Subsidiaries with respect to the
incurrence and maintenance of the Obligations, any other transaction
contemplated by the Documents or any services rendered in connection with such
transactions.
6.21 Security Documents
------------------
(a) Security Agreement Collateral. The provisions of the Security
-----------------------------
Documents upon execution and delivery thereof are effective to create in favor
of the Collateral Agent for the benefit of the Secured Parties pursuant to the
Collateral Security Agreement, a legal, valid and enforceable security interest
in all right, title and interest of the applicable Credit Party in the
Collateral (other than the Collateral described in the Mortgages) owned by such
Credit Party, and the Collateral Security Agreement, together with the filings
of Form UCC-1 (or other similar filing, if any) in all relevant jurisdictions
and delivery of all possessory collateral creates a first lien on, and security
interest in (or similar interest in respect of), all right, title and interest
of Holdings and such Credit Parties in all of the Collateral described therein,
subject to no other Liens other than Permitted Liens. Except for titled
vehicles, vessels and other collateral which may not be perfected through the
filing of financing statements under the Uniform Commercial Code (or similar
applicable law) of the appropriate jurisdiction (or similar filings in each
relevant jurisdiction) and which have an aggregate fair market value of less
than $5,000,000, and except for patents, trademarks, trade names and copyrights
to the extent perfection would require filing in any foreign jurisdiction, all
such Liens have been or, upon the filing of the financing statements delivered
on the Initial Borrowing Date, will be fully perfected Liens (or similar legal
status). The recordation in the United States Patent and Trademark Office and
in the United States Copyright Office of assignments for security made pursuant
to the Collateral Security Agreement will be effective, under Federal law, to
perfect the security interest granted to the Collateral Agent for the benefit of
the Secured Parties in the trademarks, patents and copyrights covered by such
the Collateral Security Agreement.
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(b) Pledged Securities. The security interests created in favor of
------------------
Collateral Agent, as pledgee for the benefit of the Secured Parties under the
Collateral Security Agreement, constitute perfected security interests in the
Pledged Securities, if any, subject to no security interests of any other Person
except for the Liens granted under or pursuant to the Collateral Security
Agreement. No filings or recordings are required in order to perfect the
security interests created in the Pledged Securities under the Collateral
Security Agreement other than with respect to filings required by applicable
foreign law and UCC financing statements with respect to uncertificated Pledged
Securities.
(c) Real Estate Collateral. The Mortgages create, as security for the
----------------------
obligations purported to be secured thereby, a valid and enforceable (and upon
the due recording thereof under applicable law) perfected security interest in
and Lien on all of the Mortgaged Property (including, without limitation, all
fixtures and improvements relating to such Mortgaged Property and affixed or
added thereto on or after the Initial Borrowing Date) in favor of the Collateral
Agent (or such other agent or trustee as may be named therein) for the benefit
of the Secured Parties, superior to and prior to the rights of all third Persons
(except that the security interest created in the Mortgaged Property may be
subject to the Permitted Liens related thereto). Schedule 6.21(c) contains a
----------------
true and complete list of each parcel of real property owned or leased by the
Borrower and its Subsidiaries in the United States, the United Kingdom or other
jurisdiction in which a material plant is located and the type of interest
therein held by the Borrower or such Subsidiary. The Borrower or a Subsidiary of
the Borrower has good and marketable title to all Mortgaged Property free and
clear of all Liens except those described in the first sentence of this
Section 6.21(c).
- ---------------
6.22 Documents
---------
(a) The Borrower has on or prior to the Initial Borrowing Date
delivered to the Administrative Agent true, correct and complete copies of the
material Transaction Documents entered into by Holdings, the Borrower or any
Subsidiary on or before the Initial Borrowing Date in connection with the
Transaction and, with respect to any such Transaction Document entered into
after the Effective Date, the terms thereof shall be reasonably satisfactory to
the Administrative Agent. Holdings and each of its Subsidiaries have,
concurrently with the execution and delivery of this Agreement or will have by
the Initial Borrowing Date, consummated the transactions contemplated by the
Documents pursuant thereto, and the Documents set forth the entire agreement
among the parties thereto with respect to the subject matter thereof. No party
to the Transaction Documents has waived the fulfillment of any material
condition precedent set forth therein to the consummation of the transactions
contemplated thereby, no party is in default or has failed to perform any of its
material obligations thereunder or under any material instrument or document
executed and delivered in connection therewith.
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(b) All representations and warranties of Holdings and the Borrower
set forth in the Documents were true and correct in all material respects (taken
as a whole) at the time as of which such representations and warranties were
made or deemed made and as of the Initial Borrowing Date.
6.23 Purchase and Supply Contracts
-----------------------------
Attached hereto as Schedule 6.23 is a true and complete list of each purchase
------------- contract and supply contract that will be
material to the operations of the Borrower on the Initial Borrowing Date, and a
true, correct and complete copy of each of which have been delivered to the
Administrative Agent, subject to pre-existing confidentiality provisions with
third parties.
6.24 Millennium
----------
On the basis of an investigation made by Holdings for itself and each of its
Subsidiaries, Holdings and the Borrower, to the best of their knowledge,
reasonably believe that the "Y2K problem" (that is, the risk that computer
applications used by the Holdings and its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999) will not result in a Material
Adverse Effect.
6.25 Subordination Provisions
------------------------
The subordination provisions contained in the Senior Subordinated Note
Documents, when executed, are enforceable against the issuer of the respective
security and the holders thereof, and the Loans and all other Obligations
entitled to the benefits of any Loan Document and any related guaranty are
within the definitions of "Senior Indebtedness" included in such provisions.
6.26 Foreign Intercompany Loan Documents
-----------------------------------
Upon execution and delivery thereof, the Foreign Intercompany Loan Documents and
the Foreign Intercompany Loan Security Documents constitute legal, valid and
binding obligations of the Persons party thereto (except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law)) and are in full force and effect and the Foreign Intercompany
Loan Security Documents are effective to create the security interests purported
to be created thereby).
6.27 Supply Arrangement
------------------
In the event that the Supply Arrangement is entered into on the Initial
Borrowing Date, Holdings and the Borrower reasonably believe that the Supply
Arrangement delivers to the Borrower and
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its Subsidiaries the same net economic benefit and cash flows (net of the
(Pounds) 1,500,000 annual fee payable to ICI) as would have been the case had
the Retained Olefins Business (as defined in the Supply Arrangement Agreement
defined in clause (l) of the definition "Supply Arrangement Agreements") been
-----------------------------
transferred to the Borrower and its Subsidiaries on the Initial Borrowing Date.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower and Holdings hereby agree that, so long as any of the
Commitments remain in effect, or any Loan or LC Obligation remains outstanding
and unpaid or any other amount is owing to any Lender or the Administrative
Agent hereunder, the Borrower and Holdings shall:
7.1 Financial Statements Furnish, or cause to be furnished, to each Lender:
--------------------
(a) Quarterly Financial Statements. As soon as available, but in any
------------------------------
event not later than 45 days after the end of each of the first full three
Fiscal Quarters of each Fiscal Year of the Borrower, (i) the unaudited
consolidated balance sheet of the Borrower and its consolidated subsidiaries as
at the end of such quarter and the related unaudited consolidated statements of
income and of cash flows of the Borrower and its consolidated Subsidiaries for
such quarter and the portion of the Fiscal Year through the end of such quarter
and in each case commencing with the fiscal quarter ending September 30, 2000
setting forth comparative figures for the related periods in the prior Fiscal
Year, and, if the Borrower has established any Unrestricted Subsidiaries, such
consolidated statements shall be accompanied by a balance sheet as of such date,
and a statement of income and cash flows for such period, reflecting on a
combined basis, for Subsidiaries and on a combined basis for Unrestricted
Subsidiaries, the consolidating entries for such types of Subsidiaries, (ii) the
unaudited consolidating balance sheets of the Borrower as at the end of such
Fiscal Quarter and the related unaudited consolidating statements of income and
of cash flows of the Borrower and its Subsidiaries for such quarter and in each
case commencing with the Fiscal Quarter ending September 30, 2000 setting forth
comparative figures for the related periods in the prior Fiscal Year and (iii)
the unaudited business segment footnote information, consistent with the
requirements of GAAP, of the Borrower and its consolidated subsidiaries for such
quarter and the position of the Fiscal Year through the end of such quarter, and
in each case commencing with the Fiscal Quarter ending September 30, 2000
setting forth comparative figures for the related periods in the prior Fiscal
Year. Each of the above items shall be in a form satisfactory to the
Administrative Agent and certified by the Responsible Financial Officer of the
Borrower, subject to normal year-end audit adjustments; and
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(b) Annual Financial Statements. As soon as available, but in any
---------------------------
event not later than 90 days after the end of each Fiscal Year of the Borrower,
a copy of (i) the consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and consolidated statements
of income and of cash flows for such year, setting forth in each case,
commencing for the year ending December 31, 2000, in comparative form the
figures for the previous year (which, in case of the year ending December 31,
2000, shall be compared against the figures for the period from June 30, 1999 to
December 31, 1999) and, if the Borrower has established any Unrestricted
Subsidiaries, such consolidated statements shall be accompanied by a balance
sheet as of such date, and a statement of income and cash flows for such period,
reflecting on a combined basis, for Subsidiaries and on a combined basis for
Unrestricted Subsidiaries, the consolidating entries for each of such types of
Subsidiaries; all such financial statements shall be complete and correct in all
material respects and shall be prepared in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by the accountants preparing such statements or the
Responsible Financial Officer, as the case may be, and disclosed therein) and,
in the case of the consolidated financial statements referred to in Section
-------
7.1(b), accompanied by a report thereon of Deloitte & Touche or such other
- ------
independent certified public accountants of recognized national standing, which
report shall contain no qualifications with respect to the continuance of the
Borrower and its Subsidiaries as a going concern and shall state that such
financial statements present fairly the financial position of the Borrower and
its Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in conformity with GAAP, (ii) the
related consolidating balance sheets of the Borrower as at the end of such
Fiscal Year and the related consolidating statements of income and of cash flows
of the Borrower and its Subsidiaries for such Fiscal Year through the end of
such quarter, setting forth in each case commencing with the Fiscal Year ending
December 31, 2000 in comparative form the figures for the previous year, all of
which shall be in a form satisfactory to the Administrative Agent and (iii) the
related business segment footnote information, consistent with the requirements
of GAAP, of the Borrower and its consolidated subsidiaries for such Fiscal Year,
setting forth in each case commencing with the Fiscal Year ending December 31,
2000 incomparative form the figures for the prior Fiscal Year. Each of the above
items shall be in a form satisfactory to the Administrative Agent and certified
by a Responsible Financial Officer of the Borrower;
(c) Annual Schedule of Foreign Intercompany Notes. As soon as
---------------------------------------------
available, but in any event within 90 days after the end of each Fiscal Year of
the Borrower an unaudited schedule of Foreign Intercompany Notes as at the end
of such year, separately presenting the Foreign Intercompany Notes, indebtedness
permitted under Section 8.2 (including overdraft facilities) and cash balances,
-----------
for each consolidated Subsidiary with total assets in excess of $25,000,000 as
at the end of such period.
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7.2 Certificates; Other Information
-------------------------------
Furnish to each Lender (or, if speified below, to the Administrative Agent):
(a) Accountant's Certificates. Concurrently with the delivery of the
-------------------------
financial statements referred to in Section 7.1(b), to the extent not contrary
--------------
to the then current recommendations of the American Institute of Certified
Public Accountants, a certificate from Deloitte & Touche or other independent
certified public accountants of nationally recognized standing, stating that, in
the course of their annual audit of the books and records of the Borrower, no
Event of Default or Unmatured Event of Default, insofar as they relate to
accounting and financial matters, has come to their attention which was
continuing at the end of such Fiscal Year or on the date of their certificate,
or if such an Event of Default or Unmatured Event of Default has come to their
attention, the certificate shall indicate the nature of such Event of Default or
Unmatured Event of Default;
(b) Officer's Certificates. Concurrently with the delivery of the
----------------------
financial statements referred to in Sections 7.1(a) and 7.1(b), a certificate
--------------------------
of a Responsible Financial Officer (I) substantially in the form of Exhibit
-------
7.2(b) stating that, to the best of such officer's knowledge, (i) such financial
- ------
statements present fairly, in accordance with GAAP, the financial condition and
results of operations of the Borrower and its Subsidiaries for the period
referred to therein (subject, in the case of interim statements, to normal
recurring adjustments) and (ii) no Event of Default or Unmatured Event of
Default has occurred, except as specified in such certificate and, if so
specified, the action which the Borrower proposes to take with respect thereto,
which certificate shall set forth detailed computations to the extent necessary
to establish the Borrower's compliance with the covenants set forth in Article
-------
IX of this Agreement and (II) setting forth the then current outstanding amount
- -- of each Intercompany Loan;
(c) Audit Reports and Statements. Promptly following the Borrower's
----------------------------
receipt thereof, copies of all consolidated financial or other consolidated
reports or statements, if any, submitted to the Borrower or any of its
Subsidiaries by independent public accountants relating to any annual or interim
audit of the books of the Borrower or any of its Subsidiaries;
(d) Management Letters. Promptly after receipt thereof, a copy of
------------------
any "management letter" received by the Borrower or any of its Subsidiaries
from its certified public accountants;
(e) Projections. As soon as available and in any event within sixty
-----------
(60) days following the first day of each Fiscal Year of the Borrower,
projections (prepared on a business segment basis) in form satisfactory to the
Administrative Agent and the Required Lenders covering the period from such
Fiscal Year through the next two Fiscal Years prepared in reasonable detail,
with appropriate presentation and discussion of the principal assumptions upon
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<PAGE>
which such projections are based, which shall be accompanied by the statement of
the chief executive officer or Responsible Financial Officer of the Borrower to
the effect that, to the best of his knowledge, such projections are a reasonable
estimate for the periods respectively covered thereby;
(f) Public Filings. Within 10 days after the same become public,
--------------
copies of all financial statements and reports which the Borrower may make to,
or file with the SEC or any successor or analogous Governmental Authority;
(g) Quarterly Service Agreement Report. For so long as any Huntsman
----------------------------------
Agreement or ICI Agreement is in full force and effect, promptly following the
end of each Fiscal Quarter, the Borrower shall deliver to the Administrative
Agent a report explaining in reasonable detail (i) any material change in the
scope of the services provided to the Borrower under the Huntsman Agreements
(taken as a whole) or ICI Agreements (taken as a whole) from that contemplated
on the Initial Borrowing Date and (ii) any material change in the basis for
allocation of costs and expenses under the Huntsman Agreements or the ICI
Agreements together with a description of how such change was determined. the
Borrower shall provide the Administrative Agent with additional documents and
information related to the quarterly report, as reasonably requested by the
Administrative Agent;
(h) Insurance. Prior to the Initial Borrowing Date, the Borrower
----------
shall have delivered to the Administrative Agent evidence of insurance complying
with the requirements of Section 7.8 for the business and properties of the
-----------
Borrower and its Subsidiaries, in form reasonably satisfactory to the
Administrative Agent and the Required Lenders and naming the Administrative
Agent as an additional insured, mortgagee and/or loss payee, and stating that
such insurance shall not be canceled or revised without 30 days' prior written
notice by the insurer to the Administrative Agent;
(i) Insurance Information. The Borrower shall deliver to the
---------------------
Administrative Agent information concerning insurance at the times and in the
manner specified in Section 7.8; and
-----------
(j) Other Requested Information. Such other information respecting
---------------------------
the respective properties, business affairs, financial condition and/or
operations of the Borrower or any of its Subsidiaries as the Administrative
Agent or any Lender (through the Administrative Agent) may from time to time
reasonably request.
7.3 Notices
-------
Promptly and in any event within three Business Days in the case of clauses (a),
-----------
(d) and (e) below, 30 days in the case of clauses (b) and (c) below, or one
- - ---------- -
Business Day in the case of clause
------
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<PAGE>
(f) below after an officer of the Borrower or of any of its Subsidiaries
-
obtains knowledge thereof, give written notice to the Administrative Agent
(which shall promptly provide a copy of such notice to each Lender) of:
(a) Event of Default or Unmatured Event of Default. The occurrence
----------------------------------------------
of any Event of Default or Unmatured Event of Default, accompanied by a
statement of a Responsible Financial Officer setting forth details of the
occurrence referred to therein and stating what action the Borrower proposes to
take with respect thereto.
(b) Litigation and Related Matters. The commencement of, or any
------------------------------
material development in, any action, suit, proceeding or investigation affecting
the Borrower or any of its Subsidiaries or any of their respective properties
before any arbitrator or Governmental Authority, (i) in which the amount
involved that the Borrower reasonably determines is not covered by insurance or
other indemnity arrangement is $10,000,000 or more, (ii) with respect to any
Document or any material Indebtedness of the Borrower or any of its Subsidiaries
or (iii) which, if determined adversely to the Borrower or any of its
Subsidiaries, could reasonably be expected to have a Material Adverse Effect.
(c) Environmental.
-------------
(i) The occurrence of one or more of the following, to the
extent that any of the following, if adversely determined, would have a Material
Adverse Effect or, in any event, could reasonably be expected to result in
liability to the Borrower or any of its Subsidiaries in excess of $3,000,000 or
a fine or penalty in excess of $1,000,000: (A) written notice, claim or request
for information to the effect that the Borrower or any of its Subsidiaries is or
may be liable in any material respect to any Person as a result of the presence
of or the Release or substantial threat of a material Release of any Contaminant
into the environment; (B) written notice that the Borrower or any of its
Subsidiaries is subject to investigation by any Governmental Authority
evaluating whether any Remedial Action is needed to respond to the presence or
to the Release or substantial threat of a material Release of any Contaminant
into the environment; (C) written notice that any property, whether owned or
leased by, or operated on behalf of, the Borrower or its Subsidiaries is subject
to a material Environmental Lien; (D) written notice of violation to the
Borrower or any of its Subsidiaries of any Environmental Laws or Environmental
Permits, or (E) commencement or written threat of any judicial or administrative
proceeding alleging a violation of any Environmental Laws or Environmental
Permits; provided, however, that the provisions of this clause (i) shall not
-------- ------- ----------
require the Borrower to violate or breach any confidentiality covenants to which
it is bound.
(ii) Upon written request by the Administrative Agent, the Borrower
shall promptly submit to the Administrative Agent and the Lenders a report
providing an update of the status of each environmental, health or safety
compliance, hazard or liability issue identified in
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<PAGE>
any notice or report required pursuant to clause (i) above and any other
environmental, health and safety compliance obligation, remedial obligation or
liability that could reasonably be expected to have a Material Adverse Effect.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or Remedial Action and the
Borrower's or such Subsidiary's response thereto.
(d) Notice of Change of Control. Each occasion that any Change of
---------------------------
Control shall occur and such notice shall set forth in reasonable detail the
particulars of each such occasion.
(e) Notices under Transaction Documents. Promptly following the
-----------------------------------
receipt or delivery thereof, copies of any material demands, notices or
documents received or delivered by the Borrower or any Subsidiary of the
Borrower outside of the ordinary course of business under or pursuant to the
Contribution Agreement, the BPCL Sales Agreement and/or the Supply Arrangement
Agreements, the Senior Subordinated Note Documents, the Holdings Zero Coupon
Notes, the Limited Liability Company Agreement of Holdings and of the Borrower,
any material joint venture agreement and any other material agreement from time
to time identified by the Administrative Agent (provided, that the foregoing
shall apply to material demands, notices or documents under the Limited
Liability Company Agreement of Holdings and of the Borrower, only to the extent
required under applicable law to be delivered to the members of Holdings and of
the Borrower, as the case may be, in their capacity as members).
(f) UK Insolvency Proceedings. A meaningful threat of or notice in
-------------------------
respect of any insolvency proceeding involving any Foreign Subsidiary
incorporated under the laws of England and Wales.
7.4 Conduct of Business and Maintenance of Existence
------------------------------------------------
Continue to engage in business of the same general type as now conducted by it
and preserve, renew and keep in full force and effect its and each Subsidiary's
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises material to its and those of each of its Subsidiaries'
businesses except to the extent that failure to take any such action could not
in the aggregate reasonably be expected to have a Material Adverse Effect or as
otherwise permitted pursuant to Sections 8.3 and comply and cause each of its
------------
Subsidiaries to comply with all Requirements of Law except to the extent that
failure to comply therewith would not in the aggregate reasonably be expected to
have a Material Adverse Effect.
7.5 Payment of Obligations
----------------------
Pay or discharge or otherwise satisfy at maturity or, to the extent permitted
hereby, prior to maturity or before they become delinquent, as the case may be,
and cause each of its Subsidiaries
127
<PAGE>
to pay or discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be:
(i) all material taxes, assessments and governmental charges or
levies imposed upon any of them or upon any of their income or profits or any of
their respective properties or assets prior to the date on which penalties
attach thereto; and
(ii) all lawful claims prior to the time they become a Lien (other
than Permitted Liens) upon any of their respective properties or assets;
provided, however, that neither the Borrower nor any of its Subsidiaries shall
- -------- -------
be required to pay or discharge any such material tax, assessment, charge, levy
or claim while the same is being contested by it in good faith and by
appropriate proceedings diligently pursued so long as the Borrower or such
Subsidiary, as the case may be, shall have set aside on its books adequate
reserves in accordance with GAAP (segregated to the extent required by GAAP)
with respect thereto and title to any material properties or assets is not
jeopardized in any material respect.
7.6 Inspection of Property, Books and Records
-----------------------------------------
Keep, or cause to be kept, and cause each of its Subsidiaries to keep or
cause to be kept, adequate records and books of account, in which complete
entries are to be made reflecting its and their business and financial
transactions, such entries to be made in accordance with sound accounting
principles consistently applied and permit, and cause each of its Subsidiaries
to permit, any Lender or its respective representatives, at any reasonable time,
and from time to time at the reasonable request of such Lender made to the
Borrower and upon reasonable notice, to visit and inspect its and their
respective properties, to examine and make copies of and take abstracts from its
and their respective records and books of account, and to discuss its and their
respective affairs, finances and accounts with its and their respective
principal officers, directors and with the written consent of the Borrower
(which consent shall not be required if any Event of Default has occurred and is
continuing), independent public accountants, provided that the Borrower may
attend any such meetings (and by this provision the Borrower authorizes such
accountants to discuss with the Lenders and such representatives the affairs,
finances and accounts of the Borrower and its Subsidiaries).
7.7 ERISA
-----
(i) As soon as practicable and in any event within ten (10) days after the
Borrower or any of its Subsidiaries or ERISA Affiliates knows or has reason to
know that a Reportable Event has occurred with respect to any Plan, deliver, or
cause such Subsidiary or ERISA Affiliate to deliver, to the Administrative Agent
a certificate of a responsible officer of the Borrower or such Subsidiary or
ERISA Affiliate, as the case may be, setting forth the details of such
Reportable Event and the action, if any, which the Borrower or such Subsidiary
or ERISA Affiliate is
128
<PAGE>
required or proposes to take, together with any notices required or proposed
to be given; (ii) upon the request of any Lender made from time to time,
deliver, or cause each Subsidiary or ERISA Affiliate to deliver, to each Lender
a copy of the most recent actuarial report and annual report completed with
respect to any Plan; (iii) as soon as possible and in any event within ten (10)
days after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or
has reason to know that any of the following have occurred or is reasonably
likely to occur with respect to any Plan: (A) such Plan has been terminated,
reorganized, petitioned or declared insolvent under Title IV of ERISA, (B) the
Plan Sponsor intends to terminate such Plan, (C) the PBGC has instituted or will
institute proceedings under Section 515 of ERISA to collect a delinquent
contribution to such Plan or under Section 4042 of ERISA to terminate such Plan,
(D) that an accumulated funding deficiency has been incurred or that an
application has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section 412 of the
Code, or (E) that Holdings, or any Subsidiary of Holdings (including, but not
limited to, the Borrower) or any ERISA Affiliate will incur any material
liability (including, but not limited to, contingent or secondary liability) to
or on account of the termination of or withdrawal from a Plan under Section
401(a)(29), 4971 or 4975 of the Code or Section 409 or 502(1) of ERISA, deliver,
or cause such Subsidiary or ERISA Affiliate to deliver, to the Administrative
Agent a written notice thereof; and (iv) as soon as possible and in any event
within thirty days after the Borrower or any of its Subsidiaries or ERISA
Affiliates knows or has reason to know that any of them has caused a complete
withdrawal or partial withdrawal (within the meaning of Sections 4203 and 4205,
respectively, of ERISA) from any Multiemployer Plan, deliver, or cause such
Subsidiary or ERISA Affiliate to deliver, to the Administrative Agent a written
notice thereof. For purposes of this Section 7.7, the Borrower shall be deemed
-----------
to have knowledge of all facts known by the Plan Administrator of any Plan of
which the Borrower is the Plan Sponsor, and each Subsidiary and ERISA Affiliate
of the Borrower shall be deemed to have knowledge of all facts known by the Plan
Administrator of any Plan of which such Subsidiary or ERISA Affiliate,
respectively, is a Plan Sponsor. In addition to its other obligations set forth
in this Article VII, the Borrower shall, and shall cause each of its
-----------
Subsidiaries and ERISA Affiliates to:
(A) provide the Administrative Agent with prompt written notice,
with respect to any Plan, of any failure to satisfy the minimum
funding standard requirements of Section 412 of the Code,
(B) furnish to the Administrative Agent, promptly after delivery
of the same to the PBGC, a copy of any delinquency notice pursuant to
Section 412(n)(4) of the Code,
(C) correct any such failure to satisfy funding requirements or
delinquency referred to in the foregoing clauses (A) and (B) within
ninety (90)
129
<PAGE>
days after the occurrence thereof, except where the failure to so
satisfy would not reasonably be expected to have a Material Adverse
Effect;
(D) comply in good faith in all material respects with the
requirements set forth in Section 4980B of the Code and with Sections
601(a) and 606 of ERISA;
(E) at the request of any Lender, deliver to such Lender (and a
copy to the Administrative Agent) a complete copy of the most recent
annual report (Form 5500) of each Plan required to be filed with the
Internal Revenue Service; and
(F) at the request of any Lender, deliver to such Lender (and a
copy to the Administrative Agent) copies of the most recent annual
reports received by Holdings or any Subsidiary of Holdings or any
ERISA Affiliate with respect to any Plan or Foreign Pension Plan no
later than ten (10) days after the date of such request.
7.8 Maintenance of Property, Insurance
----------------------------------
(i) Keep, and cause each of its Subsidiaries to keep, all property (including,
but not limited to, equipment) useful and necessary for its business in good
working order and condition, normal wear and tear and damage by casualty
excepted, subject to Section 8.3(b), (ii) maintain, and shall cause each of its
--------------
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to its material properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons. Such insurance shall
be maintained with financially sound and reputable insurers, except that a
portion of such insurance program (not to exceed that which is customary in the
case of companies engaged in the same or similar business or having similar
properties similarly situated) may be effected through self-insurance, provided
adequate reserves therefor, in accordance with GAAP, are maintained. All
insurance policies or certificates (or certified copies thereof) with respect to
such insurance (A) shall be endorsed to the Administrative Agent's reasonable
satisfaction for the benefit of the Lenders (including, without limitation, by
naming the Administrative Agent as loss payee or additional insured, as
appropriate); and (B) shall state that such insurance policy shall not be
canceled or revised without thirty days' prior written notice thereof by the
insurer to the Administrative Agent and (iii) furnish to the Administrative
Agent, on the Initial Borrowing Date and on the date of delivery of each annual
financial statement, full information as to the insurance carried. At any time
that insurance at levels described in Schedule 7.8 is not being maintained by or
------------
on behalf of the Borrower or any of its Subsidiaries, the Borrower will notify
the Lenders in writing within two Business Days thereof and, if thereafter
notified by the Administrative Agent or the Required Lenders to do so, the
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<PAGE>
Borrower or any such Subsidiary, as the case may be, shall obtain insurance at
such levels at least equal to those set forth on Schedule 7.8.
------------
7.9 Environmental Laws
------------------
(a) The Borrower shall, and shall cause each of its Subsidiaries, in
the exercise of its reasonable business judgment, to take prompt and appropriate
action to respond to any material non-compliance with all applicable
Environmental Laws or Environmental Permits or to any material Release or a
substantial threat of a material Release of a Contaminant, and upon request from
the Administrative Agent, shall regularly report to the Administrative Agent on
such response. Without limiting the generality of the foregoing, whenever the
Administrative Agent or any Lender has a reasonable basis to believe that the
Borrower is not in material compliance with applicable Environmental Laws or
Environmental Permits or that any property of the Borrower or its Subsidiaries,
or any property to which Contaminants generated by the Borrower or its
Subsidiaries have come to be located ("Offsite Property") has or may become
----------------
contaminated or subject to an order or decree such that any non-compliance,
contamination or order or decree could reasonably be anticipated to have a
Material Adverse Effect, then, to the extent the Borrower has the legal right to
do so, the Borrower agrees to, at the Administrative Agent's request and the
Borrower's expense: (i) cause an independent environmental engineer reasonably
acceptable to the Administrative Agent to conduct such tests of the site where
the alleged or actual non-compliance or contamination has occurred and prepare
and deliver to the Administrative Agent, the Lenders and the Borrower a
report(s) reasonably acceptable to the Administrative Agent setting forth the
results of such tests, the Borrower's proposed plan and schedule for responding
to any environmental problems described therein, and the Borrower's estimate of
the costs thereof, and (ii) provide the Administrative Agent, the Lenders and
the Borrower a supplemental report(s) of such engineer whenever the scope of the
environmental problems or the Borrower's response thereto or the estimated costs
thereof, shall materially change. Notwithstanding the above, the Borrower shall
not be obligated (other than as required by applicable law) to undertake any
tests or remediation at any Offsite Property that (a) is not owned or operated
by the Borrower or any of its Subsidiaries and (b) where Contaminants generated
by persons other than the Borrower or any of its Subsidiaries have also come to
be located.
(b) Defend, indemnify and hold harmless the Administrative Agent and
the Lenders, and their respective employees, the Administrative Agents, officers
and directors, from and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower, any of its
Subsidiaries or their respective properties, or any orders, requirements or
demands of Governmental Authorities related thereto, including, without
limitation, reasonable attorneys' and consultants' fees,
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<PAGE>
investigation and laboratory fees, costs arising from any Remedial Actions,
court costs and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct of the party
seeking indemnification therefor. The agreements in this Section 7.9(b) shall
--------------
survive repayment of the Notes and all other Obligations.
7.10 Use of Proceeds
---------------
Use all proceeds of the Loans as provided in Section 6.8.
-----------
7.11 Interest Rate Protection
------------------------
The Borrower shall (x) no later than thirty (30) days following the Initial
Borrowing Date, enter into and maintain arrangements which have the effect of
establishing a fixed or maximum interest rate reasonably acceptable to the
Administrative Agent for an aggregate notional principal amount of Indebtedness
equal to at least $150,000,000 for a period of at least five years from the
Initial Borrowing Date, (y) no later than sixty (60) days following the Initial
Borrowing Date, enter into and maintain arrangements which have the effect of
establishing a fixed or maximum interest rate reasonably acceptable to the
Administrative Agent such that the aggregate notional principal amount of
Indebtedness covered thereby is equal to at least $300,000,000 for a period of
at least five years from the Initial Borrowing Date and (z) no later than ninety
(90) days following the Initial Borrowing Date, enter into and maintain
additional arrangements which have the effect of establishing a fixed or maximum
interest rate reasonably acceptable to the Administrative Agent such that the
aggregate notional principal amount of Indebtedness equal to at least (a)
$250,000,000 for a period of at least three years from the Initial Borrowing
Date and (b) $300,000,000 for a period of at least five years from the Initial
Borrowing Date.
7.12 Additional Security; Further Assurances
---------------------------------------
(a) Agreement to Grant Additional Security. Promptly, and in any
--------------------------------------
event within 30 days after the acquisition by the Borrower or any Domestic
Subsidiary of assets or real or personal property or leasehold interests of the
type that would have constituted Collateral on the date hereof, in each case in
which the Collateral Agent or the Administrative Agent does not have a perfected
security interest under the Security Documents (other than (u) Capital Stock
subject to Section 7.12(c), (v) all assets owned by any Receivables Subsidiary,
---------------
(w) Copyrights, Patents and Trademarks to the extent perfection would require
filing in any foreign jurisdiction, (x) assets or real or personal property
subject to Liens permitted under Section 8.1(c) under agreements which prohibit
--------------
the creation of additional Liens on such assets, (y) any parcel of real estate
or leasehold interest acquired after the Effective Date with a fair market value
of less than $10,000,000 or (z) any other asset with a fair market value of less
than $100,000 individually (provided that all such other assets collectively
have a fair market value of less than $10,000,000)) and within 30 days after
request by the Administrative Agent with respect to any
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other after acquired collateral deemed material by the Administrative Agent or
Required Lenders (the "Additional Collateral"), the Borrower and Holdings will,
---------------------
and will cause each of their respective Domestic Subsidiaries (including the
Borrower) to, take all necessary action, including (i) the filing of appropriate
financing statements under the provisions of the UCC, applicable foreign,
domestic or local laws, rules or regulations in each of the offices where such
filing is necessary or appropriate to grant the Collateral Agent or the
Administrative Agent for the benefit of the Secured Parties pursuant to the
Collateral Security Agreement a perfected Lien (subject only to Permitted Liens)
in such Collateral pursuant to and to the full extent required by the Security
Documents and this Agreement and (ii) with respect to real estate, the execution
of a Mortgage, the obtaining of title insurance policies or indemnification
agreements satisfactory to the Administrative Agent, title surveys and real
estate appraisals satisfying the Requirements of Law.
(b) Subsidiary Guarantees. The Borrower agrees to cause each
---------------------
Domestic Subsidiary (other than a Receivables Subsidiary) to execute and deliver
the Subsidiary Guarantee Agreement (or a supplement thereto) promptly, and in
any event, within 30 days of such Person's having become a Domestic Subsidiary.
(c) Pledge of New Subsidiary Stock. The Borrower agrees to pledge
------------------------------
(or cause its Subsidiaries to pledge) all of the Capital Stock of each new
Domestic Subsidiary and, to the extent such pledge would not result in adverse
tax consequences to the Borrower, 65% of the Capital Stock of each new first-
tier Foreign Subsidiary established, acquired or created after the Initial
Borrowing Date to the Collateral Agent for the benefit of the Secured Parties
pursuant to the Collateral Security Agreement promptly, and in any event, within
30 days of the creation of such new Subsidiary.
(d) Grant of Security by New Subsidiaries. Subject to the provisions
-------------------------------------
of Sections 7.12(a) and 7.12(c), the Borrower will promptly and, in any event,
---------------- -------
within 30 days of the establishment, acquisition or creation of a Domestic
Subsidiary, cause each Domestic Subsidiary established or created in accordance
with Section 8.7 to grant to the Collateral Agent for the benefit of the Secured
-----------
Parties pursuant to the Collateral Security Agreement a first priority Lien
(subject to Permitted Liens) on all property (tangible and intangible) of such
Domestic Subsidiary by executing and delivering an agreement substantially in
the form of Exhibit A to the Collateral Security Agreement, or such other
---------
security agreement on other terms satisfactory in form and substance to the
Administrative Agent. The Borrower shall cause each Domestic Subsidiary, at its
own expense, to execute, acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter register, file or record in any
appropriate governmental office, any document or instrument reasonably deemed by
the Administrative Agent to be necessary or desirable for the creation and
perfection of the foregoing Liens. The Borrower will cause each of its Domestic
Subsidiaries to take all action requested by the
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Administrative Agent or the Required Lenders (including, without limitation, the
filing of UCC-1's) in connection with the granting of such security interests.
(e) Pledge of Equity in Unrestricted Subsidiaries. The Borrower
---------------------------------------------
agrees to pledge (or cause its Domestic Subsidiaries to pledge) all of the
Capital Stock owned by the Borrower or a Domestic Subsidiary of each domestic
Unrestricted Subsidiary (or 65% in the case of first-tier Foreign Subsidiaries)
to the Collateral Agent for the benefit of the Secured Parties pursuant to the
Collateral Security Agreement. The Borrower agrees to pledge or cause its
Subsidiaries to pledge, to the Collateral Agent for the benefit of the Secured
Parties pursuant to the Collateral Security Agreement all instruments evidencing
indebtedness owed by any Unrestricted Subsidiary to the Borrower or any Domestic
Subsidiary.
(f) Receivables Financing Security. No later than the time that any
------------------------------
Receivables Documents are entered into, and no later than the time any capital
is contributed or funds are advanced by the Borrower to the Receivables
Subsidiary, the Borrower and each Participating Subsidiary shall execute and
deliver to Collateral Agent for the benefit of the Secured Parties, the
Receivables Subsidiary Pledge Agreement, accompanied by certificates
representing the Pledged Securities.
(g) Documentation for Additional Security. The security interests
-------------------------------------
required to be granted pursuant to this Section 7.12 shall be granted pursuant
------------
to the Annexes to the Security Documents or such other security documentation
satisfactory in form and substance to the Administrative Agent and the Required
Lenders and shall constitute valid and enforceable perfected security interests
prior to the rights of all third Persons and subject to no other Liens except
Permitted Liens. The Additional Security Documents and other instruments related
thereto shall be duly recorded or filed in such manner and in such places and at
such times as are required by law to establish, perfect, preserve and protect
the Liens, in favor of the Administrative Agent for the benefit of the Lenders,
required to be granted pursuant to the Additional Security Document and, all
taxes, fees and other charges payable in connection therewith shall be paid in
full by the Borrower or its Subsidiaries. At the time of the execution and
delivery of the Additional Security Documents, the Borrower shall cause to be
delivered to the Administrative Agent such agreements, opinions of counsel,
title surveys, real estate appraisals satisfying any Requirements of Law, and
other related documents as may be reasonably requested by the Administrative
Agent or the Required Lenders to assure themselves that this Section 7.12 has
------------
been complied with.
7.13 End of Fiscal Years; Fiscal Quarters
------------------------------------
Cause each of its and its Subsidiaries' annual accounting periods to end on
December 31 of each year (each a "Fiscal Year", with quarterly accounting
-----------
periods ending on March 31, June 30,
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September 30, December 31 of each Fiscal Year (each a "Fiscal Quarter"), unless
otherwise required by applicable law. --------------
7.14 Maintenance of Corporation Separateness
---------------------------------------
Holdings will, and will cause each of its Subsidiaries to, satisfy customary
corporate (or other similar) formalities, including the maintenance of corporate
(or other similar) records. Neither Holdings, the Borrower nor any Subsidiary of
the Borrower shall make any payment to a creditor of any Huntsman Affiliate in
respect of any liability of any of the foregoing, and no bank account of
Holdings or the Borrower shall be commingled with any bank account of any
Huntsman Affiliate. Any financial statements distributed to any creditors of
Holdings or the Borrower shall, to the extent permitted by GAAP, clearly
establish the corporate separateness of the Huntsman Affiliates from Holdings
and each of Holdings' Subsidiaries. Finally, neither the Borrower nor any of its
Subsidiaries shall take any action, or conduct its affairs in a manner, which is
likely to result in the corporate existence of any Huntsman Affiliate on the one
hand and of Holdings, the Borrower or any Subsidiary of the Borrower on the
other hand being ignored, or in the assets and liabilities of the Borrower or
any Subsidiary of the Borrower being substantively consolidated with those of
any Huntsman Affiliate in a bankruptcy, reorganization or other insolvency
proceeding.
7.15 Foreign Subsidiaries Security
-----------------------------
(a) The Borrower will cause each of its Subsidiaries that is a party
to a Foreign Intercompany Loan Document to comply at all times with all of its
obligations under that Foreign Intercompany Loan Document, and will not permit
any such Subsidiary to amend the terms of or assign or transfer (except, other
than in the case of UK Holdco 1, to the extent such Indebtedness would remain
permitted Indebtedness pursuant to, any of its rights and/or Section 8.2 hereof)
-----------
obligations under, or grant any waiver or release in respect of, indebtedness
the obligations of any Person under, that Foreign Intercompany Loan Document or
agree to terminate that Foreign Intercompany Loan Document except (other than in
the case of UK Holdco 1) as permitted pursuant to Section 8.7(j) or in
--------------
connection with the sale or other transfer of the assets of a Foreign Subsidiary
permitted pursuant to Section 8.3.
-----------
(b) The Borrower will cause any Foreign Subsidiary created or acquired
after the Initial Borrowing Date to take all necessary action in order to grant
a Lien on its assets (including, without limitation, Capital Stock) to secure
its obligations under Foreign Intercompany Loan Documents in such form, if any,
as the Administrative Agent (subject to compliance with Foreign Requirements of
Law) shall require; provided, however, that the Administrative Agent shall not
-------- -------
require a Foreign Subsidiary organized under the laws of the United Kingdom,
France, Italy, Spain or The Netherlands (each, an "Initial Borrowing Date
----------------------
Country") to execute any Foreign Intercompany Loan Document other than with
- -------
respect to the
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<PAGE>
type of collateral that was provided for by a Foreign Subsidiary in an Initial
Borrowing Date Country on the Initial Borrowing Date; and provided
--------
further, that the Administrative Agent shall not require a Foreign Subsidiary
- -------
organized under the laws of a jurisdiction other than an Initial Borrowing Date
Country to execute any Foreign Intercompany Loan Document with respect to its
assets (other than Capital Stock) if (1) (x) the principal balance of
Indebtedness under the Foreign Intercompany Note issued by such Foreign
Subsidiary is equal to or less than the Dollar Equivalent of $50,000,000 and (y)
the assets of such Foreign Subsidiary constitute less than 2% of the
Consolidated Total Assets of the Borrower at such time, or (2) any Requirement
of Law (including any exchange control, financial assistance, minimum
capitalization, fraudulent conveyance or similar rules or regulations, "Foreign
-------
Requirements of Law") would be violated thereby, provided that all relevant
- ------------------- --------
Persons have taken all commercially reasonable steps to avoid or cure such
violation (collectively, the "Foreign Document Criteria").
--------------------------
(c) If, following a change in the relevant sections of the Code, the
regulations and rules promulgated thereunder and any rulings issued thereunder
and at the request of the Administrative Agent or the Required Lenders, counsel
for the Borrower acceptable to the Administrative Agent and the Required Lenders
does not within 30 days after such request deliver evidence reasonably
satisfactory to the Administrative Agent with respect to any Foreign Subsidiary
that meets the Foreign Document Criteria and is a Wholly-Owned Subsidiary of the
Borrower that any of (i) a pledge of 66-2/3% or more of the total combined
voting power of all classes of Capital Stock of such Foreign Subsidiary entitled
to vote, (ii) the entering into by such Foreign Subsidiary of a guaranty in
substantially the form of the Subsidiary Guaranty or (iii) the entering into by
such Foreign Subsidiary of a security agreement in substantially the form of the
Security Agreement, in any case could cause all or a portion of the earnings of
such Foreign Subsidiary to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent or would otherwise violate applicable law or
result in adverse tax consequences to the Borrower or its Subsidiaries
(including, without limitation, in the form of distributions payable to Holdings
pursuant to the Limited Liability Company Agreement of the Borrower or to the
members of Holdings pursuant to the Limited Liability Company Agreement of
Holdings), then in the case of a failure to deliver the evidence described in
clause (i) above, that portion of such Foreign Subsidiary's outstanding Capital
Stock not theretofore pledged pursuant to the Security Documents shall be
pledged to the Administrative Agent for the benefit of the Lenders pursuant to
the Security Documents (or another pledge agreement in substantially similar
form, if needed), (ii) in the case of a failure to deliver the evidence
described in clause (ii) above, such Foreign Subsidiary shall execute and
deliver a guaranty of the Obligations of the Borrower under the Loan Documents
(subject to compliance with financial assistance laws or similar laws applicable
to such Foreign Subsidiary), and (iii) in the case of a failure to deliver the
evidence described in clause (iii) above, such Foreign Subsidiary (subject to
compliance with financial assistance laws or similar laws applicable to such
Foreign Subsidiary) shall execute and deliver a security agreement granting the
Administrative Agent for the benefit of the Lenders a security interest in all
of such Foreign Subsidiary's assets, in each case with all documents delivered
pursuant to this
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Section 7.15 to be in form and substance reasonably satisfactory to the
- ------------
Administrative Agent and the Required Lenders, but in each case, only to the
extent permitted without violating applicable law or resulting in adverse tax
consequences.
7.16 Y2K
---
The Borrower will take, and will cause each of its Subsidiaries to take, all
such actions as are reasonably necessary to successfully implement a program to
assure that the "Year 2000 problem" will not have a Material Adverse Effect. At
the request of the Administrative Agent or any Lender, the Borrower will provide
a description of such program, together with any updates or progress reports
with respect thereto.
7.17 Certain Fees Indemnity
-----------------------
The Borrower covenants that it will indemnify the Administrative Agent and each
Lender against and hold the Administrative Agent and each Lender harmless from
any claim, demand or liability for broker's or finder's fees or similar fees or
commissions alleged to have been incurred in connection with any of the
transactions contemplated hereby.
7.18 Contribution Documents
----------------------
The Borrower will, and will cause its Subsidiaries to, use good faith diligent
efforts to promptly provide to the Administrative Agent (i) drafts of any
proposed amendment, modification or supplement to the Contribution Agreement or
schedules thereto, (ii) drafts of any document to be executed pursuant to, or in
connection with, the Contribution Agreement, the form of which is not attached
to, or deviates in any material respect from the form attached to, the
Contribution Agreement and (iii) any change in the structure of the transactions
contemplated by the Contribution Documents (including, without limitation,
corporate and organizational structure, intercompany debt and equity structure,
asset and operations structure, and the process to achieve such structures) to
be effected on or prior to the Initial Borrowing Date. The rights of the Agents
to approve any of the foregoing matters shall be governed by the express terms
of this Agreement, including, without limitation, Section 8.11.
------------
ARTICLE VIII
NEGATIVE COVENANTS
Holdings and the Borrower hereby covenant and agree that, so long as
any of the Commitments remain in effect or any Loan or LC Obligation remains
outstanding and unpaid or any other amount is owing to any Lender or the
Administrative Agent hereunder:
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8.1 Liens
-----
Holdings and the Borrower will not, and will not permit any of their
Subsidiaries to create, incur, assume or suffer to exist or agree to create,
incur or assume any Lien in, upon or with respect to any of its properties or
assets (including, without limitation, any securities or debt instruments of any
of its Subsidiaries), whether now owned or hereafter acquired, or assign or
otherwise convey any right to receive income to secure any obligation, except
for the following Liens (herein referred to as "Permitted Liens"):
---------------
(a) Liens created under the Security Documents;
(b) Customary Permitted Liens;
(c) Liens on any property securing Indebtedness incurred or assumed
for the purpose of financing all or any part of the acquisition, construction,
repair or improvement cost of such property (or financing of the purchase price
within 120 days after the respective purchase of assets), and any Lien arising
out of the refinancing, extension, renewal or refunding of any Indebtedness
secured by any Lien permitted by this clause (c); provided, that (A) any such
--------
Lien does not extend to any other property (other than accessions and additions
to the property covered thereby), (B) such Lien either exists on the date hereof
or is created in connection with the acquisition, construction, repair or
improvement of such property as permitted by this Agreement, (C) the
indebtedness secured by any such Lien (or the Capitalized Lease Obligation with
respect to any Capitalized Lease) when incurred, (x) does not exceed 100% of the
fair market value of such assets and (y) is not less than 70% of the fair market
value of such assets (unless the Administrative Agent has a perfected second
lien on such asset); and (D) the Indebtedness secured thereby is permitted to be
incurred pursuant to Section 8.2(d), provided that such Indebtedness is not
--------------- --------
increased and is not secured by any additional assets;
(d) additional Liens incurred by the Borrower and its Subsidiaries
which do not secure Indebtedness for money borrowed so long as the value of the
property subject to such Liens, and the obligations secured thereby, do not
exceed $5,000,000 in the aggregate at any one time outstanding;
(e) Liens consisting of an agreement to sell, transfer or dispose of
any asset (to the extent such sale, transfer or disposition is permitted
hereby);
(f) Liens created under the Foreign Intercompany Loan Security
Documents to secure Indebtedness incurred pursuant to the Foreign Intercompany
Loan Documents;
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<PAGE>
(g) Liens securing Indebtedness of Foreign Subsidiaries; provided,
--------
that the amount of such Indebtedness shall not exceed $7,500,000 in the
aggregate at any one time outstanding;
(h) Liens existing on the date hereof listed on Schedule 8.1(h)
---------------
hereto and any extension, renewal or replacement thereof but only if the
principal amount of the Indebtedness (including, for purposes of this
Section 8.1(h), any additional Indebtedness incurred pursuant to revolving
- --------------
commitments in an amount not in excess of the available commitment as set forth
on Schedule 8.2(b) secured thereby) is not increased and such Liens do not
---------------
extend to or cover any other property or assets;
(i) Liens on Receivables Facility Assets transferred (a) to a
Receivables Subsidiary or (b) by a Receivables Subsidiary to the purchasers of
such receivables (and the filing of financing statements in connection
therewith) created by, and as set forth in, the Receivables Documents pursuant
to a Permitted Accounts Receivable Securitization; and
(j) Liens securing Indebtedness permitted pursuant to Section 8.2(n),
--------------
provided, that such any such Lien does not extend to any other property (other
- --------
than accessions and additions to the property secured thereby).
In connection with the granting of Liens of the type described in
clause (c) of this Section 8.1 by the Borrower or any of its Subsidiaries, at
-----------
the reasonable request of the Borrower, and at the Borrower's expense, the
Administrative Agent or the Collateral Agent shall take (and is hereby
authorized to take) any actions reasonably requested by the Borrower in
connection therewith (including, without limitation, by executing appropriate
lien releases in favor of the holder or holders of such Liens, in either case
solely with respect to the item or items of equipment or other assets subject to
such Liens).
8.2 Indebtedness
------------
Holdings and the Borrower will not, and will not permit any of their
Subsidiaries to, incur, create, assume directly or indirectly, or suffer to
exist any Indebtedness except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Loan Documents;
(b) Indebtedness to Remain Outstanding on the Initial Borrowing Date
(which, to the extent required by Section 6.5(d), is to be listed on Schedule
-------------- --------
8.2(b)), without giving effect to any subsequent extension, renewal or
- -------
refinancing thereof;
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<PAGE>
(c) Indebtedness of the Borrower under Interest Rate Agreements
entered into to protect the Borrower or any of its Subsidiaries against
fluctuations in interest rates;
(d) Indebtedness of the Borrower and its Subsidiaries secured by
purchase money Liens permitted under Section 8.1(c) or constituting Capitalized
--------------
Lease Obligations or an Operating Financing Lease; provided, that (x) all such
--------
Capitalized Lease Obligations are permitted under Section 9.1 and (y) the sum of
-----------
(i) the aggregate outstanding Capitalized Lease Obligations plus (ii) the
----
aggregate outstanding Attributable Debt with respect to Operating Financing
Leases plus (iii) the aggregate outstanding principal amount of such purchase
----
money Indebtedness plus (iv) the aggregate outstanding amount of Indebtedness
----
permitted by Section 8.2(n) at any time shall not exceed $25,000,000;
--------------
(e) Indebtedness of (x) the Borrower under Other Hedging Agreements
providing protection against fluctuations in currency or commodity values (in
the case of commodity values, for a period not to exceed 36 months) in
connection with the Borrower's or any of its Subsidiaries' operations so long as
management of the Borrower or such Subsidiary, as the case may be, has
determined that the entering into of such Other Hedging Agreements are bona fide
---- ----
hedging activities, (y) UK Petrochem under Other Hedging Agreements providing
protection against fluctuations in commodity values for a period not to exceed
36 months in connection with UK Petrochem's operations so long as the management
of UK Petrochem has determined that the entering into of such Other Hedging
Agreements are bona fide hedging activities and (z) a Subsidiary of the Borrower
---- ----
under Other Hedging Agreements constituting currency forward contracts
specifically related to a transaction requiring the exchange of currencies in
the conduct of such Subsidiary's ordinary course of business;
(f) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes;
(g) Indebtedness of the Borrower and its Subsidiaries consisting of
take-or-pay obligations contained in supply agreements entered into in the
ordinary course of business;
(h) Indebtedness of the Borrower and its Subsidiaries resulting from
the refinancing of Indebtedness permitted by clauses (b) and (d) above and
-------------------
clause (n) below; provided, however, that (i) the principal amount of any such
- ---------- -------- -------
refinancing Indebtedness (as determined as of the date of the incurrence of such
refinancing Indebtedness in accordance with GAAP), does not exceed the principal
amount of the Indebtedness refinanced thereby on such date (ii) the Weighted
Average Life to Maturity of such Indebtedness is not decreased and (iii) in the
case of any such refinancing Indebtedness which is in excess of $5,000,000, such
refinancing Indebtedness is upon terms and subject to documentation which is in
form and substance reasonably satisfactory to the Administrative Agent;
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<PAGE>
(i) Indebtedness of Holdings or the Borrower to a Huntsman Affiliate
or a ICI Affiliate (in each case other than Holdings) that is subordinated to
the Obligations in a manner reasonably satisfactory to the Administrative Agent;
(j) Indebtedness of the Borrower to Holdings that is subordinated to
the Obligations in a manner satisfactory to the Administrative Agent and that is
either not evidenced by a promissory note or, if evidenced by a promissory note,
such note has been delivered to and effectively pledged by Holdings to the
Collateral Agent pursuant to the Collateral Security Agreement;
(k) Indebtedness incurred by a Foreign Subsidiary pursuant to an
Intercompany Note or the Foreign Intercompany Loan Documents provided that with
respect to any such Indebtedness each Foreign Subsidiary shall comply with the
provisions of Section 7.15;
------------
(l) Indebtedness consisting of (i) Guarantee Obligations of any
Subsidiary of the Borrower of the Obligations under any Loan Document or any
Foreign Intercompany Loan Document, (ii) a guarantee by the Borrower of
obligations of a Subsidiary or by any Foreign Subsidiary of obligations of its
Subsidiary under any lease or other agreement otherwise permitted hereunder or
entered into in the ordinary course of business and not constituting
Indebtedness, and (iii) a guarantee by the Borrower of the obligations of its
Foreign Subsidiaries incorporated under the laws of The Netherlands or by any
such Person of the obligations of its Subsidiaries as required by Section 2.403
of the Civil Code of The Netherlands;
(m) Indebtedness of Domestic Subsidiaries of the Borrower consisting
of subordinated guarantees of the Senior Subordinated Notes which are
subordinated to the Subsidiary Guaranty in the same fashion as the Senior
Subordinated Notes are subordinated to the Obligations;
(n) Indebtedness of a Subsidiary of the Borrower issued and
outstanding on or prior to the date on which such Subsidiary was acquired by the
Borrower or a Subsidiary of the Borrower in a transaction constituting an
Acquisition (other than Indebtedness issued as consideration in, or to provide
all or any portion of the funds utilized to consummate such Acquisition) and any
extension, renewal or replacement thereof; provided, that the aggregate amount
--------
of such Indebtedness outstanding at any time, together with Indebtedness
outstanding and permitted by Section 8.2(d) (without double counting and without
--------------
giving effect to Section 8.1(c)(C)(x)) does not exceed $25,000,000;
---------------------
(o) Indebtedness of the Borrower and of its Subsidiaries (other than
UK Holdco 1) and Guarantee Obligations with respect thereto by the Borrower
and/or its Subsidiaries pursuant to over-draft or similar lines of credit
(including unsecured back-to-back lines of credit relating thereto among Foreign
Subsidiaries, an "Overdraft Facility") such that the
------------------
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aggregate amount of such Indebtedness permitted thereunder or outstanding under
this clause (o) at anyone time does not exceed (without duplication) (x)
$60,000,000 (or the Dollar Equivalent thereof), with respect to such
Indebtedness incurred by a Foreign Subsidiary and (y) $20,000,000, with respect
to such Indebtedness incurred by the Borrower and its Domestic Subsidiaries,
provided, however, that the aggregate principal amount of Indebtedness shall be
- -------- -------
reduced to the Dollar Equivalent of $10,000,000 during at least one day during
each calendar month;
(p) so long as no Event of Default or Unmatured Event of Default has
occurred and is continuing at the time of the incurrence thereof, Indebtedness
of the Borrower to BASF or its Affiliates in an aggregate outstanding amount not
in excess of $50,000,000 incurred for the purpose of financing up to 50% of the
cost of installation, construction or improvement of property relating to the
manufacture of PO/MTBE; provided such Indebtedness shall be on terms identical
--------
to that set forth in the promissory note attached hereto as Exhibit 8.2(p), with
--------------
such changes and modifications thereto as are reasonably acceptable to the
Administrative Agent, and subordinated to the Obligations on terms satisfactory
to the Administrative Agent;
(q) Indebtedness of Holdings pursuant to the Holdings Zero Coupon
Notes;
(r) Indebtedness of Holdings to the Borrower to the extent permitted
by Section 8.7(m);
--------------
(s) (i) Indebtedness of the Borrower consisting of unsecured
Guarantee Obligations incurred to (x) satisfy bonding obligations not in excess
of $20,000,000 at any one time which arise in the ordinary course of business
and (y) to support obligations of Subsidiaries in connection with a transaction
otherwise permitted pursuant to this Agreement; provided, that such Guarantee
--------
Obligations under this clause (y) shall not at any time exceed $20,000,000, and
(ii) obligations (whether in respect of letters of credit, bank guarantees,
Guarantee Obligations or otherwise) of Foreign Subsidiaries (including, without
duplication, unsecured Guarantee Obligations of Foreign Subsidiaries and of the
Borrower in respect thereof) in an aggregate amount not to exceed the Dollar
Equivalent of $30,000,000 at any time outstanding in respect of customs bonding,
regulatory (including, without limitation, environmental agency) requirements or
arrangements and other operational obligations or bonding arrangements arising
in the ordinary course of business other than in respect of borrowed money;
(t) (i) Receivables Facility Attributed Indebtedness as long as the
provisions of Section 4.4(k) are complied with in connection with the incurrence
--------------
of such Receivables Facility Attributed Indebtedness and (ii) Intercompany
Indebtedness of a Receivables Subsidiary owed to the Borrower and its
Participating Subsidiaries to the extent it constitutes a permitted Investment
pursuant to Section 8.7(q); and
--------------
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(u) unsecured Indebtedness of the Borrower on terms and conditions
not more restrictive to the Borrower and its Subsidiaries than those set forth
in this Agreement (and at or below a market interest rate for comparable
instruments) which Indebtedness is subordinated to the Obligations on terms and
conditions reasonably satisfactory to the Administrative Agent and, with respect
to which, no principal payments may be made prior to June 30, 2009, so long as
at the time of incurrence thereof (x) no Unmatured Event of Default or Event of
Default exists, (y) the Borrower would remain in compliance with Section 9.3 and
-----------
9.4 after giving pro forma effect to the incurrence of any such Indebtedness for
- ---
the twelve month period following the incurrence of any such Indebtedness and
(z) the Borrower shall comply with the mandatory pre payment provisions of
Section 4.4(i).
- --------------
8.3 Consolidation, Merger, Purchase or Sale of Assets, etc.
-------------------------------------------------------
Holdings and the Borrower will not, and will not permit any of their
Subsidiaries to, wind up, liquidate or dissolve any of their affairs or enter
into any transaction of merger or consolidation, or convey, sell, lease or
otherwise dispose of any of its properties or assets (or, with respect to a
transaction involving all or substantially all of the assets of Holdings or the
Borrower, agree to do any of the foregoing at any future time without the
Administrative Agent's prior written consent unless the effectiveness of such
agreement is conditional upon the consent of the Administrative Agent) or
convey, sell or otherwise dispose of any part of its property or assets, or
enter into any Sale and Leaseback Transaction, except that:
(a) Holdings, the Borrower and its Subsidiaries may consummate the
Transaction;
(b) each of the Borrower and its Subsidiaries may (x) in the ordinary
course of business, sell, lease or otherwise dispose of any assets which, in the
reasonable judgment of such Person, are obsolete, worn out or otherwise no
longer useful in the conduct of such Person's business and (y) sell, lease or
otherwise dispose of any other assets, provided that the aggregate Net Sale
Proceeds of all assets subject to sales or other dispositions pursuant to this
clause (y) which are not reinvested to acquire assets to be used in such
Person's business in the manner described in Section 4.4(e) shall not exceed
--------------
$2,500,000 in any Fiscal Year of the Borrower;
(c) Investments may be made to the extent permitted by Section 8.7;
-----------
(d) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business other than to a
Receivables Subsidiary;
(e) each of the Borrower and its Subsidiaries may make sales or
transfers of inventory, Cash Equivalents and Foreign Cash Equivalents in the
ordinary course of business other than to a Receivables Subsidiary;
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<PAGE>
(f) the Borrower and its Subsidiaries may sell or discount, in each
case without recourse and in the ordinary course of business, Accounts
Receivable arising in the ordinary course of business (x) which are overdue, or
(y) which the Borrower or such Subsidiary may reasonably determine are difficult
to collect but only in connection with the compromise or collection thereof
consistent with customary industry practice (and not as part of any bulk sale or
financing of receivables);
(g) the Borrower and its Subsidiaries may license its patents, trade
secrets, know-how and other intellectual property relating to the manufacture of
chemical products and by-products (the "Technology") provided that such license
----------
shall be assignable to the Administrative Agent or any assignee of the
Administrative Agent without the consent of the licensee and no such license
shall (i) transfer ownership of such Technology to any other Person or (ii)
require the Borrower to pay any fees for any such use (such licenses permitted
by this Section 8.3(g), hereafter "Permitted Foreign Technology Licenses");
-------------- -------------------------------------
(h) any Subsidiary of the Borrower (other than a Receivables
Subsidiary) may be merged or consolidated (x) with or into the Borrower so long
as the Borrower is the surviving entity, (y) with or into any one or more
Wholly-Owned Subsidiaries of the Borrower; provided, however, that the Wholly-
-------- -------
Owned Subsidiary or Subsidiaries shall be the surviving entity or (z) with or
into any Person in connection with the consummation of an Acquisition; provided,
however, that after giving effect to such merger or consolidation the surviving
Subsidiary shall be a Wholly-Owned Subsidiary;
(i) the Borrower and its Subsidiaries may sell, transfer or otherwise
dispose of any asset in connection with any Sale and Leaseback Transaction
involving Indebtedness, Capitalized Lease Obligations or an Operating Financing
Lease otherwise permitted hereunder so long as, in the case of a transaction
involving operating assets, such transaction occurs within 120 days of the
acquisition by the Borrower or any Subsidiary of the asset sold, transferred or
otherwise disposed of;
(j) the Borrower or any Subsidiary may dispose of any of its assets
if the aggregate book value (at the time of disposition thereof) of all assets
disposed of by the Borrower and its Subsidiaries subsequent to the Initial
Borrowing Date pursuant to this clause (j) plus the aggregate book value of all
----
the assets then proposed to be disposed of does not exceed 5% of the net
property, plant and equipment of the Borrower and its Subsidiaries (on a
consolidated basis) as of the end of the immediately preceding Fiscal Quarter
for which the Borrower has delivered financial statements as required by Section
-------
7.1; provided, however, that if concurrently with any disposition of assets or
- --- -------- -------
within 180 days thereof, substantially all of the net proceeds of such
disposition are used by the Borrower or a Subsidiary to acquire other property
and if the Borrower or such Subsidiary has complied with the provisions of
Section 7.12 with respect to such property, such dispositions shall be
- ------------
disregarded for purposes of calculations pursuant to this
144
<PAGE>
Section 8.3 (j)) (and shall otherwise be deemed to be permitted under this
- ----------------
Section 8.3) from and after the time of compliance with Section 7.12 with
- ------------ ------------
respect to the acquisition of such other property;
(k) any Subsidiary of the Borrower may sell, lease, transfer or
otherwise dispose of any or all of its assets to the Borrower or any other
Wholly-Owned Subsidiary of the Borrower (other than (I) from (x) a Domestic
Subsidiary to a Foreign Subsidiary or (y) a Foreign Subsidiary party to Foreign
Intercompany Loan Documents to a Foreign Subsidiary which is not a party to
Foreign Intercompany Loan Documents or (II) to a Receivables Subsidiary);
(l) any Subsidiary of the Borrower (other than UK Holdco 1 and a
Receivables Subsidiary) may voluntarily liquidate, wind-up or dissolve; and
(m) the Borrower and its Subsidiaries may sell, contribute and make
other transfers of Receivables Facility Assets to a Receivables Subsidiary and
such Receivables Subsidiary may sell and make other transfers of Receivables
Facility Assets to the Issuer, in each case pursuant to the Receivables
Documents under a Permitted Accounts Receivable Securitization.
8.4 Dividends or Other Distributions
--------------------------------
Neither Holdings, the Borrower nor any of its Subsidiaries will: (i) declare or
pay any dividend or make any distribution on or in respect of its Capital Stock
or to the direct or indirect holders of its Capital Stock (other than (w)
dividends or distributions payable solely in such Capital Stock or in options,
warrants or other rights to purchase such Capital Stock, (x) dividends and
distributions payable to the Borrower or a Wholly-Owned Subsidiary of the
Borrower or payable to holders of minority interests in any Subsidiary so long
as the Borrower or any other Subsidiary having an interest in such Subsidiary
shall receive its proportionate share of such dividend or distribution;
provided, however, that (i) dividends and distributions made after the Effective
Date to holders of B shares of UK Holdco 1 shall not exceed (Pounds)500 per
annum (or the Dollar Equivalent thereof) and (ii) dividends and distributions
effected by TG shall be permitted only to the extent that there are at such
time, no amounts outstanding under the UK Holdco Note, the dividend with respect
to its preferred stock has been declared and paid and that such dividends are
limited to 1% of total dividends paid to the Borrower with respect to ordinary
shares, (y) cash distributions to Holdings for distribution to the members of
Holdings from time to time to the extent that the amounts of such distributions
do not exceed the amounts to be made pursuant to Section 3.1(d) and 6.4(b) of
the Limited Liability Company Agreement of Holdings and/or Article 5 of the
Limited Liability Company Agreement of the Borrower; provided that in no event
shall such distribution exceed forty (40%) percent of the hypothetical taxable
income of Holdings if it was a (Corporation under the Code ("Tax Distributions")
-----------------
and (z) distributions to effect the Transactions on the Initial Borrowing Date,
(ii) purchase, redeem or otherwise acquire
145
<PAGE>
or retire for value any Capital Stock of the Borrower, (iii) make any interest
or principal payment on or purchase, defease, redeem, prepay, or otherwise
acquire or retire for value, prior to any scheduled final maturity or applicable
redemption date, the Senior Subordinated Notes, the Holdings Zero Coupon Notes
or any other Indebtedness that is subordinate or junior in right of payment to
the Obligations.
8.5 Limitation on Certain Restrictions on Subsidiaries
--------------------------------------------------
The Borrower will not, and will not permit any of its Subsidiaries to create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction (other than pursuant to the Loan Documents) on the
ability of any Subsidiary of the Borrower to (i) pay dividends or make any other
distributions on its Capital Stock or pay any Indebtedness or other obligation
owed to the Borrower or any of its other Subsidiaries, (ii) make any loans or
advances to the Borrower or any of its other Subsidiaries, or (iii) transfer any
of its property or assets to the Borrower or any of its other Subsidiaries,
except:
(a) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the Effective Date and reflected on Schedule 8.5(a) hereto
---------------
or any extension, replacement or refinancing thereof not prohibited herein;
(b) any such encumbrance or restriction consisting of customary non-
assignment provisions in Contractual Obligations entered into in the ordinary
course of business to the extent such provisions restrict the transfer or
assignment of such agreement;
(c) in the case of clause (iii) above, Permitted Liens or other
restrictions contained in security agreements securing Indebtedness permitted
hereby to the extent such restrictions restrict the transfer of the property
subject to such security agreements;
(d) any restrictions on transfer of an asset pursuant to an agreement
to sell such asset to the extent such sale would be permitted hereby; and
(e) any encumbrance or restriction on a Receivables Subsidiary as set
forth in the Receivables Documents, or any encumbrance or restriction on a
Participating Subsidiary with respect to Receivables Facility Assets as set
forth in Receivables Documents.
8.6 Issuance of Stock
-----------------
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, issue, sell, assign, pledge or
otherwise encumber or dispose of any shares of Capital Stock of any Subsidiary
of the Borrower, except (i) to the Borrower, (ii) to another Wholly-Owned
Subsidiary of the Borrower, (iii) to qualifying directors or to satisfy other
similar
146
<PAGE>
requirements, in each case, pursuant to Requirements of Law or (iv) pursuant to
the Loan Documents or the Foreign Intercompany Loan Security Documents.
(b) The Borrower shall not issue any Capital Stock, except as
permitted by Section 8.4(i) and except for such issuances of Capital Stock
--------------
(including private placements) (x) where after giving effect to such issuance,
no Event of Default will exist under Sections 10.1(l) and (y) where the
---------------- ---
Administrative Agent and the Required Lenders have consented (such consent not
to be unreasonably withheld) to the terms and conditions of such offering. In
the event any Capital Stock of the Borrower is issued pursuant to this
Section 8.6(b), the Borrower shall apply the Net Offering Proceeds received in
- --------------
connection with such disposition in accordance with Section 4.4(g).
--------------
8.7 Loans and Investments
---------------------
Holdings and the Borrower will not, and will not permit any Subsidiary to
make or own any Investments except:
(a) The Borrower and its Domestic Subsidiaries may acquire and hold
Cash and Cash Equivalents;
(b) the Borrower and its Subsidiaries may hold the Investments
identified on Schedule 8.7(b) in an amount not greater than the amount indicated
---------------
thereon which shall not exceed the amount thereof on the Initial Borrowing Date
(after giving effect to the Transaction) in each case as such Investments may be
adjusted due to appreciation, repayment of principal, payment of interest,
return of capital or similar circumstances;
(c) the Borrower and its Subsidiaries may make or maintain advances
(i) for relocation and related expenses and other advances to their employees in
the ordinary course of business and (ii) for any other advances to their
employees in the ordinary course of business in an aggregate principal amount
not exceeding $2,000,000 (or the Dollar Equivalent thereof) at any one time
outstanding;
(d) the Borrower and its Subsidiaries may acquire and hold
Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and other Persons and in
settlement of delinquent obligations of, and other disputes with, customers and
suppliers and other Persons arising in the ordinary course of business;
(e) the Borrower and its Subsidiaries may make deposits in a
customary fashion in the ordinary course of business;
147
<PAGE>
(f) subject to Section 8.2(j) if applicable, Holdings may make
--------------
Investments in the Borrower;
(g) the Borrower and its Subsidiaries may acquire and hold debt
securities as partial consideration for a sale of assets pursuant to Section 8.3
-----------
or 4.4(e) to the extent permitted by any such Section;
------
(h) Huntsman ICI Finco may make an intercompany loan to UK Holdco 1
pursuant to the terms of the UK Holdco Note as long as the Administrative Agent
has a perfected first priority security interest in such UK Holdco Note and UK
Holdco 1 may make intercompany loans and advances to other Foreign Subsidiaries
pursuant to the terms of the Foreign Intercompany Loan Documents so long as the
representation and warranty set forth in Section 6.26 is true and correct at the
-------------
time of such advance and the Borrower has complied with the provisions of
Section 7.15;
- -------------
(i) the Borrower may make intercompany loans and advances to any of
its Wholly-Owned Subsidiaries, any Subsidiary of the Borrower may make
intercompany loans and advances to the Borrower, and any Subsidiary of the
Borrower may make intercompany loans and advances to any other Wholly-Owned
Subsidiary of the Borrower (collectively, "Intercompany Loans"), provided, that
------------------ --------
(x) each Intercompany Loan made by a Foreign Subsidiary or a non-Wholly-Owned
Domestic Subsidiary to the Borrower or a Wholly-Owned Domestic Subsidiary of the
Borrower shall contain the subordination provisions set forth on Exhibit 8.7(i),
--------------
and (y) each Intercompany Loan (other than pursuant to an Overdraft Facility)
made to a Foreign Subsidiary shall be evidenced by an Intercompany Note.
(j) the Borrower and its Subsidiaries may make capital contributions
to existing Foreign Subsidiaries of the Borrower, and may capitalize or forgive
any Indebtedness owed to them by a Foreign Subsidiary of the Borrower, provided,
--------
that the aggregate amount of such contributions, capitalizations and
forgiveness, without duplication as to amounts contributed from one Subsidiary
to its Subsidiary (determined without regard to any write-downs or write-offs
thereof), shall not exceed an amount equal to $200,000,000 (or $250,000,000 in
the event that the BPCL Transaction is consummated);
(k) Foreign Subsidiaries of the Borrower may invest in cash, Cash
Equivalents and Foreign Cash Equivalents;
(l) so long as no Unmatured Event of Default or Event of Default
exists, the Borrower and its Subsidiaries make any Investment in any Permitted
Unconsolidated Venture or in any Unrestricted Subsidiary consisting of an amount
not in excess of the Available Unrestricted Subsidiary Investment Basket;
provided, that, the Borrower shall have complied with Section 7.12(e) in
- -------- ---- ---------------
connection with such Investment;
148
<PAGE>
(m) the Borrower may make intercompany loans to Holdings, the
proceeds of which shall be utilized by Holdings to pay legal, franchise tax,
audit, and other expenses directly relating to the administration or legal
existence of Holdings (including fees and expenses relating to the resale of
Holdings Zero Coupon Notes other than underwriting discounts and commissions);
provided, that the aggregate outstanding principal amount of such intercompany
- --------
loan shall not exceed $750,000 in any Fiscal Year (without giving effect to any
write-downs or write-offs thereof) and which amount shall not include any
intercompany loans or advances made or deemed to have been made for any reason
in respect of accrued but unpaid interest on any intercompany loans previously
made to Holdings, including the capitalization thereof);
(n) in addition to Investments permitted by clauses (a) through (m)
above and clauses (o) through (s) below, the Borrower may make additional
Investments, so long as the aggregate outstanding amount of such Investments
does not exceed $10,000,000 provided further, that the Borrower may not make or
-------- -------
own any investment in Margin Stock;
(o) the Borrower may make Investments in Rubicon and LPC, so long as:
(i) the Administrative Agent possesses a valid, perfected Lien on the applicable
Credit Party's interests in such Joint Venture, (ii) such Joint Venture does not
have any Indebtedness for borrowed money at any time on or after the date of
such Investment other than to the partners in such Joint Venture, (iii) the
documentation governing such Joint Venture does not contain a restriction on
distributions or loan repayments as applicable, to the Borrower or to the
applicable Subsidiary holding the interest in such Joint Venture, and (iv) such
Investment shall be treated as Capital Expenditures for purposes of Section 9.1
-----------
of this Agreement;
(p) the Borrower or any Domestic Subsidiary may purchase all or a
significant part of the assets of a business conducted by another Person, make
any Investment in any Person which, after the Initial Borrowing Date as a result
of such Investment becomes a Wholly-Owned Domestic Subsidiary of the Borrower
which is not an Unrestricted Subsidiary or, to the extent permitted under
Section 8.3, enter into any merger, consolidation or amalgamation with any other
- -----------
Person (any such purchase, Investment or merger, an "Acquisition"); provided,
----------- --------
however, that such Acquisition shall not be permitted unless, (i) after giving
- -------
effect thereto on a pro forma basis for the period (the "Pro Forma Period") of
--------- ----------------
four Fiscal Quarters ending with the Fiscal Quarter for which financial
statements have most recently been delivered (or were required to be delivered)
under Section 7.1 (on the basis that (A) any Indebtedness incurred or assumed in
-----------
connection with such Acquisition was incurred or assumed at the beginning of the
Pro Forma Period, (B) such Indebtedness was repaid from operating cash flow over
the Pro Forma Period at the intervals and in the amounts reasonably projected to
be paid in respect of such Indebtedness over the 12-month period immediately
following the Acquisition, (C) if such Indebtedness bears a floating interest
rate, such interest shall be paid over the Pro Forma Period at the rate in
effect on the date of such Acquisition, and (D) all income and expense
associated with the assets or entity acquired in connection with such
Acquisition for the most recently ended four Fiscal
149
<PAGE>
Quarter period for which such income and expense amounts are available (with
good faith estimates thereof being permitted if financial statements indicating
such amounts are not available) shall be treated as being earned or incurred by
the Borrower over the Pro Forma Period on a pro forma basis), no Event of
Default or Unmatured Event of Default would exist hereunder; (ii) if the total
consideration given and Indebtedness assumed in connection with such Acquisition
exceeds $20,000,000, after giving effect to such Acquisition, the Borrower's
Total Available Domestic Revolving Commitment and Total Available Multicurrency
Revolving Commitment, plus cash, Cash Equivalents and the Dollar Equivalent of
----
Foreign Cash Equivalents, minus the aggregate amount of utilized Overdraft
Facilities of the Borrower and its Subsidiaries, shall equal or exceed
$275,000,000; (iii) the Borrower and its Subsidiaries have complied with the
requirements of Section 7.12 hereof with respect to any required additional
------------
Security Documents; and (iv) such acquisition has been approved by the board of
directors of the Person to be acquired;
(q) make Investments in the Receivables Subsidiary prior to the
occurrence and continuance of an Event of Default under Section 10.1(e) which in
---------------
the judgment of the Borrower are reasonably necessary in connection with any
Permitted Accounts Receivable Securitization;
(r) a Foreign Subsidiary of the Borrower may purchase all or a
significant portion of the polyurethane business of Orica Pty; provided, that
--------
(x) the total consideration given and Indebtedness assumed in connection
therewith shall not exceed 50,000,000 Australian Dollars and (ii) the
Administrative Agent shall have received, and shall be satisfied with, the terms
and conditions of the documentation executed in connection therewith; and
(s) in the event that the BPCL Acquisition is not consummated on the
Initial Borrowing Date, a Foreign Subsidiary of the Borrower organized under the
laws of England and Wales may consummate the BPCL Acquisition in accordance with
the terms of the BPCL Memorandum of Understanding, provided, that (i) the total
--------
consideration given (and Indebtedness assumed) by the Borrower and its
Subsidiaries in connection with the BPCL Acquisition shall not exceed
(Pounds)75,000,000 and (ii) the Administrative Agent shall have received and be
satisfied with the terms and conditions of the BPCL Documents and any Foreign
Intercompany Loan Security Documents executed and delivered by any such Foreign
Subsidiary in connection with the BPCL Acquisition.
8.8 Transactions with Affiliates
----------------------------
The Borrower will not, and the Borrower will not cause or permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with or for the benefit of any of the Borrower's Affiliates or any
150
<PAGE>
Affiliate of a Subsidiary of Holdings (other than the Borrower) (an "Affiliate
----------
Transaction"), other than (x) the entry by the Borrower and its Subsidiaries
- -----------
into the transactions contemplated by a Permitted Accounts Receivable
Securitization, (y) transactions that are on terms that are fair and reasonable
to the Borrower or to any such Subsidiary and that are on terms that are no less
favorable to the Borrower or to such Subsidiary than those that might reasonably
have been obtained in a comparable transaction on an arm's-length basis from a
Person that is not an Affiliate, and (z) any transaction arising in the ordinary
course of business of the Borrower or of such Subsidiary; provided, however,
-------- -------
that with respect to transactions between the Borrower or any of its
Subsidiaries and any of their respective Affiliates arising in the ordinary
course of business (including, without limitation, purchase or supply contracts
relating to products or raw materials) a Responsible Officer of the Borrower
shall, not later than the date of delivery of the annual Financial Statements,
have reviewed the aggregate of such transactions and determined that, in the
aggregate, such transactions are on terms that are fair and reasonable to the
Borrower or to such Subsidiary and are no less favorable to the Borrower or to
such Subsidiary than those that might reasonably have been obtained in a
comparable transactions on an arm's-length basis from a Person that is not an
Affiliate. The foregoing restrictions will not apply to (1) reasonable and
customary directors' fees, indemnification and similar arrangements and payments
thereunder; (2) any transaction between the Borrower and any Wholly-Owned
Subsidiary (other than an Unrestricted Subsidiary) of the Borrower or between
Wholly-Owned Subsidiaries (other than an Unrestricted Subsidiary) to the extent
that any such transaction is otherwise in compliance with the terms of this
Agreement and (3) loans or advances to officers of the Borrower and of its
Subsidiaries for bona fide business purposes of the Borrower or of such
---- ----
Subsidiary not to exceed $1,000,000 in the aggregate at any one time outstanding
for the Borrower and its Subsidiaries. The restriction set forth in the first
proviso to this Section 8.8 will not apply to the execution and delivery of or
-----------
payments made under the Limited Liability Company Agreement of Holdings, the
Limited Liability Company Agreement of the Borrower, the Huntsman Agreements,
the ICI Agreements or to loans to Holding permitted by Section 8.7(m).
--------------
8.9 Lines of Business
-----------------
Holdings and the Borrower will not, and will not permit any Subsidiary (other
than a Receivables Subsidiary) to enter into or acquire any line of business
which is not reasonably related to the chemical or petrochemical business,
provided, that none of Huntsman ICI Finco, TG, UK Holdco 1, UK Holdco 2, Dutch
- --------
Mixer or any Thai Holding Company will engage in any business other than (a)
holding Capital Stock of its Subsidiaries, (b) in the case of UK Holdco 1 and
Huntsman ICI Finco, the borrowing and lending funds pursuant to the Intercompany
Notes and entering into the Foreign Intercompany Loan Documents and (c) in the
case of UK Holdco 2, cash management and related treasury activities.
151
<PAGE>
8.10 Fiscal Year
-----------
Neither Holdings nor the Borrower will change its Fiscal Year.
8.11 Limitation on Voluntary Payments and Modifications of Indebtedness;
-------------------------------------------------------------------
Modifications of Certificate of Incorporation, By-Laws and Certain Other
------------------------------------------------------------------------
Agreements; Etc.
------------------------------------------------------------------------
Holdings and the Borrower will not, and will not permit any of their
Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with the
trustee with respect thereto or any other Person money or securities
before due for the purpose of paying when due) any Obligations under
the Holdings Zero Coupon Notes or the Senior Subordinated Notes;
(ii) amend, modify or terminate, or permit the amendment,
modification, or termination of any provision of any Senior
Subordinated Notes Document or the Holdings Zero Coupon Note
Documents; or amend, modify or permit the amendment, termination or
modification in any way adverse to the interests of the Lenders (as
determined by the Administrative Agent in its sole reasonable
discretion after reasonable advance notice of such proposed change)
any provision of the Contribution Documents, the BPCL Documents, UK
Holdco Note, any Foreign Intercompany Loan Document, the Huntsman
Agreements listed on Exhibit 1.1(c), the ICI Agreements listed on
--------------
Exhibit 1.1(d);
--------------
(iii) amend, modify or change in any way adverse to the
interests of the Lenders (as determined by the Administrative Agent in
its sole reasonable discretion after reasonable advance notice of such
proposed change), its Organizational Documents (including, without
limitation, by filing or modification of any certificate of
designation) or by-laws, or any agreement entered into by it, with
respect to its Capital Stock, or enter into any new agreement with
respect to its Capital Stock or any new tax sharing agreement which in
any way could reasonably be expected to be adverse to the interests of
the Lenders; or
(iv) issue any class of its Capital Stock other than (y) in the
case of the Borrower and its Subsidiaries, non-redeemable Capital
Stock (including by private placements) and (z) in the case of
Holdings, issuances of Capital Stock (including by private
placements) where, after giving effect to such issuance, no
152
<PAGE>
Event of Default will exist under Section 10.1(m) and to the extent
---------------
the proceeds thereof are applied in accordance with this Agreement.
The Administrative Agent agrees that, with respect to any matters required to be
reasonably satisfactory or acceptable to it, it shall exercise its reasonable
judgment in making, and shall not unreasonably withhold or delay, such
determination.
8.12 Accounting Changes
------------------
The Borrower shall not, nor shall it permit any of its Subsidiaries to make or
permit to be made any change in accounting policies affecting the presentation
of financial statements or reporting practices from those employed by it on the
date hereof, unless (i) such change is required by GAAP, (ii) such change is
disclosed to the Lenders through the Administrative Agent or otherwise and (iii)
relevant prior financial statements that are affected by such change are
restated (in form and detail satisfactory to the Administrative Agent) as may be
required by GAAP to show comparative results. If any changes in GAAP or the
application thereof from that used in the preparation of the financial
statements referred to in Section 6.5(a) hereof occur after the Effective Date
--------------
and such changes result in, in the sole judgment of the Administrative Agent, a
meaningful change in the calculation of any financial covenants or restrictions
set forth in this Agreement, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial covenants and
restrictions so as to equitably reflect such changes, with the desired result
that the criteria for evaluating the financial condition and results of
operations of the Borrower and its Subsidiaries shall be the same after such
changes as if such changes had not been made.
8.13 Permitted Accounts Receivable Securitization.
--------------------------------------------
The Borrower shall not, nor shall it permit any of its Subsidiaries to, enter
into any Receivables Documents other than in connection with a Permitted
Accounts Receivable Securitization (unless such Receivables Documents have been
approved by the Administrative Agent or are non-material documentation entered
into pursuant to such approved Receivables Documents) or amend or modify in any
material respect which is adverse to the Lenders any of such Receivables
Documents unless such amendment or modification has been approved by the
Administrative Agent; provided, however, that if the Receivables Documents,
-------- -------
after giving effect to such amendment or modification, would constitute a
Permitted Accounts Receivable Securitization, then such approval of the
Administrative Agent shall not be required. No Unrestricted Subsidiary may be a
Participating Subsidiary in a Permitted Accounts Receivable Securitization.
153
<PAGE>
ARTICLE IX
FINANCIAL COVENANTS
Holdings and the Borrower hereby agree that, so long as the
Commitments remain in effect or any Loan or LC Obligation remains outstanding
and unpaid or any other amount is owing to any Lender or the Administrative
Agent hereunder:
9.1 Capital Expenditures
--------------------
(a) Holdings and the Borrower will not, and will not permit any of
their Subsidiaries to, make any Consolidated Capital Expenditures, except that
during any Fiscal Year the Borrower and its Subsidiaries may make Consolidated
Capital Expenditures so long as the aggregate amount so made by the Borrower and
its Subsidiaries (on a consolidated basis) does not exceed during (i) the 1999
Fiscal Year, an amount equal to $200,000,000 and (ii) each Fiscal Year
thereafter an amount equal to (x) $300,000,000 plus (y) an amount equal to the
----
amount of Consolidated Capital Expenditures permitted pursuant to the preceding
clause (x) for the immediately preceding Fiscal Year and not utilized during
such Fiscal Year, provided, that the aggregate amount attributable to this
--------
clause (y) shall not at any time exceed $100,000,000.
(b) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make Consolidated Capital Expenditures on any date with (i) proceeds of
Indebtedness incurred pursuant to Section 8.2(i) and (p) and (ii) Net Offering
-------------- ---
Proceeds which are not required to be applied as a mandatory prepayment under
Section 4.4(g).
- --------------
(c) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make Consolidated Capital Expenditures with (i) the insurance proceeds
received by Holdings or any of its Subsidiaries from any Recovery Event and (ii)
the Net Sale Proceeds received by Holdings or any of its Subsidiaries from any
Asset Disposition, so long as such insurance proceeds and/or Net Sale Proceeds
are used or contractually committed to be used within 365 days to make
Consolidated Capital Expenditures in accordance with Section 4.4(e).
--------------
9.2 Maintenance of Consolidated Net Worth
-------------------------------------
The Borrower will not permit its Consolidated Net Worth on the last day of any
Fiscal Quarter ending after the Initial Borrowing Date to be less than the sum
of (i) $965,000,000 plus (ii) an amount equal to 50% of the aggregate
----
Consolidated Net Income of the Borrower since the Initial Borrowing Date plus
----
(iii) an amount equal to 75% or the Net Offering Proceeds from primary issuances
of capital stock of Holdings of any of its Subsidiaries; provided, however, that
-------- -------
in the event that the Borrower has Consolidated Net Income of less than zero for
any Fiscal Quarter,
154
<PAGE>
Consolidated Net Income for purposes only of this Section 9.1 shall be deemed to
-----------
be zero for such Fiscal Quarter.
9.3 Interest Coverage Ratio
-----------------------
Neither Holdings nor the Borrower will permit the Interest Coverage Ratio
calculated for any Test Period ending at the following dates or during the
follow periods to be less than the ratio set forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
December 31, 1999 to March 31, 2000 1.75 to 1.0
June 30, 2000 to March 31, 2001 2.00 to 1.0
June 30, 2001 to March 31, 2002 2.25 to 1.0
June 30, 2002 to March 31, 2003 2.50 to 1.0
June 30, 2003 and thereafter 2.75 to 1.0
</TABLE>
9.4 Leverage Ratio
--------------
The Borrower will not permit for any Test Period ending on a date set forth
during any period described below, the Leverage Ratio to exceed the ratio set
forth opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
December 31, 1999 to June 30, 2000 5.75 to 1.0
September 30, 2000 to June 30, 2001 5.50 to 1.0
September 30, 2001 to June 30, 2002 4.75 to 1.0
September 30, 2002 to June 30, 2003 4.0 to 1.0
September 30, 2003 and thereafter 3.75 to 1.0
</TABLE>
155
<PAGE>
ARTICLE X
EVENTS OF DEFAULT
10.1 Events of Default
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Any of the following events, acts, occurrences or states of facts shall
constitute an "Event of Default" for purposes of this Agreement:
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(a) Failure to Make Payments When Due. The Borrower (i) shall default
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in the payment of principal on any of the Loans or any reimbursement obligation
with respect to any Letter of Credit; or (ii) shall default in the payment of
interest on any of the Loans or default in the payment of any fee or any other
amount owing hereunder or under any other Loan Document when due and such
default in payment shall continue for five (5) Business Days; or
(b) Representations and Warranties. Any representation or warranty
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made by or on the part of the Borrower or any Credit Party, as the case may be,
contained in any Loan Document or any document, instrument or certificate
delivered pursuant hereto or thereto shall have been incorrect or misleading in
any material respect when made or deemed made; or
(c) Covenants. The Borrower shall (i) default in the performance or
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observance of any term, covenant, condition or agreement on its part to be
performed or observed under Article VIII and Article IX hereof or Sections
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7.3(a), 7.9, 7.10, 7.11, 7.12 or 7.15 or (ii) default in the due performance or
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observance by it of any other term, covenant or agreement contained in this
Agreement and such default shall continue unremedied for a period of thirty (30)
days after written notice to the Borrower by the Administrative Agent or any
Lender; or
(d) Default Under Other Loan Documents. Any Credit Party shall
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default in the performance or observance of any term, covenant, condition or
agreement on its part to be performed or observed hereunder or under any Loan
Document (and not constituting an Event of Default under any other clause of
this Section 10.1) and such default shall continue unremedied for a period of
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thirty (30) days after written or telephonic (immediately confirmed in writing)
notice thereof has been given to the Borrower by the Administrative Agent; or
(e) Voluntary Insolvency, Etc. Holdings, the Borrower or any of its
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Material Subsidiaries shall become insolvent or generally fail to pay, or admit
in writing its inability to pay, its debts as they become due, or shall
voluntarily commence any proceeding or file any petition under any bankruptcy,
insolvency or similar law or seeking dissolution or reorganization or the
appointment of a receiver, trustee, administrator, custodian or liquidator for
it or a substantial portion of its property, assets or business or to effect a
plan or other arrangement with its creditors, or shall file any answer admitting
the jurisdiction of the court and the material
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allegations of an involuntary petition filed against it in any bankruptcy,
insolvency or similar proceeding, or shall be adjudicated bankrupt, or shall
make a general assignment for the benefit of creditors, or shall consent to, or
acquiesce in the appointment of, a receiver, trustee, custodian, administrator
or liquidator for a substantial portion of its property, assets or business,
shall call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts or shall take any corporate action authorizing any of
the foregoing; or
(f) Involuntary Insolvency, Etc. Involuntary proceedings or an
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involuntary petition shall be commenced or filed against Holdings, the Borrower
or any of its Material Subsidiaries under any bankruptcy, insolvency or similar
law or seeking the dissolution or reorganization of it or the appointment of a
receiver, trustee, custodian, administrator or liquidator for it or of a
substantial part of its property, assets or business, or any similar writ,
judgment, warrant of attachment, execution or process shall be issued or levied
against a substantial part of its property, assets or business, and (other than
a petition for administration) such proceedings or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded, within thirty (30) (or,
in the case of a petition for administration, five (5)) days after commencement,
filing or levy, as the case may be, or any order for relief shall be entered in
any such proceeding; or
(g) Default Under Other Agreements. (i) Holdings, the Borrower or any
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of its Subsidiaries shall default in the payment when due, whether at stated
maturity or otherwise, of any Indebtedness (other than Indebtedness owed to the
Lenders under the Loan Documents) in excess of $5,000,000 in the aggregate
beyond the period of grace if any, provided in the instrument or agreement under
which such Indebtedness was created, or (ii) a default shall occur in the
performance or observance of any agreement under any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any notice of
acceleration or similar notice is required), any such Indebtedness to become due
or be repaid prior to its stated maturity or (iii) any such Indebtedness of the
Borrower or any of its Subsidiaries shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment
(other than with proceeds of the event giving rise to such prepayment), prior to
the stated maturity thereof; or
(h) Invalidity of Subordination Provisions. The subordination
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provisions of any agreement or instrument governing the Holding Zero Coupon
Notes or the Senior Subordinated Note Documents is for any reason revoked or
invalidated, or otherwise cease to be in full force and effect, any Person
contests in any manner the validity or enforceability thereof or denies that it
has any further liability or obligation thereunder, or the Loans and the other
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Obligations hereunder entitled to receive the benefits of any Loan Document is
for any reason subordinated or does not have the priority contemplated by this
Agreement or such subordination provisions; or
(i) Judgments. One or more judgments or decrees shall be entered
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against Holdings, the Borrower or any of its Subsidiaries involving,
individually or in the aggregate, a liability (to the extent not paid or covered
by a reputable insurance company or indemnitor as to which coverage or
indemnification, as the case may be, has not been disclaimed) of $5,000,000 or
more and all such judgments or decrees shall not have been vacated, discharged,
satisfied, stayed or bonded pending appeal within thirty (30) days from the
entry thereof; or
(j) Security Documents. At any time after the execution and delivery
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thereof, any of the Security Documents shall cease to be in full force and
(other than as a result of the actions taken by the Collateral Agent or the
Lenders to release such Security Document) effect or shall cease to give the
Collateral Agent the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a first priority perfected
security interest in, and Lien on, all of the Collateral), in favor of the
Collateral Agent, for the benefit of the Secured Parties, superior to and prior
to the rights of all third Persons and subject to no other Liens (except to the
extent expressly permitted herein or therein); or
(k) Guaranties. Any Guaranty or any provision thereof shall (other
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than as a result of the actions taken by the Administrative Agent or the Lenders
to release such Guaranty) cease to be in full force and effect in accordance
with its terms, or any Credit Party or any Person acting by or on behalf of such
Guarantor shall deny or disaffirm such Credit Party's obligations under any
Guaranty; or
(l) ERISA. Either (i) any Reportable Event which the Required Lenders
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determine constitutes reasonable grounds for the termination of any Plan by the
PBGC or of any Multiemployer Plan or for the appointment by the appropriate
United States District Court of a trustee to administer or liquidate any Plan or
Multiemployer Plan shall have occurred, (ii) a trustee shall be appointed by a
United States District Court to administer any Plan or Multiemployer Plan, (iii)
the PBGC shall institute proceedings to terminate any Plan or Multiemployer Plan
or to appoint a trustee to administer any Plan; (iv) the Borrower or any of its
Subsidiaries or any of their ERISA Affiliates shall become liable to the PBGC or
any other party under Section 4062, 4063 or 4064 of ERISA with respect to any
Plan; or (v) the Borrower or any of its Subsidiaries or any of their ERISA
Affiliates shall become liable to make a current payment with respect to any
Multiemployer Plan under Section 4201 et seq. of ERISA; if as of the date
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thereof or any subsequent date, the sum of each of the Borrower's and its
Subsidiaries' and their ERISA Affiliates' various liabilities (such liabilities
to include, without limitation, any liability to the PBGC or to any other party
under Section 4062, 4063 or 4064 of ERISA with
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respect to any Plan, or to any Multiemployer Plan under Section 4201 et seq. of
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ERISA) as a result of such events listed in subclauses (i) through (v) above
exceeds $7,500,000; or
(m) Change of Control. A Change of Control shall occur; or
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(n) Receivables Facility. Any event (after the expiration of any
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applicable grace periods) as specified in the Receivables Documents for any
Permitted Accounts Receivable Securitization shall entitle the Persons (other
than a Receivable Subsidiary) financing Accounts Receivables pursuant to a
Permitted Accounts Receivable Securitization to terminate or permanently cease
funding the financing of Accounts Receivable pursuant to such Permitted Accounts
Receivable Securitization.
If any of the foregoing Events of Default shall have occurred and be
continuing, the Administrative Agent, at the written direction of the Required
Lenders, shall take one or more of the following actions: (i) by written or oral
or telephonic notice (in the case of oral or telephonic notice confirmed in
writing immediately thereafter) to the Borrower declare the Total Commitments to
be terminated whereupon the Total Commitments shall forthwith terminate, (ii) by
written or oral or telephonic notice (in the case of oral or telephonic notice
confirmed in writing immediately thereafter) to the Borrower declare all sums
then owing by the Borrower hereunder and under the Loan Documents to be
forthwith due and payable, whereupon all such sums shall become and be
immediately due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrower, (iii)
terminate any Letter of Credit in accordance with its terms, (iv) direct the
Borrower to pay (and the Borrower agrees that upon receipt of such notice, or
upon the occurrence of any Event of Default specified in Section 10.1(e) or
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Section 10.1(f) with respect to the Borrower it will pay) to the Administrative
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Agent at the Payment Office such additional amount of cash, to be held as
security by the Administrative Agent, as is equal to the Assigned Dollar Value
of the aggregate Stated Amount of all Letters of Credit issued for the account
of the Borrower and its Subsidiaries and then outstanding, and (v) enforce, as
the Administrative Agent (to the extent permitted under the applicable Security
Documents), or direct the Collateral Agent to enforce pursuant to the Security
Documents, as the case may be, all of the Liens and security interests created
pursuant to the Security Documents. In cases of any occurrence of any Event of
Default described in Section 10.1(e) or Section 10.1(f) with respect to the
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Borrower, the Loans, together with accrued interest thereon, shall become due
and payable forthwith without the requirement of any such acceleration or
request, and without presentment, demand, protest or other notice of any kind,
all of which are expressly waived by the Borrower, any provision of this
Agreement or any other Loan Document to the contrary notwithstanding, and other
amounts payable by the Borrower hereunder shall also become immediately due and
payable all without notice of any kind.
Anything in this Section 10.1 to the contrary notwithstanding, the
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Administrative Agent shall, at the request of the Required Lenders, rescind and
annul any acceleration of the
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Loans by written instrument filed with the Borrower; provided that at the time
such acceleration is so rescinded and annulled: (A) all past due interest and
principal (other than principal due solely as a result of such acceleration), if
any, on the Loans and all other sums payable under this Agreement and the other
Loan Documents shall have been duly paid, and (B) no other Event of Default
shall have occurred and be continuing which shall not have been waived in
accordance with the provisions of Section 12.1 hereof. Upon any such rescission
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and annulment, the Administrative Agent shall return to the Borrower any cash
collateral delivered pursuant to the preceding paragraph.
10.2 Rights Not Exclusive
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The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
ARTICLE XI
THE ADMINISTRATIVE AGENT
In this Article XI, the Lenders agree among themselves as follows:
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11.1 Appointment
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The Lenders hereby appoint BT as the Administrative Agent (for purposes of this
Article XI, the term "Administrative Agent" shall, except for purposes of
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Section 11.9, include BT in its capacity as the Administrative Agent pursuant to
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the Security Documents) to act as specified herein and in the other Loan
Documents. Each Lender hereby irrevocably authorizes and each holder of any
Note by the acceptance of such Note shall be deemed to irrevocably authorize the
Administrative Agent to take such action on its behalf under the provisions
hereof, the other Loan Documents (including, without limitation, to give notices
and take such actions on behalf of the Required Lenders as are consented to in
writing by the Required Lenders or all Lenders, as the case may be) and any
other instruments, documents and agreements referred to herein or therein and to
exercise such powers hereunder and thereunder as are specifically delegated to
the Administrative Agent by the terms hereof and thereof and such other powers
as are reasonably incidental thereto. The Administrative Agent may perform any
of its duties hereunder and under the other Loan Documents, by or through its
officers, directors, Administrative Agents employees or affiliates.
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11.2 Nature of Duties
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(a) The Administrative Agent shall not have any duties or responsibilities
except those expressly set forth in this Agreement. The duties of the
Administrative Agent shall be mechanical and administrative in nature. EACH
LENDER HEREBY ACKNOWLEDGES AND AGREES THAT, SUBJECT TO SECTION 11.2(b), THE
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ADMINISTRATIVE AGENT SHALL NOT HAVE, BY REASON OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, A FIDUCIARY RELATIONSHIP TO OR IN RESPECT OF ANY LENDER. Nothing
in any of the Loan Documents, expressed or implied, is intended to or shall be
so construed as to impose upon the Administrative Agent any obligations in
respect of any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of the Borrower in connection with the making
and the continuance of the Loans hereunder and shall make its own appraisal of
the credit worthiness of the Borrower, and the Administrative Agent shall not
have any duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before making of the Loans or at any time or
times thereafter. The Administrative Agent will promptly notify each Lender at
any time that the Required Lenders have instructed it to act or refrain from
acting pursuant to Article X.
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(b) The Administrative Agent hereby declares that it, including in its
capacity as Collateral Agent, holds and shall hold:
(i) all rights, title and interest that may now or hereafter be mortgaged,
charged or assigned or otherwise secured in favor of the Administrative
Agent and/or the Collateral Agent by or pursuant to the Loan Documents
governed by English law and all proceeds of enforcement of such security;
and
(ii) the benefit of all representations, covenants, guarantees, indemnities
and other contractual provisions governed by English law given in favor of
the Administrative Agent and/or the Collateral Agent (other than any such
benefits given to the Administrative Agent and/or the Collateral Agent
solely for its own benefit), on trust (for which the perpetuity period
shall be 80 years) for itself and the other Lenders from time to time.
11.3 Exculpation, Rights Etc.
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Neither the Administrative Agent nor any of its officers, directors, agents,
employees or affiliates shall be liable to any Lender for any action taken or
omitted by them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The Administrative Agent shall not be responsible to
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any Lender for any recitals, statements, representations or warranties herein or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of any of the Loan Documents or any other
document or the financial condition of the Borrower. The Administrative Agent
shall not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or
any of the Loan Documents or any other document or the financial condition of
the Borrower, or the existence or possible existence of any Unmatured Event of
Default or Event of Default unless requested to do so by the Required Lenders.
The Administrative Agent may at any time request instructions from the Lenders
with respect to any actions or approvals (including the failure to act or
approve) which by the terms of any of the Loan Documents, the Administrative
Agent is permitted or required to take or to grant, and if such instructions are
requested, the Administrative Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action or withholding
any approval under any of the Loan Documents until it shall have received such
instructions from the Required Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Administrative
Agent as a result of the Administrative Agent acting, approving or refraining
from acting or approving under any of the Loan Documents in accordance with the
instructions of the Required Lenders or, to the extent required by Section 12.1,
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all of the Lenders.
11.4 Reliance
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The Administrative Agent shall be entitled to rely, and shall be fully protected
in relying, upon any notice, writing, resolution notice, statement, certificate,
order or other document or any telephone, telex, teletype or telecopier message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person, and, with respect to all matters pertaining herein or to
any of the other Loan Documents and its duties hereunder or thereunder, upon
advice of counsel selected by the Administrative Agent.
11.5 Indemnification
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To the extent the Administrative Agent is not reimbursed and indemnified by the
Borrower, the Lenders will reimburse and indemnify the Administrative Agent for
and against any and all liabilities, obligations, losses, damages, claims,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Administrative Agent, acting pursuant hereto in such capacity, in
any way relating to or arising out of this Agreement or any of the other Loan
Documents or any action taken or omitted by the Administrative Agent under this
Agreement or any of the other Loan Documents, in proportion to each Lender's
Aggregate Pro Rata Share of the Total Commitment; provided, however, that no
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Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, claims, penalties, actions, judgments, suits, costs,
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expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. The obligations of the Lenders under this
Section 11.5 shall survive the payment in full of the Notes and the termination
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of this Agreement.
For purposes of this Section 11.5, "Aggregate Pro Rata Share" means,
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when used with reference to any Lender and any described aggregate or total
amount, an amount equal to the result obtained by multiplying such desired
aggregate or total amount by a fraction the numerator of which shall be the
aggregate principal amount of such Lender's Domestic Revolving Loan,
Multicurrency Revolving Loan, Term A Dollar Loan, Term A Euro Loan, and Term B
Loan, and Term C Loan and the denominator of which shall be aggregate of all of
the Loans outstanding hereunder.
11.6 The Administrative Agent In Its Individual Capacity
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With respect to its Loans and Commitments (and its Domestic Revolver Pro Rata
Share, Multicurrency Revolver Pro Rata Share, Term A Dollar Pro Rata Share, Term
A Euro Pro Rata Share, Term B Pro Rata Share and Term C Pro Rata Share, as
applicable, thereof), the Administrative Agent shall have and may exercise the
same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender or holder
of Obligations. The terms "Lenders", "holder of Obligations" or "Required
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include the Administrative Agent in its individual capacity as a
Lender, one of the Required Lenders or a holder of Obligations. The
Administrative Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Borrower or any
Subsidiary or affiliate of the Borrower as if it were not acting as the
Administrative Agent hereunder or under any other Loan Document, including,
without limitation, the acceptance of fees or other consideration for services
without having to account for the same to any of the Lenders.
11.7 Notice of Default
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The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Event of Default or Unmatured Event of Default hereunder
unless the Administrative Agent has received written notice from a Lender or the
Borrower referring to this Agreement describing such Event of Default or
Unmatured Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall give prompt notice thereof to the Lenders.
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11.8 Holders of Obligations
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The Administrative Agent may deem and treat the payee of any Obligation as
reflected on the books and records of the Administrative Agent as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent pursuant to Section 12.8(c). Any request, authority or consent of any
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Person who, at the time of making such request or giving such authority or
consent, is the holder of any Obligation shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Obligation or of any
Obligation or Obligations granted in exchange therefor.
11.9 Resignation by the Administrative Agent
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(a) The Administrative Agent may resign from the performance of all
its functions and duties hereunder at any time by giving fifteen (15) Business
Days' prior written notice to the Borrower and the Lenders. Such resignation
shall take effect upon the acceptance by a successor Administrative Agent of
appointment pursuant to clauses (b) and (c) below or as otherwise provided
below.
(b) Upon any such notice of resignation, the Required Lenders shall
appoint a successor the Administrative Agent who shall be satisfactory to the
Borrower and shall be an incorporated bank or trust company.
(c) If a successor the Administrative Agent shall not have been so
appointed within said fifteen (15) Business Day period, the Administrative
Agent, with the consent of the Borrower, shall then appoint a successor who
shall serve as the Administrative Agent until such time, if any, as the Required
Lenders, with the consent of the Borrower, appoint a successor the
Administrative Agent as provided above.
(d) If no successor the Administrative Agent has been appointed
pursuant to clause (b) or (c) by the twentieth (20th) Business Day after the
date such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders, with the consent of
the Borrower, appoint a successor Administrative Agent as provided above.
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11.10 The Administrative Agent as English Trustee
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(a) The Administrative Agent in its capacity as trustee or otherwise
under a Loan Document governed by English law
(i) is not liable for any failure, omission, or defect in
perfecting or registering the security constituted or created by any Loan
Document;
(ii) may accept without inquiry such title as any the Borrower
or any of its Subsidiaries may have to any asset secured by any Loan Document;
and
(iii) is not under any obligation to hold any Loan Document or any
other document in connection with such Loan Document or the assets secured by
such Loan Document (including title deeds) in its own possession or take any
steps to protect or preserve the same. The Administrative Agent may permit any
the Borrower or any of its Subsidiaries to retain any Loan Document or other
document in its possession.
(b) Except as otherwise provided in the Loan Documents governed by
English law, all moneys which under the trusts contained in the Loan Documents
are received by the Administrative Agent in its capacity as trustee or otherwise
may be invested in the name of or under the control of the Administrative Agent
in any investment authorized by English law for the investment by a trustee of
trust money or in any other investments which may be selected by the
Administrative Agent. Additionally, the same may be placed on deposit in the
name or under the control of the Administrative Agent with such Lender or
institution (including the Administrative Agent itself) and upon such terms as
the Administrative Agent may think fit.
ARTICLE XII
MISCELLANEOUS
12.1 No Waiver; Modifications in Writing
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(a) No failure or delay on the part of the Administrative Agent or any
Lender in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Administrative Agent or any Lender at law or in equity or otherwise. Neither
this Agreement nor any terms hereof may be amended, modified, supplemented,
waived, discharged, terminated or
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otherwise changed unless such amendment, modification, supplement, waiver,
discharge, termination or other change is in writing signed by Holdings, the
Borrower and the Required Lenders, provided that no such amendment,
modification, supplement waiver, discharge, termination or other change shall,
without the consent of each Lender (other than a Defaulting Lender) with
Obligations directly affected thereby in the case of the following clause (i),
(i) extend the final scheduled maturity of any Loan or Note, or extend the
stated maturity of any Letter of Credit beyond the Revolver Termination Date, or
reduce the rate or extend the time of payment of interest or fees thereon, or
reduce the principal amount thereof, (ii) release all or substantially all of
the Collateral (except as expressly provided in the Security Documents) or
Guarantor (other than a Guarantor that is not a Material Subsidiary or in
connection with a transaction permitted by Section 8.3), (iii) amend, modify or
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waive any provision of this Section 12.1, (iv) reduce the percentage specified
------------
in the definition of Required Lenders (it being understood that, with the
consent of the Required Lenders, the definition of "Required Lenders" shall
include lenders with respect to additional revolving loans or term loans
pursuant to this Agreement so long as such additional revolving loans or term
loans are on substantially the same basis as the extensions of Revolving Loans,
Multicurrency Revolving Loans or Term Loans, as the case may be, are included on
the date hereof) or (v) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement; provided, further, that
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no such amendment, modification, supplement, waiver, discharge, termination or
other change shall (1) increase the Commitments of any Lender over the amount
thereof then in effect without the consent of such Lender (it being understood
that waivers or modifications of conditions precedent, covenants, Events of
Default or Unmatured Events of Default shall not constitute an increase of the
Commitment of any Lender, and that an increase in the available portion of any
Commitment of any Lender shall not constitute an increase in the Commitment of
such Lender), (2) without the consent of Facing Agent, amend, modify or waive
any provision of Section 2.10 or alter its rights or obligations with respect to
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Letters of Credit, (3) without the consent of the Administrative Agent, amend,
modify or waive any provision of Article XI as same applies to the
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Administrative Agent or any other provisions as same relates to the rights or
obligations of the Administrative Agent, (4) without the consent of the
Administrative Agent, amend, modify or waive any provisions relating to the
rights or obligations of the Administrative Agent under the other Loan
Documents, (5) without the consent of the Majority Lenders of each Facility
which is being allocated a lesser prepayment, repayment or commitment reduction,
alter the required application of any prepayments or repayments (or commitment
reduction), as between the various Facilities pursuant to clause (i) of the
first sentence of Section 4.5(a) and the second and third sentence of Section
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4.5(a) (although the Required Lenders may waive in whole or in part, any such
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prepayment, repayment or commitment reduction so long as the application, as
amongst the various Facilities, of any such prepayment, repayment or commitment
reduction which is still required to be made is not altered), (6) without the
consent of the Majority Lenders of each Facility, amend the definition of
Majority Lenders, (7) without the consent of the Majority Lenders of the Term A
Dollar Facility, amend the
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definition of Term A Dollar Pro Rata Share; without the consent of the Majority
Lenders of the Term A Euro Facility, amend the definition of Term A Euro Pro
Rata Share, without the consent of the Majority Lenders of the Term B Facility,
amend the definition of Term B Pro Rata Share; without the consent of the
Majority Lenders of the Term C Facility, amend the definition of Term C Pro Rata
Share; without the consent of the Majority Lenders of the Domestic Revolving
Facility, amend the definition of Domestic Revolver Pro Rata Share; and without
the consent of the Majority Lenders of the Multicurrency Revolving Facility,
amend the definition of Multicurrency Revolver Pro Rata Share or (8) without the
consent of the Majority Lenders of the Term A Dollar Facility, amend the
definition of Scheduled Term A Dollar Repayments; without the consent of the
Majority Lenders of the Term A Euro Facility, amend the definition of Scheduled
Term A Euro Repayments; without the consent of the Majority Lenders of the Term
B Facility, amend the definition of Scheduled Term B Repayments, and without the
consent of the Majority Lenders of the Term C Facility, amend the definition of
Scheduled Term C Repayments.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to the third sentence
of Section 12.1(a), the consent of the Required Lenders is obtained but the
---------------
consent of one or more of such other Lenders whose consent is required is not
obtained, then the Borrower shall have the right, so long as all non-consenting
Lenders whose individual consent is required are treated as described in either
clause (A) or (B) below, to either (A) replace each such non-consenting Lender
or Lenders (or, at the option of the Borrower if the respective Lender's consent
is required with respect to less than all Loans, to replace only the respective
Loans of the respective non-consenting Lender which gave rise to the need to
obtain such Lender's individual consent) with one or more Replacement Lenders
pursuant to Section 3.7 so long as at the time of such replacement, each such
-----------
Replacement Lender consents to the proposed amendment, modification, supplement.
waiver, discharge, termination or other change or (B) terminate such non-
consenting Lender's Domestic Revolving Commitment and/or Multicurrency Revolving
Commitment, as the case may be, and repay all outstanding Loans of such Lender
which gave rise to the need to obtain such Lender's consent, in accordance with
Section 4.l(b) and/or 4.3; provided that, unless the Domestic Revolving
- -------------- --- --------
Commitment and/or the Multicurrency Revolving Commitment, as the case may be,
terminated and Loans repaid pursuant to the preceding clause (B) are immediately
replaced in full at such time through the addition of new Lenders or the
increase of the Commitments and/or outstanding Loans of existing Lenders (who
in each case must specifically consent thereto), then in the case of any action
pursuant to preceding clause (B) the Required Lenders (determined before giving
effect to the proposed action) shall specifically consent thereto, provided,
--------
further, that in any event the Borrower shall not have the right to replace a
- -------
Lender, terminate its Domestic Revolving Commitment and/or the Multicurrency
Revolving Commitment, as the case may be, or repay its Loans solely as a result
of the exercise of such Lender's rights (and the withholding of any required
consent by such Lender) contemplated by the second proviso to the third sentence
of Section 12.1(a).
---------------
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12.2 Further Assurances
------------------
The Borrower agrees to do such further acts and things and to execute and
deliver to the Administrative Agent such additional assignments, agreements,
powers and instruments, as the Administrative Agent may reasonably require or
deem advisable to carry into effect the purposes of this Agreement or any of the
Loan Documents or to better assure and confirm unto the Administrative Agent its
rights, powers and remedies hereunder.
12.3 Notices, Etc
------------
Except where oral or telephonic instructions or notices are authorized herein to
be given, all notices, demands, instructions and other communications required
or permitted to be given to or made upon any party hereto or any other Person
shall be in writing and shall be personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or by a reputable
overnight or courier delivery service, or by telecopier, and shall be deemed to
be given for purposes of this Agreement on the third day after deposit in
registered or certified mail, postage prepaid, and otherwise on the date that
such writing is delivered or sent to the intended recipient thereof, or in the
case of notice delivered by telecopy, upon completion of transmission with a
copy of such notice also being delivered under any of the other methods provided
above, all in accordance with the provisions of this Section 12.3. Unless
------------
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 12.3, notices, demands, instructions and
------------
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telecopier
numbers) indicated on Schedule 12.3 or, in the case of any Assignee, in the
-------------
applicable Assignment and Assumption Agreement and, in the case of telephonic
instructions or notices, by calling the telephone number or numbers indicated
for such party on its signature page to this Agreement or such Assignment and
Assumption Agreement, as the case may be.
12.4 Costs, Expenses and Taxes
-------------------------
(a) Generally. The Borrower agrees (without duplication) to pay all
---------
reasonable costs and expenses of the Agents in connection with the negotiation,
preparation, printing, typing, reproduction, execution and delivery of this
Agreement and the other Loan Documents and the documents and instruments
referred to herein and therein and any amendment, waiver, consent relating
hereto or thereto or other modifications of (or supplements to) any of the
foregoing and any and all other documents and instruments furnished pursuant
hereto or thereto or in connection herewith or therewith, including without
limitation, the reasonable fees and out-of-pocket expenses of Winston & Strawn,
special counsel to the Administrative Agent, and any local counsel retained by
the Administrative Agent relative thereto or the reasonable allocated costs of
staff counsel as well as the fees and out-of-pocket expenses of counsel,
independent public accountants and other outside experts retained by the
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Administrative Agent in connection with the administration of this Agreement and
the other Loan Documents, and all search fees, appraisal fees and expenses,
title insurance policy fees, costs and expenses and filing and recording fees
and all costs and expenses (including, without limitation, Attorney Costs), if
any, of the Agents and the Lenders in connection with the enforcement of this
Agreement, any of the Loan Documents or any other agreement furnished pursuant
hereto or thereto or in connection herewith or therewith. In addition, the
Borrower shall pay any and all present and future stamp, transfer, excise and
other similar taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, any Loan Document, or the making of
any Loan (other than taxes based on the net income of the Lenders), and agrees
to save and hold the Administrative Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay by
the Borrower in paying, or omission by the Borrower to pay, such taxes. Any
portion of the foregoing fees, costs and expenses which remains unpaid more
than thirty (30) days following the Administrative Agent's, any Agents' or any
Lender's statement and request for payment thereof shall bear interest from the
date of such statement and request to the date of payment at the Default Rate.
Subject to Section 4.7, the Borrower will indemnify and hold harmless the
-----------
Administrative Agent, each Agent and each Lender and each director, officer,
employee, partner, agent, attorney, trustee and Affiliate of the Administrative
Agent, each Agent and each Lender (each such Person an "Indemnified Party") from
-----------------
and against all losses, claims, damages, penalties, obligations (including
removal or remedial actions), expenses or liabilities which arise out of, in any
way relate to, or result from the transactions contemplated by this Agreement or
any of the other Loan Documents and to reimburse each Indemnified Party upon
their demand, for any Attorney Costs incurred in connection with investigating,
preparing to defend or defending any such loss, claim, damage, liability, action
or claim; provided, however, (a) that no Indemnified Party shall have the right
-------- -------
to be so indemnified hereunder for any loss, claim, damage, penalties,
obligations, expense or liability to the extent it arises or results from the
gross negligence or willful misconduct or bad faith of such Indemnified Party as
finally determined by a court of competent jurisdiction and (b) that nothing
contained herein shall affect the obligations and liabilities of the Lenders to
the Borrower contained herein. If any action, suit or proceeding arising from
any of the foregoing is brought against the Administrative Agent, any Agent, any
Lender or any other Indemnified Party, the Borrower will, if requested by the
Administrative Agent, any Agent, any Lender or any such Indemnified Party,
resist and defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel reasonably satisfactory to the Person or
Persons indemnified or intended to be indemnified. Each Indemnified Party
shall, unless the Administrative Agent, an Agent, a Lender or other Indemnified
Party has made the request described in the preceding sentence and such request
has been complied with, have the right to employ its own counsel (or (but not as
well as) staff counsel) to investigate and control the defense of any matter
covered by such indemnity and the reasonable fees and expenses of such counsel
shall be at the expense of the indemnifying party. Excluding any liability
arising out of the gross negligence or willful misconduct of any Indemnified
Party, the Borrower further agrees to indemnify and hold each Indemnified Party
harmless from all loss, cost (including Attorney
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Costs), liability and damage whatsoever incurred by any Indemnified Party by
reason of any violation of any Environmental Laws or Environmental Permits or
for the Release or threatened Release of any Contaminants into the environment
for which the Borrower or any of its Subsidiaries has any liability or which
occurs upon the Mortgaged Property or which is related to any property currently
or formerly owned, leased or operated by or on behalf of the Borrower or any of
its Subsidiaries, or by reason of the imposition of any Environmental Lien in
respect of the Borrower or its Subsidiaries or which occurs by a breach of any
of the representations, warranties or covenants relating to environmental
matters contained herein, including, without limitation, by reason of any
matters disclosed in Schedule 6.17, provided that, with respect to any
-------------
liabilities arising from acts or failure to act for which the Borrower or any of
its Subsidiaries is strictly liable under any Environmental Law or Environmental
Permit, the Borrower's obligation to each Indemnified Party under this indemnity
shall likewise be without regard to fault on the part of the Borrower or any
such Subsidiary. If the Borrower shall fail to do any act or thing which it has
covenanted to do hereunder or any representation or warranty on the part of the
Borrower or any Subsidiary contained herein or in any other Loan Document shall
be breached, the Administrative Agent may (but shall not be obligated to) do the
same or cause it to be done or remedy any such breach, and may expend its funds
for such purpose, and will use its best efforts to give prompt written notice to
the Borrower that it proposes to take such action. Any and all amounts so
expended by the Administrative Agent shall be repaid to it by the Borrower
promptly upon the Administrative Agent's demand therefor, with interest at the
Default Rate in effect from time to time during the period including the date so
expended by the Administrative Agent to the date of repayment. To the extent
that the undertaking to indemnify, pay or hold harmless the Administrative Agent
or any Lender as set forth in this Section 12.4 may be unenforceable because it
------------
is violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law. The obligations of the
Borrower under this Section 12.4 shall survive the termination of this
------------
Agreement, the assignment by any Lender of all or any part of its Credit
Exposure hereunder and the discharge of the Borrower's other Obligations
hereunder.
(b) Foreign Exchange Indemnity. If any sum due from the Borrower
--------------------------
under this Agreement or any order or judgment given or made in relation hereto
has to be converted from the currency (the "first currency") in which the same
--------------
is payable hereunder or under such order or judgment into another currency (the
"second currency") for the purpose of (i) making or filing a claim or proof
---------------
against the Borrower with any Governmental Authority or in any court or
tribunal, or (ii) enforcing any order or judgment given or made in relation
hereto, the Borrower shall indemnify and hold harmless each of the Persons to
whom such sum is due from and against any loss actually suffered as a result of
any discrepancy between (a) the rate of exchange used to convert the amount in
question from the first currency into the second currency, and (b) the rate or
rates of exchange at which such Person, acting in good faith in a commercially
reasonable manner, purchased the first currency with the second currency after
receipt of a sum
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paid to it in the second currency in satisfaction, in whole or in part, of any
such order, judgment, claim or proof. The foregoing indemnity shall constitute a
separate obligation of the Borrower distinct from its other obligations
hereunder and shall survive the giving or making of any judgment or order in
relation to all or any of such other obligations. Notwithstanding the foregoing,
payments of principal and interest on Loans denominated in Euros, Sterling or an
Alternative Currency, as the case may be, shall be made in Euros, Sterling or
such Alternative Currency, as the case may be.
12.5 Confirmations
-------------
Each of the Borrower and each holder of any portion of the Obligations agrees
from time to time, upon written request received by it from the other, to
confirm to the other in writing (with a copy of each such confirmation to the
Administrative Agent) the aggregate unpaid principal amount of the Loan or Loans
and other Obligations then outstanding.
12.6 Adjustment; Setoff
------------------
(a) If any lender (a "Benefited Lender") shall at any time receive any
----------------
payment of all or part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by setoff,
pursuant to events or proceedings of the nature referred to in Section 10.1(e)
---------------
or Section 10.1(f) hereof, or otherwise) in a greater proportion than any such
---------------
payment to and collateral received by any other Lender in respect of such other
Lender's Loans or interest thereon, such Benefited Lender shall purchase for
cash from the other Lenders such portion of each such other Lender's Loans, or
shall provide such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral or proceeds ratably with
each Lender; provided, however, that if all or any portion of such excess
-------- -------
payment or benefits is thereafter recovered from such Benefited Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest unless the Benefited Lender
from which such excess payment is recovered is required by court order to pay
interest thereon, in which case each Lender returning funds to such Benefited
Lender shall pay its pro rata share of such interest. The Borrower agrees that
each Lender so purchasing a portion of another Lender's Loans may exercise all
rights of payment (including, without limitation, rights of setoff) with respect
to such portion as fully as if such Lender were the direct holder of such
portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower, upon the occurrence and
during the continuance of an Event of Default, to setoff and apply against any
Obligations, whether matured or unmatured, of the Borrower to such Lender, any
amount owing from such Lender to the Borrower, at or at any time
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<PAGE>
after, the happening of any of the above-mentioned events, and the aforesaid
right of setoff may be exercised by such Lender against the Borrower or against
any trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receivers, or execution, judgment or attachment creditor of the
Borrower, or against anyone else claiming through or against, the Borrower or
such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receivers, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of setoff shall not have been exercised
by such Lender prior to the making, filing or issuance, or service upon such
Lender of, or of notice of, any such petition, assignment for the benefit of
creditors, appointment or application for the appointment of a receiver, or
issuance of execution, subpoena, order or warrant. Each Lender agrees promptly
to notify the Borrower and the Administrative Agent after any such setoff and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such setoff and application.
(c) The Borrower expressly agrees that to the extent the Borrower
makes a payment or payments and such payment or payments, or any part thereof,
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or are required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the Indebtedness to the Lenders
or part thereof intended to be satisfied shall be revived and continued in full
force and effect as if said payment or payments had not been made.
12.7 Execution in Counterparts
-------------------------
This Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.
12.8 Binding Effect; Assignment; Addition and Substitution of Lenders
----------------------------------------------------------------
(a) This Agreement shall be binding upon, and inure to the benefit of,
the Borrower, the Administrative Agent, the Lenders, all future holders of the
Notes and their respective successors and assigns; provided, however, that the
-------- -------
Borrower may not assign its rights or obligations hereunder or in connection
herewith or any interest herein (voluntarily, by operation of law or otherwise)
without the prior written consent of the Administrative Agent and all of the
Lenders.
(b) Each Lender may at any time sell to one or more banks or other
entities ("Participants") participating interests in all or any portion of its
------------
Commitment and Loans or participation in Letters of Credit or any other interest
of such Lender hereunder (in respect of any Lender, its "Credit Exposure"). In
---------------
the event of any such sale by a Lender of participating
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<PAGE>
interests to a Participant, such Lender's obligations under this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, and the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Each Lender shall from
time to time upon request of the Borrower notify the Borrower of the identity of
any Participants with respect to its Credit Exposure hereunder, provided,
however, that failure to provide such notice will not affect the validity of
such participation. The Borrower agrees that if amounts outstanding under this
Agreement or any of the Loan Documents are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in respect
of its participating interest in amounts owing under this Agreement and the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement or any other Loan
Document, provided, however, that such right of setoff shall be subject to the
-------- -------
obligation of such Participant to share with the Lenders, and the Lenders agree
to share with such Participant, as provided in Section 12.6. The Borrower also
------------
agrees that each Participant shall be entitled to the benefits of Section 3.5,
-----------
3.6 and 4.7 with respect to its participation in the Loans outstanding from time
- --- ---
to time, provided that such Participant's benefits under Sections 3.5, 3.6 and
------------ ---
4.7 shall be limited to the benefits that the primary Lender would be entitled
- ---
to thereunder. Each Lender agrees that any agreement between such Lender and any
such Participant in respect of such participating interest shall not restrict
such Lender's right to approve or agree to any amendment, restatement,
supplement or other modification to, waiver of, or consent under, this Agreement
or any of the Loan Documents except to the extent that any of the foregoing
would (i) extend the final scheduled maturity of any Loan or Note in which such
Participant is participating (it being understood that amending the definitions
of Scheduled Term A Euro Repayments (other than the Term A Loan Maturity Date),
Schedule Term A Dollar Repayment (other than the Term Loan A Maturity Date),
Scheduled Term A Repayments (other than the Term A Loan Maturity Date),
Scheduled Term B Repayments (other than the Term B Loan Maturity Date) and
Scheduled Term C Repayments (other than the Term C Loan Maturity Date) shall not
constitute an extension of the final scheduled maturity of any Loan or Note) or
extend the stated maturity of any Letter of Credit in which such Participant is
participating beyond the Revolver Termination Date, or reduce the rate or extend
the time of payment of interest or fees on any such Loan, Note or Letter of
Credit (except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or increase
the amount of the Participant's participation over the amount thereof then in
effect (it being understood that waivers or modifications of conditions
precedent, covenants, Events of Default or Unmatured Events of Default or of a
mandatory reduction in Commitments shall not constitute a change in the terms of
such participation, and that an increase in any Commitment or Loan shall be
permitted without the consent of any Participant if the Participant's
participation is not increased as a result thereof), (ii) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement or (iii) release all or substantially all of the Collateral
under all of the Security Documents (except as expressly provided in the Loan
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Documents) supporting the Loans and/or Letters of Credit hereunder in which such
Participant is participating.
(c) Any Lender may at any time assign to one or more Eligible
Assignees, including an Affiliate thereof (treating any fund that invests in
bank loans, any other fund that invests in bank loans and is managed by the same
investment advisor of such Lender or by an affiliate of such investment manager
as a single Eligible Assignee) (each an "Assignee"), all or any part of its
--------
Credit Exposure pursuant to an Assignment and Assumption Agreement, provided
--------
that (i) it assigns its Credit Exposure in an amount not less than the Dollar
Equivalent of $5 million (or if less the entire amount of Lender's Credit
Exposure) and (ii) any assignment of all or any portion of any Lender's Credit
Exposure to an Assignee other than an Affiliate of such Lender or another
Lender, or in the case of a Lender that is a fund that invests in senior loans,
any other fund that invests in senior loans and is managed by the same
investment advisor of such Lender or by an Affiliate of such investment advisor,
shall require the prior written consent of the Administrative Agent and the
Borrower (the consent of the Borrower and the Administrative Agent not to be
unreasonably withheld or delayed, provided, however, that for the first ten
-------- -------
Business Days following the Initial Borrowing Date, assignments by the Agents
shall not require the consent of the Borrower) and provided further, that
-------- -------
notwithstanding the foregoing limitations, any Lender may at any time assign all
or any part of its Credit Exposure to any Affiliate of such Lender or to any
other Lender (treating any fund that invests in bank loans, any other fund that
invests in bank loans and is managed by the same investment advisor of such
Lender or by any Affiliate of such investment manager as a single Lender). Upon
execution of an Assignment and Assumption Agreement and the payment of a
nonrefundable assignment fee of $3,500 in immediately available funds to the
Administrative Agent at its Payment Office in connection with each such
assignment, written notice thereof by such transferor Lender to the
Administrative Agent and the recording by the Administrative Agent in the
Register of such assignment and the resulting effect upon the Loans, Domestic
Revolving Commitment and Multicurrency Revolving Commitment of the assigning
Lender and the Assignee, the Assignee shall have, to the extent of such
assignment, the same rights and benefits as it would have if it were a Lender
hereunder and the holder of the Obligations (provided that the Borrower and the
Administrative Agent shall be entitled to continue to deal solely and directly
with the assignor Lender in connection with the interests so assigned to the
Assignee until written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Administrative Agent by the
assignor Lender and the Assignee) and, if the Assignee has expressly assumed,
for the benefit of the Borrower, some or all of the transferor Lender's
obligations hereunder, such transferor Lender shall be relieved of its
obligations hereunder to the extent of such assignment and assumption, and
except as described above, no further consent or action by the Borrower, the
Lenders or the Administrative Agent shall be required. At the time of each
assignment pursuant to this Section 12.8(c) to a Person which is not already a
---------------
Lender hereunder and which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) United States Federal income
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tax purposes, the respective Assignee shall provide to the Borrower and the
Administrative Agent the appropriate IRS Forms (and, if applicable a Section
4.7(d)(ii) Certificate) described in Section 4.7(d). Each Assignee shall take
--------------
such Credit Exposure subject to the provisions of this Agreement and to any
request made, waiver or consent given or other action taken hereunder, prior to
the receipt by the Administrative Agent and the Borrower of written notice of
such transfer, by each previous holder of such Credit Exposure. Such Assignment
and Assumption Agreement shall be deemed to amend this Agreement and Schedule
--------
1.1(a) hereto, to the extent, and only to the extent, necessary to reflect the
- ------
addition of such Assignee as a Lender and the resulting adjustment of all or a
portion of the rights and obligations of such transferor Lender under this
Agreement, the Maximum Commitment, the determination of its Term A Pro Rata
Share, Term B Pro Rata Share, Term C Pro Rata Share, Domestic Revolver Pro Rata
Share or Multicurrency Revolver Pro Rata Share, as the case may be (in each
case, rounded to twelve decimal places), the Loans, any outstanding Letters of
Credit and any new Notes to be issued, at the Borrower's expense, to such
Assignee, and no further consent or action by the Borrower or the Lenders shall
be required to effect such amendments.
(d) The Borrower authorizes each Lender to disclose to any Participant
or Assignee (or its investment advisor) (each, a "Transferee") and any
----------
prospective Transferee any and all financial information in such Lender's
possession concerning the Borrower and any Subsidiary of the Borrower which has
been delivered to such Lender by the Borrower pursuant to this Agreement or
which has been delivered to such Lender by the Borrower in connection with such
Lender's credit evaluation of the Borrower prior to entering into this
Agreement. Any Transferee or any prospective Transferee to whom such financial
information is disclosed shall be required to maintain the confidentiality of
such information pursuant to Section 12.14 as if they were parties to this
-------------
Agreement.
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time pledge or assign all or any portion of its rights
under this Agreement and the other Loan Documents (including, without
limitation, the Notes held by it) to any Federal Reserve Bank in accordance with
Regulation A of the Federal Reserve Board without notice to, or the consent of,
the Borrower or the Administrative Agent and without the consent of, or notice
to, the Borrower or the Administrative Agent, any Lender which is a fund may
pledge all or any portion of its Notes or Loans to its trustee in support of its
obligations to its trustee. No such pledge or assignment shall release the
transferor lender from its obligations hereunder. No such pledge or assignment
shall release the transferor Lender from its obligations hereunder.
12.9 CONSENT TO JURISDICTION; MUTUAL WAIVER OF JURY TRIAL
----------------------------------------------------
(A) THE BORROWER, THE ADMINISTRATIVE AGENT, HOLDINGS, AND EACH LENDER
HEREBY IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW
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YORK STATE COURT SITTING IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND
HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT TO SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH UNITED STATES FEDERAL OR NEW YORK STATE
COURT AND THE BORROWER, THE ADMINISTRATIVE AGENT, HOLDINGS AND EACH LENDER
IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS WHICH ANY OF
THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
IN SUCH RESPECTIVE JURISDICTIONS.
(B) AS A METHOD OF SERVICE, THE BORROWER, THE ADMINISTRATIVE AGENT,
HOLDINGS, AND EACH LENDER IRREVOCABLY CONSENT TO THE SERVICE OF ANY AND ALL
PROCESS IN ANY SUCH ACTION OR PROCEEDING, BROUGHT IN ANY SUCH UNITED STATES
FEDERAL OR NEW YORK STATE COURT BY THE DELIVERY OF COPIES OF SUCH PROCESS TO THE
BORROWER, THE ADMINISTRATIVE AGENT, HOLDINGS OR EACH RESPECTIVE LENDER, AS THE
CASE MAY BE, AT THE ADDRESSES SPECIFIED ON THEIR RESPECTIVE SIGNATURE PAGES TO
THIS AGREEMENT OR BY CERTIFIED MAIL DIRECT TO SUCH RESPECTIVE ADDRESSES.
(C) THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHT, POWER OR REMEDY UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT. THE TERMS AND THE PROVISIONS OF THIS
SECTION CONSTITUTE A MATERIAL INDUCEMENT TO LENDERS ENTERING INTO THIS
AGREEMENT.
12.10 GOVERNING LAW
-------------
THIS AGREEMENT AND EACH NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
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12.11 Severability of Provisions
--------------------------
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
12.12 Headings
--------
The Table of Contents and Article and Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction of
this Agreement.
12.13 Termination of Agreement
------------------------
This Agreement shall terminate when the Commitment of each Lender has terminated
and all outstanding Obligations and Loans have been paid in full and all Letters
of Credit have expired or been terminated; provided, however, that the rights
-------- -------
and remedies of the Administrative Agent and each Lender with respect to any
representation and warranty made by the Borrower pursuant to this Agreement or
any other Loan Document, and the indemnification provisions contained in this
Agreement and any other Loan Document, shall be continuing and shall survive any
termination of this Agreement or any other Loan Document.
12.14 Confidentiality
---------------
Each of the Lenders severally agrees to keep confidential all non-public
information pertaining to the Borrower and its Subsidiaries and their respective
predecessors in interest which is provided to it by any such parties in
accordance with such Lender's customary procedures for handling confidential
information of this nature and in a prudent fashion, and shall not disclose such
information to any Person except (i) to the extent such information is public
when received by such Lender or becomes public thereafter due to the act or
omission of any party other than a Lender, (ii) to the extent such information
is independently obtained from a source other than the Borrower or its
Subsidiaries and such information from such source is not, to such Lender's
knowledge, subject to an obligation of confidentiality or, if such information
is subject to an obligation of confidentiality, that disclosure of such
information is permitted, (iii) to an Affiliate of such Lender (or its
investment advisor), counsel, auditors, ratings agencies, examiners of any
regulatory authority having or asserting jurisdiction over such Lender,
accountants and other consultants retained by the Administrative Agent or any
Lender, (iv) in connection with any litigation or the enforcement of the rights
of any Lender or the Administrative Agent under this Agreement or any other Loan
Document, (v) to the extent required by any applicable statute, rule or
regulation or court order (including, without limitation, by way of subpoena) or
pursuant to the request of any Governmental Authority having or asserting
jurisdiction over any Lender or
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the Administrative Agent; provided, however, that in such event, if the
Lender(s) are able to do so, the Lender shall provide the Borrower with prompt
notice of such requested disclosure so that the Borrower may seek a protective
order or other appropriate remedy, and, in any event, the Lenders will endeavor
in good faith to provide only that portion of such information which, in the
reasonable judgment of the Lender(s), is relevant and legally required to be
provided, (vi) to any direct or indirect contractual counterparty in swap
agreements or such contractual counterparty's professional advisors (so long as
such contractual counterparty and its professional advisors agree to be bound by
the provisions of this Section 12.14), or (vii) to the extent disclosure to
-------------
other entities is appropriate in connection with any proposed or actual
assignment or grant of a participation by any of the Lenders of interests in
this Agreement and/or any of the other Loan Documents to such other entities
(who will in turn be required to maintain confidentiality as if they were
Lenders parties to this Agreement). In no event shall the Administrative Agent
or any Lender be obligated or required to return any such information or other
materials furnished by the Borrower.
12.15 Concerning the Collateral and the Loan Documents
------------------------------------------------
(a) Authority. Each Lender authorizes and directs BT to act as
---------
Collateral Agent under the Collateral Security Agreement and to enter into the
Loan Documents relating to the Collateral (including, without limitation, the
Collateral Security Agreement) for the benefit of the Lenders and the other
Secured Parties. Each Lender agrees that any action taken by the Administrative
Agent or the Required Lenders (or, where required by the express terms hereof, a
different proportion of the Lenders) in accordance with the provisions hereof or
of the other Loan Documents, and the exercise by the Administrative Agent, the
Collateral Agent or the Required Lenders (or, where so required, such different
proportion) of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all of the Lenders. Without limiting the generality of the foregoing, the
Administrative Agent or the Collateral Agent, as the case may be, shall have the
sole and exclusive right and authority to (i) act as the disbursing and
collecting agent for the Lenders with respect to all payments and collections
arising in connection herewith and with the Loan Documents relating to the
Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by the Borrower
or any of its Subsidiaries, (iii) act as Collateral Agent for the Lenders and
certain other Secured Parties for purposes stated in the Security Documents to
the extent such perfection is required under the Loan Documents, provided,
--------
however, the Collateral Agent hereby appoints, authorizes and directs each
- -------
Lender to act as collateral sub-agent for the Collateral Agent and the Lenders
for purposes of the perfection of all security interests and Liens with respect
to the Borrower's and its Subsidiaries' respective deposit accounts maintained
with, and cash and Cash Equivalents held by, such Lender; (iv) manage, supervise
and otherwise deal with the Collateral; (v) take such action as is necessary or
desirable to maintain the perfection and priority of the security interests and
liens created or purported to be created by the Loan Documents, and (vi) except
as may be
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otherwise specifically restricted by the terms hereof or of any other Loan
Document, exercise all remedies given to the Administrative Agent or the Lenders
with respect to the Collateral under the Loan Documents relating thereto,
applicable law or otherwise.
(b) Release of Collateral.
---------------------
(i) The Administrative Agent and the Lenders hereby direct the
Administrative Agent or the Collateral Agent, as the case may be, to release, in
accordance with the terms hereof, any Lien held by the Administrative Agent or
the Collateral Agent, as the case may be, for the benefit of the Secured
Parties:
(A) against all of the Collateral, upon final and indefeasible payment
in full of the Loans and Obligations and termination hereof;
(B) against any part of the Collateral sold or disposed of by the
Borrower or any of its Subsidiaries to the extent such sale or disposition
is permitted hereby (or permitted pursuant to a waiver or consent of a
transaction otherwise prohibited hereby);
(C) against any Collateral acquired by the Borrower or any of its
Subsidiaries after the Effective Date and at least 70% of the purchase
price therefor is within 120 days of the acquisition thereof financed with
Indebtedness secured by a Lien permitted by Section 8.1(c);
--------------
(D) so long as no Default or Event of Default has occurred and is
continuing, in the sole discretion of the Administrative Agent upon the
request of the Borrower, against any part of the Collateral with a fair
market value of less than $10,000,000 in the aggregate during the term of
this Agreement as such fair market value may be certified to the
Administrative Agent and the Collateral Agent by the Borrower in an
officer's certificate acceptable in form and substance to the
Administrative Agent and the Collateral Agent;
(E) against a part of the Collateral which release does not require
the consent of all of the Lenders as set forth in Section 12.1(a)(ii), if
-------------------
such release is consented to by the Required Lenders; and
(F) against the Collateral consisting of Receivables Facility Assets
upon the entry by the Borrower and/or its Subsidiaries into a Permitted
Account Receivable Securitization and compliance by the Borrower with the
provisions of Section 4.4(k) hereof; provided, however, that (y) the
--------------
Administrative Agent shall not be required to execute any such document on
terms which, in its opinion, would expose it to liability or create any
obligation or entail any consequence other than the release of such Liens
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<PAGE>
without recourse or warranty, and (z) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or
obligations of the Borrower or any of its Subsidiaries in respect of) all
interests retained by the Borrower and/or any of its Subsidiaries,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(ii) Each of the Lenders hereby directs the Administrative Agent to
(or to cause the Administrative Agent to) execute and deliver or file such
termination and partial release statements and such other things as are
necessary to release Liens to be released pursuant to this Section 12.15
-------------
promptly upon the effectiveness of any such release or enter into intercreditor
agreements contemplated or permitted herein.
(c) No Obligation. Neither the Administrative Agent nor the
-------------
Collateral Agent shall have any obligation whatsoever to any Lender or to any
other Person to assure that the Collateral exists or is owned by the Borrower or
any of its Subsidiaries or is cared for, protected or insured or has been
encumbered or that the Liens granted to the Administrative Agent or the
Collateral Agent herein or pursuant to the Loan Documents have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Administrative Agent or the Collateral Agent in any of the Loan Documents,
it being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Administrative Agent and the Collateral
Agent may act in any manner it may deem appropriate, in its sole discretion,
given the Administrative Agent's and the Collateral Agent's own interests in the
Collateral as one of the Lenders and that neither the Administrative Agent nor
the Collateral Agent shall have any duty or liability whatsoever to any Lender,
provided, that, notwithstanding the foregoing, the Administrative Agent and the
Collateral Agent shall be responsible for their respective grossly negligent
actions or actions constituting intentional misconduct
12.16 Effectiveness
-------------
This Agreement shall become effective on the date (the "Effective Date") on
--------------
which the Borrower, Holdings and each of the Lenders shall have signed a
counterpart of this Agreement (whether the same or different counterparts) and
shall have delivered the same to the Administrative Agent at the Notice Office
(or to the Administrative Agent's counsel as directed by such counsel) or, in
the case of the Lenders, shall have given to the Administrative Agent telephonic
(confirmed in writing), written, telex or facsimile notice (actually received)
at such office or the office of the Administrative Agent's counsel that the same
has been signed and mailed to it. The Administrative Agent will give the
Borrower, Holdings and each Lender prompt written notice of the occurrence of
the Effective Date
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<PAGE>
12.17 Registry
--------
The Borrower hereby designates the Administrative Agent to serve as the
Borrower's agent, solely for purposes of this Section 12.17 to maintain a
-------------
register (the "Register") on which it will record the Commitments from time to
--------
time of each of the Lenders, the Loans made by each of the Lenders and each
repayment in respect of the principal amount of the Loans of each Lender.
Failure to make any such recordation, or any error in such recordation shall not
affect the Borrower's obligations in respect of such Loans. With respect to any
Lender, the transfer of the Commitments of such Lender and the rights to the
principal of, and interest on, any Loan made pursuant to such Commitments shall
not be effective until such transfer is recorded on the Register maintained by
the Administrative Agent with respect to ownership of such Commitments and Loans
and prior to such recordation all amounts owing to the transferor with respect
to such Commitments and Loans shall remain owing to the transferor. The
registration of assignment or transfer of all or part of any Commitments and
Loans shall be recorded by the Administrative Agent on the Register only upon
the acceptance by the Administrative Agent of a properly executed and delivered
Assignment and Assumption Agreement pursuant to Section 12.8(c). Coincident
---------------
with the delivery of such an Assignment and Assumption Agreement to the
Administrative Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Lender shall surrender the Note evidencing such Loan, and thereupon
one or more new Notes in the same aggregate principal amount then owing to such
assignor or transferor Lender shall be issued to the assigning or transferor
Lender and/or the new Lender. The Borrower agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
-------
12.17.
- -----
12.18 Limited Recourse
----------------
The Lenders, the Facing Agents and the Administrative Agent agree that
notwithstanding anything to the contrary contained herein or in the other Loan
Documents, neither HSCC nor ICI, nor any directors, employee or agent of HSCC or
ICI, nor any Affiliate of HSCC or ICI (other than Holdings, the Borrower and its
Subsidiaries) in each case in such capacity, shall have any liability to the
Lenders or the Administrative Agent for, and neither the Lenders nor the
Administrative Agent shall have recourse against any such Person in such
capacity in respect of, the Obligations or this Agreement, provided, that
--------
nothing contained in this Section 12.18 shall be construed so as to prevent the
-------------
Lenders from commencing any action, suit or proceeding in respect of or causing
legal papers to be served upon any Person solely for the purpose of obtaining
jurisdiction over Holdings or the Borrower.
12.19 Accounts Receivable Securitization
----------------------------------
181
<PAGE>
By its execution of this Agreement, each Lender agrees, for the benefit of the
holders from time to time of interests in trade receivables under the Permitted
Accounts Receivables Securitization not to:
(a) challenge the "true sale" characterization of the sales and
transfers of Accounts Receivables by the Borrower or any Participating
Subsidiary to a Receivables Subsidiary pursuant to a Permitted Accounts
Receivable Securitization;
(b) join in any proceeding in whole or in part to commence or consent
to the commencement of a case against a Receivables Subsidiary under the Federal
Bankruptcy Code or any other applicable bankruptcy, insolvency or similar
federal or state law or file a petition seeking or consenting to reorganization
or relief under any applicable federal or state law relating to bankruptcy, or
seek or consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of a Receivables Subsidiary or any
substantial part of its assets; or
(c) assert or consent to any attempt by any person to assert that a
Receivables Subsidiary should be substantively consolidated with the Borrower or
any other Subsidiary.
By its execution of this Agreement, each Lender further authorises the
Collateral Agent and the Collateral Agent, with the approval of the
Administrative Agent, to enter into an intercreditor agreement with the Persons
providing a Permitted Accounts Receivables Securitization as long as the
provisions of any such agreement are not more burdensome to the Lenders.
ARTICLE XIII
HOLDINGS GUARANTY
13.1 The Guaranty
------------
In order to induce the Lenders to enter into this Agreement and to extend credit
hereunder and in recognition of the direct benefits to be received by Holdings
from the proceeds of the Loans and the issuance of the Letters of Credit,
Holdings hereby agrees with the Lenders as follows: Holdings hereby
unconditionally and irrevocably guarantees as primary obligor and not merely as
surety the full and prompt payment when due, whether upon maturity, acceleration
or otherwise, of any and all of the Guaranteed Obligations of the Borrower and
its Subsidiaries to the Guaranteed Creditors. If any or all of the Guaranteed
Obligations of the Borrower or its Subsidiaries to the Guaranteed Creditors
becomes due and payable hereunder, Holdings unconditionally promises to pay such
indebtedness to the Administrative Agent and/or the Lenders, or order, on
demand, together with any and all expenses which may be incurred by the
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<PAGE>
Administrative Agent or the Lenders in collecting any of the Guaranteed
Obligations. If claim is ever made upon any Guaranteed Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower or any of its Subsidiaries), then
and in such event Holdings agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon Holdings, notwithstanding any
revocation of this Guaranty or other instrument evidencing any liability of the
Borrower or any of its Subsidiaries, and Holdings shall be and remain liable to
the aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee.
13.2 Insolvency
----------
Additionally, Holdings unconditionally and irrevocably guarantees the payment of
any and all of the Guaranteed Obligations of the Borrower and its Subsidiaries
to the Guaranteed Creditors whether or not due or payable by the Borrower or
such Subsidiary upon the occurrence of any of the events specified in Sections
--------
10.1(e) or (f), and unconditionally promises to pay such indebtedness to the
- ------- ---
Guaranteed Creditors, or order, on demand, in lawful money of the United States.
13.3 Nature of Liability
-------------------
The liability of Holdings hereunder is exclusive and independent of any security
for or other guaranty of the Guaranteed Obligations of the Borrower or any of
its Subsidiaries whether executed by Holdings, any other guarantor or by any
other party, and the liability of Holdings hereunder is not affected or impaired
by (a) any direction as to application of payment by the Borrower or any of its
Subsidiaries or by any other party; or (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the Guaranteed Obligations of the Borrower or any of its Subsidiaries; or
(c) any payment on or in reduction of any such other guaranty or undertaking; or
(d) any dissolution, termination or increase, decrease or change in personnel by
the Borrower; or (e) any payment made to any Guaranteed Creditor on the
Guaranteed Obligations which any such Guaranteed Creditor repays to the Borrower
or any of its Subsidiaries pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
Holdings waives any right to the deferral or modification of its obligations
hereunder by reason of any such proceeding.
13.4 Independent Obligation
----------------------
183
<PAGE>
The obligations of Holdings hereunder are independent of the obligations of any
other guarantor, any other party, the Borrower or any of its Subsidiaries, and a
separate action or actions may be brought and prosecuted against Holdings
whether or not action is brought against any other guarantor, any other party or
the Borrower or any of its Subsidiaries and whether or not any other guarantor,
any other party or the Borrower or any of its Subsidiaries be joined in any such
action or actions. Holdings waives, to the full extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by the Borrower or any of its Subsidiaries or
other circumstance which operates to toll any statute of limitations as to the
Borrower or any of its Subsidiaries shall operate to toll the statute of
limitations as to any Guarantor.
184
<PAGE>
13.5 Authorization
-------------
Holdings authorizes the Guaranteed Creditors without notice or demand (except as
shall be required by applicable statute and cannot be waived), and without
affecting or impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended, renewed
or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or US Mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset there against;
(c) exercise or refrain from exercising any rights against the
Borrower, any of its Subsidiaries or others or otherwise act or refrain
from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower, any of its Subsidiaries or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower or any of its Subsidiaries
to its creditors other than the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower or any of its Subsidiaries to the
Guaranteed Creditors regardless of what liability or liabilities of
Holdings, the Borrower or any of its Subsidiaries remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default
under, this Agreement or any of the instruments or agreements referred to
herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements; and/or
185
<PAGE>
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Holdings from its liabilities under this Guaranty.
13.6 Reliance
--------
It is not necessary for any Guaranteed Creditor to inquire into the capacity or
powers of the Borrower or any of its Subsidiaries or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
Guaranteed Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
13.7 Subordination
-------------
Any of the indebtedness of the Borrower and its Subsidiaries relating to the
Guaranteed Obligations now or hereafter owing to Holdings is hereby subordinated
to the Guaranteed Obligations of the Borrower and its Subsidiaries owing to the
Guaranteed Creditors; and if the Administrative Agent so requests at a time when
an Event of Default shall have occurred and is continuing, all such indebtedness
relating to the Guaranteed Obligations of the Borrower and its Subsidiaries to
Holdings shall be collected, enforced and received by Holdings for the benefit
of the Guaranteed Creditors and be paid over to the Administrative Agent on
behalf of the Guaranteed Creditors on account of the Guaranteed Obligations of
the Borrower to the Guaranteed Creditors, but without affecting or impairing in
any manner the liability of Holdings under the other provisions of this
Guaranty. Prior to the transfer by Holdings of any note or negotiable
instrument evidencing any of the indebtedness relating to the Guaranteed
Obligations of the Borrower and its Subsidiaries to Holdings, Holdings shall
mark such note or negotiable instrument with a legend that the same is subject
to this subordination. Without limiting the generality of the foregoing,
Holdings hereby agrees with the Guaranteed Creditors that it will not exercise
any right of subrogation which it may at any time otherwise have as a result of
this Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all Guaranteed Obligations have been irrevocably paid in full
in cash.
13.8 Waiver
------
(a) Holdings waives any right (except as shall be required by
applicable statute and cannot be waived) to require any Guaranteed Creditor to
(i) proceed against the Borrower, any other guarantor or any other party, (ii)
proceed against or exhaust any security held from the Borrower, any other
guarantor or any other party or (iii) pursue any other remedy in any Guaranteed
Creditor's power whatsoever. Holdings waives any defense based on or arising
out of any defense of the Borrower, any other guarantor or any other party,
other than payment in full of the Guaranteed Obligations, based on or arising
out of the disability of the Borrower, any other guarantor or any other party,
or the validity, legality or unenforceability of the Guaranteed
186
<PAGE>
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower other than payment in full of the Guaranteed
Obligations. The Guaranteed Creditors may, at their election, foreclose on any
security held by the Administrative Agent, or any other Guaranteed Creditor by
one or more judicial or nonjudicial sales, whether or not every aspect of any
such sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Guaranteed Creditors
may have against the Borrower or any other party, or any security, without
affecting or impairing in any way the liability of Holdings hereunder except to
the extent the Guaranteed Obligations have been paid. Holdings waives any
defense arising out of any such election by the Guaranteed Creditors, even
though such election operates to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of Holdings against the Borrower or any
other party or any security.
(b) Holdings waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Guaranteed Obligations. Holdings assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of non-payment of the Guaranteed
Obligations and the nature, scope and extent of the risks which Holdings assumes
and incurs hereunder, and agrees that the Administrative Agent and the Lenders
shall have no duty to advise Holdings of information known to them regarding
such circumstances or risks.
13.9 Nature of Liability
-------------------
It is the desire and intent of Holdings and the Lenders that this Guaranty shall
be enforced against Holdings to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
If, however, and to the extent that, the obligations of Holdings under this
Guaranty shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers), then the amount of the
Guaranteed Obligations of Holdings shall be deemed to be reduced and Holdings
shall pay the maximum amount of the Guaranteed Obligations which would be
permissible under applicable law.
[signature pages follow]
187
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized, as of the date first above written.
HUNTSMAN ICI HOLDINGS LLC
By: /s/ Curtis C. Dowd
--------------------------------------------------
Name: Curtis C. Dowd
-----------------------------------------------
Title: Vice President, Corporate Development
-----------------------------------------------
HUNTSMAN ICI CHEMICALS LLC
By: /s/ Curtis C. Dowd
--------------------------------------------------
Name: Curtis C. Dowd
-----------------------------------------------
Title: Vice President, Corporate Development
-----------------------------------------------
BANKERS TRUST COMPANY, Individually
as a Lender and as Administrative Agent
By: /s/ Robert R. Telesca
--------------------------------------------------
Name: Robert R. Telesca
------------------------------------------------
Title: Assistant Vice President
-----------------------------------------------
THE CHASE MANHATTAN BANK,
Individually as a Lender and as a Co-
Documentation Agent
By: /s/ Peter Dedousis
--------------------------------------------------
Name: Peter Dedousis
-----------------------------------------------
Title: Managing Director
-----------------------------------------------
GOLDMAN SACHS CREDIT PARTNERS L.P.,
Individually as a Lender and as Syndication
Agent
By: /s/ Gary E. Moross
--------------------------------------------------
Name: Gary E. Moross
-----------------------------------------------
Title: Authorized Signatory
-----------------------------------------------
UBS AG, STAMFORD BRANCH,
Individually as a Lender and as a Co-Documentation
Agent
By: /s/ Michael R. Grayer
---------------------------------------------------
Name: Micheal R. Grayer
-----------------------------------------------
Title: Managing Director, Leveraged Finan
-----------------------------------------------
By: /s/ David Barth
--------------------------------------------------
Name: David Barth
-----------------------------------------------
Title: Director
-----------------------------------------------
THE SUMITOMO TRUST & BANKING CO, LTD.
NEW YORK BRANCH
By: /s/ Suraj P. Bhatia
--------------------------------------------------
Name: Suraj P. Bhatia
-----------------------------------------------
Title: Senior Vice President
-----------------------------------------------
NATIONAL CITY BANK
By: /s/ Joseph D. Robison
--------------------------------------------------
Name: Joseph D. Robison
------------------------------------------------
Title: Vice President
-----------------------------------------------
THE BANK OF NEW YORK
By: /s/ Mehrasa Raygani
--------------------------------------------------
Name: Mehrasa Raygani
------------------------------------------------
Title: Assistant Vice President
-----------------------------------------------
LLOYDS TSB BANK PLC
By: /s/ Ian Dimmock
--------------------------------------------------
Name: Ian Dimmock
-----------------------------------------------
Title: Vice President, Acquisition Finance
-----------------------------------------------
LLOYDS TSB BANK PLC
By: /s/ David C. Rodway
--------------------------------------------------
Name: David C. Rodway
------------------------------------------------
Title: Assistant Vice President R156
-----------------------------------------------
NATIONAL WESTMINSTER BANK Plc
By: /s/ Douglas Iain Kerr
--------------------------------------------------
Name: Douglas Iain Kerr
-----------------------------------------------
Title: Corporate Manager
-----------------------------------------------
NATIONAL WEST MINISTER BANK Plc.
NASSAU BRANCH
By: /s/ Douglas Iain Kerr
--------------------------------------------------
Name: Douglas Iain Kerr
-----------------------------------------------
Title: Corporate Manager
-----------------------------------------------
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By: /s/ Peter Stearn
--------------------------------------------------
Name: Peter Stearn
-----------------------------------------------
Title: Vice President
-----------------------------------------------
TORONTO DOMINION (TEXAS), INC.
By: /s/ Mark A. Baird
--------------------------------------------------
Name: Mark A. Baird
-----------------------------------------------
Title: Vice President
-----------------------------------------------
THE ROYAL BANK OF SCOTLAND Plc
By: /s/ Scott Barton
--------------------------------------------------
Name: Scott Barton
-----------------------------------------------
Title: Vice President
-----------------------------------------------
THE ROYAL BANK OF SCOTLAND Plc
By: /s/ Scott Barton
--------------------------------------------------
Name: Scott Barton
-----------------------------------------------
Title: Vice President
-----------------------------------------------
FLEET NATIONAL BANK
By: /s/ David M. Harnisch
--------------------------------------------------
Name: David M. Harnisch
-----------------------------------------------
Title: Vice President
-----------------------------------------------
THE FUJI BANK, LIMITED
By: /s/ Masahito Fukuda
--------------------------------------------------
Name: Masahito Fukuda
-----------------------------------------------
Title: SVP & Group Head
-----------------------------------------------
BANK OF AMERICA NATIONAL
NATIONAL TRUST & SAVINGS ASSOCIATION
By: /s/ Donald J. Chin
--------------------------------------------------
Name: Donald J. Chin
-----------------------------------------------
Title: Managing Director
-----------------------------------------------
CREDIT SUISSE FIRST BOSTON
By: /s/ Douglas e. Maher
--------------------------------------------------
Name: Douglas C. Maher
-----------------------------------------------
Title: Vice President
-----------------------------------------------
CREDIT SUISSE FIRST BOSTON
By: /s/ Thomas G. Mudid
--------------------------------------------------
Name: Thomas G. Mudid
-----------------------------------------------
Title: Vice President
-----------------------------------------------
SINGER & FRIEDLANDER LIMITED
By: /s/ A. J. Milicox
--------------------------------------------------
Name: A J. Milicox
-----------------------------------------------
Title: Assistant Director
-----------------------------------------------
By: /s/ K. A. Bradford
--------------------------------------------------
Name: K. A. Bradford
-----------------------------------------------
Title: Assistant Manager
-----------------------------------------------
MELLON BANK NA
By: /s/ William M. Feathers
--------------------------------------------------
Name: William F. Feathers
-----------------------------------------------
Title: Lending Officer
-----------------------------------------------
SOUTHERN PACIFIC BANK
By: /s/ Cheryl A. Wasllewsid
--------------------------------------------------
Name: Cheryl A. Wasllewsid
-----------------------------------------------
Title: Senior Vice President
-----------------------------------------------
BAYERESCHE HYPO-UND VEREINSBANK AG
NEW YORK BRANCH
By: /s/ Sylvia K. Cheng
--------------------------------------------------
Name: Sylvia K. Cheng
-----------------------------------------------
Title: Director
-----------------------------------------------
By: /s/ Carlo Lamberti
--------------------------------------------------
Name: Carlo Lamberti
-----------------------------------------------
Title: Associate Director
-----------------------------------------------
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ Beatrice E. Kossodo
--------------------------------------------------
Name: Beatrice E. Kossodo
-----------------------------------------------
Title: Senior Vice President
-----------------------------------------------
ABN AMRO BANK N.V.
By: /s/ Dianna D. Barkley
--------------------------------------------------
Name: Dianna D. Barkley
-----------------------------------------------
Title: Group Vice-President
-----------------------------------------------
By: /s/ Maria Vickroy-Peralta
--------------------------------------------------
Name: Maria Vickroy-Peralta
-----------------------------------------------
Title: Vice President
-----------------------------------------------
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By: /s/ Beverly G. Cason
--------------------------------------------------
Name: Beverly G. Cason
-----------------------------------------------
Title: Vice President
-----------------------------------------------
By: /s/ John W. Sweeney
--------------------------------------------------
Name: John W. Sweeney
-----------------------------------------------
Title: Vice President
-----------------------------------------------
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
--------------------------------------------------
Name: F.C.H. Ashby
-----------------------------------------------
Title: Senior Manager Loan Operations
-----------------------------------------------
SOLOMON BROTHERS HOLDING COMPANY
INC
By: /s/ Timothy L. Freeman
--------------------------------------------------
Name: Timothy L. Freeman
-----------------------------------------------
Title: Attorney-in-Fact
-----------------------------------------------
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: /s/ Benjamin W. Boesch
--------------------------------------------------
Name: Benjamin W. Boesch
-----------------------------------------------
Title: Assistant Vice President
-----------------------------------------------
<PAGE>
EXHIBIT 10.5
Dated 30th June 1999
BP CHEMICALS LIMITED
-and-
HUNTSMAN ICI CHEMICALS LLC
==========================================
Asset Sale Agreement
==========================================
Confidential treatment requested. Exhibit omitted and filed separately with the
SEC.
<PAGE>
Exhibit 10.6
JOINT VENTURE AGREEMENT
DATED AS OF
OCTOBER 18, 1993
BETWEEN
TIOXIDE AMERICAS INC.
AND
KRONOS LOUISIANA, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINITIONS
1.01. Definitions......................................................................... 1
ARTICLE II
FORMATION AND PURPOSES OF THE JOINT VENTURE
2.01. Formation of the Joint Venture....................................................... 10
2.02. Name of the Joint Venture............................................................ 10
2.03. Purpose of the Joint Venture......................................................... 10
2.04. Place of Business of the Joint Venture............................................... 10
2.05. Duration of the Joint Venture........................................................ 10
2.06. Title to Joint Venture Property...................................................... 11
2.07. Filing of Certificates............................................................... 11
2.08. Registered Office; Registered Agent.................................................. 11
2.09. Reliance by Third Parties............................................................ 11
ARTICLE III
PARTNERS; CAPITAL CONTRIBUTIONS; DEFAULTS
3.01. Partners............................................................................. 11
3.02. Additional Capital Contributions..................................................... 12
3.03. Defaults............................................................................. 15
3.04. Adjustment of Percentage Interests................................................... 21
ARTICLE IV
TRANSFER RESTRICTIONS;
OFFER RIGHT; PUT OPTION; CALL OPTION
4.01. Transfer Restrictions................................................................ 25
4.02. Offer Right.......................................................................... 27
4.03. Put Option........................................................................... 31
4.04. Minority Call Option................................................................. 33
4.05. Conditions Relating to the Sale of an Interest....................................... 34
4.06. Exit Indemnification................................................................. 36
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE V
TAX MATTERS
5.01. Partnership for Tax Purposes......................................................... 37
5.02. Tax Matters.......................................................................... 37
ARTICLE VI
DISTRIBUTIONS; CAPITAL CALLS
6.01. Distributions........................................................................ 39
6.02. Amounts Withheld from Distributions.................................................. 40
6.03. Capital Calls........................................................................ 40
ARTICLE VII
THE SUPERVISORY COMMITTEE
7.01. The Supervisory Committee............................................................ 40
7.02. Quorum and Manner of Acting.......................................................... 41
7.03. Time and Place of Meetings........................................................... 46
7.04. Regular Meetings..................................................................... 46
7.05. Special Meetings..................................................................... 47
7.06. Action by Consent.................................................................... 47
7.07. Telephonic Meetings.................................................................. 47
7.08. Resignation.......................................................................... 47
7.09. Term; Vacancies; Alternates.......................................................... 48
ARTICLE VIII
MANAGEMENT OF OPERATIONS
8.01. General Managers..................................................................... 48
8.02. Business Plan........................................................................ 50
8.03. General Managers' Reports............................................................ 51
ARTICLE IX
EMPLOYEES
9.01. Principal Officers................................................................... 51
9.02. Nomination, Confirmation, Term of Office and Remuneration............................ 51
9.03. Subordinate Officers................................................................. 52
9.04. Removal.............................................................................. 52
9.05. Resignations......................................................................... 52
9.06. Powers and Duties.................................................................... 52
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
9.07. Tioxide Observers.................................................................... 52
9.08. Transferred Employees................................................................ 52
9.09. Limitations on Hiring................................................................ 53
ARTICLE X
ACCOUNTING
10.01. Auditors and Financial Statements................................................... 54
10.02. Fiscal Year......................................................................... 54
ARTICLE XI
INDEMNIFICATION
11.01. Employee Indemnification............................................................ 54
11.02. Partner Indemnification............................................................. 56
ARTICLE XII
COVENANTS OF THE PARTNERS
12.01. Nature of Obligations Between Partners.............................................. 56
12.02. Confidentiality..................................................................... 56
12.03. Debt................................................................................ 58
12.04. Negative Pledge..................................................................... 59
12.05. Consolidations, Mergers and Sales of Assets......................................... 60
12.06. Restriction on Other Businesses..................................................... 60
ARTICLE XIII
TERMINATION AND LIQUIDATION
13.01. Term................................................................................ 60
13.02. Liquidating Event................................................................... 60
13.03. Resignation and Withdrawal.......................................................... 60
13.04. Bankruptcy.......................................................................... 61
13.05. Winding Up.......................................................................... 61
13.06. Discretion of the Liquidator........................................................ 61
13.07. Rights of Partners.................................................................. 62
</TABLE>
iii
<PAGE>
<TABLE>
ARTICLE XIV
DISPUTE RESOLUTION
<S> <C>
14.01. Arbitration........................................................................... 62
14.02. Injunctive Relief..................................................................... 63
ARTICLE XV
MISCELLANEOUS
15.01. Notices............................................................................. 64
15.02. Survival............................................................................ 65
15.03. Amendments; No Waivers.............................................................. 65
15.04. Expenses............................................................................ 66
15.05. Successors and Assigns.............................................................. 66
15.06. Headings............................................................................ 67
15.07. Governing Law; Entire Agreement..................................................... 67
15.08. Counterparts; Effectiveness......................................................... 67
15.09. Severability........................................................................ 67
15.10. Further Assurances.................................................................. 67
</TABLE>
EXHIBITS AND SCHEDULES
Exhibit 1: Form of Assumption Agreement
Exhibit 2: Form of Selling Partner's First Notice
Exhibit 3: Form of Exiting Partner's Indemnity
iv
<PAGE>
JOINT VENTURE AGREEMENT
AGREEMENT dated as of October 18, 1993 between TIOXIDE AMERICAS INC., a
Delaware corporation (the "TIOXIDE PARTNER"), and KRONOS LOUISIANA, INC., a
Delaware corporation (the "KRONOS PARTNER").
W I T N E S S E T H:
WHEREAS, the Kronos Partner conducts a business which manufactures
titanium dioxide pigment using a chloride process at its plant located in Lake
Charles, Louisiana (the "PLANT");
WHEREAS, the Tioxide Partner and the Kronos Partner have entered into a
Formation Agreement (as hereinafter defined) pursuant to which they have agreed
to form a joint venture, organized as a limited partnership under the laws of
Delaware; and
WHEREAS, the Joint Venture will own and operate the Plant for the benefit
of the Partners.
NOW, THEREFORE, the parties hereto agree to enter into an agreement of
limited partnership as follows:
ARTICLE I
DEFINITIONS
1.01. Definitions. (a) As used herein, the following terms have the
following meanings:
"AAA" means the American Arbitration Association.
"AFFILIATE" means, with respect to any Person at any time, any other
Person directly or indirectly through one or more intermediaries controlling,
controlled by, or under common control with, that Person at such time. For the
purposes of this definition, "control" (including, with correlative meanings,
"controlling", "controlled by" and "under common control with"), with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities, by contract or otherwise. The Joint
Venture shall not be deemed an Affiliate of either Partner.
<PAGE>
"ASSUMPTION AGREEMENT" means each Assumption Agreement executed pursuant
to Section 3.04(f) between the Non-Defaulting Partner and the Defaulting
Partner, each such agreement to be substantially in the form of Exhibit 1
hereto.
"BANK DEFAULT" means with (i) with respect to the Tioxide Partner, a
Tioxide Bank Default, and (ii) with respect to the Kronos Partner, a Kronos Bank
Default.
"CLASS I DEFAULT" means (i) with respect to the Tioxide Partner, a Tioxide
Class I Default, and (ii) with respect to the Kronos Partner, a Kronos Class I
Default.
"CLOSING" means the Closing under the Formation Agreement.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
reference to a section of the Code shall include any successor section or
provision of the Code.
"CONVERTIBLE LOAN" means a loan to the Joint Venture made by a Non-
Defaulting Partner pursuant to Section 3.03 to cure a Default, which loan shall
(A) accrue interest quarterly on the unpaid principal amount of such Convertible
Loan and on any previously accrued interest at a floating rate per annum equal
to the highest rate of interest then applicable to loans (whether Tranche A or
Tranche B Loans) outstanding during such quarter under the Credit Agreement, or,
in the event that no such loans are outstanding, the rate announced from time to
time by Citibank, N.A. as its base rate, (B) have a maturity of not less than
one year from the date of issue (the specific maturity date to be established by
the Non-Defaulting Partner); provided, however, that such maturity shall be
extended automatically for successive 180-day periods if such extension is
necessary to avoid a default under any Debt of the Joint Venture, (C) be
subordinated to all Obligations under the Credit Agreement and (D) solely as to
principal (and not accrued interest) be convertible into an increased Percentage
Interest in the Joint Venture in accordance with Section 3.04 (with all interest
thereon waived upon such conversion) upon 21 days' prior written notice by the
Non-Defaulting Partner to the Joint Venture and the Defaulting Partner. At the
option of the Joint Venture, subject to the Credit Agreement, the Joint Venture
may pay all or any portion of any interest payment in cash rather than permit it
to continue to accrue.
2
<PAGE>
"CREDIT AGREEMENT" means the Credit Agreement dated as of the date hereof
among the Joint Venture, the lenders listed therein and Citibank, N.A., as
Agent, as the same may be amended, modified, supplemented or refinanced from
time to time.
"DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with GAAP, (v) all Debt of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such Person and
(vi) all Debt of others guaranteed by such Person.
"DEFAULT" means (i) with respect to the Tioxide Partner, a Tioxide Class I
Default, a Tioxide Bank Default or a Tioxide Class II Default, and (ii) with
respect to the Kronos Partner, a Kronos Class I Default, a Kronos Bank Default
or a Kronos Class II Default.
"FAIR MARKET VALUE" means, as of any determination time, (i) with respect
to the Joint Venture as a whole, the cash price at which a willing seller under
no compulsion to sell would sell, and a willing buyer under no compulsion to
purchase would purchase, 100% of the Percentage Interests in the Joint Venture
(subject to all Debt, liabilities and other obligations of the Joint Venture
outstanding at such time), and (ii) with respect to the Percent age Interest of
either Partner in the Joint Venture, the product of (x) the Fair Market Value of
the Joint Venture at such time determined in accordance with clause (i) above
and (y) the Percentage Interest in the Joint Venture represented by the
Percentage Interest being valued. In the event that as of the date of any
determination of Fair Market Value, a Permitted Expansion has begun but there
has been no adjustment of the Percentage Interests pursuant to Section 3.04(c),
Fair Market Value shall include assets added by the Permitted Expansion only to
the extent that the Partners shall have agreed to value them according to
procedures established at the time of the initiation of the Permitted Expansion.
"FIXED OPERATING COSTS" has the meaning ascribed to such term in the
Offtake Agreements.
3
<PAGE>
"FORMATION AGREEMENT" means the Formation Agreement dated October 18, 1993
among the Kronos Partner, the Tioxide Partner and the Joint Venture.
"GAAP" means accounting principles generally
accepted in the United States.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules promulgated thereunder.
"HSR AUTHORITIES" means the Federal Trade Commission and the Anti trust
Division of the Department of Justice.
"HSR FILING DATE" means, with respect to (i) Defaulting Partner under
Section 3.03, (ii) the Selling Partner under Section 4.02, (iii) the Electing
Partner under Section 4.03 or (iv) the Minority Partner under Section 4.04, the
date such Partner files with the HSR Authorities an HSR Report with respect to
the transaction contemplated by such Section, which HSR Report complies in all
material respects with the requirements of the HSR Act.
"HSR REPORT" means a Notification and Report Form (or any successor form)
required under the HSR Act to be filed with the HSR Authorities to report an
acquisition of the Percentage Interest of either Partner in the Joint Venture.
"KRONOS" means Kronos, Inc., a Delaware corporation.
"KRONOS BANK DEFAULT" means a "Tranche B Single Tranche Event of Default"
as defined in the Credit Agreement.
"KRONOS CLASS I DEFAULT" means any failure by the Kronos Partner (i) to
pay within ten (10) days after the due date amounts aggregating in excess of
$100,000 in respect of the Tranche A Debt or the Tranche B Debt (including,
without limitation, any interest, deferred financing cost or principal payment)
required to be paid by the Kronos Partner pursuant to the Kronos Offtake
Agreement or any Assumption Agreement under which it is an obligor or (ii) to
pay within ten (10) days after the due date specified in an invoice or other
written notice from the Joint Venture received by the Kronos Partner prior to
such due date, any other amount in excess of $100,000 required to be paid by the
Kronos Partner pursuant to the Kronos Offtake Agreement (including, without
4
<PAGE>
limitation, any payment in respect of Fixed Operating Costs or Variable Costs).
"KRONOS CLASS II DEFAULT" means (i) any Kronos Class I Default or (ii) any
material breach by the Kronos Partner of any of its obligations to the Joint
Venture under this Agreement or Section 7.02(a) of the Formation Agreement, in
each case, which breach involves or can be cured by the payment of money to the
Joint Venture and which breach remains uncured by the Kronos Partner 10 days
after the earlier of (A) agreement by the Partners with respect to the existence
and amount of such breach or (B) final and non-appealable judicial or
arbitrative determination of the existence and amount of such breach.
"KRONOS GROUP" means, at any time, Kronos and each Person that is a
Subsidiary of Kronos at such time.
"KRONOS GROUP MEMBER" means, at any time, any Person included in the
Kronos Group at such time.
"KRONOS OFFTAKE AGREEMENT" means the Offtake Agreement dated as of the
date hereof between the Kronos Partner and the Joint Venture.
"LICENSE AGREEMENTS" means the License Agreements attached as Exhibits A
through [X] to the Master Technology Exchange Agreement.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"MASTER TECHNOLOGY EXCHANGE AGREEMENT" means the Master Technology
Exchange Agreement dated as of the date hereof between Kronos and Tioxide.
"OFFTAKE AGREEMENTS" means, collectively, the Tioxide Offtake Agreement
and the Kronos Offtake Agreement.
"ORIGINAL CAPITAL CONTRIBUTION" means, with respect to either Partner, the
capital contribution it is required to make to the Joint Venture at the Closing
pursuant to Article II of the Formation Agreement.
"OUTPUT SHARE" has the meaning ascribed to such term in the Offtake
Agreements.
"PARTNER" means the Tioxide Partner or the Kronos Partner, as the context
may require, and "PARTNERS" means, collectively, the Tioxide Partner and the
Kronos Partner.
5
<PAGE>
Unless otherwise specifically provided in this Agreement, each and every
reference in this Agreement to either Partner means such Partner in its
capacities as both a limited partner and a general partner in the Joint Venture.
"PERCENTAGE INTEREST" means, at any time with respect to either Partner,
the interest (both general and limited) of such Partner in the Joint Venture at
such time expressed as a percentage. The initial Percentage Interests of the
Partners are set forth in Section 3.01(a) and are subject to adjustment only as
provided in Sections 3.04(c) and 3.04(e) of this Agreement. The dollar amount of
a Partner's capital account in the Joint Venture shall not affect its Percentage
Interest.
"PERSON" means an individual, corporation, partnership, association, trust
or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PROPERTY" means all real and personal property (whether tangible or
intangible) owned by the Joint Venture and any improvements thereto (including
any property contributed by the Partners).
"REGULATIONS" means the Income Tax Regulations promulgated under the Code,
as such regulations are in effect from time to time. Any reference to any
provision of the Regulations shall be interpreted to refer to any succes sor
provision of the Regulations.
"SEASONING PERIOD" means the three-year period beginning on the Closing
Date and ending on October 18, 1996.
"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.
"TIO2" means titanium dioxide pigments.
"TIOXIDE" means Tioxide Group Limited, a corporation organized and
existing under the laws of England.
"TIOXIDE BANK DEFAULT" means a "Tranche A Single Tranche Event of Default"
as defined in the Credit Agreement.
6
<PAGE>
"TIOXIDE CLASS I DEFAULT" means any failure by the Tioxide Partner (i) to
pay within ten (10) days after the due date amounts aggregating in excess of a
$100,000 in respect of the Tranche A Debt or the Tranche B Debt (including,
without limitation, any interest, deferred financing cost or principal payment)
required to be paid by the Tioxide Partner pursuant to the Tioxide Offtake
Agreement or any Assumption Agreement under which it is an obligor or (ii) to
pay within ten (10) days after the due date specified in an invoice or other
written notice from the Joint Venture received by the Tioxide Partner prior to
such due date, any other amount in excess of $100,000 required to be paid by the
Tioxide Partner pursuant to the Tioxide Offtake Agreement (including, without
limitation, any payment in respect of Fixed Operating Costs or Variable Costs).
"TIOXIDE CLASS II DEFAULT" means (i) any Tioxide Class I Default or (ii)
any material breach by the Tioxide Partner of any of its obligations to the
Joint Venture under this Agreement or Section 7.02(c) of the Formation
Agreement, in each case, which breach involves or can be cured by the payment of
money to the Joint Venture and which breach remains uncured by the Tioxide
Partner 10 days after the earlier of (A) agreement by the Partners with respect
to the existence and amount of such breach or (B) final and non-appealable
judicial or arbitrative determination of the existence and amount of such
breach.
"TIOXIDE GROUP" means, at any time, Tioxide, the Tioxide Partner and each
Person that is a Subsidiary of Tioxide at such time.
"TIOXIDE GROUP MEMBER" means, at any time, any Person included in the
Tioxide Group at such time.
"TIOXIDE OFFTAKE AGREEMENT" means the Offtake Agreement dated as of the
date hereof between the Tioxide Partner and the Joint Venture.
"TRANCHE A DEBT" means Debt of the Joint Venture outstanding as Tranche A
Loans under the Credit Agreement, provided, however, that, for the purposes of
Sections 3.03(c), 3.03(d), 3.03(e), 3.04(e), 3.04(f), 4.03 and 12.03 only all
amounts due with respect to Tranche A Debt shall be calculated as if all
payments in respect of such Tranche A Debt made by the Tioxide Partner or any of
its Affiliates under any guaranty of the Tioxide Partner's obligations were so
applied, without regard to whether so applied.
"TRANCHE B DEBT" means Debt of the Joint Venture outstanding as Tranche B
Loans under the Credit Agreement, provided, however, that, for the purposes of
Sections 3.03(c), 3.03(d), 3.03(e), 3.04(e), 3.04(f), 4.03 and 12.03 only all
amounts due with respect to Tranche B Debt shall be calculated as if all
payments in respect of such Tranche B Debt made by the Kronos Partner or any of
its Affiliates under any guaranty of the Kronos Partner's obligations were so
applied, without regard to whether so applied.
"TRANSACTION AGREEMENTS" means this Agreement, the Offtake Agree ments,
each Assumption Agreement, the Formation Agreement and the Transitional Services
Agreement.
7
<PAGE>
"TRANSFERRED ASSETS" has the meaning set forth in the Formation Agreement.
"TRANSITIONAL SERVICES AGREEMENT" means the Transitional Services
Agreement dated as of the date hereof between Kronos and the Joint Venture.
"VALUATION FIRM" means an independent valuation firm of nationally
recognized standing which, unless otherwise agreed to by the Partners, shall not
have had any material business relationship with either Tioxide or Kronos or any
of their respective Affiliates during the two-year period preceding its
engagement.
"VARIABLE COSTS" has the meaning ascribed to such term in the Offtake
Agreements.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Answering Partner 14.01(b)
Arbitrated Price 4.02(f)
Assumed Amount 3.04(f)
Bank Default Call 3.03(e)
Bank Default Call Closing 3.03(e)
Bank Default Call Notice 3.03(e)
Bank Default Call Price 3.03(e)
Borrowing Base 12.03(a)
Borrowing Partner 12.03(b)
Business Plan 8.02(b)
Call Notice 4.04(a)
Capacity Test Date 3.04(b)
CEO Committee 7.02(e)
Contributed Transferred Assets 5.02(c)
Default Call 3.03(c)
Default Call Closing 3.03(c)
Default Call Notice 3.03(c)
Default Call Price 3.03(c)
Defaulting Partner 3.03(a)
Electing Partner 4.03
Exiting Partner 4.06
Expansion Plan 3.02(a)
Financial Statements 5.02(c)
Fiscal Year 10.02
Free Return Employee 9.08(a)
General Managers 8.01(a)
IC 3.04(c)
Incur 12.03(b)
Initial Business Plan 8.02(a)
8
<PAGE>
Term Section
---- -------
Invoking Partner 14.01(b)
Joint Venture 2.01
Joint Venture Accounting Principles 10.01(b)
Kronos Partner Recitals
Kronos Partner Stock 4.01(v)
Liquidator 13.05
Majority Partner 4.04(a)
Material Adverse Development 4.03
Minority Call Closing 4.04(c)
Minority Partner 4.04(a)
Non-Borrowing Partner 12.03(b)
Non-Defaulting Partner 3.03(a)
OC 3.04(c)
Offeree Partner 4.02(a)
Offeree Partner Response Date 4.02(a)
Offeree Partner's Notice 4.02(a)
Offeree Partner's Price 4.02(a)
Parent Committee 7.02(e)
Partnership Act 2.01
Permitted Amount 12.03(b)
Permitted Expansion 3.02(a)
Plant Recitals
Production Factors 7.02(d)
Providing Partner 12.02(a)
Purchased Transferred Assets 5.02(c)
Purchasing Partner 4.03
Put Closing 4.03
Put Notice 4.03
Put Price 4.03
Receiving Partner 12.02(a)
Requesting Partner 3.02(a)
Responding Partner 3.02(a)
Selling Partner 4.02(a)
Selling Partner's First Notice 4.02(a)
Selling Partner's Price 4.02(a)
Selling Partner's Second Notice 4.02(a)
Supervisory Committee 7.01(a)
Supervisory Committee Members 7.01(a)
Third Party 4.02(d)
Third Party Sale Materials 4.02(e)
Tioxide Partner Recitals
Tioxide Partner Stock 4.01(iv)
ARTICLE II
FORMATION AND PURPOSES OF THE JOINT VENTURE
9
<PAGE>
2.01. Formation of the Joint Venture. Effective as of the filing for
record of a Certificate of Limited Partnership in the office of the Secretary of
State of the State of Delaware, the Partners hereby form and establish a limited
partnership (the "JOINT VENTURE") under the terms and provisions of this
Agreement and the provisions of the Delaware Revised Uniform Limited Partnership
Act (the "PARTNERSHIP ACT"), and the rights and liabilities of the Partners
shall be as provided in this Agreement and, except as herein otherwise expressly
provided, in the Partnership Act. The making of the Original Capital
Contributions as described in Section 3.01 shall occur as of the Closing Date in
accordance with the Formation Agreement.
2.02. Name of the Joint Venture. The name of the Joint Venture shall be
"Louisiana Pigment Company, L.P.". The business of the Joint Venture shall be
conducted solely under such name (or such trade names as the Joint Venture may
adopt in conformity with applicable law) and all assets (other than as expressly
provided in the Formation Agreement) of the Joint Venture shall be held under
such name.
2.03. Purpose of the Joint Venture. The purpose of the Joint Venture is
to operate the Plant to achieve the highest output of TiO2 consis tent with
meeting the respective product specifications of the Partners, such output to be
produced in the most efficient and cost-effective manner deemed reasonable in
the circumstances by the Supervisory Committee. The Joint Venture shall operate
the Plant in accordance with prudent operating, safety, health and environmental
standards and in compliance with all federal, state and local laws and
regulations. The Joint Venture shall be operated for the exclusive benefit of
the Partners. In furtherance of its purpose, the Joint Venture shall have and
may exercise all the powers now or hereafter conferred by Delaware law on, or
permitted by Delaware law to be exercised by, limited partnerships formed under
the laws of such State.
2.04. Place of Business of the Joint Venture. The principal place of
business of the Joint Venture shall be located at the Plant.
2.05. Duration of the Joint Venture. The Joint Venture shall commence on
the date of filing of the Certificate of Limited Partnership in the Office of
the Secretary of State of the State of Delaware and shall continue until its
termination in accordance with the provisions of Article XIII.
10
<PAGE>
2.06. Title to Joint Venture Property. As to all property that is owned
by the Joint Venture, such property shall be deemed to be owned by the Joint
Venture as an entity for the exclusive benefit of its Partners and neither
Partner, individually, shall have any direct ownership interest in such
property.
2.07. Filing of Certificates. The Partners shall file and publish all
such certificates, notices, statements or other instruments required by law for
the formation, qualification and operation of a limited partnership in all
jurisdictions where the Joint Venture may elect to do business.
2.08. Registered Office; Registered Agent. The address of the registered
office of the Joint Venture shall be Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801. The name of the registered agent of the
Joint Venture at such address shall be The Corporation Trust Company.
2.09. Reliance by Third Parties. Persons dealing with the Joint Venture
are entitled to rely conclusively upon the power and authority of the general
partners or the Supervisory Committee as herein set forth.
ARTICLE III
PARTNERS; CAPITAL CONTRIBUTIONS; DEFAULTS
3.01. Partners. (a) Each of the Partners shall make its Original
Capital Contribution to the Joint Venture on the terms and subject to the
conditions set forth in the Formation Agreement. After giving effect to the
transactions contemplated by the Formation Agreement, the names, addresses, the
Original Capital Contribution and initial Percentage Interests of the Partners
shall be as follows:
<TABLE>
<CAPTION>
Initial
Original Capital Percentage
Name and Address Contributions Interest
- ---------------- ---------------- ----------
<S> <C> <C>
TIOXIDE AMERICAS $175,000,000 less 50% (consisting
INC. the original of a 25% general
Suite 115 principal amount of partnership
901 Warrenville Road the Tranche A interest and a
Facility, paid to
the Joint Venture
pursuant to Section
2.01 of the
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C>
Lisle, IL 60532 Formation Agreement 25% limited
partnership interest)
KRONOS LOUISIANA, A one-half undivided 50% (consisting
INC. interest in the of a 25% general
3000 North Sam Transferred Assets, partnership interest
Houston Parkway East contributed to the and a 25% limited
Houston, TX 77032 Joint Venture partnership interest)
pursuant to Section
2.02(a) of the
Formation Agreement
</TABLE>
(b) No additional partner shall at any time be admitted to the Joint
Venture without the consent of each Person that is a partner in the Joint
Venture at such time and, except as otherwise provided in this Agreement, no
partner shall demand or receive a return of its capital contributions to or
withdraw from the Joint Venture (with respect to all or any part of its
Percentage Interest in the Joint Venture whether general or limited), in each of
the foregoing cases, without the consent of each other partner.
(c) Except as otherwise specifically provided in this Agreement or the
Transitional Services Agreement, neither Partner shall receive any interest,
salary or drawing with respect to its capital contributions for services
rendered on behalf of the Joint Venture or otherwise in its capacity as a
Partner.
(d) Notwithstanding any other provision of this Agreement, the general
partnership interest of each Partner shall at all times equal its limited
partnership interest and any adjustments to or change in the Percent age
Interest of either Partner shall result in equal adjustments to or changes in
both the general partnership interest and the limited partnership interest of
such Partner.
(e) Unless otherwise specifically provided in this Agreement, all rights,
obligations and agreements of either Partner hereunder shall be deemed to be
rights, obligations and agreements of such Partner in respect of both its
general partnership interest and its limited partnership interest.
3.02. Additional Capital Contributions. (a) At any time after the
Seasoning Period, either Partner shall have the right to cause a Permitted
Expansion (as defined below) to be made. The Partner desiring the expansion
(the "REQUESTING PARTNER") shall submit a written appropriation request (the
"EXPANSION PLAN") to the Supervisory Committee
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<PAGE>
and the other Partner (the "RESPONDING PARTNER"), which request shall (x)
describe in reasonable detail the nature of the proposed Permitted Expansion,
(y) include a proposed capital budget and timetable therefor and (z) unless
waived by the Responding Partner, shall be accompanied by a report from an
independent engineering firm confirming that in the opinion of such firm the
Permitted Expansion can be completed at a total cost and with an output capacity
which are, in each case, within 10% of the estimates contained in the Expansion
Plan. The Requesting Partner and its employees and agents shall be permitted
reasonable access to the Plant and its personnel for the purpose of developing
an Expansion Plan. Notwithstanding anything to the contrary in this Section
3.02, any Permitted Expansion must be carried out in a manner that does not
materially interrupt production of TiO2 or materially adversely affect the Joint
Venture. The Responding Partner shall have 180 days from the date it receives
the Expansion Plan to notify the Requesting Partner of its decision as to
whether it wishes to participate in the Permitted Expansion described in such
Expansion Plan. "PERMITTED EXPANSION" means (i) the construction of one or more
chloride process lines or pigment finishing lines (which pursuant to its design
specifications is intended to increase the total output of the Plant by at least
10%), either within the existing Plant (but separate from and in addition to the
chloride process lines and pigment finishing lines forming part of the Plant on
the Closing Date) or on property of the Joint Venture located adjacent to the
Plant, or (ii) the achievement of "debottlenecking" through an individual
project for the modification of certain equipment or other facilities of the
Plant which pursuant to its design specifications is intended to increase the
total output of the Plant by at least 10% by permitting other equipment or
facilities of the Plant to perform at greater capacity or efficiency.
(b) If within 180 days after its receipt of an Expansion Plan, the
Responding Partner either (i) fails to deliver a written notice to the
Requesting Partner setting forth a binding commitment on the part of the
Responding Partner to participate in and fund its share of the Permitted
Expansion described in such Expansion Plan or (ii) delivers a written notice to
the Requesting Partner stating that the decision of the Responding Partner is
not to participate in such Permitted Expansion, the Requesting Partner shall be
entitled to implement the Permitted Expansion unilaterally in accordance with
such Expansion Plan and fund it in accordance with Section 3.02(d). In
connection with any Permitted Expansion in which the Responding Partner is not
participating, the Responding Partner shall cooperate, and cause its
representatives on
13
<PAGE>
the Supervisory Committee to cooperate, with the Requesting Partner in
implementing the Permitted Expansion in accordance with the Expansion Plan
relating thereto and the Requesting Partner shall indemnify and hold harmless
the Joint Venture and the Responding Partner for any losses, claims or damages
(including, without limitation, consequential and incidental damages) arising
from such Permitted Expansion.
(c) If the Responding Partner delivers the participation notice described
in clause (i) of Section 3.02(b) within the time period specified therein, the
Permitted Expansion described therein shall be implemented promptly by the Joint
Venture and the cost thereof shall be funded by one or more capital
contributions to the Joint Venture as set forth in the Expansion Plan or as
otherwise agreed by the Partners, such capital contributions to be made by the
Partners in proportion to their respective Percentage Interests on the date the
Responding Partner delivers its participation notice in accor dance with this
Section 3.02(c).
(d) The Requesting Partner shall have the option of funding any Permitted
Expansion in which the Responding Partner is not participating by (i) making one
or more additional capital contributions to the Joint Venture in an aggregate
amount equal to the total cost of such Permitted Expansion (including, without
limitation, additional start-up and operating costs to the extent such costs are
not already included in the Requesting Partner's share of Fixed Operating Costs
or Variable Costs pursuant to its Offtake Agreement) in return for an increased
Percentage Interest in the Joint Venture to be calculated in accordance with
Section 3.04(c); (ii) except in the case of a Permitted Expansion described in
Section 3.02(a)(ii), making the required funds available to an Affiliate of the
Requesting Partner which would con struct and own the assets comprising the
Permitted Expansion on property leased from the Joint Venture and enter into a
management and support services agreement with the Joint Venture, both of which
arrangements shall be on an arm's length basis (which lease and agreement shall
be subject to the prior written approval of the Responding Partner, such
approval not to be unreason ably withheld); or (iii) providing the required
funds on such other terms as the Partners may mutually agree at such time. All
payments required to fund any Permitted Expansion shall be made on or prior to
the date on which expenses relating to such Permitted Expansion are due and
payable. The Partners agree to review the provisions of Section 3.03(e) hereof
in connection with any proposed Permitted Expansion and to use their best
efforts to agree upon any
14
<PAGE>
modifications thereto that may be equitable in light of the proposed funding of
such Permitted Expansion.
3.03. Defaults. (a) Within 24 hours of the due date of any payment
required to be made by either Partner to the Joint Venture pursuant to any
Transaction Agreement, the Joint Venture shall provide each Partner with notice
by verified facsimile of (i) all amounts actually received by the Joint Venture,
(ii) the failure by either Partner to make any payment and (iii) the amount of
any underpayment or non-payment. If a Default shall occur with respect to
either Partner (the "DEFAULTING PARTNER"), the other Partner (the "NON-
DEFAULTING PARTNER") shall, in addition to any rights it may have under the
other Transaction Agreements, have the rights set forth in this Section 3.03.
From and after the occurrence of any Default and for so long as such Default
shall continue, the Defaulting Partner shall not take any action that materially
and adversely affects the operation of the Plant in the ordinary course of its
business consistent with past practice.
(b) Within 10 days after the occurrence of any Default or, if later,
written notice referred to in Section 3.03(a) to the Non-Defaulting Partner, the
Non-Defaulting Partner shall have the right at its option to either make a
capital contribution or a Convertible Loan to the Joint Venture in an amount (as
reasonably determined by the Non-Defaulting Partner) sufficient to cure such
Default. At any time prior to the later of (i) 21 days after the making of a
capital contribution by the Non-Defaulting Partner pursuant to this Section
3.03(b) or (ii) the conversion pursuant to Section 3.04(e) of this Agreement of
a Convertible Loan made by the Non-Defaulting Partner pursuant to this Section
3.03(b), the Defaulting Partner shall have the right to cure the Default giving
rise to such capital contribution or Convertible Loan and prevent the adjustment
of the Percentage Interests of the Partners pursuant to Section 3.04(e)
resulting therefrom, by making a capital contribution to the Joint Venture in
cash in an amount equal to (1) the aggregate amount of all capital contributions
made by the Non-Defaulting Partner to the Joint Venture in respect of such
Default, together with an amount equal to interest thereon from the respective
date or dates of contribution through the date of repay ment at the rate per
annum then applicable, or that would then be applicable, to Convertible Loans
and (2) the aggregate amount of all Convertible Loans (including all interest
accrued thereon) made by the Non-Defaulting Partner to the Joint Venture in
respect of such Default. Immediately upon receipt of a capital contribution
from a Defaulting Partner pursuant to the immediately preceding sentence, the
Joint Venture shall
15
<PAGE>
make a special cash distribution, or shall repay the Convertible Loan (including
all accrued interest thereon), to the Non- Defaulting Partner in an amount equal
to such capital contribution by the Defaulting Partner. No partial cure of any
Default attempted by the Defaulting Partner shall prevent the full adjustment of
Percentage Interests of the Partners pursuant to Section 3.04(e) resulting from
the aggregate amount of capital contributions and Convertible Loans made by the
Non-Defaulting Partner in respect of such Default.
(c) Within 30 days after the occurrence of any Class I Default or, if
later, written notice referred to in Section 3.03(a) to the Non-Defaulting
Partner of such Class I Default, the Non-Defaulting Partner shall, in addition
to its rights under Section 3.03(b), have the right to purchase the Percentage
Interest of the Defaulting Partner in the Joint Venture (the "DEFAULT CALL") at
an aggregate purchase price (the "DEFAULT CALL PRICE") equal to $125 million
plus the Defaulting Partner's Percentage Interest of the Joint Venture's net
working capital (excluding work-in-process inventory) all as determined in
accordance with GAAP as of the date the applicable Default Call Notice (as
defined below) is issued (the amount of such net working capital being evidenced
by a certificate of the Joint Venture's chief accounting officer) less the sum
of all outstanding Convertible Loans to the Joint Venture in respect of Fixed
Operating Costs and Variable Costs owed but not paid by the Defaulting Partner
from the date of written notice to the Defaulting Partner of the exercise of the
Default Call to the date of the Default Call Closing, which shall be paid by the
Non-Defaulting Partner in the following order: first: to the lenders under the
Credit Agreement in an amount equal to all amounts payable in respect of the
Tranche A Debt (in case the Tioxide Partner is the Defaulting Partner) or the
Tranche B Debt (in case the Kronos Partner is the Defaulting Partner)
outstanding under the Credit Agreement immediately prior to the closing of such
purchase (the "DEFAULT CALL CLOSING"); second: to the relevant obligees under
all other Debt of the Joint Venture (other than Convertible Loans) in an amount
equal to the product of (x) the aggregate principal amount of such Debt
outstanding immediately prior to the Default Call Closing and (y) the Percentage
Interest of the Defaulting Partner immediately prior to the Default Call
Closing; and third: to the Defaulting Partner in an amount equal to the
remaining balance, if any. To exercise the foregoing option, the Non-Defaulting
Partner shall deliver a written notice (the "DEFAULT CALL NOTICE") to the
Defaulting Partner setting forth its election and a proposed date for the
Default Call Closing, which date shall in no event be set earlier than 15 days
or later than 60 days
16
<PAGE>
after delivery of the Default Call Notice (except as otherwise provided in the
last paragraph of Section 3.03(e). Promptly after delivery of the Default Call
Notice each Partner shall file an HSR Report to report the proposed acquisition
by the Non-Defaulting Partner of the Percentage Interest of the Defaulting
Partner (unless that acquisition does not require a filing under the HSR Act).
Delivery of a Default Call Notice shall constitute an irrevocable agreement by
the Non-Defaulting Partner to purchase the Percentage Interest of the Defaulting
Partner, and shall irrevocably obligate the Defaulting Partner to sell such
Percentage Interest, at the Default Call Price and on the other terms and
conditions set forth in Section 4.05. The Default Call Closing shall be
postponed for up to 208 days after the HSR Filing Date if, as of the proposed
Default Call Closing date set forth in the Default Call Notice, the condition
set forth in Section 4.05(a)(i) remains unsatisfied. If at the end of such 208-
day period, such condition still remains unsatisfied, neither Partner shall have
any further obligation under this Section 3.03(c) to consummate such Default
Call Closing; provided, however, that (i) the Non-Defaulting Partner shall
retain all of its rights under this Section 3.03(c) in respect of any subsequent
Class I Default by the Defaulting Partner and (ii) such 208-day period shall be
extended indefinitely after the authorization of any general assignment by the
Defaulting Partner for the benefit of creditors or of the institution by any
Person (including the Defaulting Partner) of any proceeding to adjudicate the
Defaulting Partner as bankrupt or insolvent, or seeking the liquidation, winding
up, reorganization, arrangement, adjustment, dissolution, protection, relief or
composition of the Defaulting Partner or its debts under any existing or future
law of any jurisdiction relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for the Defaulting
Partner or for any substantial part of its assets. Notwithstanding anything to
the contrary in this Section 3.03(c), the exercise of the Default Call shall be
unavailable (A) during any period in which the closing of the purchase of the
Percentage Interest of the Defaulting Partner pursuant to Section 4.02 or 4.04
has been extended beyond the period initially provided for closing to satisfy
the condition set forth in Section 4.05(a)(i) and (B) until the later of (i) the
expiration of the ten (10) day grace period provided in the definition of Class
I Default and (ii) three (3) days after the Defaulting Partner has received
notice of its failure to make a payment required under its Offtake Agreement or
any Assumption Agreement, either from the Joint Venture pursuant to the first
sentence of Section 3.03(a) or
17
<PAGE>
from the Non-Defaulting Partner, and during such three-day period the Defaulting
Partner has failed to cure such Class I Default by making payment in full to the
Joint Venture.
(d) From and after written notice to the Defaulting Partner of the
exercise by the Non-Defaulting Partner of the Default Call pursuant to Section
3.03(c), the Defaulting Partner shall be obligated to pay, prospectively,
pursuant to the provisions of its Offtake Agreement, Fixed Operating Costs and
Variable Costs in order to receive its Output Share of TiO2 from the Joint
Venture from and after the date upon which, but only so long as, the sum of (i)
the aggregate principal amount then outstanding under the Tranche A Debt (if the
Tioxide Partner is the Defaulting Partner) or the Tranche B Debt (if the Kronos
Partner is the Defaulting Partner), (less the aggregate principal amount thereof
assumed by the Non-Defaulting Partner pursuant to Assumption Agreements), (ii)
the product of the Percentage Interest of the Defaulting Partner and the
aggregate principal amount of all Debt of the Joint Venture (except for any
Convertible Loans and Tranche A and Tranche B Loans) and (iii) the total
outstanding aggregate principal amount of Convertible Loans made after the
Default Call Notice by the Non-Defaulting Partner the proceeds of which were
used to pay Fixed Operating Costs and Variable Costs that the Defaulting Partner
has failed to pay pursuant to its Offtake Agreement, exceeds $125,000,000. The
making of any capital contribution or Convertible Loan by the Non-Defaulting
Partner in respect of any Default by the Defaulting Partner does not entitle the
Non-Defaulting Partner to any additional output of TiO2 from the Plant, except
to the extent specifically provided in Section 3.04 as a result of the
adjustment of the Percentage Interests of the Partners.
(e) Within 60 days after the occurrence of any Bank Default, the Non-
Defaulting Partner shall, in addition to its rights under Section 3.03(b) (if
any), have the option to purchase the Percentage Interest of the Defaulting
Partner in the Joint Venture (the "BANK DEFAULT CALL") at an aggregate purchase
price (the "BANK DEFAULT CALL PRICE") equal to the greater of
(i) the aggregate principal amount outstanding at the time of Bank
Default Call Closing (as defined below) of the Tranche A Debt in the case
of a Tioxide Bank Default or the Tranche B Debt in the case of a Kronos
Bank Default or
(ii) the Bank Default Price on the date of the closing of such
purchase (the "BANK DEFAULT CALL CLOSING") pursuant to the formula:
18
<PAGE>
BDP = (FMV + AD) X PI
Where:
BDP = Bank Default Price
FMV = Fair Market Value of the Joint
Venture as of the date of the Bank
Default Call Notice (as defined
below)
AD = the total aggregate principal
amount of the Debt of the Joint
Venture outstanding as of the date
of the Bank Default Call Notice
PI = the Percentage Interest of the
Defaulting Partner as of the date
of the Bank Default Call Notice
The Bank Default Call Price shall be paid by the Non-Defaulting
Partner and applied in the following order:
first: to the lenders under the Credit Agreement in an amount equal to
the aggregate amount of (a) all amounts payable in respect of the Tranche A
Debt (in case the Tioxide Partner is the Defaulting Partner) or the Tranche
B Debt (in case the Kronos Partner is the Defaulting Partner) outstanding
under the Credit Agreement immediately prior to the Bank Default Call
Closing plus (b) all other obligations for Debt assumed by the Defaulting
Partner pursuant to any Assumption Agreement;
second: to the Non-Defaulting Partner in an amount equal to the
aggregate outstanding amount of the Convertible Loans made by the Non-
Defaulting Partner less the aggregate outstanding amount of the Convertible
Loans made by the Defaulting Partner;
third: to the relevant obligees under all other Debt of the Joint
Venture (other than Convertible Loans) in an amount equal to the product of
(x) the aggregate principal amount of such Debt outstanding immediately
prior to the Bank Default Call Closing and (y) the Percentage Interest of
the Defaulting Partner immediately prior to the Bank Default Call Closing;
and
19
<PAGE>
fourth: to the Defaulting Partner in an amount equal to the remaining
balance, if any.
To exercise the Bank Default Call option, the Non-Defaulting Partner
shall deliver written notice (the "BANK DEFAULT CALL NOTICE") to the Defaulting
Partner setting forth its election to exercise the Bank Default Call and two
proposed Valuation Firms. If the Partners fail to agree on the selection of two
Valuation Firms within the 15-day period after the date of the Bank Default Call
Notice, the Partners shall request that two Valuation Firms shall be appointed
by the AAA as soon as practicable but no later than 30 days thereafter. The
decisions of the AAA and the Valuation Firms, respectively, shall be final and
binding upon the Partners. As soon as practicable after their appointment and
using their best efforts to complete the task no later than 30 days thereafter,
both Valuation Firms shall estimate the Fair Market Value of the Joint Venture
as of the date of the delivery of the Bank Default Call Notice and deliver
reports setting forth their respective estimates to each Partner and the Joint
Venture. The average of the estimates of the Fair Market Value by each of the
Valuation Firms shall be deemed to be the final and conclusive determination of
the Fair Market Value. Within 10 days after the earlier of (i) delivery of the
report of the Valuation Firm or (ii) agreement by the Partners concerning the
Fair Market Value of the Joint Venture, the Non-Defaulting Partner shall set a
date for the Bank Default Call Closing, which date shall in no event be set
earlier than 15 days or later than 60 days after the delivery of the report of
the Valuation Firm or agreement by the Partners concerning the Fair Market Value
of the Joint Venture. Promptly after delivery of the Bank Default Call Notice
each Partner shall file an HSR Report to report the proposed acquisition by the
Non-Defaulting Partner of the Percentage Interest of the Defaulting Partner
(unless that acquisition does not require a filing under the HSR Act).
Unless during the 60-day period beginning on the date of any Bank
Default, either (A) the lenders under the Credit Agreement have waived or
withdrawn notice of all Bank Defaults relating to the Defaulting Partner or any
of its Affiliates in accordance with the terms of the Credit Agreement or (B)
the Non-Defaulting Partner rescinds its Bank Default Call Notice (by written
notice delivered to the Defaulting Partner), the Bank Default Call Notice shall
irrevocably obligate the Non-Defaulting Partner to purchase the Percentage
Interest of the Defaulting Partner and the Defaulting Partner to sell such
Percentage Interest, at the Bank Default Call Price and on the other terms and
conditions set forth in Section 4.05. The Bank Default Call
20
<PAGE>
Closing shall be postponed until the end of the Forbearance Period (as defined
in the Credit Agreement) if, as of the proposed Bank Default Call Closing date,
the condition set forth in Section 4.05(a)(i) remains unsatisfied. If at the
end of such Forbearance Period, such condition still remains unsatisfied,
neither Partner shall have any further obligation under this Section 3.03(d) to
consummate such Bank Default Call Closing; provided, however, that the Non-
Defaulting Partner shall retain all of its rights under this Section 3.03(e) in
respect of any other or subsequent Bank Default by the Defaulting Partner.
If after the date of delivery of a Bank Default Call Notice but prior
to the date of the Bank Default Call Closing, there is a Class I Default by the
Defaulting Partner, the Non-Defaulting Partner shall have the right to terminate
such Bank Default Call and to exercise its rights under Section 3.03(c) of this
Agreement, provided, however, that the Default Call Notice may specify any date
(within 60 days after the date of such Default Call Notice) as the Closing Date.
3.04. Adjustment of Percentage Interests. (a) On each and every
occasion that a Requesting Partner or a Non-Defaulting Partner makes an
additional capital contribution to the Joint Venture pursuant to Section 3.02(d)
or 3.03(b), respectively, or converts pursuant to its terms a Convertible Loan
made pursuant to Section 3.03(b), the Percentage Interests of the Partners shall
be adjusted in accordance with Section 3.01(d) and this Section 3.04.
(b) In the case of any Permitted Expansion effected pursuant to
Section 3.02(d)(i), within 30 days after the delivery of written notice from the
Requesting Partner to the Responding Partner setting forth its good faith
determination that such Permitted Expansion has been completed and achieved a
capacity increase acceptable to the Requesting Partner, which notice shall be
delivered no later than one year after the completion of construction of such
Permitted Expansion, the Partners shall mutually agree on the old capacity
("OC") of the Plant and the increase in capacity ("IC") of the Plant (as such
terms are defined below) resulting from such Permitted Expansion (determined as
of the date the completion notice is delivered by the Requesting Partner (the
"CAPACITY TEST DATE")), or, failing agreement, mutually appoint a Valuation Firm
to determine either or both of the OC and the IC of the Plant as of the Capacity
Test Date. If the Partners fail to agree on the selection of a Valuation Firm
within such 30-day period, as soon as practicable but no later than 30 days
thereafter, a Valuation Firm shall be appointed by AAA, whose decision
21
<PAGE>
shall be final and binding upon the Partners. As soon as practicable after its
appointment, the Valuation Firm shall determine either or both, as may be
necessary, of (i) the OC of the Plant immediately prior to the Capacity Test
Date without giving effect to any increase in capacity resulting from such
Permitted Expansion and (ii) the IC of the Plant as of the Capacity Test Date
giving full effect to the increase in capacity resulting from such Permitted
Expansion and deliver a report setting forth its determination to each Partner
and the Joint Venture.
(c) Upon the earlier to occur of (i) the delivery of the report of
the Valuation Firm pursuant to 3.04(b) and (ii) agreement by the Partners with
respect to both the OC and the IC of the Plant, the Percentage Interest of the
Requesting Partner shall immediately be adjusted pursuant to the formula:
(OPI X OC) + IC
---------------
API = OC + IC
Where:
API = the adjusted Percentage Interest of the Requesting
Partner (to be calculated to five decimal places);
OPI = the Percentage Interest of such Partner immediately
prior to such adjustment;
OC = the capacity of the Plant to produce TiO2 measured
in metric tons on a per annum basis as of the
Capacity Test Date without giving effect to any
increase in capacity resulting from such Permitted
Expansion;
IC = the capacity of the Plant to produce TiO2 measured
in metric tons on a per annum basis giving full
effect to the increase in capacity resulting from
such Permitted Expansion less the OC.
Simultaneously with the adjustment of the Percentage Interest of the
Requesting Partner, the Percentage Interest of the Responding Partner shall be
adjusted to equal 100% less the newly adjusted Percentage Interest of the
Requesting Partner.
(d) Within 30 days of the making of a capital contribution pursuant
to Section 3.03(b) or the conversion
22
<PAGE>
of a Convertible Loan made pursuant to Section 3.03(b), the Partners shall
either mutually agree on the Fair Market Value of the Joint Venture to be
applicable to such capital contribution or conversion, or, failing agreement,
appoint a Valuation Firm to determine the Fair Market Value of the Joint
Venture; provided, however, that if the Fair Market Value of the Joint Venture
shall have been determined by a Valuation Firm pursuant to this Section 3.04 at
any time during the 90 days immediately preceding such capital contribution or
conversion, unless the Partners otherwise agree, no new valuation shall be
conducted and the Fair Market Value of the Joint Venture as determined in such
prior valuation shall be applicable to such capital contribution or conversion.
If the Partners fail to agree on the selection of a Valuation Firm within such
30-day period, as soon as practicable but no later than 30 days thereafter, a
Valuation Firm shall be appointed by the AAA, whose decision shall be final and
binding upon the Partners. As soon as practicable after its appointment, the
Valuation Firm shall determine the Fair Market Value of the Joint Venture as of
the date the capital contribution or loan conversion is made and deliver a
report setting forth its determination to each Partner and the Joint Venture.
(e) Upon the earliest to occur of (i) delivery of the report of the
Valuation Firm pursuant to Section 3.04(d), (ii) agreement by the Partners
concerning the Fair Market Value of the Joint Venture and (iii) 10 days after
the making of a capital contribution or the conversion of a Convertible Loan (if
pursuant to the proviso to Section 3.04(d) no new valuation of the Fair Market
Value of the Joint Venture is required), the Percentage Interest of the Non-
Defaulting Partner shall immediately be adjusted pursuant to the formula:
API = OPI + (1.15 X IPI)
Where:
API = the adjusted Percentage Interest of the Non-
Defaulting Partner (to be calculated to five
decimal places);
OPI = the Percentage Interest of such Partner immediately
prior to such adjustment; and
IPI = the increase in Percentage Interest expressed as
percentage points given by the formula:
23
<PAGE>
IPI = (NC / (FMV + PA)) X 100
Where:
NC = the aggregate amount of the capital contribution or the
aggregate principal amount of the Convertible Loan (excluding
any interest accrued on such Convertible Loan) giving rise to
such adjustment;
FMV = the Fair Market Value of the Joint Venture immediately
following the capital contribution or the loan conversion, as
determined in accordance with Section 3.04(d) (i.e. the net
equity value); and
PA = the aggregate principal amount of the Tranche B Debt (if
Tioxide is the Defaulting Partner) or the Tranche A Debt (if
the Kronos Partner is the Defaulting Partner) plus any Debt of
the Defaulting Partner previously assumed by the Non-
Defaulting Partner pursuant to Section 3.04(f), in each case,
outstanding immediately following the capital contribution
(after application of the proceeds thereof) or the loan
conversion.
Simultaneously with the adjustment of the Percentage Interest of the Non-
Defaulting Partner, the Percentage Interest of the Defaulting Partner shall be
adjusted to equal 100% less the newly adjusted Percentage Interest of such Non-
Defaulting Partner.
(f) In the event that the Non-Defaulting Partner's Percentage
Interest increases as a result of a Default, the Non- Defaulting Partner shall
(i) be entitled to output from the Plant in accordance with its adjusted
Percentage Interest and shall be responsible for the Plant's Fixed Operating
Costs in accordance with its adjusted Percentage Interest, in each case,
pursuant to the Offtake Agreements and (ii) execute an Assumption Agreement
pursuant to which it shall assume, and indemnify the Defaulting Partner against,
obligations with respect to the Assumed Amount (as defined below) of the Tranche
A Debt then outstanding (if the Kronos Partner is the Non-Defaulting Partner) or
the Tranche B Debt then outstanding (if the
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Tioxide Partner is the Non-Defaulting Partner). "ASSUMED AMOUNT" means a portion
of the principal amount of the Tranche A Debt or Tranche B Debt, as the case may
be, determined pursuant to the formula:
AA = (IPI X (FMV + APA)) - NC
Where:
AA = the Assumed Amount;
APA = the aggregate principal amount of the Tranche A Debt
plus the Tranche B Debt; and
IPI, FMV and NC have the respective values ascribed to such
variables pursuant to Section 3.04(e) in respect of the
adjustment of Percentage Interests giving rise to the
assumption of Debt by the Non-Defaulting Partner.
If the Non-Defaulting Partner thereafter fails to meet its obligations with
respect to its additional Percentage Interest of Fixed Operating Costs or
assumed Debt of the Joint Venture, such failure shall be deemed to be a "Class I
Default" for purposes of Section 3.03, subject to cure by the other Partner and
readjustment of the Partners' Percentage Interests as provided in Sections 3.03
and 3.04.
ARTICLE IV
TRANSFER RESTRICTIONS;
OFFER RIGHT; PUT OPTION; CALL OPTION
4.01. Transfer Restrictions. Except as specifically permitted in this
Agreement:
(i) Neither Partner shall sell, assign, dispose of, encumber,
mortgage, hypothecate or otherwise transfer, or withdraw from the
Joint Venture with respect to, all or any portion of its general
partnership interest or its limited partnership interest without
simultaneously in the same transaction selling, assigning, disposing
of, encumbering, mortgaging, hypothecating, transferring or
withdrawing with respect to (as the case may be) an equal portion
of, respectively, its remaining limited or general partnership
interest in the Joint Venture.
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(ii) Except as required by the Credit Agreement, neither
Partner shall sell, assign, dispose of, encumber, mortgage,
hypothecate or otherwise transfer all or any portion of its
Percentage Interest without the prior written consent of the other
Partner and, if required, the lenders under the Credit Agreement;
provided that the Tioxide Partner may transfer all but not less than
all of its Percentage Interest to any Tioxide Group Member and the
Kronos Partner may transfer all but not less than all of its
Percentage Interest to any Kronos Group Member so long as the
transferee of such Percentage Interest shall have entered into an
agreement on terms reasonably satisfactory to the non-transferring
Partner to be bound by the terms of this Agreement, which agreement
shall in all events require that, in the event such transferee shall
thereafter cease to be a Tioxide Group Member (in the case of any
transfer by the Tioxide Partner) or a Kronos Group Member (in the
case of any transfer by the Kronos Partner), the Percentage Interest
held by such transferee shall first be retransferred to the
transferring Partner or another Tioxide Group Member or Kronos Group
Member, respectively. After giving effect to any such permitted
transfer of a Percentage Interest, (x) each reference herein to the
Partner transferring such Percentage Interest shall be deemed to
include a reference to the relevant transferee and (y) any right
exercisable by the transferring Partner hereunder shall be
exercisable by such transferee and any obligation of the
transferring Partner hereunder shall be a joint and several
obligation of the transferring Partner and such transferee,
notwithstanding the fact that the transferring Partner shall no
longer continue to have a Percentage Interest.
(iii) Neither Partner shall issue any shares of its capital
stock or other equity interest except to a Tioxide Group Member in
the case of the Tioxide Partner or to a Kronos Group Member in the
case of the Kronos Partner; provided, however, that either Partner
may issue up to a total of 20% of its capital stock outstanding
after such issuance to any Person or Persons in one or more
transactions; provided that in connection with any such issuance no
Person acquiring such capital stock or other equity interest shall
be given any right to veto, approve or consent with respect to
material decisions affecting the Joint Venture (including, without
limitation, the election of Supervisory Committee Members, the
appointment of General Managers or the amendment of or grant of
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consent or waiver under any Transaction Agreement or the Credit
Agreement).
(iv) No Tioxide Group Member shall, except as expressly
permitted by Section 4.01(iii) of this Agreement, directly or
indirectly, sell, assign, transfer, dispose of, or, except as
required by the Credit Agreement, directly encumber, mortgage or
hypothecate any shares of capital stock of or other equity interest
in the Tioxide Partner ("TIOXIDE PARTNER STOCK") except to another
Tioxide Group Member; provided that if the Tioxide Group Member to
which such transfer is made shall thereafter cease to be a Tioxide
Group Member such transferee shall first be required to retransfer
such Tioxide Partner Stock to another Tioxide Group Member.
(v) No Kronos Group Member shall, except as expressly
permitted by Section 4.01(iii) of this Agreement, directly or
indirectly, sell, assign, transfer, dispose of, or, except as
required by the Credit Agreement, directly encumber, mortgage or
hypothecate any shares of capital stock of or other equity interest
in the Kronos Partner ("KRONOS PARTNER STOCK") except to another
Kronos Group Member; provided that if the Kronos Group Member to
which such transfer is made shall thereafter cease to be a Kronos
Group Member such transferee shall first be required to retransfer
such Kronos Partner Stock to another Kronos Group Member.
4.02. Offer Right. (a) At any time after the expiration of the
Seasoning Period, either Partner shall have the right to sell all (but not less
than all) of its Percentage Interest provided such sale is made in compliance
with the procedure set forth in this Section 4.02. The Partner desiring to sell
its Percentage Interest (the "SELLING PARTNER") shall deliver a written notice
(the "SELLING PARTNER'S FIRST NOTICE") to the other Partner (the "OFFEREE
PARTNER") substantially in the form of the letter of intent attached as Exhibit
2 hereto stating the intention of the Selling Partner to sell its Percentage
Interest. If the Offeree Partner determines that it may desire to exercise
certain of its rights under this Section 4.02 it shall, within 10 days after
receipt of the Selling Partner's First Notice, return an executed copy thereof
to the Selling Partner; provided, however, that the failure of the Offeree
Partner to execute or return the Selling Partner's First Notice shall not affect
any of its rights under this Section 4.02, other than its right to postpone the
closing of any purchase by it hereunder if the condition set forth in
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Section 4.05(a)(i) has not been satisfied as of the scheduled closing date.
Promptly after delivery to the Selling Partner of a copy of the Selling
Partner's First Notice executed by the Offeree Partner, each Partner shall file
an HSR Report to report the possible acquisition by the Offeree Partner of the
Percentage Interest of the Selling Partner (unless that acquisition does not
require a filing under the HSR Act). No later than 90 days after delivery of the
Selling Partner's First Notice, the Selling Partner shall deliver a second
written notice (the "SELLING PARTNER'S SECOND NOTICE") to the Offeree Partner
setting forth the proposed sale price (the "SELLING PARTNER'S PRICE") and
describing the proposed structure of the transaction. If the Offeree Partner
desires to purchase the Percentage Interest of the Selling Partner, it shall, on
or prior to the Offeree Partner Response Date (as defined below) deliver a
written notice (the "OFFEREE PARTNER'S NOTICE") to the Selling Partner. The
Offeree Partner's Notice shall either (i) set forth an irrevocable commitment by
the Offeree Partner to purchase the Percentage Interest of the Selling Partner
at the Selling Partner's Price and the other terms and conditions set forth in
the Selling Partner's Second Notice and in Section 4.05 or (ii) set forth an
offer to purchase the Percentage Interest of the Selling Partner at a price (the
"OFFEREE PARTNER'S PRICE") and on such other terms and conditions as stated
therein. "OFFEREE PARTNER RESPONSE DATE" means the later of (x) the date that is
120 days after the receipt by the Offeree Partner of the Selling Partner's First
Notice and (y) the date that is 30 days after the receipt by the Offeree Partner
of the Selling Partner's Second Notice.
(b) If the Offeree Partner's Notice sets forth a commitment to
purchase the Percentage Interest of the Selling Partner at the Selling Partner's
Price, the closing of such purchase shall take place within 90 days after
delivery of the Offeree Partner's Notice (subject to extension for up to 208
days from the HSR Filing Date if required to satisfy the condition set forth in
Section 4.05(a)(i)). If at the end of such 208-day period, such condition still
remains unsatisfied, the Selling Partner shall have no further obligations to
the Offeree Partner under this Section 4.02 for the 24-month period beginning at
the end of such 208-day period.
(c) If the Offeree Partner's Notice sets forth an offer to purchase
the Percentage Interest of the Selling Partner at a price other than the Selling
Partner's Price, the Offeree Partner and the Selling Partner shall have a period
of 30 days in which to execute a binding agreement governing the purchase of the
Percentage Interest of the
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Selling Partner by the Offeree Partner. If the Partners fail to execute such an
agreement within the required 30-day period, they shall promptly submit the sale
price dispute to binding arbitration pursuant to the procedure set forth in
Section 4.02(f).
(d) If the Offeree Partner either notifies the Selling Partner in
writing that it has elected not to purchase the Percentage Interest of the
Selling Partner or fails to provide the Offeree Partner's Notice on or prior to
the Offeree Partner Response Date, the Selling Partner shall have (i) 180 days
in which to execute a definitive agreement with any Person which shall not be an
Affiliate of the Selling Partner (a "THIRD PARTY") committing the Selling
Partner to sell, and such Third Party to purchase (subject to the Offeree
Partner's right of first refusal set forth in Section 4.02(e)), the Percentage
Interest of the Selling Partner and (ii) 90 days thereafter in which to complete
such sale (subject to extension for up to another 118 days if required to
satisfy the condition set forth in Section 4.05(a)(i)). If the Selling Partner
fails to either execute a definitive sale agreement or complete the sale
contemplated thereby within such periods, it shall not again be entitled to
invoke the offer procedure set forth in this Section 4.02 during the 12 months
following the end of the relevant period.
(e) Prior to consummating a proposed sale of its Percentage Interest
to any Third Party pursuant to Section 4.02(d), the Selling Partner shall
provide the Offeree Partner with a description of the material terms and
conditions of the proposed sale (including the proposed purchase price and
structure), together with any letter of intent or definitive agreement relating
to such proposed sale if executed as of such date, to the extent that the
delivery of such letter of intent or definitive agreement to third parties is
not prohibited by the terms thereof (collectively, the "THIRD PARTY SALE
MATERIALS"). The Offeree Partner shall have a right of first refusal in respect
of such proposed sale, exercisable by delivery of a written notice to the
Selling Partner within 10 days after receipt by the Offeree Partner of the Third
Party Sale Materials. The Offeree Partner's notice shall set forth an
irrevocable commitment by the Offeree Partner to purchase the Percentage
Interest of the Selling Partner on the terms and conditions set forth in the
Third Party Sale Materials and in Section 4.05. The closing of the sale of the
Selling Partner's Interest to the Offeree Partner pursuant to this Section
4.02(e) shall take place within 30 days after the delivery of such notice by the
Offeree Partner, subject to extension for up to an additional 208 days from the
HSR
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Filing Date if required to satisfy the condition set forth in Section
4.05(a)(i). If at the end of such 208-day period, such condition still remains
unsatisfied, the Selling Partner shall have no further obligations to the
Offeree Partner under this Section 4.02 for the 24-month period beginning at the
end of such 208-day period. If the Offeree Partner fails to deliver such written
notice to the Selling Partner within such 10-day period, the Selling Partner
shall be free to consummate its proposed sale to the Third Party in accordance
with such Third Party Sale Materials and Section 4.02(d).
(f) If pursuant to Section 4.02(c), the Partners are required to
submit a sale price dispute to binding arbitration they shall mutually appoint a
Valuation Firm to determine the Fair Market Value of the Percentage Interest of
the Selling Partner. If within 10 days after delivery of the first written
notice by either Partner of the identity of the Valuation Firm it wishes to
designate, the Partners are unable to mutually agree upon a Valuation Firm, as
soon as practicable but no later than 30 days thereafter, a Valuation Firm shall
be appointed by the AAA, whose determination shall be final and binding upon the
Partners. Until a Valuation Firm has been appointed by both Partners or the AAA,
as the case may be, the Selling Partner may revise the Selling Partner's Price
by written notice to the Offeree Partner (in which case such revised price shall
after receipt of notice by the Offeree Partner be deemed the "Selling Partner's
Price") and the Offeree Partner may revise the Offeree Partner's Price by
written notice to the Selling Partner (in which case such revised price shall
after receipt of notice by the Selling Partner be deemed the "Offeree Partner's
Price"). Within 10 days after the appointment of the Valuation Firm, the Selling
Partner shall submit to such Valuation Firm and the Offeree Partner, the Selling
Partner's Price and any supporting information it wishes to include and the
Offeree Partner shall submit to the Valuation Firm and the Selling Partner, the
Offeree Partner's Price and any supporting information it wishes to include. At
any time prior to the making of such submissions to the Valuation Firm, either
Partner may abandon the sale process by written notice to the other Partner (in
which case, if it is the Offeree Partner that has elected to abandon the
process, the Selling Partner may sell its Percentage Interest in accordance with
Sections 4.02(d) and (e) (provided that the Offeree Partner shall have no right
of first refusal as contemplated by Section 4.02(e) if the Selling Partner is
able to sell its Percentage Interest to a Third Party at a price greater than
the Selling Partner's Price and the Selling Partner keeps the Offeree Partner
reasonably informed as to the progress
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of the third party sale process), or, if it is the Selling Partner that has
elected to abandon the process, it may not again invoke the offer procedure set
forth in this Section 4.02 during the 12-month period following delivery of its
notice of abandonment). In case the Offeree Partner elects to abandon the sale
process, the Selling Partner's Price in effect at the time notice of abandonment
is first given shall be the Selling Partner's Price for purposes of the
immediately preceding sentence and may not thereafter be revised by the Selling
Partner. Once the Partners have made their formal submissions to the Valuation
Firm, the Selling Partner shall be obligated to sell, and the Offeree Partner
shall be obligated to purchase (subject to satisfying the conditions set forth
in Section 4.05), the Selling Partner's Percentage Interest at the Arbitrated
Price (as defined below). The Valuation Firm shall, as promptly as practicable,
determine the Fair Market Value of the Percentage Interest of the Selling
Partner and deliver a report setting forth such determination to each Partner.
The closing of the sale of the Selling Partner's Interest to the Offeree Partner
pursuant to this Section 4.02(f) shall take place within 30 days after the
delivery of the Valuation Firm's report (subject to extension for up to 208 days
from the HSR Filing Date if required to satisfy the condition set forth in
Section 4.05(a)(i)). If at the end of such 208-day period, such condition still
remains unsatisfied, the Selling Partner shall have no further obligations to
the Offeree Partner under this Section 4.02 for the 24-month period beginning at
the end of such 208-day period. "ARBITRATED PRICE" means (1) the Selling
Partner's Price if it is closer to the Fair Market Value of the Percentage
Interest of the Selling Partner as determined by the Valuation Firm, or (2) the
Offeree Partner's Price if it is closer to such Fair Market Value.
4.03. Put Option. At any time after the expiration of the Seasoning
Period, if as of such time the Non-Defaulting Partner has not delivered a
Default Call Notice pursuant to Section 3.03, either Partner (the "ELECTING
PARTNER") may, subject to the following terms and conditions, elect to put its
Percentage Interest in the Joint Venture to the other Partner (the "PURCHASING
PARTNER") at an aggregate purchase price (the "PUT PRICE") equal to $125 million
plus the Electing Partner's Percentage Interest of the Joint Venture's net
working capital (excluding work-in-process inventory) all as determined in
accordance with GAAP as of the date the Put Notice (as defined below) is issued
(the amount of such net working capital being evidenced by a certificate of the
Joint Venture's chief accounting officer) which shall be paid by the Purchasing
Partner in the following order: first: to
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the lenders under the Credit Agreement in an amount equal to all amounts payable
in respect of the Tranche A Debt (in case the Tioxide Partner is the Electing
Partner) or the Tranche B Debt (in the case the Kronos Partner is the Electing
Partner) outstanding under the Credit Agreement immediately prior to the closing
of such sale (the "PUT CLOSING"); second: to the relevant obligees under all
other Debt of the Joint Venture (other than Convertible Loans) in an amount
equal to the product of (x) the aggregate principal amount of such Debt
outstanding immediately prior to the Put Closing and (y) the Percentage Interest
of the Electing Partner immediately prior to the Put Closing; third: to the
Purchasing Partner to the extent that it has outstanding Convertible Loans to
the Joint Venture in respect of Fixed Operating Costs or Variable Costs owed but
not paid by the Electing Partner from the date which is 180 days prior to the
date of delivery of the Put Notice (as defined below) to the date of the Put
Closing; and fourth: to the Electing Partner in an amount equal to the remaining
balance, if any. To exercise this put right, the Electing Partner shall deliver
a written notice (the "PUT NOTICE") to the Purchasing Partner setting forth its
election and a proposed date for the Put Closing, which date shall in no event
be set earlier than 60 or later than 90 days after delivery of the Put Notice.
Promptly after delivery of the Put Notice each Partner shall file an HSR Report
to report the proposed acquisition by the Purchasing Partner of the Percentage
Interest of the Electing Partner (unless that acquisition does not require a
filing under the HSR Act). Delivery of a Put Notice shall constitute an
irrevocable agreement by the Electing Partner to sell its Percentage Interest to
the Purchasing Partner, and shall obligate the Purchasing Partner to purchase
such Percentage Interest, at the Put Price and on the other terms and conditions
set forth in Section 4.05; provided, however, that the Purchasing Partner shall
have no obligation to purchase the Percentage Interest of the Electing Partner
pursuant to this Section 4.03 if as a result of a Material Adverse Development
(as defined below) (i) the Fair Market Value of such Percentage Interest as of
the Put Closing plus the aggregate principal amount (but only in an aggregate
amount not to exceed the Put Price) of all Debt of the Joint Venture that is
required to be repaid from the proceeds of the Put Price in accordance with the
first sentence of this Section 4.03 does not exceed (ii) the Put Price by at
least $15 million. The Put Closing shall be postponed for up to 208 days from
the HSR Filing Date if, as of the proposed Put Closing date set forth in the Put
Notice, the condition set forth in Section 4.05(a)(i) remains unsatisfied. If at
the end of such 208-day period, such condition still remains unsatisfied, the
Purchasing Partner shall have no further
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obligation under this Section 4.03 to purchase the Percentage Interest of the
Electing Partner as a result of the exercise of the put option set forth in this
Section 4.03; provided, however, the Electing Partner shall retain the right to
again exercise such put option no earlier than 24 months after the end of such
208-day period. "MATERIAL ADVERSE DEVELOPMENT" means a material adverse
development affecting the financial condition, business, assets or results of
operations of the Joint Venture that has occurred since the Closing Date other
than an adverse development affecting the TiO2 industry generally.
4.04. Minority Call Option. (a) If, at any time after the Closing
Date, the Percentage Interest of either Partner equals or exceeds 85%, such
Partner (the "MAJORITY PARTNER") shall have the option to purchase the
Percentage Interest of the other Partner (the "MINORITY PARTNER") at the Fair
Market Value of such Percentage Interest determined as of the date of delivery
of the Call Notice (as defined below) and on the other terms and conditions set
forth below. If the Majority Partner desires to exercise its call option, it
shall deliver a written notice (the "CALL NOTICE") to the Minority Partner
setting forth its election. Promptly after delivery of the Call Notice each
Partner shall file an HSR Report to report the proposed acquisition by the
Majority Partner of the Percentage Interest of the Minority Partner (unless that
acquisition does not require a filing under the HSR Act). Delivery of a Call
Notice shall constitute an irrevocable agreement by the Majority Partner to
purchase the Percentage Interest of the Minority Partner, and shall obligate the
Minority Partner to sell such Percentage Interest, at the Fair Market Value of
such Percentage Interest determined in accordance with Section 4.04(b) and on
the other terms and conditions set forth in Section 4.04(c) and Section 4.05.
(b) Within 30 days of the delivery of a Call Notice pursuant to
Section 4.04(a), the Partners shall either mutually agree on the Fair Market
Value of the Percentage Interest of the Minority Partner, or, failing agreement,
appoint a Valuation Firm to determine such Fair Market Value. If the Partners
fail to agree on the selection of a Valuation Firm within such 30-day period, as
soon as practicable but no later than 30 days thereafter, a Valuation Firm shall
be appointed by the AAA, whose decision shall be final and binding upon the
Partners. As soon as practicable after its appointment, the Valuation Firm shall
determine the Fair Market Value of the Percentage Interest of the Minority
Partner and deliver a report setting forth its determination thereof to each
Partner and the Joint Venture.
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(c) The closing of the sale of the Percentage Interest of the
Minority Partner (the "MINORITY CALL CLOSING") shall take place no later than 30
days after delivery of the Valuation Firm's report on a date established by the
Majority Partner by written notice to the Minority Partner. The Minority Call
Closing shall be postponed for up to 208 days from the HSR Filing Date if, as of
the scheduled date for the Minority Call Closing, the condition set forth in
Section 4.05(a)(i) remains unsatisfied. If at the end of such 208-day period,
such condition still remains unsatisfied, neither Partner shall have any further
obligation under this Section 4.04 to consummate such purchase and sale;
provided, however, that the Majority Partner shall have the right to once again
exercise its call option set forth in this Section 4.04 no earlier than 24
months after the end of such 208-day period. In addition to paying the Minority
Partner the Fair Market Value of its Percentage Interest in accordance with this
Section 4.04, the Majority Partner shall reimburse the Minority Partner for the
out-of-pocket legal fees reasonably incurred by the Minority Partner during any
period in which the Minority Call Closing is postponed beyond its scheduled date
at the request of the Majority Partner to satisfy the condition set forth in
Section 4.05(a)(i).
4.05. Conditions Relating to the Sale of an Interest. (a) The
obligation of either Partner to sell its Percentage Interest or to purchase the
Percentage Interest of the other Partner pursuant to Section 3.03, 4.02, 4.03 or
4.04 is subject to the satisfaction of the following conditions:
(i) Any applicable waiting period under the HSR Act relating to such
transaction shall have expired or been terminated;
(ii) (A) No provision of any applicable law or regulation
and no judgment, injunction, order or decree shall prohibit the
consummation of such transaction and (B) in the case of the
transactions described in Sections 3.03, 4.02, 4.03 or 4.04, the
purchasing Partner shall not have received any communication from
any HSR Authority (which communication shall be confirmed to the
selling Partner by such HSR Authority) that causes the purchasing
Partner to reasonably believe that any HSR Authority has
authorized the institution of litigation challenging the proposed
transaction under the U.S. antitrust laws, which litigation will
include a motion seeking an order or injunction of the type
described in Section 4.05(a)(iii) (provided that prior to
invoking the
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condition set forth in clause (B) of this Section 4.05(a)(ii),
the purchasing Partner shall first consult with the selling
Partner and shall use its reasonable commercial efforts to
negotiate a final resolution of all issues raised by the HSR
Authority that is acceptable to both Partners);
(iii) No motion seeking to restrain or enjoin such
transaction or seeking to prohibit, alter, prevent or materially
delay the consummation thereof shall have been filed by any
Person (other than one of the Partners or any of such Partner's
Affiliates) before any court, arbitrator or governmental body,
agency, official or authority and be pending or still subject to
appeal; and
(iv) All actions by or in respect of or filings with any
governmental body, agency, official or authority required to
permit the consummation of such transaction shall have been taken
or made.
(b) Each Partner agrees to cooperate with the other Partner and to
use its reasonable commercial efforts to take such actions and make such filings
as are necessary to satisfy the conditions set forth in Section 4.05(a)
(including, without limitation, the filing of HSR Reports and the provision of
supplemental information under the HSR Act) in connection with any sale of the
Percentage Interest of either Partner pursuant to this Agreement, provided that
neither Partner shall be required to agree to any consent decree or order in
connection with satisfying any of the conditions set forth in Section 4.05(a)(i)
or (ii) that would, (1) impose material limitations on the ability of such
Partner to effectively control, operate, or enjoy full rights of ownership with
respect to the business, assets or operations of the Joint Venture or any other
material business or assets of such Partner or its Affiliates, (2) require the
divestiture of any other material business or assets by such Partner or its
Affiliates or (3) require the prior approval by any HSR Authority of future
acquisitions by such Partner or its Affiliates.
(c) In connection with any sale made pursuant to this Article IV,
the selling Partner shall only be required to make representations and
warranties to the purchasing Partner concerning its ownership of its Percent age
Interest free and clear of any Lien or other adverse interest (except for Liens
created pursuant to the Credit Agreement), its power and authority to consummate
the sale, the absence of any motion seeking to enjoin the sale and the absence
of any
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material default under or breach or violation of any applicable agreement or
law.
4.06. Exit Debt Satisfaction. Notwithstanding any other provision of
this Agreement, prior to the sale of any Percentage Interest of a Defaulting
Partner pursuant to Section 3.03(c) and Section 3.03(e), a Selling Partner
pursuant to Section 4.02, an Electing Partner pursuant to Section 4.03 or a
Minority Partner pursuant to Section 4.04 (each of the foregoing, an "EXITING
PARTNER"): (a) the Joint Venture and the Purchasing Partner shall indemnify and
hold the Exiting Partner harmless from and against (i) all Debt, liabilities and
obligations relating to or arising from the business, operations or activities
of the Joint Venture from and after the date of such sale; and (ii) all
executory obligations arising or entered into prior to the date of such sale to
the extent not related to periods prior to the date of such sale; and (b) the
Joint Venture and the purchasing Partner shall: (1) pay or otherwise provide for
satisfaction in full of, or (2) obtain the full and complete release of the
Exiting Partner with respect to, all Debt, liabilities and other obligations of
the Joint Venture that were taken into account in determining the Fair Market
Value of the Percentage Interest that was sold, that were deducted from the
Default Call Price or that were paid, in part or in whole, from the proceeds of
the Default Call Price or the Put Price, as the case may be, in accordance with
the requirements of Section 3.03 and 4.03; provided, however, that the Joint
Venture and the purchasing Partner shall pay in full any Debt which Debt by its
terms requires such payment upon the sale of the Percentage Interest of the
Exiting Partner, and provided further that in the event that the Joint Venture
and the purchasing Partner do not fulfill (and are not required by the terms of
Debt to fulfill) the requirement in (1) above, but have used their reasonable
commercial efforts to fulfill the requirement in (2) above and are unable to do
so, the Joint Venture and the purchasing Partner shall indemnify and hold the
Exiting Partner harmless, to the reasonable satisfaction of such Exiting
Partner, from and against, all Debt, liabilities and other obligations of the
Joint Venture that were taken into account in determining the Fair Market Value
of the Percentage Interest that was sold, that were deducted from the Default
Call Price or that were paid, in part or in whole, from the proceeds of the
Default Call Price or the Put Price, as the case may be, in accordance with the
requirements of Section 3.03 and 4.03. The indemnification described in the
foregoing sentence shall be deemed reasonably satisfactory to the Exiting
Partner if (i) in the form of the attached Exhibit 3; and (ii) executed by the
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Joint Venture, the purchasing Partner and one or more Affiliates of the
purchasing Partner, which Affiliate or Affiliates shall be at least as
creditworthy as of the date of such indemnification as was Kronos, in the event
that the Tioxide Partner is the Exiting Partner, or Tioxide, in the event that
the Kronos Partner is the Exiting Partner, as of the date of this Agreement.
ARTICLE V
TAX MATTERS
5.01 Partnership For Tax Purposes. The Partners hereby agree that
the Joint Venture shall be treated as a partnership for tax purposes under
United States federal, state and local income tax laws or other laws, and
further agree not to take any position or to make any election, in a tax return
or otherwise, inconsistent herewith or with the election described in Section
5.02(a).
5.02. Tax Matters. (a) Notwithstanding anything to the contrary in
Section 5.01, the Partners shall cause the Joint Venture to make a timely
election in accordance with the provisions of Section 761(a) of the Code,
Regulations Section 1.761-2 and any relevant state or local law to be excluded
from the application of the provisions of subchapter K of the Code. This
Agreement is a manifestation of the Partners' intent that the Joint Venture be
excluded from the provisions of subchapter K of the Code. The Joint Venture
shall make no other tax election or filing without the mutual consent of the
Partners.
(b) Consistent with the election described in Section 5.02(a), the
Partners intend that all tax allocations shall be made in a manner consistent
with treating the Tioxide Partner as having directly acquired a 50% undivided
interest in the Transferred Assets from the Kronos Partner and as if the ongoing
operations of the Joint Venture were conducted jointly and directly by the
Partners (rather than through the Joint Venture).
(c) Within 75 days of the close of each Fiscal Year, the General
Managers of the Joint Venture shall provide a copy to each Partner of the Joint
Venture's financial statements (the "FINANCIAL STATEMENTS") for such Fiscal Year
to facilitate each Partner's tax return filing obligations. The Financial
Statements shall allocate to each Partner each line item in accordance with
Section 5.02(b) of this Agreement (and as described below). Each
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Partner shall have the right to review the books and records of the Joint
Venture to confirm the accuracy of the Financial Statements, and, if upon any
such review, a Partner reasonably believes the Financial Statements are
incorrect in any material respect, such Partner shall promptly notify the Joint
Venture and the other Partner of such inaccuracy.
Allocations on the Financial Statements with respect to the items
described in (i)-(iv) below shall be made as so provided below:
(i) The Tioxide Partner shall be allocated all items of tax
depreciation attributable to the 50% portion of the Transferred Assets
purchased by the Joint Venture from the Kronos Partner for an amount equal
to the sum of the Tioxide Partner's Original Capital Contribution and the
proceeds of the Tranche A Debt (the "PURCHASED TRANSFERRED ASSETS"), and
the Kronos Partner shall be allocated all items of tax depreciation
attributable to the 50% portion of the Transferred Assets contributed to
the Joint Venture by the Kronos Partner in exchange for its Percentage
Interest in the Joint Venture (the "CONTRIBUTED TRANSFERRED ASSETS");
provided that any Partner receiving an increased Percentage Interest in the
Joint Venture pursuant to Article III of this Agreement shall be allocated
all items of tax depreciation attributable to the portion of the Property
of the Joint Venture deemed purchased by such Partner as a result of such
Partner's increased Percentage Interest;
(ii) The Tioxide Partner shall be allocated all of the interest
deductions associated with the Tranche A Debt, and the Kronos Partner shall
be allocated all of the interest deductions associated with the Tranche B
Debt; provided, however, that notwithstanding the foregoing, a Partner that
has assumed Debt of the other Partner pursuant to Section 3.04(f) shall be
entitled to all interest deductions associated therewith.
(iii) With respect to any period, (A) the Tioxide Partner shall be
allocated all items of income or deduction associated with all Variable
Costs in accordance with its entitlement during such period to the total
TiO2 output of the Joint Venture pursuant to the Tioxide Offtake Agreement,
and (B) the Kronos Partner shall be allocated all items of income or
deduction associated with all Variable Costs in accordance with its
entitlement during such period to
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the total TiO2 output of the Joint Venture pursuant to Kronos Offtake
Agreement.
(iv) With respect to any period, all items of income, gain, loss or
deduction associated with all Fixed Operating Costs shall be allocated to
each Partner in accordance with its share of Fixed Operating Costs for such
period pursuant to its Offtake Agreement, based on its Percentage Inter
est.
(d) Subject to Sections 5.01 and 5.02(a), each of the Tioxide
Partner and the Kronos Partner, individually and without consent of or notice to
the other Partner, may make any election for U.S. federal income tax purposes or
take any tax position associated with (i) the Purchased Transferred Assets, in
the case of the Tioxide Partner; (ii) the Contributed Transferred Assets, in the
case of the Kronos Partner; and (iii) any portion of the Property of the Joint
Venture deemed purchased by either Partner as a result of an increase in such
Partner's Percentage Interest pursuant to Article III of this Agreement;
provided that each Partner shall prepare its separate tax returns in a manner
consistent with the Financial Statements unless such Partner reasonably believes
such Financial Statements are incorrect and has so notified the other Partner.
ARTICLE VI
DISTRIBUTIONS; CAPITAL CALLS
6.01. Distributions. (a) All distributions made to either Partner
hereunder shall be made equally in respect of its general partnership interest
and its limited partnership interest in the Joint Venture.
(b) The Joint Venture shall make the distribution to the Kronos
Partner required by Section 2.03(vi) of the Formation Agreement.
(c) Other than the initial distribution described in Section 6.01(b)
and any special distribution made to a Non-Defaulting Partner pursuant to
Section 3.03(b), the Joint Venture shall make distributions to the Partners in
proportion to their Percentage Interests at such times and in such amounts as
the Supervisory Committee may determine from time to time in accordance with
Section 7.02(c) (including at such times as the Supervisory Committee determines
that the Joint Venture has accumulated cash in excess of its requirements). In
connection with any
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distributions involving a return of any capital contributions, neither Partner
shall have the right to receive property other than cash, except as may be
specifically provided in this Agreement.
6.02. Amounts Withheld from Distributions. The Joint Venture shall
withhold from distributions to the Partners and pay over to any United States
federal, state, local or foreign government any amounts which the Supervisory
Committee reasonably determines may be required to be so withheld pursuant to
the Code or any provisions of state, local or foreign law. All amounts so
withheld with respect to either Partner shall be treated as amounts distributed
to such Partner pursuant to this Article VI for all purposes and shall reduce on
a dollar-for-dollar basis any amounts otherwise distributable to such Partner.
6.03. Capital Calls. The Joint Venture may request the Partners to
make capital contributions to the Joint Venture at such times and in such
amounts as the Supervisory Committee may determine in accordance with Section
7.02(c).
ARTICLE VII
THE SUPERVISORY COMMITTEE
7.01. The Supervisory Committee. (a) Except as otherwise expressly
provided in this Agreement, the business and affairs of the Joint Venture shall
be managed under the direction of a four member supervisory committee (the
"SUPERVISORY COMMITTEE"), an equal number of the members of which (the
"SUPERVISORY COMMITTEE MEMBERS") shall be appointed by the Tioxide Partner on
the one hand and by the Kronos Partner on the other. Set forth on Schedule
7.01(a) are the names of the four initial Supervisory Committee Members.
(b) With respect to each Fiscal Year of the Joint Venture, one
Supervisory Committee Member shall be appointed Chairman and another Secretary.
Set forth on Schedule 7.01(b) are the names of the initial Chairman and
Secretary who shall serve until April 15, 1994. With respect to the period
commencing April 16, 1994 and ending December 31, 1994, and for each Fiscal Year
of the Joint Venture thereafter, the Chairman and the Secretary for such Fiscal
Year shall be appointed by the respective Partner which did not appoint such
officer the prior period or year.
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(c) Unless granted additional powers by the Supervisory Committee,
the Chairman's sole duty as Chairman shall be to chair meetings of the
Supervisory Committee and the Secretary's sole duties as Secretary shall be to
provide notices of and record the proceedings of Supervisory Committee meetings.
7.02. Quorum and Manner of Acting. (a) Except as otherwise expressly
provided in this Agreement, (i) a majority of the total number of Supervisory
Committee Members, including at least one Supervisory Committee Member appointed
by the Tioxide Partner and at least one Supervisory Committee Member appointed
by the Kronos Partner, shall constitute a quorum for the transaction of
business, and (ii) the affirmative vote of at least three Supervisory Committee
Members present at a meeting at which a quorum exists, shall be required for the
Supervisory Committee to take any action.
(b) When a meeting is adjourned to another time or place (whether or
not a quorum is present), notice shall be given of the time and place of the
adjourned meeting. At the adjourned meeting, the Supervisory Committee may
transact any business which might have been transacted at the original meeting.
If a quorum shall not be present at any meeting of the Supervisory Committee,
the Supervisory Committee Members present thereat may adjourn the meeting, from
time to time, until a quorum shall be present.
(c) Except for actions specifically permitted or required pursuant to
this Agreement (including, without limitation, the implementation by any
Requesting Partner of any Permitted Expansion in accordance with Section 3.02 in
which the Responding Partner is not participating and the remedies and actions
upon the occurrence of any Default taken in accordance with Section 3.03) or
pursuant to a resolution, authorization, delegation of authority or other act of
the Supervisory Committee, the following actions (in addition to such other
actions as are required pursuant to other provisions of this Agreement to be
approved by the Supervisory Committee) shall require the approval of the
Supervisory Committee in accordance with Section 7.02(a):
(i) any merger, consolidation, business combination,
recapitalization, reconstitution or reorganization involving the Joint
Venture, including any change in the form of organization of the Joint
Venture from a limited partnership;
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(ii) the adjustment of any Percentage Interest in the Joint Venture
other than the adjustment of any Percentage Interest pursuant to Section
3.02 or 3.03;
(iii) any distribution (other than as specifically required pursuant
to Section 2.03(vi) of the Formation Agreement) or any withdrawal by a
Partner of capital from the Joint Venture;
(iv) the making of additional capital contributions by either Partner
(or any capital call by the Joint Venture);
(v) the approval of each Business Plan of the Joint Venture and any
amendments or revisions thereof;
(vi) any change in the principal place of business of the Joint
Venture;
(vii) the authorization of any general assignment by the Joint
Venture for the benefit of creditors or of the institution by the Joint
Venture of any proceeding to adjudicate it as bankrupt or insolvent, or
seeking the liquidation, winding up, reorganization, arrangement,
adjustment, dissolution, protection, relief or composition of the Joint
Venture or its debts under any existing or future law of any jurisdiction
relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for the Joint Venture or for
any substantial part of its property;
(viii) the appointment or removal, with or without cause, of any officer
of the Joint Venture (or any individual performing a similar managerial
function), except for the General Managers who may be removed only in
accordance with Section 9.04;
(ix) the creation of any sub-committee of the Supervisory Committee
(the constitution of which shall be an equal number of Supervisory
Committee Members appointed by the Kronos Partner and the Tioxide Partner,
respectively, unless otherwise agreed by the Supervisory Committee);
(x) any change in the fiscal year of the Joint Venture;
(xi) the appointment or termination of engagement of the independent
auditors for the Joint Venture;
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(xii) any capital expenditure in excess of $25,000 that is not included
in or effected in the manner or within the budget provided in the then
current Business Plan previously approved by the Supervisory Committee in
accordance herewith;
(xiii) any sale, lease, exchange, transfer or other disposition,
directly or indirectly, in a single transaction or series of related
transactions of assets of the Joint Venture having a fair market value in
excess of $100,000 other than (i) sales of TiO2 or reactor discharge in the
ordinary course of business pursuant to any Offtake Agreement or (ii) any
other disposition of assets made in accordance with the then current
Business Plan previously approved by the Supervisory Committee in
accordance herewith;
(xiv) any purchase, lease, exchange or other acquisition, directly or
indirectly, in a single transaction or series of related transactions by
the Joint Venture of assets (including securities) having a fair market
value, at the time of such transaction or series of related transactions,
of more than $100,000, other than transactions effected in the manner and
within the budget provided in the then current Business Plan previously
approved by the Supervisory Committee in accordance herewith;
(xv) the entry into, amendment or modification of, or supplement to,
any contract to which the Joint Venture is a party (including with respect
to insurance coverage) or the creation of any other obligation or
commitment which creates a liability (contingent or otherwise) of or
requires payments by the Joint Venture, in any such case, aggregating in
excess of $250,000, other than as provided in the then current Business
Plan previously approved by the Supervisory Committee in accordance
herewith;
(xvi) (A) the creation, issuance, assumption, guarantee, incurrence or
voluntary prepayment (in whole or in part) by the Joint Venture in any one
transaction or series of related transactions of any Debt of the Joint
Venture in excess of $100,000 except as required pursuant to the Credit
Agreement, (B) the modification, amendment or waiver of any agreement or
instrument pursuant to which any such Debt is outstanding or (C) the making
of any advance or loan in excess of $100,000;
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(xvii) the creation or incurrence of any Lien on any property or asset
of the Joint Venture other than any Lien arising (A) under the Credit
Agreement; (B) in the ordinary course of business other than to secure Debt
in excess of $100,000; (C) by operation of law and (D) in respect of
purchase money security interests created in connection with the purchase
of assets contemplated by the then current Business Plan previously
approved by the Supervisory Committee in accordance herewith;
(xviii) the making of any investment in, or the entry into any joint
venture or partnership with, any Person except for any investment made
pursuant to the then current Business Plan previously approved by the
Supervisory Committee in accordance herewith;
(xix) the sale, issuance, distribution, exchange, purchase or
redemption of any securities of the Joint Venture;
(xx) the filing of any registration statement by the Joint Venture
under the Securities Act of 1933, as amended;
(xxi) the adoption or amendment of any employee compensation,
severance, pension, profit sharing, bonus, stock option or other benefit
plan or arrangement (except for any such plan or arrangement contemplated
by the then current Business Plan previously approved by the Supervisory
Committee in accordance herewith) or the execution or amendment of, or
supplement to, any collective bargaining or union contract;
(xxii) to the extent permitted by applicable licenses and agreements,
the grant by the Joint Venture of any license, sublicense or similar right
in or to the proprietary technology or processes of the Joint Venture
except pursuant to the Master Technology Exchange Agreement or any License
Agreement to which the Joint Venture is a party;
(xxiii) any amendment of or waiver on the part of the Joint Venture under
any Transaction Agreement to which the Joint Venture is a party;
(xxiv) except for any transaction contemplated by the Transaction
Agreements, any transaction by the Joint Venture with either Partner or any
Affiliate of a Partner that is not in the ordinary course of business and
on an arm's length basis;
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(xxv) the initiation or settlement by the Joint Venture of claims or
litigation in excess of $100,000, other than as provided in Section 7.03(a)
or (b) of the Formation Agreement;
(xxvi) the designation of costs of the Joint Venture pursuant to
Sections 1.9 and 1.28 of the Offtake Agreements and the increase or
decrease of any Cash Call Amount pursuant to Section 6.3 of the Offtake
Agreements; and
(xxvii) the reallocation of the output of the Joint Venture pursuant to
Section 7.02(d) of this Agreement;
(d) Pursuant to the Offtake Agreements, each Partner will be entitled
to obtain its Output Share (as defined therein) of the total monthly output of
the Plant. Each Partner acknowledges that various factors may affect the output
of the Plant, including, without limitation:
(i) the particular grade(s) of TiO2 ordered by each Partner,
including the amount of finishing work required in connection
therewith;
(ii) the mix of product grades of TiO2 and the number of changes in
product grades ordered by each Partner, including the amount of
Plant downtime required to effect such changes; and
(iii) the amount of TiO2 products that do not conform to the product
specifications requested by each Partner (collectively, the
"PRODUCTION FACTORS").
Accordingly, notwithstanding the entitlement of each Partner pursuant to its
respective Offtake Agreement to its Output Share of TiO2 for any given month,
the Supervisory Committee shall have the power to modify and shall modify the
amount (but not the type) of TiO2 products to be manufactured by the Joint
Venture in fulfillment of each Partner's product order for such month and the
schedule for the manufacture and delivery of the same, in each case, in light of
the Production Factors and such other equitable considerations as the
Supervisory Committee deems appropriate in the circumstances. The Supervisory
Committee shall cause the Joint Venture promptly to notify each Partner of any
reallocation of Output pursuant to this Section 7.02(d).
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(e) If either Partner elects under its Offtake Agreement to take less
than its full Output Share of the output of the Joint Venture, the Supervisory
Committee shall promptly determine whether to increase the electing Partner's
share of the Variable Costs of the Joint Venture in light of any increase in
Variable Costs of the Joint Venture resulting from such election. The
Supervisory Committee shall make such determination in light of such equitable
principles as the Supervisory Committee deems appropriate in the circumstances.
If the Supervisory Committee determines that it should reallocate Variable Costs
pursuant to this Section 7.02(e), it shall promptly deliver a written notice to
each Partner of its determination. The Partner that has elected to take less
than its full Output Share shall only be liable for an increased share of the
Variable Costs of the Joint Venture incurred after the date of notice to it from
the Joint Venture pursuant to the immediately preceding sentence.
(f) If, with respect to any matter, the Supervisory Committee is
unable to reach an agreement to act in the manner required under Section
7.02(a), any Supervisory Committee Member may refer such dispute to a commit tee
consisting of the chief executive officers of Kronos and Tioxide or appropriate
corporate officers of any successor to either Partner (the "CEO COMMITTEE"). Any
such dispute that cannot be resolved by the CEO Committee within 10 days of
referral thereto (unless otherwise agreed by the CEO Committee) shall be
referred to a special committee consisting of a senior executive officer of a
controlling Affiliate of each Partner (the "PARENT COMMITTEE"). Any such dispute
that cannot be resolved by the Parent Committee within 30 days of referral
thereto, shall be referred to binding arbitration pursuant to Section 14.01.
7.03. Time and Place of Meetings. Unless otherwise agreed, the
Supervisory Committee shall hold its meetings at such time and place as may be
determined from time to time by the Supervisory Committee.
7.04. Regular Meetings. After the place and time of regular meetings
of the Supervisory Committee shall have been determined and notice of such
schedule shall have been given to each Supervisory Committee Member, regular
meetings may be held without further notice being given. The General Managers of
the Joint Venture shall deliver to each Supervisory Committee Member, at least
10 days before the meeting date, an agenda, any proposed resolutions and
appropriate background information regarding the matters to be acted upon.
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7.05. Special Meetings. Special meetings of the Supervisory
Committee may be called upon the written request of any Supervisory Committee
Member. Notice of special meetings of the Supervisory Committee shall be given
by the Secretary to each Supervisory Committee Member at least three days before
the meeting date in such manner as is determined by the Supervisory Committee,
and shall include a statement of the purpose or purposes of such special
meeting, any proposed resolutions and appropriate background information
regarding the matters to be acted upon. A written waiver of any such notice
signed by the Supervisory Committee Member entitled thereto, whether before or
after the time stated therein, shall be deemed equivalent to notice. Attendance
of a Supervisory Committee Member at a meeting shall constitute a waiver of
notice of such meeting, except when such Supervisory Committee Member 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. Unless otherwise agreed by all of the Supervisory Committee
Members present, the business conducted at any special meeting shall be limited
to the purpose or purposes set forth in the notice thereof.
7.06. Action by Consent. Any action required or permitted to be
taken at any meeting of the Supervisory Committee or of any sub-committee
thereof may be taken without a meeting, if all Supervisory Committee Members or
sub-committee members, as the case may be, shall have consented thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Supervisory Committee or sub-committee, as the case may be. Any request
for written consent shall be accompanied by appropriate background information
regarding the matters to be acted upon.
7.07. Telephonic Meetings. Members of the Supervisory Committee or
any sub-committee thereof may participate in a meeting of the Supervisory
Committee, or such sub-committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which each person
participating in the meeting can hear all others, and such participation in a
meeting shall constitute presence in person at the meeting.
7.08. Resignation. Any Supervisory Committee Member may resign at
any time by giving written notice to the Supervisory Committee. The resignation
of any Supervisory Committee Member shall take effect upon receipt of notice
thereof or at such later time as shall be specified in such notice, and unless
otherwise specified
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therein, the acceptance of such resignation shall not be necessary to make it
effective.
7.09. Term; Vacancies; Alternates. Each Supervisory Committee Member
shall hold office until his successor is appointed, or until his earlier death,
resignation or removal. A Supervisory Committee Member may be removed with or
without cause, at any time, only by the Partner that appointed such Supervisory
Committee Member. Vacancies and newly created memberships resulting from any
increase in the authorized number of Supervisory Committee Members shall be
filled by the Partner which appointed the departing Supervisory Committee Member
or which has the right to appoint a Supervisory Committee Member to the newly
created membership. In connection with each appointment or removal of any
Supervisory Committee Member, the Partner making such appointment or removal
shall give notice thereof to the Joint Venture and the other Partners. Each
Partner, by notice to the other Partner from time to time, shall be entitled to
designate one alternate for each Supervisory Committee Member appointed by such
Partner, who shall in the absence of such Supervisory Committee Member exercise
all of the functions thereof. The number of members of the Supervisory Committee
shall not be increased except by the prior written action of both Partners.
ARTICLE VIII
MANAGEMENT OF OPERATIONS
8.01. General Managers. (a) Unless otherwise specified by the
Supervisory Committee, the day-to-day operations of the Joint Venture shall be
managed by two general managers (the "GENERAL MANAGERS") appointed in accordance
with Section 9.02(b) and acting under the direction of the Supervisory
Committee.
(b) The General Managers are hereby granted the right, power and
authority, acting jointly but not severally, to cause the Joint Venture to do
all things which are necessary, proper or advisable to carry on the day-to-day
operations of the Joint Venture as contemplated in the then current Business
Plan (including all actions required to be taken by the Joint Venture in the
case of a Default), including but not limited to the right, power and authority
from time to time to cause the Joint Venture to do any or all of the following:
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(i) to borrow money not in excess of the limitations set forth in the
then current Business Plan or limitations otherwise established from time
to time by the Supervisory Committee;
(ii) to pay to any Person all amounts that have been duly authorized
by the Supervisory Committee and that are due and payable by the Joint
Venture to such Person;
(iii) to employ such agents, employees, managers, accountants, attorneys,
consultants and other Persons necessary or appropriate to carry out the
business and affairs of the Joint Venture, whether or not any such Person
is employed by or otherwise associated with any Partner or any of its
Affiliates, and to pay reasonable fees, expenses, salaries, wages and other
compensation to such Persons; provided that the employment and compensation
of the officers of the Joint Venture shall be subject to the approval of
the Supervisory Committee as contemplated by Section 7.02(b) and Article
IX;
(iv) to pay any and all fees and to make any and all expenditures not
in excess of the limitations set forth in the then current Business Plan or
limitations otherwise established from time to time by the Supervisory
Committee, which fees and expenditures are necessary or appropriate in
connection with the organization of the Joint Venture, the management of
the affairs of the Joint Venture, and the carrying out of its obligations
and responsibilities under the then current Business Plan and this
Agreement;
(v) to the extent that funds of the Joint Venture are not immediately
required for the conduct of the Joint Venture's business, temporarily to
deposit the excess funds in a bank account or accounts, or invest such
funds in their discretion;
(vi) to acquire, prosecute, maintain, protect and defend or cause to
be protected and defended all patents (including all applications with
respect thereto) and all inventions, trade secrets and other proprietary
information which may be held by the Joint Venture;
(vii) to enter into, execute, acknowledge and deliver any and all
contracts or other instruments necessary or appropriate to carry on the
business of the Joint Venture as set forth in the then Current Business
Plan or this Agreement, subject, in the case
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of any contract or other instrument requiring approval of the Supervisory
Committee in accordance with Section 7.02(b), to obtaining any such
required approval;
(viii) to pay any and all taxes, charges and assessments that may be
levied, assessed or imposed upon the Joint Venture or any of its proper
ties or assets;
(ix) to provide each Partner with all documents necessary or desirable
to export TiO2 or, to the extent permitted under the Transaction
Agreements, any related products outside of the United States of America;
and
(x) to allow on-site storage of TiO2 purchased by the Partners pursuant
to the Offtake Agreements, which storage space shall be allocated equitably
between the Partners in accordance with their respective Percentage
Interests.
8.02. Business Plan. (a) Attached as Schedule 8.02(a) is the
interim budget and business plan of the Joint Venture for the period commencing
on the Closing Date and ending on December 31, 1993 (the "INITIAL BUSINESS
PLAN").
(b) With respect to each Fiscal Year following the year ending
December 31, 1993, no later than of the preceding year, the General Managers
shall submit to the Supervisory Committee for its approval a budget and business
plan of the Joint Venture for such Fiscal Year which shall include, inter alia,
a cash plan, production goals, an offtake schedule for each Partner by product
grade and volume, a fixed and variable costs plan, a raw materials purchasing
plan, projected workforce levels, compensation and benefit plans, a capital
expenditure and maintenance plan and budget (including the capital expenditure
and maintenance costs to be included in Fixed Operating Costs under the Offtake
Agreements for such Fiscal Year). No later than the beginning of each Fiscal
Year, the Supervisory Committee shall approve the calendarized budget and
business plan submitted by the General Managers, with such revisions thereto as
the Supervisory Committee shall deem appropriate (as so revised, the "BUSINESS
PLAN"). To the extent reasonably within the control of the General Managers, the
Joint Venture shall be operated in accordance with the then current Business
Plan approved by the Supervisory Committee. If the Supervisory Committee shall
fail to approve the Business Plan for the year ending December 31, 1994, the
Joint Venture shall be operated in accordance with the Initial Business Plan
which shall be annualized to cover a 12-month period. If the Supervisory
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Committee shall fail to approve the Business Plan for any subsequent Fiscal
Year, the Joint Venture shall be operated in accordance with the Business Plan
for the immediately preceding Fiscal Year, with each line item set forth in the
budget included in such Business Plan multiplied by one plus the percentage
increase, if any (expressed as a decimal), in the annual average All Items, All-
Urban United States Consumer Price Index published by the U.S. Department of
Labor (or, if such index is no longer published, any similar consumer price
index then published by the U.S. Government) for such immediately preceding
Fiscal Year.
8.03. General Managers' Reports. The General Managers shall prepare
and distribute to the Supervisory Committee Members a monthly financial report
on the business and operations of the Joint Venture, which report shall include,
among other things, a balance sheet, profit and loss statement and cash flow
statement.
ARTICLE IX
EMPLOYEES
9.01. Principal Officers. The principal officers of the Joint
Venture shall be, in addition to the Chairman, the Secretary and the General
Managers, one or more vice presidents (or persons with similar
responsibilities). The names of the initial principal officers of the Joint
Venture are set forth on Schedule 9.01.
9.02. Nomination, Confirmation, Term of Office and Remuneration. (a)
Except for the Chairman, the Secretary and the General Managers, the principal
officers of the Joint Venture shall be appointed by the Supervisory Committee.
Except as otherwise provided in Section 9.02(b), each such officer shall hold
office until his successor is nominated and confirmed, or until his earlier
death, resignation or removal. The remuneration of all principal officers whose
compensation is paid by the Joint Venture shall be determined by the Supervisory
Committee.
(b) The General Managers of the Joint Venture shall initially be the
individuals identified as such on Schedule 9.01. Each Partner shall appoint and
pay the salary and all benefits and other expenses for one General Manager, and
such Partner shall have the power in its sole discretion to remove such General
Manager, with or without cause. Promptly after any such removal, the Partner
that has removed its appointee shall notify the other Partner of
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such removal and shall designate a successor General Manager, if any.
9.03. Subordinate Officers. In addition to the principal officers
contemplated by Section 9.01, the Joint Venture may have such other subordinate
officers as the Supervisory Committee may deem necessary. The Supervisory
Committee shall appoint any such officers unless the Supervisory Commit tee
shall have delegated to the General Managers or to any other principal officer
the power to appoint (and to determine compensation for) and to remove such
subordinate officers.
9.04. Removal. In addition to any power to remove subordinate
officers that may be delegated to a principal officer pursuant to Section 9.03,
officers other than the General Managers may be removed, with or without cause,
at any time, by the Supervisory Committee.
9.05. Resignations. Any officer may resign at any time by giving
written notice to the Supervisory Committee. The resignation of any officer
shall take effect upon receipt of notice thereof or at such later time as shall
be specified in such notice, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
9.06. Powers and Duties. Except as otherwise provided herein, each
of the principal officers of the Joint Venture shall have such powers as would
be incident to the comparable officer of a Delaware corporation and such other
powers and perform such other duties as may from time to time be conferred upon
or assigned to such officer by or pursuant to authority delegated by the
Supervisory Committee.
9.07. Tioxide Observers. During the Seasoning Period, the Tioxide
Partner shall have the right to send to the Joint Venture at any one time not
more than ten employees of the Tioxide Group who shall act as observers for the
benefit of the Tioxide Group and shall not interfere with the operations of the
Plant. The salaries and benefit expense for such observers shall be paid by the
Tioxide Group.
9.08. Transferred Employees. (a) Except for the Transferred
Employees (as defined in the Formation Agreement), the Joint Venture shall not
hire any employee of either Partner or its Affiliates unless (i) the employer of
such employee gives its prior written consent thereto and (ii) in the reasonable
judgment of both General Managers
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there is a position available to be filled at the Joint Venture and the employee
is qualified to discharge the duties of such position. In addition, both
General Managers shall determine whether any such employee qualifies as a Free
Return Employee. "FREE RETURN EMPLOYEE" means an employee of either Partner or
its Affiliates who is hired by the Joint Venture to perform a job that in the
reasonable opinion of both General Managers as of the date of hire can be
completed by such employee by the end of the Seasoning Period. Except for Free
Return Employees and except as may be agreed by the Partners from time to time,
neither Partner nor the Affiliates shall hire or rehire a prior employee of the
Joint Venture for three (3) years after the employee's termination from the
Joint Venture. The Joint Venture shall require each employee of the Joint
Venture to sign non-competition and confidentiality agreements in forms to be
agreed on by the General Managers. The non-competition agreement shall
prohibit the employee from working for either Partner or its Affiliates or any
business entity involved in the manufacture of TiO2 for a period of three years
from the date of termination of his employment with the Joint Venture; provided,
however, that from the earlier of (A) the end of the Seasoning Period and (B)
the completion of the job for which he was hired by the Joint Venture, no Free
Return Employee shall be restricted from returning to the employ of the Partner
or Affiliate for whom he worked prior to his employment by the Joint Venture.
Any former employee of either Partner or its Affiliates who does not qualify as
a Free Return Employee will be subject to the restrictions relating to return to
his former employer set forth in his non-competition agreement.
(b) All Persons hired by the Joint Venture pursuant to Section
9.08(a) (including all Free Return Employees) shall be employed by the Joint
Venture at its expense (including salary and benefits), provided that either
Partner or its Affiliates may supplement the compensation or benefits paid by
the Joint Venture to any Free Return Employee.
9.09. Limitations on Hiring. So long as the Tioxide Partner and the
Kronos Partner remain partners in the Joint Venture, (i) the Tioxide Partner
shall not, and shall not permit any Tioxide Group Member to, knowingly employ or
offer employment to any employee of the Kronos Group without the prior written
consent of the Kronos Partner and (ii) the Kronos Partner shall not, and shall
not permit any Kronos Group Member to, knowingly employ or offer employment to
any employee of the Tioxide Group without the prior written consent of the
Tioxide Partner.
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ARTICLE X
ACCOUNTING
10.01. Auditors and Financial Statements. (a) The initial
independent public accountants of the Joint Venture shall be Coopers & Lybrand.
Such accountants shall continue to serve the Joint Venture until their
successors shall be appointed by the Supervisory Committee. The independent
accountants of the Joint Venture shall audit the annual financial statements of
the Joint Venture.
(b) The Joint Venture shall adopt and follow GAAP; provided that the
Supervisory Committee may from time to time adopt changes in the accounting
methods and principles followed by the Joint Venture or in the application
thereof. The accounting methods and principles referred to in the preceding
sentence, as they exist and are applied from time to time, are herein referred
to as "JOINT VENTURE ACCOUNTING PRINCIPLES". In addition to preparing financial
statements in accordance with Joint Venture Accounting Principles, the Joint
Venture shall prepare, at the cost of the requesting Partner, such financial
statements as are required by the Partners and their Affiliates, at the times
and in the manner reasonably requested by either Partner (including, in the case
of the Tioxide Partner, the preparation of financial statements in accordance
with accounting principles generally accepted in the United Kingdom). Each
Partner and its independent auditors shall be entitled to consult with the Joint
Venture's independent public accountants and review their work papers and
information made available to them in connection with the preparation and audit
of the Joint Venture's financial statements.
10.02. Fiscal Year. Except for the initial partial fiscal year which
shall begin on the Closing Date and end on December 31, 1993, the fiscal year of
the Joint Venture (the "FISCAL YEAR") shall begin on January 1 and end on
December 31 of each year.
ARTICLE XI
INDEMNIFICATION
11.01. Employee Indemnification. (a) Except in the case of gross
negligence or willful misconduct, a Supervisory Committee Member or an officer
of the Joint
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Venture shall not be liable to the Joint Venture or the Partners for monetary
damages for breach of fiduciary duty to the fullest extent permitted by the laws
of the State of Delaware for directors of corporations organized under the laws
of such State.
(b)(i) Except in the case of gross negligence or willful misconduct,
each person (and the heirs, executors or administrators of such person) who was
or is a party or is threatened to be made a party to, or is involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a Supervisory Committee Member, officer or employee of the
Joint Venture or is or was serving at the request of the Joint Venture as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified and held harmless by
the Joint Venture to the fullest extent permitted by the laws of the State of
Delaware for directors and officers of corporations organized under the laws of
such State. The right to indemnification conferred in this Section shall also
include the right to be paid by the Joint Venture the expenses incurred in
connection with any such proceeding in advance of its final disposition to the
fullest extent authorized by the laws of the State of Delaware for directors and
officers of corporations organized under the laws of such State. The right to
indemnification conferred in this Section shall be a contract right.
(ii) The Joint Venture may, by action of the Supervisory Committee,
provide indemnification to such agents of the Joint Venture to such extent and
to such effect as the Supervisory Committee shall determine to be appropriate.
(c) The Joint Venture shall have power to purchase and maintain
insurance in such amount as may be determined by the Supervisory Committee on
behalf of any person who is or was a Supervisory Committee Member, officer,
employee or agent of the Joint Venture, or is or was serving at the request of
the Joint Venture as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss incurred by such person in any such capacity or
arising out of his status as such, whether or not the Joint Venture would have
the power to indemnify him against such liability under the laws of the State of
Delaware.
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(d) The rights and authority conferred in this Section shall not be
exclusive of any other right which any person may otherwise have or hereafter
acquire.
(e) Neither the amendment of this Section, nor, to the fullest extent
permitted by the laws of the State of Delaware, any modification of law, shall
eliminate or reduce the effect of this Section in respect of any acts or
omissions occurring prior to such amendment or modification.
11.02 Partner Indemnification. In addition to and not in lieu of
any other indemnification arrangement among the Partners and the Joint Venture
pursuant to the Formation Agreement or otherwise, the Joint Venture hereby
indemnifies each Partner and agrees to hold such Partner and its officers,
directors, employees and agents harmless from any loss, liability, damage, cost
or expense (including reasonable fees and expenses of accountants, consultants
and engineers, and reasonable attorneys' fees and expenses in connection with
any action, suit or proceeding) incurred or suffered by any of such Persons
resulting from the Joint Venture's negligence or willful misconduct or from
product liability or similar claims relating to TiO2 produced by the Joint
Venture; provided, however, that the Joint Venture's liability under this
Section 11.02 shall be limited to the amount of insurance proceeds available to
the Joint Venture in respect of the matter giving rise to such indemnification
obligation.
ARTICLE XII
COVENANTS OF THE PARTNERS
12.01. Nature of Obligations Between Partners. The Partners, acting
together through their duly authorized representatives, shall have the authority
to act for and assume any obligation on behalf of the Joint Venture. Except as
otherwise provided in any Transaction Agreement or by written agreement between
the Partners, neither Partner shall have any authority to act for or assume any
obligation or responsibility on behalf of the other Partner or the Joint
Venture.
12.02. Confidentiality. (a) Each Partner (the "RECEIVING PARTNER")
will hold and will use its best efforts to cause its Affiliates, officers,
directors, employees, lenders, accountants, counsel, consultants, advisors and
agents to hold, in confidence all documents and information concerning the other
Partner (the "PROVIDING PARTNER") and each Affiliate of the Providing Partner
furnished to the Receiving Partner or its Affiliates in connection with the
transactions contemplated by the Transaction Agreements and
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the business and operation of the Joint Venture, except to the extent that (i)
the Receiving Partner or its Affiliates are permitted to use or transfer such
information under the Master Technology Exchange Agreement or any License
Agreement or (ii) such information can be shown to have (A) been already known
to the Receiving Partner at the time such information was received from the
Providing Partner as evidenced by preexisting written records or documents; (B)
been available, or to have become generally available to the public as evidenced
by written records or documents, through no fault of the Receiving Partner or
its Affiliates; or (C) been received by the Receiving Partner from a Person
other than the Providing Partner as evidenced by written records or documents,
which Person, to the best knowledge of the Receiving Partner, was not bound by a
confidentiality agreement with the Providing Partner with respect thereto or was
not otherwise prohibited from transmitting such information to the Receiving
Partner; provided that the Receiving Partner may disclose any such information
to its Affiliates, officers, directors, employ ees, accountants, counsel,
consultants, advisors and agents on a need-to-know basis, solely for use in
connection with the transactions contemplated by any Transaction Agreement or
the business and operation of the Joint Venture, so long as such Persons are
informed by the Receiving Partner of the confidential nature of such information
and are directed by the Receiving Partner to treat such information
confidentially and in accordance with the limitations of this Section 12.02.
The requirements of the previous sentence shall not apply to any Person if such
Person is compelled to disclose such information by judicial or administrative
subpoena or process or other legal requirements applicable to it; provided that
such Person promptly furnishes written notice to the Providing Partner, and
otherwise gives the Providing Partner an opportunity to protect all documents
and information concerning the Providing Partner, and, in addition, itself takes
all reasonable steps, including without limitation seeking protective orders, to
protect the secrecy of such documents and information. Each Receiving Partner's
obligation to hold information in confidence shall be satisfied if it exercises
the same care with respect to such information as it would take to preserve the
confidenti ality of its own similar information.
(b) The Joint Venture will hold, and will use its best efforts to cause
its officers, directors, employees, lenders, accountants, counsel, consultants,
advisors and agents to hold, in confidence, all documents and information
(including, without limitation, information relating to marketing activities,
pigment product mix, product customers, the location of each Partner's
warehouses and
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receiving areas for the output of the Joint Venture and manufacturing technol
ogies and processes) concerning each Partner and its Affiliates; provided that
the Joint Venture may disclose such information to its officers, directors,
employees, lenders, accountants, counsel, consultants, advisors and agents on a
need-to-know basis, solely for use in connection with the transactions
contemplated by any Transaction Agreement or the business and operation of the
Joint Venture, so long as such Persons are informed by the Joint Venture of the
confidential nature of such information and are directed by the Joint Venture to
treat such information confidentially and in accordance with the limitations of
this Section 12.02. The requirements of the previous sentence shall not apply
to any Person if such Person is compelled to disclose such information by
judicial or administrative subpoena or process or other legal requirements
applicable to it; provided that such Person promptly furnishes written notice to
the Partner that such information concerns, and otherwise gives such Partner an
opportunity to protect all documents and information concerning such Partner,
and, in addition, itself takes all reasonable steps, including without
limitation seeking protective orders, to protect the secrecy of such documents
and information.
(c) With respect to documents and information covered by Article III of
the Master Technology Exchange Agreement, in the event of any conflict between
the Master Technology Exchange Agreement and this Agreement, the Master
Technology Exchange Agreement shall govern.
12.03. Debt. (a) Until the third anniversary of the Closing Date,
neither Partner shall create, assume, incur, guarantee, issue or in any manner
become liable, contingently or otherwise (collectively, "INCUR") any Debt other
than Debt in an aggregate principal amount not to exceed the Permitted Amount in
effect on the date of Incurrence (except for Debt Incurred by the Joint Venture,
including, without limitation, Debt under the Credit Agreement or pursuant to
the Transaction Agreements). "PERMITTED AMOUNT" means (A) from the Closing Date
to the second anniversary of the Closing Date, $0 and (B) from the second
anniversary of the Closing Date to the third anniversary of the Closing Date,
Debt in an aggregate principal amount equal to 83-1/3% of the Borrowing Base of
the Borrowing Partner (as defined below) as of the date of Incurrence less the
sum of (1) all Tranche A Debt (if the Tioxide Partner is the Borrowing Partner)
or all Tranche B Debt (if the Kronos Partner is the Borrowing Partner) and (2)
the amount of all other Debt of the Joint Venture outstanding on such date
multiplied by the Percentage
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Interest of the Borrowing Partner on such date. "BORROWING BASE" means, as of
any date, (i) the Percentage Interest of the Borrowing Partner multiplied by the
sum of (x) the Fair Market Value of the Joint Venture as of the date of
determination, (y) the aggregate principal amount of all Debt of the Joint
Venture outstanding on the date of determination and (z) the amount of any other
obligation deducted in determining the Fair Market Value plus (ii) the fair
market value of all other assets of the Borrowing Partner as of the date of
determination.
(b) Until the third anniversary of the Closing Date, at least ten days
prior to Incurring any Debt, the Partner which plans to Incur such Debt (the
"BORROWING PARTNER") shall deliver a written notice of its proposed borrowing to
the other Partner (the "NON-BORROWING PARTNER"), which notice shall set forth
the amount of Debt proposed to be Incurred, the total amount of Debt to be
outstanding after giving effect to the proposed Incurrence, and the estimated
Borrowing Base of the Borrowing Partner as of the proposed date of Incurrence,
together with a calculation showing in reasonable detail whether the proposed
Incurrence complies with Section 12.03(a). If the Non-Borrowing Partner
disagrees with the determinations set forth in the Borrowing Partner's Notice,
the Non-Borrowing Partner shall, within five days after the receipt of such
notice, deliver a written notice of disagreement to the Borrowing Partner. Any
notice of disagreement by the Non-Borrowing Partner shall describe in reasonable
detail the basis for such disagreement. If the Non-Borrowing Partner fails to
deliver a notice of disagreement within such five-day period, the Borrowing
Partner shall be free to Incur the Debt described in its notice of borrowing.
If the Non-Borrowing Partner delivers a notice of disagreement within such five-
day period and the Borrowing Partner refuses to withdraw its proposal to Incur
Debt, the Partners shall submit their dispute to arbitration pursuant to Section
14.01. If the Borrowing Partner's proposed Incurrence is ultimately determined
to be in compliance with the restriction set forth in Section 12.03(a), the Non-
Borrowing Partner shall compensate the Borrowing Partner for any loss, damage or
expense suffered by the Borrowing Partner as a result of the Non-Borrowing
Partner's objection.
12.04. Negative Pledge. Until the third anniversary of the Closing Date,
neither Partner will create, assume or suffer to exist any Lien on its limited
or general partnership interest in the Joint Venture except for Liens securing
obligations under, or under guarantees of, the Credit Agreement. Subsequent to
the third anniversary of the Closing Date, either Partner may create, assume or
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suffer to exist any Lien on its interest except as prohibited by the lenders
under the Credit Agreement. Neither Partner will, at any time, assign or pledge
any or all of its rights, including, without limitation, any right to receive
TiO2, under its Offtake Agreement.
12.05. Consolidations, Mergers and Sales of Assets. Neither Partner will
(i) consolidate or merge with or into any other Person, (ii) liquidate or (iii)
except as specifically permitted in accordance with Article III or IV of this
Agreement, sell, lease or otherwise transfer, directly or indirectly, all or
substantially all of its assets.
12.06. Restriction on Other Businesses. Neither Partner will engage in
any business activities other than (i) the ownership of an interest in the Joint
Venture, (ii) the transactions contemplated by the Transaction Agree ments, and
(iii) the manufacture, purchase or sale of TiO2 and related products and
activities ancillary thereto. Neither the Joint Venture nor either Partner
shall have any right by virtue of this Agreement in or to any income or profits
derived from the business activities of the other Partner permitted by the first
sentence of this Section 12.06.
ARTICLE XIII
TERMINATION AND LIQUIDATION
13.01. Term. The Joint Venture shall continue in existence until
dissolved pursuant to Section 13.02.
13.02. Liquidating Event. The Joint Venture shall dissolve and commence
winding up and liquidating only upon the earlier to occur of (a) mutual
agreement of the Partners to dissolve, wind up and liquidate the Joint Venture;
and (b) subject to Section 13.04, an event of withdrawal of either general
partner (within the meaning of the Partnership Act) unless at the time there is
at least one other general partner of the Joint Venture and such general partner
shall agree to continue the business of the Joint Venture. Any such remaining
general partner is hereby authorized to continue the business of the Joint
Venture.
13.03. Resignation and Withdrawal. Each Partner covenants and agrees
that it will not withdraw or resign from the Joint Venture prior to its
termination, except in
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connection with a permitted transfer of its entire Percentage Interest in the
Joint Venture.
13.04. Bankruptcy. The bankruptcy or insolvency of either Partner, or
the occurrence with respect to either Partner of any event or circumstance
referenced in Section 17-402(a)(4) or 17-402(a)(5) of the Partnership Act, shall
not cause such Person to cease to be a general or limited partner of the Joint
Venture. Therefore, such event will not constitute an event of with drawal of
a general partner (within the meaning of the Partnership Act) and will not cause
the dissolution of the Joint Venture.
13.05. Winding Up. Upon the agreement of the Partners pursuant to
Section 13.02 to dissolve, wind up and liquidate the Joint Venture, the Joint
Venture shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners and neither Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of the
Joint Venture's business and affairs, provided that all covenants con tained in
this Agreement and obligations provided for in this Agreement shall continue to
be fully binding upon the Partners until such time as the Property or the
proceeds from the sale thereof have been distributed pursuant to this Section
and the Joint Venture has terminated. The Partner designated by mutual
agreement of the Partners (the "LIQUIDATOR") shall be responsible for overseeing
the winding up and dissolution of the Joint Venture. The Liquida tor shall
take full account of the Joint Venture's liabilities and Property and shall
cause the Property or the proceeds from the sale thereof to the extent
sufficient therefor, to be applied and distributed to the maximum extent
permitted by law, in the following order:
(a) first, to the payment and discharge of all of the Joint Ven ture's
debts and liabilities; and
(b) second, to the Partners in accordance with their respective
Percentage Interests at such time, without distinction between their
general partnership interests and limited partnership interests.
13.06. Discretion of the Liquidator. In the discretion of the
Liquidator, a pro rata portion of the distributions that would otherwise be made
to the Partners pursuant to this Article may be:
(a) distributed to a trust established for the benefit of the
Partners for the purposes of liquidating
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Property, collecting amounts owed to the Joint Venture, and paying any
contingent or unforeseen liabilities or obligations of the Joint Venture or
of the Partners arising out of or in connection with the Joint Venture; the
assets of any such trust shall be distributed to the Partners from time to
time, in the reasonable discretion of the Liquidator in the same
proportions as the amount distributed to such trust by the Joint Venture
would otherwise have been distributed to the Partners pursuant to this
Agreement; or
(b) withheld to provide a reasonable reserve for Joint Venture
liabilities (contingent or otherwise) and to allow for the collection of
the unrealized portion of any installment obligations owed to the Joint
Venture, provided that such withheld amounts shall be distributed to the
Partners as soon as practicable.
13.07. Rights of Partners. Except as otherwise provided in this
Agreement, each Partner shall look solely to the assets of the Joint Venture for
the return of its capital contribution and shall have no right or power to
demand or receive property other than cash from the Joint Venture.
ARTICLE XIV
DISPUTE RESOLUTION
14.01. Arbitration. (a) All disputes arising out of this Agreement and
the Offtake Agreements that cannot be resolved by the Joint Venture, the
Partners and their Affiliates pursuant to the procedures and within the time
limits set forth in Section 7.02(f) shall be submitted for decision and final
resolution to arbitration to the exclusion of any courts of law, under the rules
of the AAA.
(b) The arbitration tribunal shall be composed of three disinter ested
arbitrators, appointed pursuant to the following procedure: the Partner
invoking arbitration (the "INVOKING PARTNER") shall give written notice to the
other Partner (the "ANSWERING PARTNER") stating the substance of its claim and
the name and address of the arbitrator it has chosen, who shall be a citizen of
the United States of America. Within 30 days of receipt of such notifica tion,
the Answering Partner shall give written notice to the Invoking Partner
providing its answer to the claim made, any counterclaim which it wishes to
assert in the arbitration, and the name and address of its arbitrator, who shall
be a
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citizen of the United States of America. If the Answering Partner fails to give
such notice within 30 days, appointment of the second arbitrator shall be made
by the AAA upon request of the Invoking Partner.
(c) The two arbitrators shall choose a third arbitrator, who shall serve
as president of the tribunal thus composed. If the two arbitrators fail to
agree upon the choice of a third arbitrator within 20 days after the appointment
of the second arbitrator, the third arbitrator will be appointed by the AAA upon
the request of the arbitrators or either Partner.
(d) The arbitration shall take place in New York City unless the Partners
otherwise agree. The arbitrators will decide the dispute by majority decision
and in accordance with Delaware law. The decision shall be rendered in writing,
shall state the reasons on which it is based, and shall bear the signatures of
at least two arbitrators. It also shall identify the members of the arbitration
tribunal, and the time and place of the award granted. Finally, it will
determine the expenses of the arbitration and the Partner which shall be charged
therewith or the allocation of the expenses between the Partners in the
discretion of the tribunal.
(e) The arbitration decision shall be rendered as soon as possible after
the constitution of the arbitration tribunal. The arbitration decision shall be
final and binding upon both Partners and the Partners agree that any award
granted pursuant to such decision may be entered forthwith in any court of
competent jurisdiction.
14.02. Injunctive Relief. Each Partner acknowledges and agrees that in
the event either Partner breaches any of its obligations under this Agreement,
the other Partner would be irreparably harmed and could not be made whole by
monetary damages alone. Both Partners accordingly agree (i) to waive the
defense in any action for specific performance that a remedy at law would be
adequate, and (ii) that this agreement must be enforced by specific performance
or injunctive relief; provided, however that nothing in this Section 14.02 shall
be construed to prohibit either Partner from bringing an action for money
damages in addition to an action for specific performance or injunctive relief.
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ARTICLE XV
MISCELLANEOUS
15.01. Notices. All notices, requests and other communications to either
Partner or to the Joint Venture hereunder shall be in writing (includ ing
facsimile or similar writing) and shall be given,
if to the Tioxide Partner, to:
Tioxide Americas Inc.
Suite 115, 901 Warrenville Road
Lisle, Illinois 60532
Attention: Vice President - Administration
R. Lachance
Telecopier: 708-515-1210
with copies to:
Tioxide Americas Inc.
c/o Tioxide Group Limited
Lincoln House
137-143 Hammersmith Road
London, England W14 0QL
Attention: Secretary
Telecopier: 011-44-71-331-7778
and
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Peter R. Douglas, Esq.
Telecopier: 212-450-4800
if to the Kronos Partner, to:
Kronos Louisiana, Inc.
3000 North Sam Houston Parkway East
Houston, Texas 77032
Attention: David B. Garten, Esq.
Telecopier: 713-987-4333
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with copies to:
NL Industries, Inc.
445 Park Avenue, 15th Floor
New York, New York 10022
Attention: Susan E. Alderton,
Vice President
Telecopier: 212-421-7209
and
On or before October 22, 1993:
Kirkland & Ellis
1999 Broadway, Suite 4000
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
Telecopier: 303-291-3300
After October 22, 1993:
Bartlit Beck Herman Palenchar & Scott
511 Sixteenth Street, Suite 700
Denver, Colorado 80202
Attention: James L. Palenchar, Esq.
Telephone: (303) 592-3100
Telecopy: (303) 592-3140
if to the Joint Venture, to:
Louisiana Pigment Company, L.P.
P.O. Box 70
Westlake, LA 70669-2070
Attention: The General Managers
Telecopier:
or to such other address or telecopier number as such Partner or the Joint
Venture may hereafter specify for the purpose of notices hereunder. Each such
notice, request or other communication shall be effective (i) if given by
facsimile, when such facsimile is transmitted to the telecopier number specified
in this Section and transmission of the appropriate number of pages is confirmed
or (ii) if given by any other means, when delivered at the address specified in
this Section. A copy of each communication sent by telecopier to any party
shall also be sent to such party by registered mail, but notice hereunder shall
be effective upon telecopier transmission in the manner specified above.
15.02. Survival. The agreements contained herein shall survive the
Closing but shall not survive the termination of this Agreement except as
otherwise specifically provided for herein.
15.03. Amendments; No Waivers. (a) Except as otherwise provided in
Section 11.01(e), any provision of this Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by each Partner or in the case of a waiver, by the Partner against
whom the waiver is to be effective.
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(b) No failure or delay by either Partner in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
15.04. Expenses. Except as otherwise contemplated herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the Partner
incurring such cost or expense, and this obligation shall survive the
termination of this Agreement. Any organization fees within the meaning of
Section 709 of the Code incurred by a Partner on behalf of the Joint Venture
shall be treated as a contribution to the Joint Venture, and any loss, deduction
or similar item attributable to such fees shall be specially allocated to such
Partner.
15.05. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the Partners and their
respective permitted successors and assignees in accordance with Article IV.
Neither party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement except to the extent expressly provided in
Article IV. If this Agreement is assigned by either party, such party shall
also assign all of its rights and obligations under its Offtake Agreement. This
Agreement is for the sole benefit of the Partners and nothing herein expressed
or implied shall give or be construed to give any Person other than the
Partners, any legal or equitable rights hereunder.
(b) Any permitted successor or assignee of any partner in the Joint
Venture shall be required to execute an agreement by which such successor or
assignee agrees to be bound by all terms and conditions of this Agreement. Any
assignee of the Partnership Interest of either Partner shall also enter into an
agreement with the Joint Venture as of the date of such assignment which
agreement shall be substantially similar to the Offtake Agreements.
(c) Each of the parties hereto shall consent to the assignment of the
rights and obligations of the Partners under this Agreement (i) to Citibank,
N.A., as Agent under the Credit Agreement, in a foreclosure pursuant to the
Collateral Documents (as defined in the Credit Agreement) or to any other
assignee of substantially all of the assets of the Joint Venture or to any
assignee of the Partnership Interest of either Partner, in either case in a sale
66
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pursuant to Collateral Documents; provided that such assignee shall agree
expressly in writing to be bound by terms and conditions of this Agreement from
and after the effective date of such assignment and (ii) to any subse quent
direct or indirect assignee of such assignee of all or substantially all the
assets of the Joint Venture or the Partnership Interest of either Partner;
provided that such assignee shall expressly agree in writing as aforesaid and,
if any such assignment(s) shall occur, references to the Joint Venture or such
Partner, as the case may be, in provisions of this Agreement which survive sale
pursuant to Collateral Documents shall refer to such assignee except as
otherwise specifically provided in this Agreement.
15.06. Headings. Headings are for ease of reference only and shall not
form a part of this Agreement.
15.07. Governing Law; Entire Agreement. (a) THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF DELAWARE
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE. The
choice of law and forum provisions of this Agreement have been negotiated in
good faith and agreed upon by the parties hereto. Each party by its execution
of this Agreement expressly agrees to the fullest extent permitted by law not to
challenge the choice of law or forum provisions contained in this Agreement.
(b) This Agreement and the other Transaction Agreements embody the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto.
15.08. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original. This
Agreement shall become effective when each Partner shall have received a
counterpart hereof signed by the other Partner.
15.09. Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid or unen
forceable to any extent, the remainder of this Agreement and the application of
such provisions to other Persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
15.10. Further Assurances. The Partners will execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purpose of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TIOXIDE AMERICAS INC., in its
capacity as a General Partner
and a Limited Partner
By: /s/ DAVID BUSBY
Name: David Busby
Title: Vice President
KRONOS LOUISIANA, INC., in its
capacity as a General Partner
and a Limited Partner
By: /s/ SUSAN E. ALDERTON
Name: Susan E. Alderton
Title: Vice President
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EXHIBIT 10.7
SHAREHOLDERS AGREEMENT
----------------------
THIS AGREEMENT (for convenience called "Shareholders Agreement") made
as of the 11th day of January 1982, by and among Imperial Chemical Industries
PLC (formerly Imperial Chemical Industries Limited) ("ICI PLC"), an English
company having its registered office in London, England; ICI American Holdings
Inc. ("ICI"), a Delaware corporation having its principal office in Wilmington,
Delaware, and UNIROYAL, Inc. (formerly United States Rubber Company)
("Uniroyal"), a New Jersey corporation having its principal office in
Middlebury, Connecticut 06749.
WHEREAS:
(1) ICI PLC and Uniroyal are the parties to a so-called Main
Agreement, dated December 19, 1963 ("Main Agreement"), pursuant to which they
jointly formed and owned Rubicon Chemicals Inc. ("RCI"), a Louisiana corporation
having its principal office at Geismar, Louisiana; and
(2) ICI PLC and Uniroyal are the parties to a so-called Shareholders
Agreement, dated April 1, 1977 (the "First Shareholders Agreement"), pursuant to
which they provided for certain matters relating to RCI and amended the Main
Agreement; and
(3) in accordance with, or as contemplated by, the First Shareholders
Agreement, (i) RCI, ICI Americas Inc. ("ICI-AM", a wholly owned subsidiary of
ICI), a Delaware corporation having its principal office in Wilmington,
Delaware, and Uniroyal entered into a so-called Operating Agreement, dated April
1, 1977 (the "Original Operating Agreement"), pursuant to which RCI operated
certain parts of its facilities to perform conversion services for ICI-AM and
Uniroyal, (ii) RCI leased certain portions of its facilities to ICI-AM and
Uniroyal in accordance with an indenture of lease, dated April 1, 1977 (the
"Lease"), (iii) ICI-AM and Uniroyal provided funds to RCI to finance certain of
its facilities and operations in accordance with an agreement, dated April 1,
1977 (the "Original Financing Agreement"), (iv) Uniroyal provided certain
utility services to RCI in accordance with an agreement, dated April 1, 1977
(the "Existing Utilities Services Agreement"), (v) ICI PLC and Uniroyal,
respectively, entered into various license
<PAGE>
agreements with RCI concerning patent and technology licenses and technical
assistance, each dated April 1, 1977 (collectively the "License Agreements"),
(vi) ICI PLC, ICI-AM, Uniroyal and RCI entered into an agreement, dated April 1,
1977 (the "First Liability and Indemnity Agreement"), and (vii) ICI PLC and
Uniroyal entered into an agreement, dated December 28, 1978 (the "First Secrecy
Agreement"); and
(4) ICI and Uniroyal are the parties to a so-called Interim
Shareholders Agreement, dated December 29, 1981 (the "Interim Shareholders
Agreement"), pursuant to which, recognizing the coincidental transfer from ICI
PLC to ICI of ICI PLC's shares of stock in RCI, they provided for certain
matters relating to RCI and, recognizing the prior formation by RCI of a wholly
owned subsidiary, Rubicon Inc. ("Rubicon"), a Louisiana corporation having its
principal office in Geismar, Louisiana, and in contemplation of RCI distributing
all of its Class A shares of stock in Rubicon to Uniroyal and all of its Class B
shares of stock in Rubicon to ICI as dividends, provided for certain matters
relating to Rubicon; and
(5) in accordance with the Interim Shareholders Agreement, RCI and
Rubicon entered into a so-called Exchange Agreement, dated as of December 28,
1981 (the "Exchange Agreement"), pursuant to which RCI transferred to Rubicon
certain assets in exchange for shares of Rubicon's stock and the assumption by
Rubicon of certain liabilities; and
(6) in view of the sale by Uniroyal of all its shares of stock in RCI
to ICI and the result that RCI thereby became a wholly owned subsidiary of ICI,
the Main Agreement and the First Shareholders Agreement are no longer applicable
to RCI, and the parties to both such Agreements desire to document the
termination thereof; and
(7) as contemplated by the Interim Shareholders Agreement, ICI and
Uniroyal desire to enter into this Shareholders Agreement with respect to
Rubicon and, upon the execution of this Shareholders Agreement, to terminate the
Interim Shareholders Agreement; and
(8) ICI and Uniroyal desire that, commencing as of December 28, 1981,
Rubicon operate certain of the facilities transferred to it from RCI in
accordance with the Exchange Agreement to perform conversion services for ICI-AM
and Uniroyal and certain services for RCI and also operate the facilities of RCI
on behalf of RCI, all in accordance with an agreement (the "Operating
Agreement"), which
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amends and restates the Original Operating Agreement, to be entered into among
Rubicon, RCI, ICI-AM and Uniroyal in the form attached hereto as Exhibit 1; and
(9) the parties hereto desire that (i) ICI PLC and Uniroyal,
respectively, and RCI and Rubicon enter into assignments, in the form attached
hereto as Exhibits 2 and 3, effective as of the dates set forth therein, from
RCI to Rubicon of certain of the License Agreements, (ii) RCI, Rubicon, ICI-AM
and Uniroyal enter into an assignment, in the form attached hereto as Exhibit 4,
effective as of the date set forth therein, from RCI to Rubicon of the Lease,
(iii) RCI, Rubicon, ICI-AM, ICI-AH and Uniroyal enter into a Financing
Agreement, in the form attached hereto as Exhibit 5, effective as of the date
set forth therein, assigning the Original Financing Agreement from RCI to
Rubicon and amending and restating the Original Financing Agreement, (iv) ICI
PLC and Uniroyal enter into a Secrecy Agreement, in the form attached hereto as
Exhibit 6, effective as of the date set forth therein, (v) RCI and Rubicon enter
into a Secrecy Agreement, in the form attached hereto as Exhibit 7, effective as
of the date set forth therein and (vi) ICI, ICI-AM, Uniroyal, Rubicon and RCI
enter into a Liability and Indemnity Agreement, in the form attached hereto as
Exhibit 8, effective as of the date set forth therein; and
(10) the parties hereto desire that Uniroyal provide to Rubicon
certain substances, utilities and services in accordance with the provisions of
an agreement (the "Utilities Services Agreement") in the form attached as
Exhibit D to the Operating Agreement; and
(11) upon the execution of this Agreement, the parties hereto desire
that certain Agreements presently in existence among Uniroyal, ICI-AM and RCI be
terminated, as hereinafter provided in this Agreement.
NOW, THEREFORE, in consideration of the covenants herein contained,
the parties hereto, intending to be legally bound hereby, agree as follows.
1. Definitions; Causation
----------------------
1.1 All terms which are defined elsewhere in this Agreement or any
Exhibit hereto or in the Operating Agreement or any Exhibit thereto are used in
this Agreement as so defined.
1.2 Whenever in this Agreement it is provided that RCI or ICI-AM will
enter into an agreement or take or concur in an action, it is understood that
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<PAGE>
ICI will cause RCI or ICI-AM to enter into such agreement or take or concur in
such action, and whenever in this Agreement it is provided that Rubicon will
enter into an agreement or take or concur in an action, it is understood that
ICI and Uniroyal together will cause Rubicon to enter into such agreement or
take or concur in such action.
2. Execution of Other Agreements; Termination of Other Agreements
--------------------------------------------------------------
2.1 Promptly following the execution of this Agreement, the parties
thereto will forthwith execute and deliver, each to the other, the agreements in
the forms attached hereto as Exhibits 1 through 8 and in the form attached as
Exhibit D to the Operating Agreement.
2.2 Upon the execution of this Agreement, the following Agreements
are hereby terminated as of the dates specified:
(a) the Main Agreement, as of January 11, 1982,
(b) the First Shareholders Agreement, as of January 11, 1982,
(c) the Interim Shareholders Agreement, as of January 11, 1982,
(d) the Agreement for Technical Assistance by Uniroyal Respecting
MDI between Uniroyal and RCI, as of December 28, 1981, and
(e) the First Secrecy Agreement, as of December 28, 1981.
3. Financing of Rubicon
--------------------
3.1 Except as otherwise may be agreed by ICI and Uniroyal or as
otherwise provided in paragraph 3.2, ICI and Uniroyal intend that Rubicon's
requirements for financing in excess of the stated capital and capital surplus
contributed by RCI at the time Rubicon issued its 800,000 shares of stock to RCI
shall be provided by ICI-AM and Uniroyal in accordance with the Financing
Agreement.
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<PAGE>
3.2 As a result of the Exchange Agreement and as provided in the
Interim Shareholders Agreement, as of December 28, 1981 Rubicon owed RCI a long
term debt of $956,000, bearing interest at the rate of 11 1/2% per annum. The
principal of this debt shall be repaid by Rubicon in monthly installments,
payable on the 15th day of each month commencing with April 15, 1982 and ending
when the debt has been repaid as provided herein. Each such installment shall
be in an amount equal to the capital based costs, except interest, incurred by
Rubicon in the preceding month, in accordance with the Operating Agreement, with
respect to all those fixed assets transferred to Rubicon pursuant to the
Exchange Agreement which were not financed under the Financing Agreement.
Interest at the aforesaid rate shall be paid in arrears on the unpaid balance of
the debt with each installment of principal.
4. Rights to Proceeds upon Sale or Dissolution of Rubicon
------------------------------------------------------
4.1 In the event of the sale by ICI and Uniroyal, jointly, of all of
their stock in Rubicon or the sale by Rubicon of all or substantially all of its
assets and its subsequent dissolution, the Operating Agreement and the Lease
shall forthwith be terminated and, notwithstanding the respective percentages
of Rubicon's stock then owned by ICI and Uniroyal, the net proceeds, i.e., the
price received from such sale after payment of all expenses of sale and, if it
is a sale of assets, after payment of all of Rubicon's debts (including those to
ICI-AM and Uniroyal under the Financing Agreement), if any, ("net proceeds") of
either such event ("such event") will be shared by ICI and Uniroyal in
accordance with this Section 4, and they will take whatever steps are necessary
to effect such ultimate sharing in the proportions provided below. For purposes
of this Section 4 the fixed capital responsibility of ICI shall be deemed to be
that of ICI-AM. For the purposes of this Section 4 ICI PLC shall be deemed not
to be included in the term "party."
4.2 (a) For the purpose of determining the proportion of the net
proceeds to be received by ICI and Uniroyal, respectively, the procedures and
computations specified in paragraphs 4.3 and 4.4 shall be applicable.
(b) Notwithstanding the provisions of paragraph 4.2(a), either
party may, within 90 days before such event, on written notice to the other, for
good and sufficient reasons stated in such notice (e.g., the fact that one or
more of Rubicon's then processes or plants are effectively obsolete or are not
being operated) elect to reject the application of the procedures and
computations specified in
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<PAGE>
paragraph 4.4 for this purpose and, if this occurs, the procedures and
computations specified in paragraphs 4.3 and 4.5 shall be applicable.
4.3 Not less than 30 days prior to such event the parties shall agree
upon a single disinterested appraiser or, failing such agreement, each of the
parties shall appoint a disinterested appraiser to appraise the fair market
value of Rubicon's real property ("land"). Such appraiser or appraisers shall
be instructed that such appraisal is to be made solely for the purpose of this
Section 4 and that, for this purpose, the parties desire an appraisal of
Rubicon's land, as land, usable for the highest and best use for which it may
legally be used but without consideration of the improvements thereon or
thereto. If the parties each appoint such an appraiser and within 60 days after
both such appointments such appraisers fail to agree on such fair market value,
such appraisers shall jointly appoint a third disinterested appraiser who shall
determine such value. The final appraisal shall be reduced to writing,
including the method or methods used for reaching the stated value, and
delivered to the parties. The cost of such appraisal shall be borne by the
parties equally.
4.4 (a) All of Rubicon's fixed assets (excluding land) as of the
date of such event (regardless whether or not fully depreciated) shall be
analyzed from Rubicon's books and records to determine the date of their
acquisition by Rubicon and their original gross book value as recorded by
Rubicon. Such original gross book value of each such asset shall then be
adjusted to arrive at an "indexed gross book value" by multiplying the original
gross book value of such asset by the quotient resulting from dividing the value
of the annual CE Plant Cost Index reported by "Chemical Engineering Magazine"
("CE Index") prevailing for the year during which such event occurs by the value
of the CE Index prevailing for the year during which such asset was originally
acquired by Rubicon. If the CE Index should not be published or its four
components (equipment, machinery and supports; construction labor; buildings;
and engineering and manpower) should be materially altered, ICI and Uniroyal
shall mutually agree upon a substantially equivalent alternative index believed
by both parties to reflect the same intended result.
(b) ICI and Uniroyal, respectively, shall be entitled to receive
that fraction of the net proceeds which has as its numerator the sum of
(i) the indexed gross book value of each Rubicon fixed
asset (or appropriate portion thereof), except land, for which such party
had the fixed capital responsibility, plus (ii) 50% of
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<PAGE>
the appraised value of Rubicon's land, and has as its denominator the sum
of (iii) the values determined under (i) for both parties plus (v) two
times the value determined under (ii).
4.5 (a) If either party makes the election provided in subparagraph
4.2(b), then, within 30 days after the making of such election, the parties
shall agree upon a single disinterested appraiser or, failing such agreement,
each of the parties shall appoint a disinterested appraiser to appraise the
value of the Aniline Facilities and the DPA plant as independent production
units. If the parties each appoint such an appraiser and within 30 days after
both such appointments such appraisers fail to agree on all such independent
production unit values in accordance with the instructions provided below, such
appraisers shall jointly appoint a third disinterested appraiser who shall
determine any such disputed values. All appraisers shall be instructed that
(i) the appraisal is being made solely for the purposes of
this Section 4 to allocate the net proceeds fairly between the parties,
(ii) their appraisal should not be influenced by the amount
of the net proceeds,
(iii) their appraisal of each of the foregoing units should
be as a separate, independent producing unit and such appraisal should not
be affected by (1) the fact that the several units share the Off-sites and
the waste disposal plant and any other existing waste disposal facilities,
but assuming the use of the portions thereof allocated to the producing
units in accordance with Exhibit A to the Operating Agreement, (2) the fact
that Rubicon is performing conversion services (rather than producing and
selling products) with respect to those production units for which it is
then performing conversion services, (3) the fact of the unique combination
of the units in one place and any integration of the units resulting
therefrom, and (4) any other of the unique and unusual aspects of the
operation of Rubicon,
(iv) their appraisal of each of the units on an independent
production basis should not be affected by considerations of their actual
previous financing, Rubicon's or either User's sources of raw materials,
the management, production or marketing capabili-
7
<PAGE>
ties of Rubicon's or either User's employees or the actual previous
profitability of Rubicon or either User with respect to the products, and
(v) their appraisal should be on the basis of the value of
each unit as a separate, independent producing unit giving recognition to
its age, condition and operating process, the general availability of the
raw materials and utilities it requires and the general saleability of the
product it produces.
The final appraisal of each unit shall be reduced to writing, including the
method or methods used for reaching the stated values, and delivered to both
parties. The cost of such appraisals shall be paid by the party which made the
election under subparagraph 4.2(b).
(b) The appraised values established pursuant to subparagraph
4.5(a) shall be adjusted by deducting from the appraised value of each unit the
value of the land, determined as provided in paragraph 4.3, allocated thereto.
(c) The procedures and computations provided in subparagraph
4.4(a) shall be made with respect to the Aniline Facilities and then, for each
party, compute a fraction (i) which has as its numerator the aggregate of the
appropriate portion of the indexed gross book value of each Rubicon fixed asset,
except land, allocated to the Aniline Facilities for which such party had the
fixed capital responsibility and (ii) which has as its denominator the aggregate
of (i) for both parties. Each such fraction shall be applied to the appraised
value of the Aniline Facilities determined in accordance with subparagraph
4.5(a).
(d) ICI shall be entitled to receive that fraction of the net
proceeds which has as its numerator the sum of
(i) the result of the computation provided in subparagraph
4.5(c) with respect to ICI, plus
(ii) 50% of the appraised value of Rubicon's land, and has
as its denominator the sum of said numerator plus the numerator determined
as provided in subparagraph 4.5(e).
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<PAGE>
(e) Uniroyal shall be entitled to receive that fraction of the
net proceeds which has as its numerator the sum of
(i) the result of the computation provided in subparagraph
4.5(c) with respect to Uniroyal, plus
(ii) 100% of the appraised value of the DPA plant, plus
(iii) 50% of the appraised value of Rubicon's land and has
as its denominator the sum of said numerator and the numerator determined
as provided in paragraph 4.5(d).
5. Pledge or Sale of Securities in Rubicon
---------------------------------------
5.1 Neither party (and, for the purposes of this Section 5, the term
"party" refers to ICI or Uniroyal and not ICI PLC) may, during the term of this
Agreement, pledge or hypothecate any of its securities in Rubicon, and any
purported pledge or hypothecation thereof shall be invalid; provided, however,
that this restriction shall not prohibit a general charge or pledge created upon
the whole or the major portion of the assets of either party.
5.2 Each party hereby consents to the transfer at any time by the
other party of any of such other party's securities in Rubicon to any Controlled
Company of such other party, and the further transfer at any time of such
securities in Rubicon by such Controlled Company back to such other party or to
another Controlled Company of such other party. Neither party will, without the
written consent of the other party, sell or otherwise dispose of any shares of
the capital stock of any Controlled Company which then holds any securities in
Rubicon, or permit any Controlled Company which then holds any securities in
Rubicon
(a) to pledge or hypothecate any securities in Rubicon,
(b) to sell any securities in Rubicon to any person other than
such Controlled Company's parent corporation or another Controlled Company of
such parent corporation,
(c) to issue any shares of its capital stock to any person other
than such Controlled Company's parent corporation or another Controlled Company
of such parent corporation, or
9
<PAGE>
(d) to merge or consolidate with any person other than such
Controlled Company's parent corporation or another Controlled Company of such
parent corporation.
For purposes of this paragraph 5.2, a company shall be deemed to be a Controlled
Company of Uniroyal or ICI if the whole of the capital stock of such company
shall be controlled and owned directly or indirectly by Uniroyal or ICI PLC, as
the case may be, and, in the case of ICI, for the purposes of this Section 5,
the term "Controlled Company" includes ICI PLC.
5.3 (A) At no time while this Agreement is in effect may either
party sell or otherwise dispose of any of its securities in Rubicon, other than
a transfer permitted by paragraph 5.2, except in accordance with the applicable
provisions of subparagraphs 5.3(B), (C) and (D).
(B) If a party desires to sell its securities in Rubicon, such
party (hereinafter in this paragraph 5.3 called the "selling party") shall
give written notice of such desire to the other party (hereinafter in this
paragraph 5.3 called the "non-selling party"), which notice shall contain
an offer by the selling party to sell all of its securities in Rubicon at a
specified cash price (payable in U.S.A. dollars). The non-selling party
shall have an absolute and irrevocable right, during a period of 60 days
following receipt of said notice, to make or not to make written acceptance
of said offer. If the non-selling party makes written acceptance of the
selling party's offer within said period of 60 days, the selling party's
securities in Rubicon shall be sold to the non-selling party in accordance
with the provisions of subparagraph 5.3 (C). If the non-selling party does
not make written acceptance of the selling party's offer within said period
of 60 days, the selling party shall be free, subject to the requirements
specified in subparagraph 5.3 (D), to sell all of its securities in Rubicon
at any time during the next succeeding period of 120 days following the
expiration of said period of 60 days, but not thereafter without again
complying with the procedure specified in this subparagraph 5.3 (B).
(C) An offer made by the selling party and accepted by the non-
selling party, pursuant to subparagraph 5.3 (B), shall constitute a binding
contract of purchase and sale, and each party shall have, in addition to
all other rights and obligations, the right to specific performance. A
closing shall be had in the United States on the 40th working day (counting
Satur-
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days, Sundays and legal holidays as non-working days) following the day on
which the non-selling party shall have made the written acceptance of the
selling party's offer. At said closing, the selling party shall
(i) transfer all of its securities in Rubicon to the
non-selling party; and
(ii) pay to the non-selling party, or have paid to the
appropriate government authority, all taxes levied on said transfer.
At said closing, the non-selling party shall
(a) pay to the selling party, by the delivery of a
certified or bank officer's check payable to, or wire transfer to, the
selling party in U.S.A. dollars, the contract price for all of the selling
party's securities in Rubicon; and
(b) arrange to have the selling party relieved of its
obligations, if any, as a guarantor of any outstanding loans to Rubicon, or
undertake in writing to indemnify the selling party against any and all
losses which may thereafter be incurred by the selling party by reason of
its having acted as such a guarantor.
Rubicon shall direct its independent certified public accountants to
audit Rubicon's books and records for the period from the date of the last audit
to the date of said closing (treating said closing date as the end of an
operating year for purposes of all year-to-date accounting and all other
accounting under the operating Agreement) and to supply certified financial
statements to the parties as soon as possible thereafter. At said closing, in
addition to the obligations of the selling party set forth in (i) and (ii)
above, the selling party (including ICI-AM in the case of ICI) shall assign to
the non-selling party (including ICI-AM in the case of ICI) the Operating
Agreement, the Lease and the Financing Agreement, and shall undertake in writing
to pay to Rubicon, without duplication, (1) one-half of the cost of said audit,
(2) all sums shown by said audit to be owing by the selling party (including
ICI-AM in the case of ICI) to Rubicon as of said closing date pursuant to all
agreements then in effect between the selling party (including ICI-AM in the
case of ICI) and Rubicon, and (3) a portion of all operating costs subsequently
incurred by Rubicon and properly allocable to the period ending with said
closing date, such portion to be that which would have been charged to the
selling party (including ICI-
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<PAGE>
AM in the case of ICI) by Rubicon had such sale and the assignment of the
Operating Agreement, Lease and Financing Agreement not taken place. At said
closing, in addition to the obligations of the non-selling party set forth in
(a) and (b) above, the non-selling party shall, by appropriate means, cause
Rubicon to undertake in writing to pay to the selling party (including ICI-AM in
the case of ICI), without duplication, (I) all sums shown by said audit to be
owing by Rubicon to the selling party (including ICI-AM in the case of ICI), and
(II) a portion of all sums subsequently received by Rubicon from any person or
concern other than the selling party (including ICI-AM in the case of ICI) and
properly allocable to the period ending with said closing date, such portion to
be that for which the selling party (including ICI-AM in the case of ICI) would
have received payment or credit from Rubicon had such sale and assignment not
taken place.
(D) In order for a valid sale of the selling party's securities
in Rubicon to be made to a purchaser other than the non-selling party,
there must be compliance with the provisions of subparagraph 5.3 (B) and,
in addition,
(i) all of the selling party's securities in Rubicon must
be sold to a single purchaser,
(ii) the price charged by the selling party and paid by
said purchaser must be a bona fide price in cash (payable in U.S.A.
dollars), which price must be not less than that at which the selling
party's securities in Rubicon were offered to the non-selling party
and must not be affected by any other transaction between the selling
party and said purchaser,
(iii) the selling party must, at the non-selling party's
option, cause said purchaser to enter into a written agreement with
the non-selling party embodying provisions comparable to those
contained in this Section 5, such agreement to be entered into not
later than the date on which the selling party's securities in Rubicon
are transferred to said purchaser,
(iv) the selling party must assign to said purchaser the
Operating Agreement, the Lease and the Financing Agreement, but
excepting from such assignment (1) the selling party's (including ICI-
AM in the case of ICI) rights with respect to amounts shown by
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Rubicon's books to be owing by Rubicon to the selling party (including
ICI-AM) at the time of such sale and (2) the selling party's
(including ICI-AM in the case of ICI) rights with respect to a portion
of all sums subsequently received by Rubicon from any person or
concern other than the selling party (including ICI-AM in the case of
ICI) and properly allocable to the period ending with such sale, such
portion to be that for which the selling party (including ICI-AM in
the case of ICI) would have received payment or credit from Rubicon
had such sale and assignment of the Operating Agreement, the Lease and
the Financing Agreement not taken place,
(v) the selling party (including ICI-AM in the case of ICI)
must pay to Rubicon all amounts shown by Rubicon's books to be owing
by the selling party (including ICI-AM in the case of ICI) to Rubicon
at the time of such sale, must undertake in writing, for the benefit
of the non-selling party (including ICI-AM in the case of ICI), to pay
to Rubicon a portion of all operating costs subsequently incurred by
Rubicon and properly allocable to the period ending with such sale,
such portion to be that which would have been charged to the selling
party (including ICI-AM in the case of ICI) by Rubicon had such sale
and assignment not taken place, and must cause said purchaser to
undertake in writing, for the benefit of the non-selling party
(including ICI-AM in the case of ICI), to be bound by, and to perform,
the selling party's (including ICI-AM in the case of ICI) remaining
obligations under the Operating Agreement, the Lease and the Financing
Agreement, and
(vi) the selling party must, at the non-selling party's
option, cause said purchaser to enter into a written agreement with
the non-selling party embodying provisions comparable to those
contained in this Shareholders Agreement.
Any purported sale of the selling party's securities in Rubicon to a purchaser
other than the non-selling party, made contrary to any of the foregoing
provisions, shall be invalid.
5.4 For purposes of this Section 5, any reference to a party's
"securities in Rubicon" shall be taken to mean the shares of Rubicon's stock
owned by such party and any bonds, debentures and notes of Rubicon owned by such
party
13
<PAGE>
and the rights of such party (ICI-AM in the case of ICI) under the Financing
Agreement.
6. Other Shareholder Matters
-------------------------
6.1 ICI PLC, ICI and Uniroyal each hereby agree that
(i) it (and, in the case of ICI, ICI-AM and RCI) will
comply with its obligations under each of the agreements entered into by it
with Rubicon as contemplated by this Agreement;
(ii) it will so vote the shares in Rubicon owned by it, so
instruct its representatives on Rubicon's Board of Directors and so conduct
its relations with Rubicon as to enable and encourage Rubicon and the
officers and employees of Rubicon to comply with Rubicon's obligations
under each of the agreements entered into by Rubicon with RCI, ICI-AM or
Uniroyal, or all, or ICI or ICI PLC as contemplated by this Agreement;
(iii) it will not, by any act or failure to act, cause
Rubicon or any officer or employee of Rubicon to violate any of Rubicon's
obligations under any agreement entered into by Rubicon with RCI, ICI-AM or
Uniroyal, or all, or ICI or ICI PLC as contemplated by this Agreement; and
(iv) if ICI, ICI PLC, RCI, ICI-AM or Uniroyal shall default
in the performance of any of its obligations to Rubicon under this
Agreement or under any agreement contemplated by this Agreement, the party
not in default (ICI in the case of ICI PLC, RCI or ICI-AM), without the
concurrence of the defaulting party, may cause Rubicon to assert its rights
under such agreement.
6.2 The Operating Agreement, the Lease and the Financing Agreement
shall be considered as a whole, so that failure by a party thereto to perform
its obligations under one such agreement shall constitute a breach of all, and
the failing party shall not be able to assert its rights under any such
agreement unless and until such failure has been cured to the satisfaction of
the other parties thereto.
14
<PAGE>
6.3 ICI and Uniroyal will supervise Rubicon's financial arrangements.
6.4 Rubicon's Articles of Incorporation shall be amended to reflect
the substance of Section 5 of this Agreement, and the certificates representing
Rubicon's stock shall bear an appropriate legend.
7. Certain Other Matters
---------------------
7.1 At any time and from time to time hereafter, upon reasonable and
appropriate notification by Uniroyal to RCI, RCI will, as requested by Uniroyal
pursuant to such notification, produce for Uniroyal, from aniline supplied by
Uniroyal, any or all types of MDI being produced by RCI up to the lesser of (i)
Uniroyal's requirements for MDI to produce other products or (ii) an aggregate
of 20 million pounds per year of MDI, such production to be done for a tolling
fee per pound of MDI consisting of RCI's cost to convert Uniroyal's aniline to
MDI (such cost to be pro-rated by RCI to a pound of MDI on the basis of the
Design Capacity of the MDI plant), plus a reasonable charge; provided, however,
that such tolling fee may not exceed the difference between the cost of aniline
to Uniroyal and RCI's lowest current price for each type of MDI, f.o.b. RCI's
Geismar facilities, for similar quantities of MDI of such type (other than so-
called "spot" or export sales).
7.2 In the event that RCI exercises the right it has under the
Operating Agreement to terminate Rubicon's operation of RCI's facilities with
Rubicon personnel and consequently RCI operates its facilities with its own
personnel, the Director of Production of Rubicon thereafter may not be an
individual employed by, or having any responsibility for the management of, RCI.
7.3 RCI and Rubicon shall from time to time grant to each other such
servitudes and rights-of-way as either may reasonably request from the other to
accommodate their respective present and future operations provided the same
shall not interfere with the operations of the granting party or present
unreasonable hazards to health and safety or conflict with other obligations or
commitments of the granting party.
7.4 Uniroyal shall continue to lease, for the benefit of RCI and
Rubicon, the parking spaces heretofore leased to RCI by Monochem, Inc., subject
to Uniroyal's obligations, encumbrances and servitudes with respect to such
property,
15
<PAGE>
on an evergreen basis at the present rental escalated annually with reference to
the Consumer Price Index, with December 1981 as the base.
7.5 It is the intention of the parties that the sum of the respective
payments to be made by ICI-AM and Uniroyal for (i) the respective fees payable
pursuant to paragraph 4.5 of the Operating Agreement and (ii) the respective
additional rents payable with respect to the Leased Property described in
subparagraph 2(a) of the Lease, as provided in paragraph 4 of the Lease, shall
be equal, and the fees referred to in (i) shall be appropriately adjusted when
the rents referred to in (ii) are changed or cease to be payable. It is the
further intention of the parties that, notwithstanding the payment provisions of
paragraph 4.5 of the Operating Agreement and paragraph 4 of the Lease, ICI-AM
and Uniroyal, respectively, on the one hand, and Rubicon, on the other hand,
will accrue the payments due under paragraph 4.5 of the Operating Agreement and
the specified dollar amounts set forth in paragraph 4 of the Lease, as
payables and receivables, respectively, with payment being made by ICI-AM and
Uniroyal, respectively, on Rubicon's call when needed by Rubicon for the purpose
of paying its income taxes. It is the intention of the parties that, from time
to time as determined by Rubicon's Board of Directors, Rubicon will declare a
dividend in an amount equal to the net receivables theretofore accrued (after
payment or accrual of income taxes) as contemplated by the prior sentence, and
will pay such dividend by off-set against such receivables.
8. Miscellaneous
-------------
8.1 Nothing in this Agreement is intended to prevent any party from
constructing and operating its own plant or plants for the manufacture of
aniline or DPA, utilizing technology (including, without limitation, patents and
technical information) properly available to it.
8.2 Failure of any party to insist, in any one or more instances,
upon a strict performance of any of the terms of this Agreement or the waiver by
such party of any term or right or any default of any other party hereunder will
not be deemed or construed as a waiver or a relinquishment for the future of any
such term, right or default.
8.3 This Agreement, together with its Exhibits, constitutes the
entire agreement among the parties relating to the subject matter hereof, and
may be amended only by written instrument executed on behalf of each party
hereto by an authorized officer thereof.
16
<PAGE>
8.4 All questions relating to the validity, interpretation or
performance of this Agreement will be determined in accordance with the law of
the State of Louisiana.
8.5 Any notice required or permitted to be given hereunder shall be
in writing and shall be deemed to have been properly given by one party to an
other if the same shall have been mailed in a sealed envelope, postage prepaid,
by certified or registered mail, addressed to Uniroyal as follows:
UNIROYAL, Inc.
Oxford Management & Research Center
Middlebury, Connecticut 06749
Attention: Secretary
and addressed to-ICI PLC as follows:
Imperial Chemical Industries PLC
Imperial Chemical House
Millbank
London, SW1P 3JF
England
Attention: Secretary
and addressed to ICI as follows:
ICI American Holdings Inc.
One Rollins Plaza
Wilmington, Delaware 19897
Attention: Secretary
or otherwise addressed with respect to any party as such party may designate by
written notice to the other parties.
8.6 This Agreement shall be binding upon and shall enure to the
benefit of the parties and their successors, and shall not be assignable by any
party without the consent of the others. It shall continue in effect until
either ICI or Uniroyal shall have sold its securities in Rubicon in accordance
with the provisions of Section 5 of this Agreement.
17
<PAGE>
8.7 Any delay or failure by any party hereto in performance hereunder
shall be excused if and to the extent that such delay or failure shall be
related to occurrences beyond such party's control, including, but not limited
to, decrees or restraints of government, acts of God, strikes or other labor
disturbances, war, sabotage, or any other cause or causes, whether similar or
dissimilar to those already specified, which cannot be controlled by such party.
Such performance shall be so excused during the continuance of the inability of
the party to perform so caused, but for no longer period, and the cause thereof
shall be remedied as far as possible with all reasonable dispatch.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
triplicate as of the date first above written.
IMPERIAL CHEMICAL INDUSTRIES PLC
By /s/ Gerald R. Zimmer
Attorney-in-fact
ICI AMERICAN HOLDINGS INC.
By /s/ J. Hummer
UNIROYAL, INC.
By /s/ V. Calarco
18
<PAGE>
EXHIBIT 1 TO THE SHAREHOLDERS AGREEMENT
---------------------------------------
FORM OF OPERATING AGREEMENT
EXHIBIT 2 TO THE SHAREHOLDERS AGREEMENT
---------------------------------------
FORM OF ASSIGNMENT OF AGREEMENTS
FOR TECHNICAL ASSISTANCE BY ICI PLC
RESPECTING ANILINE AND DPA
EXHIBIT 3 TO THE SHAREHOLDERS AGREEMENT
---------------------------------------
FORM OF ASSIGNMENT OF AGREEMENT
FOR TECHNICAL ASSISTANCE BY UNIROYAL
RESPECTING DPA AND ANILINE
EXHIBIT 4 TO THE SHAREHOLDERS AGREEMENT
---------------------------------------
FORM OF ASSIGNMENT OF THE LEASE
EXHIBIT 5 TO THE SHAREHOLDERS AGREEMENT
---------------------------------------
FORM OF FINANCING AGREEMENT
EXHIBIT 6 TO THE SHAREHOLDERS AGREEMENT
---------------------------------------
FORM OF SECRECY AGREEMENT
BETWEEN ICI PLC AND UNIROYAL
EXHIBIT 7 TO THE SHAREHOLDERS AGREEMENT
---------------------------------------
FORM OF SECRECY AGREEMENT
19
<PAGE>
BETWEEN RCI AND RUBICON
EXHIBIT 8 TO THE SHAREHOLDERS AGREEMENT
---------------------------------------
FORM OF LIABILITY AND INDEMNITY AGREEMENT
20
<PAGE>
EXHIBIT 10.8
OPERATING AGREEMENT
-------------------
AGREEMENT (for convenience called "Operating Agreement") made as of
the 28th day of December, 1981, by and among ICI Americas Inc. ("ICI-AM"), a
Delaware corporation having its principal office at One Rollins Plaza,
Wilmington, Delaware 19897; UNIROYAL, Inc. ("Uniroyal"), a New Jersey
corporation having its principal office at Benson Road, Middlebury, Connecticut
06749; Rubicon Chemicals Inc. ("RCI"), a Louisiana corporation having its
principal office at Geismar, Louisiana 70734 and Rubicon Inc. ("Rubicon"), a
Louisiana corporation having its principal office at Geismar, Louisiana 70734.
WHEREAS:
(1) ICI-AM, Uniroyal and RCI are the parties to an agreement, dated as
of April 1, 1977 (the "Original Operating Agreement"); and
(2) in view of certain transactions, arrangements and agreements
between RCI and Rubicon and between Uniroyal and ICI American Holdings Inc., the
parent company of ICI-AM, the parties to the Original Operating Agreement and
Rubicon desire to amend and restate the Original Operating Agreement, as
hereinafter provided, and to add Rubicon as a party hereto;
NOW, THEREFORE, in consideration of the covenants herein contained,
the parties hereto, intending to be legally bound hereby, agree that the
Original Operating Agreement be, and it hereby is, amended and restated as of
December 28, 1981 to provide as follows.
1. Exhibits; Definitions
---------------------
1.1 The following Exhibits are annexed hereto and form a part hereof:
Exhibit A - Principles of Capital Responsibility and Cost Allocation
Exhibit B - Form of Lease
Exhibit C - Form of Financing Agreement
<PAGE>
Exhibit D - Form of Utilities Services Agreement between Rubicon and
Uniroyal
Exhibit E - Benzene Specifications
Exhibit F - Ammonia Specifications
Exhibit G - Aniline Specifications
References to any of said Exhibits in this Operating Agreement shall be deemed
to mean such Exhibit as last revised or amended.
1.2 All terms which are defined elsewhere in this Operating Agreement
or in any of the Exhibits attached hereto are used in this Agreement as so
defined.
1.3 The following terms shall have exclusively the following
meanings.
(a) Nitric Acid Plant. The term "nitric acid plant" means the
-----------------
facilities included in Rubicon's two battery limits plants for reacting
ammonia and air to form nitric acid.
(b) Sulfuric Acid Plant. The term "sulfuric acid plant" means the
-------------------
facilities included in Rubicon's separate battery limits plant for
converting weak sulfuric acid into concentrated sulfuric acid.
(c) Nitrobenzene Plant. The term "nitrobenzene plant" means the
------------------
facilities included in Rubicon's separate battery limits plant for reacting
benzene and nitric acid, in the presence of concentrated sulfuric acid, to
form nitrobenzene (but excluding the TDA/DNT assets located therein).
(d) Aniline Plant. The term "aniline plant" means the facilities
-------------
included in Rubicon's separate battery limits plant for reacting
nitrobenzene and hydrogen to form aniline (but excluding the TDA/DNT assets
located therein).
(e) Integrated Aniline Plant. The term "integrated aniline plant"
------------------------
means the facilities included in Rubicon's integrated battery limits plant
2
<PAGE>
consisting of integrated process units for producing nitrobenzene and
aniline and concentrating sulfuric acid.
(f) DPA Plant. The term "DPA plant" means the facilities included in
---------
Rubicon's battery limits plant or plants for converting aniline into DPA
(but excluding the TDA/DNT assets located therein).
(g) TDI Plant. The term "TDI plant" means the battery limits plant
---------
owned by RCI at Geismar, Louisiana for the phosgenation of toluene diamine
to form toluene diisocyanate ("TDI").
(h) MDI Plant. The term "MDI plant" means the battery limits plant
---------
owned by RCI at Geismar, Louisiana for reacting aniline with formaldehyde
to form diamine diphenylmethane ("DADPM") and the phosgenation of DADPM to
form diphenylmethane diisocyanate ("MDI") and to make pure MDI and variants
thereof.
(i) TDA/DNT Plant. The term "TDA/DNT plant" means those identifiable,
-------------
distinct and separate assets located in the aniline plant, the DPA plant
and the nitrobenzene plant, respectively, which are used solely as part of
the process for producing toluene diamine ("TDA") and dinitrotoluene
("DNT"), respectively, as distinguished from those other assets located in
such plants which are used to produce products or intermediates as well as,
or other than, TDA or DNT.
(j) RCI Plants. The term "RCI plants" means the TDI plant, the MDI
----------
plant, the TDA/DNT plant and any other RCI External Assets.
(k) Waste Disposal Plant. The term "waste disposal plant" means the
--------------------
facilities included in Rubicon's deep wells and ancillary equipment for the
accumulation, neutralization, sand filtration and subsequent injection of
certain concentrated liquid waste.
(l) Off-sites. The term "Off-sites" means all of Rubicon's
---------
facilities not included in any of the plants defined in subparagraphs (a)
through (k) above (or any other newly defined plant).
3
<PAGE>
(m) Aniline Facilities. The term "Aniline Facilities" means
------------------
Rubicon's facilities consisting of the nitric acid plant, the sulfuric acid
plant, the nitrobenzene plant, the aniline plant and the integrated aniline
plant.
(n) External Assets. The term "External Assets" means personal
---------------
property owned by either RCI or Rubicon which is located on the real
property owned by the other and may or may not be interconnected or
operated in conjunction with the other's facilities. As used herein,
External Assets may be included in other defined terms, i.e., one or more
of Rubicon's battery limits plants may include External Assets of RCI and
one or more of RCI's battery limits plants may include External Assets of
Rubicon.
(o) Whenever the term "Rubicon's facilities" is used herein, it means
those facilities owned by Rubicon referred to whether or not subject to the
Lease and including Rubicon's External Assets (but in no event means or
includes the RCI plants or any other facilities owned by RCI including
RCI's External Assets).
(p) Whenever the term "battery limits plant" is used herein with
respect to one of Rubicon's or RCI's plants, it includes all facilities
associated therewith, including finished goods storage facilities related
thereto and, with respect to the Aniline Facilities, benzene unloading and
storage facilities, wherever located on Rubicon's property or RCI's
property (but in all events excluding any facilities included in any Off-
site or the waste disposal plant).
(q) Products. The term "products" means the following substances:
--------
(1) nitric acid from the nitric acid plant,
(2) concentrated sulfuric acid from the sulfuric acid plant,
(3) nitrobenzene from the nitrobenzene plant and from the
nitrobenzene unit of the integrated aniline plant,
(4) aniline from the aniline plant and from the aniline unit of
the integrated aniline plant,
(5) DPA from the DPA plant,
4
<PAGE>
(6) DNT from the TDA/DNT plant,
(7) TDA from the TDA/DNT plant,
(8) TDI from the TDI plant,
(9) MDI from the MDI plant, and
(10) DADPM from the MDI plant,
and the term "product" means any of the foregoing.
(r) RCI Products. The term "RCI products" means collectively DNT,
------------
TDA, TDI, MDI and DADPM.
(s) Percentage Entitlement. The term "percentage entitlement" with
----------------------
respect to each plant within the Aniline Facilities means, for ICI-AM,
73.2% and, for Uniroyal, 26.8%, and with respect to the DPA plant means
100% for Uniroyal. The respective percentage entitlements with respect to
each plant within the Aniline Facilities may be amended from time to time
in accordance with this Operating Agreement, and the latest percentage
entitlements as so established shall be the percentage entitlements with
respect to such plants for the purposes of this Operating Agreement.
(t) Design Capacity. The term "Design Capacity" with respect to the
---------------
capacity of all or part of a plant means the annual capacity to produce
product which the parties agree it is designed or is to be designed to
produce, when operated 24 hours per day for 330 days per year.
(u) Rated Capacity. The term "Rated Capacity" with respect to each
--------------
plant within the Aniline Facilities means the annual capacity of such plant
to produce product, determined in accordance with the procedures contained
in subparagraph 5.6(e) of this Operating Agreement, and the latest capacity
so determined shall be the Rated Capacity for the purposes of this
Operating Agreement.
(v) Expansion Percentage. The term "Expansion Percentage", for a
--------------------
User with respect to an expansion of capacity to produce aniline referred
to in Section 11, means the percent derived by dividing that User's Design
5
<PAGE>
Expansion Capacity by the aggregate Design Expansion Capacities of such
expansion for both Users.
(w) Design Expansion Capacity. The term "Design Expansion Capacity",
-------------------------
with respect to an expansion of capacity to produce aniline referred to in
Section 11, means either the additional annual aniline production capacity
specified by one User or the combined capacities specified by both Users,
as appropriate, as provided in Section 11.
(x) Expansion Rated Capacity. The term "Expansion Rated Capacity",
------------------------
with respect to an expansion of capacity to produce aniline referred to in
Section 11, means the additional annual capacity of a plant within the
Aniline Facilities to produce product resulting from such expansion,
determined in accordance with the procedures referred to in paragraph 11.4.
(y) Pre-Expansion Rated Capacity. The term "Pre-Expansion Rated
----------------------------
Capacity" means the annual capacity of a plant within the Aniline
Facilities to produce product, determined in accordance with the procedures
referred to in paragraph 11.4 before an expansion of capacity to produce
aniline referred to in Section 11.
(z) Post-Expansion Rated Capacity. The term "Post-Expansion Rated
-----------------------------
Capacity" means the annual capacity of a plant within the Aniline
Facilities to produce product, determined in accordance with the procedures
referred to in paragraph 11.4 after an expansion of capacity to produce
aniline referred to in Section 11.
(aa) Completion. The term "Completion", with respect to an expansion
----------
pursuant to this Operating Agreement, means the date upon which the
equipment or property installed or constructed to accomplish such expansion
is placed in a state of readiness for a specifically assigned purpose and
with respect to which the period of depreciation begins.
(bb) Operating Agreement. The term "Operating Agreement" means,
-------------------
unless otherwise indicated, the Original Operating Agreement as amended and
restated by this Operating Agreement as of December 28, 1981 only, and as
it may hereafter be further amended, as distinguished from the
6
<PAGE>
Original Operating Agreement prior to such amendment and restatement, and
includes all Exhibits thereto.
(cc) Users and User. The terms "Users" and "User", respectively, mean
--------------
ICI-AM and Uniroyal collectively and either individually.
(dd) Lease. The term "Lease" means the indenture of lease for certain
-----
of Rubicon's assets, the form of which is attached hereto as Exhibit B.
(ee) Financing Agreement. The term "Financing Agreement" means the
-------------------
agreement for providing financing to Rubicon, the form of which is attached
hereto as Exhibit C.
(ff) Utilities Services Agreement. The term "Utilities Services
----------------------------
Agreement" means the agreement for Uniroyal to provide Rubicon with certain
services, the form of which is attached hereto as Exhibit D.
(gg) WD Percentage Entitlement. The term "WD percentage entitlement"
-------------------------
with respect to the waste disposal plant means, for ICI-AM, 80% and, for
Uniroyal, 20%.
2. Operation for Users and RCI
---------------------------
2.1 Rubicon shall:
(i) operate the Aniline Facilities and the DPA plant to perform
conversion services for ICI-AM and Uniroyal, respectively, and operate
the waste disposal plant and the Off-sites, all as hereafter provided
in this Operating Agreement, and
(ii) lease to ICI-AM and Uniroyal certain machinery and equipment
included in the Aniline Facilities, the DPA plant, the waste disposal
plant and the Off-sites in accordance with the Lease.
2.2 Rubicon shall operate the RCI plants for RCI, as hereafter
provided in this Operating Agreement.
2.3 Notwithstanding any apparent or implicit contradiction with the
other provisions of this Operating Agreement, the parties hereto understand and
7
<PAGE>
intend that the express provisions for the operation by Rubicon of the Aniline
Facilities and the DPA plant to perform conversion services only for ICI-AM and
Uniroyal, respectively, include performing such conversion services on behalf of
ICI-AM and Uniroyal, respectively, to produce aniline from benzene furnished by
tolling customers of either of them and to produce DPA from aniline furnished by
tolling customers of Uniroyal. The performance of such conversion services by
Rubicon on behalf of either ICI-AM or Uniroyal shall, for all purposes of this
Operating Agreement, be deemed to be performance of such conversion services for
the respective User, the benzene furnished by such a customer of either User
shall be deemed furnished by such User, the aniline produced therefrom shall be
deemed produced for such User and the operating costs incurred with respect to
such production shall be allocated to and paid by such User, and the aniline
furnished by such customer of Uniroyal shall be deemed furnished by Uniroyal,
the DPA produced therefrom shall be deemed produced for Uniroyal and the
operating costs incurred with respect to such production shall be allocated to
and paid by Uniroyal; provided, however, title to benzene or aniline furnished
by such customers and material-in-process and products (but not by-products) of
the Aniline Facilities and the DPA plant in the possession of Rubicon at any
time shall be vested in such customers in the respective proportions in which
each such customer's interest therein shall appear at such time. By-products
from any such production shall be deemed by-products from production for the
respective User as provided in this Operating Agreement.
3. General Obligations of Rubicon With Respect to Its Facilities
-------------------------------------------------------------
3.1 Except as otherwise provided in Section 5, Rubicon shall, in
accordance with this Operating Agreement, as an independent contractor, but,
with respect to the use of Leased Property subject to the Lease, as agent for
the Users, operate the Aniline Facilities and the DPA plant, respectively, only
to perform conversion services to produce aniline exclusively for the Users and
DPA exclusively for Uniroyal and operate the waste disposal plant and Off-sites
as hereinafter provided. Except for benzene to be furnished by the Users to
produce aniline and aniline to be furnished by Uniroyal to produce DPA, all
utilities, labor, materials and services required to operate Rubicon's
facilities to produce aniline and DPA shall be furnished by Rubicon. Rubicon
shall
(i) allocate to, and deliver to or on behalf of, the Users the
products and by-products, if any, resulting from the operation of the
Aniline Facilities and deliver to or on behalf of Uniroyal the
products
8
<PAGE>
and by-products, if any, resulting from the operation of the DPA
plant, and
(ii) allocate to, and collect from, the Users and RCI the costs
incurred for the operation of the Aniline Facilities, the DPA plant,
the waste disposal plant and the Off-sites
in accordance with the procedures contained in Sections 5, 6 and 9 hereof,
respectively.
3.2 In determining its variable costs for all purposes of this
Operating Agreement, Rubicon shall use an average year-to-date cost for each
element, including, but not limited to, purchased utilities, labor, materials
and services.
3.3 Rubicon shall at all times maintain its facilities in a good
state of repair and shall operate such facilities utilizing sound operating
practices.
3.4 Rubicon shall make additions to, modifications of or improvements
in its facilities as may be specified by the Users in accordance with this
Operating Agreement and make such other normal maintenance and improvement
expenditures as shall be approved by Rubicon's Board of Directors.
3.5 At the request of either User or RCI made at any time, Rubicon
shall acquire such other facilities as may be required to deliver to Rubicon's
property line products resulting from the operation of its facilities or RCI's
plants for such User or RCI. Each User (and ICI-AM for RCI) shall be
responsible for the fixed capital required for the facilities requested by it or
RCI pursuant to this paragraph.
3.6 Rubicon shall maintain complete and accurate books and records
which shall reflect the procedures concerning the operation of Rubicon's
facilities in accordance with this Operating Agreement, including, without
limitation, the procedures for determining and allocating quantities of products
and for defining, calculating and allocating to each User and to RCI the costs
(including Rubicon's pre-operational and start-up costs) and capital
requirements of, and cash flows from, operating its facilities for the Users and
RCI, in accordance with Exhibit A.
9
<PAGE>
3.7 Rubicon shall maintain in force policies of insurance covering
damage to or destruction of the facilities operated for the Users and RCI,
including inventory thereat or elsewhere under the control of Rubicon. Said
insurance shall include the interests of Rubicon, the Users and RCI, and shall
cover such perils and be in such amounts as directed by the Users. The amount
and terms of such insurance shall be reviewed annually by Rubicon with the
Users.
3.8 The Users and Rubicon shall prepare a suitable accounting manual
consistent with the principles stated herein and the Exhibits hereto.
3.9 So long as Rubicon has the right to use Avenue E from 40th Street
to River Road, it will be solely responsible for the maintenance thereof and all
costs incurred for such maintenance.
4. General Obligations of Users and RCI
------------------------------------
4.1 Neither User nor RCI shall order or cause Rubicon to operate
Rubicon's facilities or the RCI plants, or to produce or deliver products, other
than in accordance with this Operating Agreement.
4.2 Except to the extent paid by a User to Rubicon as rent under the
Lease, each User and RCI shall pay to Rubicon that portion of Rubicon's pre-
operational and start-up costs and that portion of Rubicon's variable, constant
and capital based costs, as defined, calculated and allocated to such User and
RCI in accordance with this Operating Agreement.
4.3 Periodically as required, Rubicon shall prepare a forecast of its
working capital requirements with respect to the operation of its facilities for
the Users and RCI and the RCI plants for RCI for the ensuing period. Such
forecast shall be prepared, and such working capital requirements allocated to
each User (including working capital requirements allocated to RCI in ICI-AM's
share), in accordance with Exhibit A. Each User shall, in accordance with the
Financing Agreement, lend to Rubicon such User's share (including working
capital requirements allocated to RCI in ICI-AM's share) of Rubicon's forecast
working capital requirements so allocated to it.
4.4 Periodically as required, Rubicon shall prepare a forecast of its
fixed capital requirements with respect to its facilities for the ensuing period
and, after making fixed capital expenditures, an analysis of the expenditures
made. Such
10
<PAGE>
forecast and analysis shall be prepared, and such fixed capital expenditures
allocated to each User (including fixed capital requirements allocated to RCI in
ICI-AM's share), in accordance with Exhibit A. Each User shall, in accordance
with the Financing Agreement, lend to Rubicon such User's share (including fixed
capital requirements allocated to RCI in ICI-AM's share) of Rubicon's forecast
and actual fixed capital requirements as allocated to it.
4.5 For Rubicon's performing all of its obligations under this
Operating Agreement, in addition to paying the costs referred to in paragraph
4.2, ICI-AM and RCI will pay to Rubicon fees in the aggregate amount of $153,600
per year (divided between them from time to time as directed by ICI-AM and RCI)
and Uniroyal will pay to Rubicon a fee of $226,400 per year. Such fees shall be
paid in twelve equal monthly installments.
4.6 The obligations of ICI-AM and RCI, on the one hand, and Uniroyal,
on the other hand, under this Operating Agreement shall be several and not in
solido, but the obligations of ICI-AM and RCI shall be in solido and not
several.
5. General Operating Principles for the Aniline Facilities
-------------------------------------------------------
The general operating principles concerning the entitlement of the
Users with respect to products resulting from Rubicon's operation of the Aniline
Facilities (and in this Section 5 the term "products" shall mean only those
resulting from the operation of the Aniline Facilities), the requirements with
respect to furnishing benzene, the allocation and payment of Rubicon's operating
costs with respect to the Aniline Facilities (and in this Section 5 the term
"operating costs" shall mean only those incurred with respect to the Aniline
Facilities), and the consequences of a User's failure to order products or to
furnish benzene, shall be as stated below.
The other provisions of this Section 5 and elsewhere in this Operating
Agreement to the contrary notwithstanding, the parties recognize that the
production of TDA and DNT requires the use of certain facilities in the aniline
plant and the nitrobenzene plant and, as hereinafter set forth, the sulfuric
acid plant, in addition to the TDA/ DNT plant. During those periods in which
the operation of the sulfuric acid plant is not required relative to the
production of aniline for the Users it will be operated solely for the
production of DNT and all the costs, including variable, constant and capital
based costs, incurred by Rubicon for the operation of the sulfuric acid plant
during such periods shall be allocated to and paid by RCI. During
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any period in which part or all of the sulfuric acid plant's operation is
required for the production of aniline as well as DNT and at all times with
respect to the operation of the aniline plant to produce aniline and the
nitrobenzene plant to produce nitrobenzene, as well as in part for the
production of DNT, all operations for the production of DNT shall be deemed to
be production of aniline or nitrobenzene, as appropriate, for ICI-AM for
purposes of determining the respective entitlements of the Users to products
resulting from the operation of the Aniline Facilities, and for purposes of
allocating to the Users the variable, constant and capital based costs incurred
by Rubicon for the operation of the Aniline Facilities in accordance with this
Section 5. ICI-AM shall determine and instruct Rubicon to what extent production
capacity available for it shall be used for aniline, nitrobenzene or DNT and to
what extent any costs allocated to it shall be paid by RCI.
5.1. Entitlement to Products
-----------------------
(a) Before the end of each month, Rubicon shall advise the Users as
to its estimate of the maximum quantity of each product which can result
from Rubicon's operations in each day of the following month.
(b) On a specified day in each month, each User shall be entitled to
order produced for it during each day in the following month a quantity of
each product up to
(i) such User's ("the first User") percentage entitlement to
such estimated maximum quantity of each product, plus
(ii) that portion, if any, of such estimated maximum quantity
not ordered by the other User (the "second User") which,
together with the quantity determined under (i), will not
result in the first User's receiving a quantity of product
for the year-to-date period in excess of the first User's
percentage entitlement to the Rated Capacity for such
product for such year-to-date period, plus
(iii) any remaining portion of the second User's unused
percentage entitlement to such maximum estimated quantity
which the second User agrees to make available to the first
User for such day.
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(c) Thereafter, either User may increase or decrease its order for
each product for any day on reasonable notice to Rubicon and such User's
order as last so revised shall become the existing order of such User, but
any increase shall be taken into account only to the extent that a capacity
to produce such product in excess of that last ordered by both Users for
that day shall become available for such day and shall be within the
quantity of such product which the User seeking an increase would be
entitled to order under subparagraph (b) above.
(d) Rubicon shall promptly advise both Users of the aggregate
existing orders for products.
(e) The available quantity of each product shall be allocated between
the Users each day in accordance with the following:
(i) when the quantity available is equal to or greater than the
aggregate quantity ordered by both Users, the quantity
available shall be allocated between the Users in proportion
to their respective existing orders, but
(ii) when the quantity available is less than the aggregate
quantity of both Users' existing orders, the quantity
available shall be allocated between the Users as follows:
first, there shall be allocated to each User the
quantity of its existing order, or such User's percentage
entitlement of the quantity available, whichever is less,
and
then, the remaining quantity available, if any, shall
be allocated to the User to which there was allocated in the
first step above less than the quantity of such User's
existing order.
(f) If either User fails to furnish Rubicon enough benzene, or to
leave available enough intermediate product necessary for production of
another product, and thus limits the quantity of a given product which
Rubicon can produce on a given day for such User to less than the quantity
to which such User otherwise would have been entitled, then the available
13
<PAGE>
quantity of that product produced shall be allocated between the Users for
that day in proportion to the limiting benzene or intermediate product
furnished, or left available, by each User for that day.
(g) Each User shall have the right to specify how much, if any, of
the available quantity of each product allocated to such User for each day
is to be delivered to or on behalf of such User outside the Aniline
Facilities, and how much, if any, is to be used for production of another
product.
(h) If, through any circumstance, a quantity of a given product which
should have been allocated to or delivered to or on behalf of one User
("the first User") for a given day is in fact allocated to or delivered to
or on behalf of the other User ("the second User") for such day, Rubicon
shall promptly notify the first User and shall adjust subsequent
allocations or deliveries of such product between the Users so as to
correct the variance in allocation or delivery at the earliest opportunity,
but if Rubicon fails to correct such variance during the month in which it
is discovered, the variance shall be corrected at the earliest opportunity
thereafter only if and to the extent that the first User shall request it,
in which event the quantity of such product returned to the first User
shall be taken from the quantity of such product allocable to the second
User pursuant to subparagraphs (e) and (f) above.
(i) If one User ("the first User") has availed itself of product
storage space in any portion of the other User's ("the second User")
entitlement to product storage space and if, solely as a consequence of
lack of product storage space for the second User, Rubicon is unable to
produce all of the second User's ordered product, then
(i) there shall be deemed to have been produced for the second
User and transferred from the stored product of the first
User a quantity equal to the second User's order for product
which could not, for this reason, be produced; and
(ii) if the product so transferred is nitrobenzene or aniline, it
shall be deemed to have been produced from benzene belonging
to the second User.
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(j) Any by-product, except high pressure steam resulting from the
operation of the nitric acid plant and low pressure steam (approximately 30
psig) resulting from the operation of the integrated aniline plant,
resulting from the operation of the Aniline Facilities shall, at no
additional charge to the Users, be delivered to or on behalf of the Users
in the same ratios as the product to which the by-product relates.
5.2. Furnishing Benzene to Rubicon
-----------------------------
(a) Each User shall furnish to Rubicon the quantity of benzene
meeting the specifications set forth in Exhibit E required by Rubicon in
the operation of the Aniline Facilities for such User. The provisions of
any agreement by Rubicon to defend and indemnify the Users with respect to
benzene shall not be deemed or construed as a release or waiver by Rubicon
of its rights hereunder.
(b) The furnishing of benzene shall be determined in accordance with
the following rules.
(1) A User's benzene shall be deemed to be furnished to Rubicon
within the meaning of paragraph (a) immediately above and subparagraph
(2) immediately below when such benzene has been delivered to the
vicinity of Rubicon's property and is within its control, even though
such benzene has not yet been transferred into Rubicon's benzene
storage facility.
(2) If one User ("the first User") has availed itself of benzene
unloading facilities or benzene storage space in any portion of the
other User's ("the second User") entitlement to unloading facilities
or benzene storage space when the second User has furnished benzene to
Rubicon as provided in (1) above, then
(i) any demurrage charges incurred by the second User (with
respect to any vessel, tank car or tank truck holding benzene) as
a result of the first User's use of such portion of benzene
unloading facilities or benzene storage space shall be paid for
by the first User; and
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<PAGE>
(ii) the benzene of the first User which occupies such
portion of the benzene unloading facilities or benzene storage
space shall be deemed exchanged for an equal amount of benzene of
the second User but only if and to the extent that Rubicon
requires such amount of benzene to fill the second User's ordered
quantity of product.
5.3 Uniroyal's Option to Furnish Ammonia to Rubicon
-----------------------------------------------
(a) Uniroyal may, at any time and from time to time, furnish to
Rubicon for use in the nitric acid plant, and Rubicon shall accept for such
use, any ammonia which results from the operation of the DPA plant for
Uniroyal and which meets the ammonia specifications set forth in Exhibit F,
provided that such purchase by Rubicon shall not violate any existing
Rubicon contract for the purchase of ammonia or require the payment by
Rubicon of any liquidated damages under any such contract.
(b) Rubicon shall pay, or credit, Uniroyal for such ammonia the lowest
most recent net price to Rubicon (f.o.b. supplier) of ammonia otherwise
purchased by Rubicon.
(c) At Uniroyal's request, Rubicon shall, in accordance with paragraph
3.4 of this Operating Agreement, acquire and operate such additional
facilities as Uniroyal may specify so that ammonia from the DPA plant will
meet the applicable specifications for ammonia, and such facilities shall
be included in the definition of the DPA plant for all purposes under this
Agreement.
5.4 Use and Delivery of Low Pressure Steam
--------------------------------------
Rubicon shall, as and to the extent requested by Uniroyal, deliver to
Uniroyal, at the property line between Rubicon and Uniroyal, at the property
line between Rubicon and Uniroyal, up to that quantity of the low pressure steam
(approximately 30 psig) generated by the Aniline Facilities as exceeds the
aggregate quantity of such low pressure steam (i) which is utilized by Rubicon
in the Aniline Facilities plus (ii) which is delivered to RCI or the other
Rubicon facilities as provided in the following two sentences. Rubicon shall,
as and to the extent requested by RCI, deliver up to 15,000 lbs. per hour for
use in the MDI plant and up to 10,000 lbs. per hour for use in the TDI plant of
such low pressure steam. As and to the extent authorized in specific
appropriation requests approved by its Board of
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<PAGE>
Directors, Rubicon shall make additional quantities of such low pressure steam
available for delivery to and use in Rubicon facilities, other than the Aniline
Facilities, and in the RCI plants. Uniroyal and RCI shall, until December 25,
1983, pay to Rubicon, and, until such date, Rubicon shall charge to any of its
facilities, including the Aniline Facilities, utilizing such low pressure steam,
for each pound of such steam so delivered and utilized in each month, a price
equal to 0.80 of the average total constant (excluding any constant cost
resulting from the basic charge referred to in subparagraph 5.2(b) of the
Utilities Services Agreement) and variable costs incurred by Rubicon in
accordance with Exhibit A for each pound of 600 psig steam purchased by Rubicon
from Uniroyal in such month, and after such date a price equal to 0.70 of such
costs. Rubicon shall apply such payments from Uniroyal and RCI and such charges
to its facilities in reduction of Rubicon's variable costs incurred with respect
to the production of aniline.
5.5 Use of High Pressure Steam from Nitric Acid Plant
-------------------------------------------------
Rubicon shall utilize high pressure steam generated by the nitric acid
plant in its other operations and reduce purchases of steam from Uniroyal or
other sources accordingly. Rubicon shall charge to the variable cost of the
operations utilizing such steam, for each pound of steam so utilized in each
month, an amount equal to the average total constant and variable costs incurred
by Rubicon in accordance with Exhibit A for each pound of 600 psig steam
purchased by Rubicon from Uniroyal in such month, and shall apply the amount of
such charges in reduction of Rubicon's variable cost incurred with respect to
the operation of the nitric acid plant.
5.6 Allocation and Payment of the Operating Costs of the
Aniline Facilities
----------------------------------------------------
(a) The operating costs of the Aniline Facilities consist of Rubicon's
pre-operational and start-up, variable, constant and capital based costs
allocated to the Aniline Facilities in accordance with Exhibit A.
(b) The variable costs incurred by Rubicon with respect to each plant
within the Aniline Facilities shall be allocated to and paid by the Users
on an equal per-unit-of delivered product basis, calculated on an average
year-to-date basis.
(c) Except as otherwise provided in subparagraph (d) below and in the
second paragraph of the preamble to this Section 5, the pre-operational
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<PAGE>
and start-up costs, the constant costs and the capital based costs incurred
by Rubicon with respect to each plant within the Aniline Facilities shall
be allocated between and paid by the Users in proportion to their
respective percentage entitlements to product from such plant.
(d) To the extent that there is allocated to a User ("the first User")
for any year-to-date period a quantity of product in excess of the greater
of:
(i) the quantity derived by multiplying Rubicon's Rated Capacity
for such product, pro-rated to such year-to-date period, by the first
User's percentage entitlement to such product, or
(ii) the quantity derived by multiplying the aggregate quantity
of such product allocated to both Users for such year-to-date period
by the first User's percentage entitlement to such product,
the first User must pay to Rubicon, in addition to the costs allocated to
the first User pursuant to subparagraph (c) above, the year-to-date
constant and capital based costs attributable to such excess quantity of
such product during such year-to-date period, and the constant and capital
based costs allocated to the other User shall be reduced accordingly, which
shall be final only if and to the extent any such excess quantity of such
product is allocated to the first User as of the end of a year.
(e) The Rated Capacity of each plant within the Aniline Facilities
shall be expressed in pounds of product per year extrapolated from a
performance test to be conducted by Rubicon.
(1) The performance test shall be conducted
(i) as soon as practicable following the debugging of the
integrated aniline plant, and
(ii) annually thereafter at a time mutually agreed upon by
the Users.
(2) Unless otherwise agreed by the Users from time to time, the
performance test shall consist of operating each plant within the
Aniline Facilities at full possible production rates for 24 hours per
day for a period of 7 consecutive days (the "test period") and noting
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<PAGE>
the production results and operating conditions for each plant within
the Aniline Facilities during the test period. If during any portion
of any day within the test period a plant should not operate at its
full possible production rate (such portion of such day hereinafter
called "down time"), the production results obtained for such plant
during the down time shall be eliminated, and the down time shall be
eliminated from the test period for such plant. The adjusted
production results (expressed in pounds of production) when divided by
the adjusted test period (expressed in days) for each plant and
multiplied by 330 days shall be the Rated Capacity of such plant.
(3) Rubicon shall submit to the Users Rubicon's detailed plan for
conducting each performance test, and Rubicon shall not conduct such
test until the plan has been approved by the Users. Any adjustments
resulting from eliminations for down time made by Rubicon in
accordance with subparagraph (2) immediately above shall be subject to
the approval of the Users. Each User shall have the right to have its
representatives observe the performance test and receive the results
obtained therefrom.
5.7 Consequences of Failure of the Users to Order
Products or to Furnish Benzene
---------------------------------------------
The only consequences of a User's failure to order products from
Rubicon or to furnish to Rubicon the quantity and quality of benzene required by
Rubicon in the operation of the Aniline Facilities shall be that
(i) the quantities of products and by-products, if any,
allocated to such User shall be correspondingly reduced; and
(ii) such User shall nevertheless pay to Rubicon that portion of
Rubicon's operating costs for the Aniline Facilities allocated to such
User.
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6. General Operating Principles for the DPA Plant
----------------------------------------------
6.1 Operation of the DPA Plant
--------------------------
(a) Rubicon shall operate the DPA plant solely for Uniroyal, and shall
deliver to or on behalf of Uniroyal all DPA, ammonia and any other
by-product resulting from the operation of the DPA plant.
(b) Before the end of each month, Rubicon shall advise Uniroyal as to
Rubicon's estimate of the maximum quantity of DPA which can result from
Rubicon's operation in each day of the following month.
(c) On a specified day in each month, Uniroyal shall be entitled to
order DPA produced for it in each day in the following month up to such
maximum quantity, and thereafter may increase or decrease its order for DPA
for any day on reasonable notice to Rubicon, but any such increase shall be
taken into account only to the extent that a quantity of DPA in excess of
that previously ordered by Uniroyal for that day can result from Rubicon's
operation in such day.
6.2 Furnishing Aniline to Rubicon
-----------------------------
Uniroyal shall furnish to Rubicon the aniline required by Rubicon to
operate the DPA plant out of Uniroyal's allocation of aniline produced by
Rubicon or from any other source.
6.3 Allocation and Payment of the Operating Costs of
the DPA Plant
------------------------------------------------
The operating costs of the DPA plant consist of Rubicon's
pre-operational and start-up, variable, constant and capital based costs
allocable to the DPA plant in accordance with Exhibit A. The operating costs of
the DPA plant shall be allocated to and paid by Uniroyal.
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<PAGE>
6.4 Consequences of Failure of Uniroyal to Order DPA
or Furnish Aniline
------------------------------------------------
The only consequences of Uniroyal's failure to order DPA from Rubicon
or to furnish to Rubicon the quantity of aniline required by Rubicon in the
operation of the DPA plant shall be that
(i) the quantity of DPA produced for Uniroyal shall be
correspondingly reduced; and
(ii) Uniroyal shall nevertheless pay to Rubicon all of Rubicon's
operating costs for the DPA plant.
7. Rubicon's Operation of the Off-sites
------------------------------------
7.1 Rubicon shall operate the Off-sites as required to provide the
necessary and appropriate services for all its facilities and for the RCI
plants.
7.2 (a) The operating costs of the Off-sites consist of Rubicon's
pre-operational and start-up, constant and capital based costs allocated to
the Off-sites in accordance with Exhibit A.
(b) The operating costs incurred by Rubicon with respect to each
of the Off-sites shall be allocated first to the plants or to other Off-
sites and then to the plants, and then shall be allocated among and paid by
the Users and RCI, as provided in Exhibit A.
8. Rubicon's Operation of the Waste Disposal Plant
-----------------------------------------------
8.1 Rubicon shall operate the waste disposal plant to treat and
dispose of only acceptable liquid waste generated by the operation of its
facilities for the Users and the RCI plants for RCI, all as provided in this
Operating Agreement.
8.2 The total present capability of the deep well portion of the
waste disposal plant to dispose of liquid waste is estimated, as of the date of
this Operating Agreement, to be 455 gallons per minute. The parties have agreed
that ICI-AM shall be entitled to 80% and Uniroyal shall be entitled to 20% of
the flow capacity of the waste disposal plant (the respective WD percentage
entitlements). The usage of the flow capacity of the waste disposal plant for
the RCI plants shall be deemed to be usage thereof by, and shall be charged to
the WD percentage entitle-
21
<PAGE>
ment of, ICI-AM, and ICI-AM shall determine the usage of its WD percentage
entitlement as between the RCI plants and the Aniline Facilities as operated for
it. If, for any reason, the present deep wells are incapable of fulfilling the
waste disposal requirements of the Users and RCI, the provisions of Section 15
shall apply to any increase of waste disposal capability which may be proposed.
8.3 Except as provided in paragraph 8.4, the respective
responsibilities of the Users for the fixed capital of the waste disposal plant
shall be in their respective WD percentage entitlements. As a result of the
agreement to establish the respective WD percentage entitlements at 80% and 20%,
ICI-AM will increase its F.C.F. Commitment and Term Loan to Rubicon, plus pay to
Uniroyal, an aggregate amount of $120,000, divided as appropriate between such
increases and such payment, and Uniroyal's F.C.F. Commitment and Term Loan to
Rubicon shall be reduced by an amount corresponding to the ICI-AM increases in
its Commitment and Loan.
8.4 (a) In the event the capacity to produce any product is expanded
or a production process is changed by Rubicon or RCI and such expansion or
change results in an increased flow of liquid waste to be disposed of by
the waste disposal plant but is within the disposal capacity of the deep
well and is within the WD percentage entitlement of the User or Users
causing such expansion or change (including the waste from the RCI plants
in ICI-AM's WD percentage entitlement) but will require an addition or
expansion of any or all of the ancillary facilities for accumulation,
pretreatment and injection, then, Rubicon shall proceed with the design and
construction of such ancillary facility addition or expansion using such
design and such contractor or contractors as shall be determined by
Rubicon's Board of Directors.
(b) The allocation of the fixed capital responsibility for each
such ancillary facility addition or expansion shall be determined at the
time it is authorized by Rubicon's Board of Directors. The appropriation
request which is approved by Rubicon's Board of Directors covering each
such addition or expansion shall identify the purpose for its installation,
including which plant or plants have, directly or indirectly, the need for
such addition or expansion at that time and, if two or more plants have
such need, the best engineering estimates at that time of the relative
proportions of such needs between or among such plants. For purposes of
making the allocations of responsibility for the fixed capital for each
such addition or expansion, the
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<PAGE>
need or needs as so determined shall be the expected use (projected in good
faith as and to the extent reasonably able to be anticipated at that time
and acceptable to Rubicon's Board of Directors), directly or indirectly, of
such addition or expansion. Fixed capital responsibility allocated to one
or more of the RCI plants shall be allocated to ICI-AM. Each User shall
furnish the financing for the fixed capital for which it is so allocated
responsibility in the manner and on the terms set forth in the Financing
Agreement.
8.5 The operating costs of the waste disposal plant consist of
Rubicon's pre-operational and start-up, constant and capital based costs
allocated to the waste disposal plant in accordance with Exhibit A. The
operating costs incurred by Rubicon with respect to the waste disposal plant
shall be allocated between and paid by the Users as provided in Exhibit A;
provided, however, that ICI-AM may direct that some portion of its allocation be
reallocated to and paid by RCI.
9. General Obligations of Rubicon with Respect to the RCI Plants
-------------------------------------------------------------
9.1 Operation of the RCI Plants
---------------------------
(a) Rubicon shall, in accordance with this Operating Agreement, as an
independent contractor, operate the RCI plants, solely for the benefit of
RCI and as directed by RCI consistent with this Operating Agreement, to
produce RCI products. Except for aniline to be furnished by RCI, all
utilities, labor, materials and services required to operate the RCI plants
to produce RCI products shall be furnished by Rubicon. Rubicon shall
(i) deliver to or on behalf of RCI the products and by-products,
if any, resulting from the operation of the RCI plants, and
(ii) allocate to, and collect from, RCI the costs incurred by
Rubicon in its facilities and for utilities, labor, materials and
services provided by Rubicon for the operation of the RCI plants and
allocated to RCI in accordance with the procedures contained in this
Operating Agreement.
(b) Rubicon shall supervise and cause to be made such additions to,
modifications of or improvements in the RCI plants as may be specified by
RCI and make or cause to be made such other normal maintenance and
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<PAGE>
improvement expenditures as shall be approved or directed by RCI. RCI
shall directly pay for all expenditures incurred for these purposes.
9.2 Allocation and Payment of Rubicon's Operating Costs
with Respect to the RCI Plants
---------------------------------------------------
Rubicon's operating costs with respect to the RCI plants consist of
those of Rubicon's pre-operational and start-up, variable, constant and capital
based costs allocated to the RCI plants in accordance with Exhibit A, it being
understood that, in view of the fact that RCI owns and has financed and shall
finance directly all fixed capital investment in the RCI plants, Rubicon shall
have no capital based costs with respect to the RCI plants themselves.
Rubicon's operating costs for the RCI plants shall be allocated to and paid by
RCI.
9.3 Termination of Rubicon's Operation of the RCI Plants
----------------------------------------------------
(a) On reasonable notice to Rubicon, RCI may terminate Rubicon's
operation of the RCI plants and any other facilities then owned by RCI and
operated by Rubicon in accordance with this Operating Agreement. Following
the effective date of such termination, Rubicon will cease operating the
RCI plants and such other facilities, and will cease furnishing management,
staff, labor and materials to operate the RCI plants to produce RCI
products. Thereupon the provisions of paragraph 9.1 (except for
subparagraph 9.1(a)(ii)) shall no longer be applicable.
(b) Notwithstanding the provisions of subparagraph 9.3(a), unless the
parties hereto shall otherwise agree,
(i) Rubicon shall continue to furnish to RCI for the operation
of the RCI plants those substances, utilities and services
from certain of the Off-sites, the waste disposal plant and
purchased from others then being furnished by Rubicon,
(ii) Rubicon shall continue to allocate the operating costs
thereof to RCI in accordance with this Operating Agreement
(which allocations to RCI, as to constant costs, shall be
(1) of Rubicon's remaining constant costs, i.e. after
reductions thereof, if any, resulting from such termination,
following the same principles as set forth in paragraph
17.2 with respect to constant costs allocations in
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<PAGE>
the event of a plant shutdown, (2), on the same bases as
such constant costs would have been allocated to the RCI
plants and then to RCI as though such termination had not
occurred, e.g., allocations based on direct labor will
reflect RCI's employees as though they were employees of
Rubicon), and
(iii) RCI shall pay such costs.
9.4 Consequences of Failure of RCI to have Rubicon
Operate the RCI Plants
----------------------------------------------
While Rubicon is operating the RCI plants or after the termination of
such operation, the only consequences under this Operating Agreement of RCI
failing to have the RCI plants operated shall be that RCI shall nevertheless pay
to Rubicon that part of Rubicon's operating costs for the RCI plants allocated
to RCI.
10. External Assets
---------------
10.1 RCI and Rubicon, respectively, shall provide the financing for,
and pay the operating costs of, their respective External Assets.
10.2 RCI and Rubicon hereby grant, each to the other, for as long as
may be necessary, an easement on their respective real properties at Geismar,
Louisiana for the installation, operation, repair and maintenance of their
respective External Assets. If at any time, and from time to time, for any
significant reason it becomes necessary or desirable to do so, each party will
execute and deliver to the other, in recordable form acceptable to counsel for
the receiving party, documentary evidence covering one or more easements with
respect to one or more External Assets.
10.3 The ownership of External Assets will be determined by the
respective books and records of RCI and Rubicon, which, in the absence of error
or negligence, shall be the final determination of ownership and valuation.
External Assets will remain the property of the owning party notwithstanding the
fact that they are permanently affixed to, or interconnected with, the real or
personal property of the party on whose property they are located.
10.4 In the event RCI exercises its right to terminate Rubicon's
operation of the RCI plants as provided in paragraph 9.3, RCI and Rubicon,
respec-
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<PAGE>
tively, will nevertheless continue to operate the other's External Assets as and
to the extent requested by the other.
11. Expansion of Capacity to Produce Aniline
----------------------------------------
11.1 If at any time and from time to time either User desires that
Rubicon expand its then existing capacity to produce aniline, then in each such
instance the provisions of this Section 11 shall apply. The User proposing such
expansion (the "first User") shall so notify the other User (the "second User")
in writing, which notification shall state in detail the Design Expansion
Capacity desired by the first User, the cost and timing of the proposed
expansion, and, if other than by Rubicon's then current process, the proposed
process (disclosure of which process to the second User may require execution by
the second User of appropriate agreements for confidentiality) , as well as any
other information the second User may reasonably request. The Users shall then
consult together to consider this proposal. Within 90 days following its
receipt of such notification and all such information, the second User shall
elect in writing whether it desires to participate in such proposed expansion,
specifying, if it wishes to participate, the Design Expansion Capacity of
aniline it desires. Failure by the second User to make any election within said
period shall be deemed an election by it not to participate in such expansion.
If both Users desire to participate in such expansion, the Design Expansion
Capacity of such expansion shall be the combination of the Design Expansion
Capacities desired by both Users.
11.2 Upon completion of said notification, information, consultation
and election procedures, and provided that the User or Users participating in
such expansion furnish all of the financing for the fixed capital for such
expansion in the manner and on the terms set forth in the Financing Agreement,
Rubicon shall proceed with the design and construction of such expansion, using
such process as is then available, or is made available by the User or Users
participating in such expansion, to Rubicon, and such contractor or contractors
as shall be designated by the participating User or Users, which process and
contractor or contractors must be reasonably acceptable to Rubicon's Board of
Directors. The Users' respective responsibilities for the fixed capital for
such expansion and for the financing thereof shall be in their respective
Expansion Percentages.
11.3 If both Users participate in such expansion and their respective
Expansion Percentages are the same as their respective pre-expansion percent-
26
<PAGE>
age entitlements, then the provisions of the following paragraphs of this
Section 11 shall not apply.
11.4 If only one User participates in such expansion or if both Users
participate but their respective Expansion Percentages are different from their
respective pre-expansion percentage entitlements, and, in either such event, for
all expansions of capacity to produce aniline thereafter, then the provisions of
this paragraph 11.4 and the following paragraphs of this Section 11 shall apply.
Prior to the commencement of construction of each such expansion, Rubicon shall,
utilizing the procedures set forth in subparagraph 5.6(e) of this Operating
Agreement, conduct a performance test of each plant within its then existing
Aniline Facilities to determine the Pre-Expansion Rated Capacity thereof. Upon
Completion of each such expansion, Rubicon shall, utilizing said procedures,
conduct a performance test of each plant within its then expanded Aniline
Facilities to determine the Post-Expansion Rated Capacity thereof. The
difference between the Pre-Expansion and Post-Expansion Rated Capacities of each
plant within the Aniline Facilities as so determined shall be the Expansion
Rated Capacity of such plant resulting from such expansion.
11.5 After completion of each post-expansion performance test referred
to in paragraph 11.4, the definition of the respective percentage entitlements
of the Users in this Operating Agreement shall be amended by replacing the
percents then specified therein with percents for each User for each plant
within the Aniline Facilities derived as follows:
(i) multiply the Pre-Expansion Rated Capacity of each plant within the
Aniline Facilities by each User's percentage entitlement prior to
such expansion, then
(ii) multiply the Expansion Rated Capacity of each plant within the
Aniline Facilities by each User's Expansion Percentage, then
(iii) as to each plant within the Aniline Facilities, add the results of
(i) and (ii) for each User, then
(iv) as to each User for each plant within the Aniline Facilities, divide
the result of (iii) for each User by the Post-Expansion Rated
Capacity of such plant.
27
<PAGE>
The resulting percent for each User for each plant within the Aniline Facilities
shall be the amended percent for each User with respect to each such plant in
the definition of percentage entitlement in this Operating Agreement.
11.6 If only one User ("the first User") participates in such an
expansion, the first User shall, if requested by the other User ("the second
User"), during any period production of a product by a plant within the Aniline
Facilities is reduced or eliminated by reason of making such expansion prior to
Completion of such expansion, furnish to the second User, out of the first
User's entitlement to such product available from Rubicon or otherwise, a
quantity of such product equal to the difference between
(i) the second User's percentage entitlement to the Pre-
Expansion Rated Capacity of such plant and
(ii) the quantity of such product actually available to the
second User from Rubicon while such reduction or elimination
continues.
Such quantity of such product shall be so furnished at no cost to the second
User beyond its cost for such product from Rubicon in accordance with this
Operating Agreement. If any of such quantity of such product is furnished to
the second User from the first User's entitlement thereto from Rubicon, it shall
be treated by Rubicon as having been ordered by and allocated to the second User
for all purposes under this Operating Agreement, except that such quantity of
such product shall be deemed to have been allocated to the first User for the
purposes of subparagraph 5.6(d) of this Operating Agreement. If any of such
quantity of such product is furnished to the second User by the first User from
outside Rubicon, the second User shall pay the first User therefor only an
amount equal to the variable cost for an equal quantity of such product charged
by Rubicon in accordance with this Operating Agreement immediately prior to the
reduction of production caused by such expansion, plus, if benzene is included
in such product, an amount equal to the second User's then current cost of
benzene for the amount of benzene included in such product.
11.7 Upon Completion of the first such expansion, subparagraph 5.6(c)
of this Operating Agreement shall be amended in its entirety to read as follows:
28
<PAGE>
"(c) Following Completion of the first expansion referred to in
paragraph 11.4 of this Operating Agreement, and each expansion
thereafter, except as otherwise provided in subparagraph (d) below and
in the second paragraph of the preamble to this Section 5, the
pre-operational costs, the start-up costs, the constant costs and the
capital based costs incurred by Rubicon with respect to each plant
within the Aniline Facilities shall be allocated between and paid by
the Users as set forth below.
(1) The capital based costs incurred by Rubicon with respect
to the fixed capital for each pre-expanded plant, or, in the
event of any expansions subsequent to the first such expansion,
with respect to the fixed capital for each previous expansion
thereof, within the Aniline Facilities shall be allocated between
and paid by the Users in the same proportions as before each such
expansion.
(2) The capital based costs incurred by Rubicon with respect
to the fixed capital for each such expansion of each plant within
the Aniline Facilities and the pre-operational costs incurred by
Rubicon with respect to each such expansion shall be allocated
between and paid by the Users in proportion to their respective
Expansion Percentages with respect to each such expansion of each
such plant.
(3) The start-up costs incurred by Rubicon with respect to
each such expansion of each plant within the Aniline Facilities
shall be allocated between and paid by the Users in proportion to
their respective post-expansion percentage entitlements to
product from such plant.
(4) The capital based costs incurred by Rubicon with respect
to fixed capital for assets acquired by Rubicon to maintain and
operate each plant within the Aniline Facilities after Completion
of each such expansion, but prior to any subsequent expansion,
shall be allocated between and paid by the Users in proportion to
their respective post-expansion percentage entitlements to
product from such plant.
29
<PAGE>
(5) The constant costs incurred by Rubicon with respect to
each plant within the Aniline Facilities after Completion of each
such expansion shall be allocated between and paid by the Users
in proportion to their respective post-expansion percentage
entitlements to product from such plant."
11.8 Upon Completion of the first such expansion, subparagraph 5.6(d)
of this Operating Agreement shall be amended by adding the following sentence.
"Following the first expansion referred to in paragraph 11.4 of this
Operating Agreement, and each expansion thereafter, the additional
capital based costs referred to in the first sentence of this
subparagraph 5.6(d) to be paid by the first User shall be based upon
the other User's ("the second User's") average year-to-date capital
based costs with respect to the production of such product, which, for
this purpose, shall be determined by dividing the aggregate year-to-
date capital based costs allocated to the second User with respect to
such product by the number of pounds of its year-to-date entitlement
to such product, such year-to-date entitlement to such product to be
determined by multiplying the second User's percentage entitlement to
such product times the Rated Capacity for such product pro-rated for
the year-to-date period."
12. Expansion of Capacity to Produce DPA
------------------------------------
12.1 If at any time and from time to time Uniroyal desires that
Rubicon expand its then existing capacity to produce DPA, it shall so notify
Rubicon, and, provided that Uniroyal furnishes all of the financing for the
fixed capital for such expansion in the manner and on the terms set forth in the
Financing Agreement, Rubicon shall proceed with the design and construction of
such expansion, using such process as is then available, or is made available by
Uniroyal, to Rubicon and such contractor or contractors as shall be designated
by Uniroyal, which process and contractor or contractors must be reasonably
acceptable to Rubicon's Board of Directors, acceptability of a process being
unrelated in this instance to considerations of cost but related to such
considerations as environmental requirements and plant safety.
30
<PAGE>
13. Expansion of or Addition to Off-sites
-------------------------------------
13.1 In the event the capacity to produce any product or dispose of
waste is expanded by Rubicon or RCI and such expansion requires the addition or
expansion of one or more Off-sites, or if Rubicon's Board of Directors decides
to add or expand an Off-site for any other reason, Rubicon shall proceed with
the design and construction of such Off-site addition or expansion using such
design and such contractor or contractors as shall be determined by Rubicon's
Board of Directors.
13.2 The allocation of the fixed capital responsibility for each such
Off-site addition or expansion shall be determined at the time it is authorized
by Rubicon's Board of Directors on the bases provided in this Operating
Agreement. The appropriation request covering each Off-site addition or
expansion which is approved by Rubicon's Board of Directors shall identify the
purpose for its installation, including which plant or plants have, directly or
indirectly, the need for such addition or expansion at that time and, if two or
more plants have such need, the best engineering estimates at that time of the
relative proportions of such needs between or among such plants. For purposes of
making the allocations of responsibility for the fixed capital for each such
addition or expansion in accordance with Exhibit A, the need or needs as so
determined shall be the expected use (projected in good faith as and to the
extent reasonably able to be anticipated at that time and acceptable to
Rubicon's Board of Directors), directly or indirectly, of such addition or
expansion. Each User shall furnish the financing for the fixed capital for which
it is so allocated responsibility in the manner and on the terms set forth in
the Financing Agreement.
14. Certain Additional Off-sites
----------------------------
14.1 If Uniroyal or another supplier shall cease to be obligated to
furnish a substance, utility or service and other arrangements for the supply of
such substance, utility or service satisfactory to both Users are not made, and
such substance, utility or service is one which could be produced or provided by
Rubicon, Rubicon shall proceed with the design and construction of the
capability to produce or provide such substance, utility or service using such
design and such contractor or contractors as shall be determined by Rubicon's
Board of Directors. The facilities to produce each such substance, utility or
service shall be considered for all purposes of this Operating Agreement to be
an additional Off-site and, unless paragraph 14.2 applies, the provisions of
Section 13 shall apply thereto.
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<PAGE>
14.2 If for any reason either User (the "first User") is,
notwithstanding the provisions of paragraph 14.1, unwilling or unable to
participate in the actions contemplated therein with respect to such an
additional Off-site, the other User (the "second User") may nevertheless cause
Rubicon to proceed with the design and construction of such an Off-site,
furnishing all of the financing for the fixed capital therefor in the manner and
on the terms set forth in the Financing Agreement. In such event Rubicon shall
allocate all of the responsibility for the fixed capital and all of the
operating costs of such Off-site to the second User and Rubicon shall not use
any substance, utility or service derived from such Off-site with respect to any
conversion services for the first User, or, if the second User is Uniroyal,
services for RCI.
15. Expansion of Waste Disposal Plant or Different Method for the
Disposition or treatment of Waste
-------------------------------------------------------------
15.1 If at any time either User proposes that Rubicon install an
expansion of the waste disposal plant, other than expansion of ancillary
facilities as contemplated in paragraph 8.4, or that Rubicon install a method or
process for disposing or treating of waste different from that of any part of
the method used in the waste disposal plant (i.e., deep well injection after
accumulation, neutralization and sand filtration), such a proposal shall
constitute a proposal for the construction of a new plant. The User proposing
such installation (the "first User") shall so notify the other User (the "second
User") in writing, which notification shall state in detail the method or
process to be used, the cost and timing of the installation and the intended
capacity for waste disposal, as well as any other information the second User
may reasonably request. The Users shall then consult together to consider this
proposal. Within 90 days following its receipt of such notification and all
such information, the second User shall elect in writing whether it desires to
participate in such proposed plant, specifying, if it wishes to participate, the
capacity it desires. Failure by the second User to make any election within said
period shall be deemed an election by it not to participate in such plant. If
both Users desire to participate in such plant, the Design Capacity of such
plant shall be the combination of the capacities desired by both Users.
15.2 Upon completion of said notification, information, consultation
and election procedures, and provided that the User or Users participating in
such plant furnish all of the financing for the fixed capital for such plant in
the manner and on the terms set forth in the Financing Agreement, Rubicon shall
proceed with the design and construction of such plant, using such process as is
32
<PAGE>
specified by the User or Users participating in such plant and such contractor
or contractors as shall be designated by the participating User or Users, which
process and contractor or contractors must be reasonably acceptable to Rubicon's
Board of Directors. The Users' respective responsibilities for the fixed
capital for such plant and for the financing thereof shall be in the respective
percentages of their entitlement to the use of such plant.
15.3 Prior to the Completion of such plant this Operating Agreement
shall be amended by the addition of (i) appropriate new definitions of such
plant and percentage entitlement to the use thereof and (ii) appropriate new or
amended Sections covering the operation and the allocation and payment of the
operating costs of such plant corresponding to those Sections hereof applicable
to the waste disposal plant. Exhibit A hereto shall also be amended by the
addition of appropriate provisions corresponding to those provisions applicable
to the waste disposal plant.
16. Sales of Nitric Acid and Tolling of Ammonia to Nitric Acid
----------------------------------------------------------
16.1 To the extent either or both Users may, at any time and from time
to time, designate a portion of their respective entitlements to nitric acid as
available for sale, Rubicon shall, to the extent it is not already committed to
another supplier, purchase such nitric acid for its requirements to produce DNT
for RCI, and Rubicon shall use its best efforts to sell such nitric acid not so
purchased,
(i) from the aggregate quantity of nitric acid so designated by
the Users in proportion to each User's percentage entitlement to
nitric acid until a User's designated quantity of nitric acid has been
depleted, and then
(ii) from the remaining designated quantity of nitric acid of the
other User, if any.
To the extent that the Users do not make nitric acid available for Rubicon's
requirements for RCI, Rubicon shall purchase such requirements elsewhere.
16.2 All sales of a User's nitric acid (other than sales to Rubicon
for its requirements for RCI), if any, shall be made by Rubicon as undisclosed
agent for such User and Rubicon shall pay, or credit, the proceeds from sales of
such User's nitric acid to such User, but Rubicon shall invoice and receive
payment in its own
33
<PAGE>
name. Rubicon shall be reimbursed by each User for Rubicon's selling expenses
incurred on behalf of such User. Rubicon shall pay or credit to each User from
which it purchases nitric acid the then current market price of nitric acid,
f.o.b. supplier.
16.3 To the extent either or both Users may, at any time and from time
to time, designate a portion of their respective percentage entitlements to the
productive capacity of the nitric acid plant as available for tolling nitric
acid for outside customers (i.e. producing nitric acid for such customers from
ammonia supplied by the customers and charging such customers a tolling fee),
Rubicon shall use its best efforts to arrange tolling for such customers, and
Rubicon shall perform such tolling
(i) by utilizing the aggregate productive capacity so designated
by the Users in proportion to each User's percentage entitlement to
the productive capacity of the nitric acid plant, until the designated
portion of a User's percentage entitlement to productive capacity has
been fully utilized, and then
(ii) by utilizing the remaining designated portion of the other
User's percentage entitlement to productive capacity, if any.
16.4 All tolling of nitric acid utilizing a User's percentage
entitlement to the productive capacity of the nitric acid plant, if any, shall
be carried out by Rubicon as undisclosed agent for such User and Rubicon shall
pay, or credit, the proceeds to such User, but Rubicon shall invoice and receive
payment of the tolling fee in its own name. Rubicon shall be reimbursed by each
User for Rubicon's expenses incurred on behalf of such User to sell and provide
this service.
17. Capital and Operating Cost Responsibility and Allocation
--------------------------------------------------------
17.1 The capitalized expenditures made by Rubicon to acquire land, to
design and construct buildings, to acquire and install machinery and equipment
and to acquire furniture, fixtures and transportation, office and other
equipment are called fixed capital and certain costs related thereto are called
capital based costs, all as defined in this Operating Agreement. The
responsibility for fixed and working capital and the responsibility for capital
based and other costs, respectively, shall be allocated within Rubicon and then,
for fixed and working capital responsibility, to the Users (including RCI's
allocation in ICI-AM's share) and, for capital based and
34
<PAGE>
other costs, to the Users and RCI, in accordance with the terms and conditions
of this Operating Agreement. The purpose of such allocations is to determine the
respective obligations (i) of the Users to finance Rubicon's fixed and working
capital and (ii) of the Users and RCI to reimburse Rubicon for its costs with
respect to conversion services for the production of aniline for the Users and
DPA for Uniroyal and to operate the RCI plants and to provide substances,
utilities and services for RCI. The responsibility for the portions of the fixed
and working capital for the waste disposal plant and the Off-sites which are
allocated to the RCI plants shall be allocated to ICI-AM. The portions of the
capital based costs incurred by Rubicon with respect to the waste disposal plant
and the Off-sites which are allocated to the RCI plants shall be allocated to
RCI. Except with respect to RCI as aforesaid and as provided in Section 5 of
this Operating Agreement, capital based costs shall be allocated correspondingly
with fixed capital responsibility. Other operating costs shall be allocated as
provided in this Operating Agreement.
17.2 (a) The responsibility for the fixed capital for each of
Rubicon's assets and the corresponding responsibility for the capital based
costs associated with each of Rubicon's assets are determined and allocated
to the Users at the time of acquisition as provided in this Operating
Agreement. Such responsibilities shall not be reallocated unless by
agreement between the affected parties.
(b) In the event either User or RCI or, in the case of the
Aniline Facilities, either User or both Users (hereinafter in this
paragraph 17.2 individually or collectively called "the Reducing Party")
proposes a substantial reduction in operations for it for at least one year
or a permanent shutdown of a plant operated by Rubicon for it, or, in the
case of RCI, it exercises the right provided in paragraph 9.3, the parties
shall promptly determine if and to what extent Rubicon may adjust its
operations so as to reduce its constant costs without adversely affecting
Rubicon's safety or efficiency. Except as to those constant costs referred
to in (c) below, the remaining constant costs shall thereafter be allocated
to the remaining plants and Off-sites as provided in this Operating
Agreement.
(c) All net additional or continuing costs which are incurred as
a result of, or continue notwithstanding, such reduction or shutdown, e.g.
take or pay penalties under supply contracts, utility demand charges,
pension and other benefit costs, and severance pay for employees terminated
by reason of such permanent reduction or shutdown, but excluding foregone
35
<PAGE>
volume or quantity discounts, shall be allocated to the permanently reduced
or shutdown plant and paid by the Reducing Party (and in the case of both
Users permanently reducing or shutting down the Aniline Facilities,
allocated between and paid by them in their respective percentage
entitlements at the time of such permanent reduction or shutdown). "Net
additional or continuing costs" are the aggregate balance of such costs
over those costs not otherwise absorbed by the expansion or addition of
other operations at the time of or subsequent to such reduction or
shutdown.
17.3 Unless otherwise agreed between ICI-AM and Uniroyal, all property
which will qualify for investment tax credit under Section 38 of the Internal
Revenue Code which Rubicon acquires for inclusion in the Aniline Facilities, the
DPA plant, the waste disposal plant, the Off-sites and any additional plants
shall become subject to the Lease as provided therein.
18. Term of this Operating Agreement
--------------------------------
18.1 This Operating Agreement shall remain in effect until terminated
as herein provided. Termination of this Operating Agreement may be effected
only by all parties agreeing thereto in writing, which agreement to terminate
may not be rescinded by any party without the written consent of the other
parties.
19. Allocations by Rubicon Under Certain Circumstances
--------------------------------------------------
19.1 In the event Rubicon, for any reason, is unable to provide
sufficient utility services, waste disposal plant use, or Off-site use to
operate all of its and RCI's plants at each of such plants' scheduled production
level, Rubicon shall allocate its available utility services, waste disposal
capability and Off-site use on a fair and reasonable basis among all those
plants then requiring such utility services, waste disposal or Off-sites, having
regard first to (i) the obligations undertaken by the respective parties to
Rubicon and by Rubicon to the respective parties with respect to those plants
and (ii) the technical necessities and feasibilities of operating each of such
plants at reduced levels or during alternating periods, and, secondarily, to the
current business needs of the respective parties entitled to the products of
such plants. The purpose of this Section 19 is to record the understanding of
the parties to this Operating Agreement that, under circumstances of
uncontrollable reductions of one or more of those services and uses referred to
in this Section 19, Rubicon, while attempting to accommodate the desires and
needs of all parties as fairly as possible,
36
<PAGE>
will not follow any purely mechanical procedure or priority schedule in
determining how to allocate available services and uses.
20. General Provisions
------------------
20.1 Rubicon shall operate the Aniline Facilities as provided in
Section 5, the DPA plant as provided in Section 6 and the RCI plants as provided
in Section 9. All of the products and by-products resulting from Rubicon's
operation of the Aniline Facilities and the DPA plant which are not utilized by
Rubicon in the operation of such facilities or which are not discharged by
Rubicon as waste shall be furnished by Rubicon to or on behalf of the Users in
accordance with this Operating Agreement; and, except to the extent paid as rent
under the Lease, all of the pre-operational, start-up, capital based, constant
and variable costs incurred by Rubicon with respect to its facilities shall be
allocated to, and paid by, the Users and RCI in accordance with this Operating
Agreement. So long as Rubicon is operating the RCI plants, it shall operate
them, in accordance with this Operating Agreement, exclusively for, and as
directed by, RCI; and RCI shall pay all of the costs incurred by Rubicon with
respect to such operation.
20.2 Each of the Users and RCI, acting for itself, shall make such
disposition as it deems appropriate of the products and by-products resulting
from the conversion services performed by Rubicon for such User and from the
operation of the RCI plants by Rubicon for RCI.
20.3 Except as provided in paragraph 2.3 and Section 16, title to
benzene furnished by the Users and material-in-process, products and by-products
of the Aniline Facilities and the DPA plant in the possession of Rubicon at any
time shall be vested in the Users in the respective proportions in which each
User's interest therein shall appear at such time. Title to aniline furnished
by RCI and material-in-process, products and by-products of the RCI plants under
Rubicon's control at any time shall be vested in RCI.
20.4 If Rubicon under this Operating Agreement or under the Lease
charges an amount to one User ("the first User") or RCI, and if the first User
or RCI fails, upon written demand by Rubicon, either (i) to pay said amount to
Rubicon or (ii) to advance said amount to Rubicon under protest and without
prejudice to any claim by the first User or RCI that such amount was improperly
charged to the first User or RCI, then,
37
<PAGE>
(a) the right which the first User or RCI would otherwise have to
order and receive products, services, utilities and use of facilities from
Rubicon shall be suspended so long as said failure by the first User or RCI
continues, and
(b) the other User ("the second User") shall have, in the event of
such failure by the first User only, in addition to all of the second
User's other rights, the right, if the second User so elects, to pay all or
any part of said amount to Rubicon and forthwith to recover the same from
the first User or from Rubicon or in part from the first User and in part
from Rubicon, it being understood that Rubicon and the first User shall be
liable in solido to the second User, or, in the alternative, the second
User may waive such recovery and may, while making said payments, and to
the extent thereof, order Rubicon to perform conversion services hereunder
for the second User.
20.5 Each User and RCI hereby agrees with each of the others that it
will comply with its obligations to Rubicon under this Operating Agreement and
each of the other agreements entered into by it with Rubicon as contemplated by
this Operating Agreement.
20.6 The Users shall have the right from time to time to examine
jointly, or cause to be examined jointly, the books and records of Rubicon. If
either User does not wish to participate in such examination, the other User
shall have the right to conduct such examination alone. The Users shall also
have the right to require an annual audit of Rubicon's books and records by
independent certified public accountants. To the extent that the Users shall
agree upon the scope of such audit, the cost thereof shall be borne by the Users
equally; but, to the extent that one User shall require an audit greater in
scope than that agreed to by the other User, the User requiring the greater
scope of audit shall bear the extra cost. thereof.
20.7 This Operating Agreement shall be binding upon and shall enure to
the benefit of the parties, their successors and permitted assigns. This
Operating Agreement may not be assigned by Rubicon or RCI. It shall be assigned
by a User in and only in conjunction with a transfer of all of the shares of
Rubicon held by ICI American Holdings Inc. and Uniroyal, respectively, in
accordance with the Shareholders Agreement, dated January 11, 1982, among
Imperial Chemical Industries PLC, ICI American Holdings Inc. and Uniroyal, or
upon the written approval of the other User.
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<PAGE>
20.8 Any delay or failure by any party hereto in performance
hereunder shall be excused if and to the extent that such delay or failure shall
be related to occurrences beyond such party's control, including, but not
limited to, decrees or restraints of government, acts of God, strikes or other
labor disturbances, war, sabotage, or any other cause or causes, whether similar
or dissimilar to those already specified, which cannot be controlled by such
party. Such performance shall be so excused during the continuance of the
inability of the party to perform so caused, but for no longer period, and the
cause thereof shall be remedied as far as possible with all reasonable dispatch.
20.9 Failure of any party to insist, in any one or more instances,
upon a strict performance of any of the terms of this Operating Agreement or the
waiver by any party of any term of right or any default of any other party
hereunder will not be deemed or construed as a waiver or a relinquishment for
the future of any such term, right or default.
20.10 All questions relating to the validity, interpretation or
performance of this Operating Agreement shall be determined in accordance with
the law of the State of Louisiana.
20.11 This Operating Agreement may be amended from time to time only
by written instrument executed on behalf of Rubicon by its President when
specifically authorized by its Board of Directors and duly executed by each of
the other parties.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Operating Agreement
in triplicate as of the date first above written.
ICI Americas Inc.
By /s/ K. Watteau
UNIROYAL, Inc.
By /s/ V. Calarco
Rubicon Chemicals Inc.
By /s/ T. Perrin
Rubicon Inc.
By /s/ J. Hummer
40
<PAGE>
EXHIBIT A TO THE OPERATING AGREEMENT
------------------------------------
PRINCIPLES OF CAPITAL RESPONSIBILITY AND COST ALLOCATION
--------------------------------------------------------
<PAGE>
I. OBJECTIVE
---------
The objective of this Exhibit is to set forth the principles of capital
responsibility and cost allocation required by the Operating Agreement.
II. DEFINITIONS
-----------
All terms which are defined in the Operating Agreement or any other Exhibit
thereto are used in this Exhibit as so defined, including, or in addition
to, the following definitions.
A. Fixed Capital
-------------
Fixed capital consists of capitalized expenditures to acquire land, to
design and construct buildings, to acquire and install machinery and
equipment, and to acquire furniture, fixtures, transportation, office
and other equipment, and construction in process. Net fixed capital
shall be computed by deducting accumulated depreciation from fixed
capital.
B. Working Capital
---------------
Working capital consists of funds required for expenditures other than
for fixed capital, including, but not limited to, spare parts,
purchased materials, supplies, taxes and prepaid and accrued items.
C. Capital Based Costs
-------------------
Capital based costs consist of book depreciation as agreed to by the
parties from time to time to zero net book value and interest on
indebtedness for fixed capital. Gains and losses from the disposition
of assets financed by fixed capital shall be credited or charged to
the plants correspondingly with the responsibility for the fixed
capital of each such asset.
D. Constant Costs
--------------
Constant costs consist of costs other than capital based costs and
variable costs, including, but not limited to, interest on working
<PAGE>
capital loans; salaries; payroll overheads (such as pension costs,
F.I.C.A., medical benefits, vacations, holidays, etc.); all charges
for utilities (except variable charges for steam); costs of operating
supplies; costs of outside services and contractors; travel and
entertaining; taxes (other than income taxes); and insurance.
E. Fixed Costs
-----------
Fixed costs consist of capital based costs plus constant costs.
F. Variable Costs
--------------
Variable costs consist of those costs which vary directly with the
amount of production, including, but not limited to, costs of
purchased raw materials and catalysts; variable charges for steam;
costs of drums; and technical assistance fees and royalties based on
production.
G. Pre-Operational Costs
---------------------
Pre-operational costs consist of those costs incurred after the
decision has been made to make an expenditure for fixed capital but
prior to the initial operation of facilities resulting from such
expenditure, including, but not limited to, costs incurred to plan
resource requirements, secure sources of supply, develop operating
procedures, and recruit and train production personnel.
H. Start-Up Costs
--------------
Start-up costs consist of initial production costs, including, but not
limited to, costs deemed to be excessive prior to achieving an
economic or planned level of production.
III. ALLOCATION OF RESPONSIBILITY FOR FIXED AND WORKING CAPITAL
----------------------------------------------------------
A. Fixed Capital
-------------
1. Allocation to Users
-------------------
2
<PAGE>
(a Responsibility for the fixed capital for each of Rubicon's
battery limits plants and the waste disposal plant and for
that part of the fixed capital for each Off-site which is
allocated to each such plant and to each of the RCI plants
shall be allocated to the Users on the basis of percentage
entitlement or Expansion Percent age, as appropriate, for
the Aniline Facilities, to Uniroyal for the DPA Plant,
(except as provided in paragraph 8.4 of the Operating
Agreement and in (b) below) to the Users on the basis of WD
percentage entitlement for the waste disposal plant, and to
ICI-AM for the RCI plants.
(b Responsibility for the fixed capital for each addition or
expansion of the ancillary facilities in the waste disposal
plant shall be allocated to each User as provided in sub-
paragraph 8.4(b) of the Operating Agreement, i.e., not on
the basis of WD percentage entitlement. Responsibility for
the fixed capital for each capitalized expenditure made from
time to time to sustain or modify the ancillary facilities
in the waste disposal plant, after an addition or expansion,
shall be allocated to one or more of Rubicon's plants and
the RCI plants (and then to each User as provided in this
Exhibit A and said sub-paragraph 8.4(b)) at the time each
such expenditure is made on the basis of the best
engineering estimates at that time as to the expected use of
the ancillary facilities by such plant or plants, i.e., not
on the basis of the aggregate overall allocation of the
responsibility for fixed capital for the ancillary
facilities at that time or the WD percentage entitlement.
2. Allocation of off-sites to Plants
---------------------------------
(a Responsibility for the fixed capital for each Off-site shall
be allocated to one or more of Rubicon's plants and the RCI
plants at the time of the original installation of such
Off-site on the basis of the best engineer
3
<PAGE>
ing estimates at that time as to the expected use, directly
or indirectly, of such Off-site by such plant or plants.
(b Responsibility for the fixed capital for each expansion of
an Off-site shall be allocated to one or more of Rubicon's
plants and the RCI plants at the time of the original
installation of such expansion on the basis of the best
engineering estimates at that time as to the expected use,
directly or indirectly, of such expansion by such plant or
plants, i.e. not on the basis of the original allocation of
the responsibility for fixed capital for such Off-site.
(c Responsibility for the fixed capital for each capitalized
expenditure made from time to time to sustain or modify an
Off-site, whether or not expanded, shall be allocated to
one or more of Rubicon's plants and the RCI plants at the
time each such expenditure is made on the basis of the best
engineering estimates at that time as to the expected use,
directly or indirectly, of such off-site by such plant or
plants, i.e., not on the basis of the aggregate overall
allocation of the responsibility for fixed capital for such
Off-site at that time.
B. Allocation of Responsibility for Working Capital to Users and RCI
-----------------------------------------------------------------
Responsibility for the working capital for each of Rubicon's plants
and for that part of the working capital for each Off-site which is
allocated to each such plant and the RCI plants shall be allocated to
the Users, and to ICI-AM for the RCI plants, on the basis of current
levels of activity of all such plants and the RCI plants.
IV. ALLOCATION OF COSTS (OTHER THAN VARIABLE)
-----------------------------------------
A. Capital based costs shall (except as provided in Section 5 of the
Operating Agreement) be allocated to the Users correspondingly with
their respective responsibilities for fixed capital; provided, however
that, if and to the extent directed by ICI-AM, a portion of the
capital
4
<PAGE>
based costs allocated to it with respect to Off-sites and the waste
disposal plant shall be reallocated to RCI.
B. Constant costs shall first be allocated to Rubicon's plants and the
RCI plants as provided in Section V. The constant costs allocated to
each of Rubicon's plants and each of the RCI plants, including that
part of the constant costs for each Off-site which is allocated to
each of Rubicon's plants and the RCI plants, shall (except as provided
in Section 5 of the Operating Agreement) then be allocated to the
Users on the basis of percentage entitlement or Expansion Percentage,
as appropriate, for the Aniline Facilities, to Uniroyal for the DPA
plant, to the Users on the basis of WD percentage entitlement for the
waste disposal plant and to RCI for the RCI plants.
C. The pre-operational costs and start-up costs which are not deferred
and capitalized shall be allocated to the Users correspondingly with
their respective responsibilities for the fixed capital with respect
to which such costs were incurred. Unless the Users otherwise agree,
all pre-operational and start-up costs shall not be deferred and
capitalized and shall be charged immediately to the Users.
V. BASES FOR ALLOCATING CONSTANT COSTS TO PLANTS
---------------------------------------------
A. Estimated Services Rendered
---------------------------
Production Departments
Administration Department
Technical and Engineering Department
Purchasing Department
Traffic Department
Order Processing and Billing Department
Chemical Warehouse and Materials Handling Department
To make the allocations under this basis, the duties of each employee
in the above Departments shall be analyzed to determine the expected
proportion of each employee's time to be devoted to servicing each
plant at the current annual budgeted level of activity. The
proportion as so determined shall be weighted by the individual's
annual salary and a composite weighted average for each Department
shall be
5
<PAGE>
calculated. This composite weighted average shall be used to allocate
the Department's constant costs to the plants.
B. Actual Services Rendered
------------------------
Maintenance
The constant costs incurred to maintain and repair buildings,
machinery and equipment shall be recorded and charged by project work
order.
C. Current Annual Budgeted Level of Activity
-----------------------------------------
Electrical power
Steam (other than variable costs)
Natural Gas
Water
Nitrogen
Taxes (other than income taxes)
D. Percentage of Gross Capital
---------------------------
Fire protection
Property Insurance (other than on inventories)
Auxiliary facilities, including roads and parking lots, rail sidings,
grounds and fences, administration building, maintenance building and
vehicles.
The constant costs incurred for these matters shall be allocated to
each of Rubicon's plants and each of the RCI plants in the same
proportion as the gross fixed capital allocated to each such plant
bears to the total gross fixed capital of Rubicon and the RCI plants.
E. Direct Labor
------------
Accounting Department
Management Information Services Department
Personnel Department
Guards Department
6
<PAGE>
Medical Department
Safety Department
Janitorial Department
Factory Management Department
Liability Insurance
The constant costs of the above Departments and Liability Insurance
shall be allocated to each plant in the same proportion as the direct
labor salaries expected to be charged to each plant at the current
annual budgeted level of activity is to the total direct labor
salaries expected to be charged to all plants at the current annual
budgeted level of activity.
F. In the event there is a material change in the annual level of
activity from the current annual budgeted level of activity used as
the basis for allocating costs in this Section V., then this basis
will be revised to reflect such change in such allocation for the
remaining part of that year.
VI. ALLOCATION OF VARIABLE COSTS TO USERS AND RCI
---------------------------------------------
The variable costs will be charged to the Users and RCI using:
A. Standard Cost per unit times actual units produced.
-------------
B. Variations from standard cost per unit of production
-----------------------------
(1 Price Variance
--------------
Price variance is the difference between monthly average actual
cost per unit and standard cost per unit multiplied by the actual
units consumed in each plant calculated and distributed to
products on the basis of output of each product.
(2 Usage Variance
--------------
Usage variance is the difference between actual usage on a year-
to-date weighted average basis and the standard allowance
multiplied by the standard cost calculated and distributed to
products on the basis of output of each product.
7
<PAGE>
VII. ALLOCATION OF TRANSPORTATION COSTS TO USERS AND RCI
---------------------------------------------------
The costs of transportation incurred for deliveries of a product as
directed by a User or RCI shall be allocated to such User or RCI.
VIII. ALLOCATION OF INCOME TAXES TO USERS
-----------------------------------
The cost of Rubicon's income taxes will be allocated equally to the Users.
IX. BILLING AND PAYMENT
-------------------
Bills for all costs incurred in each month shall be submitted to each User
and RCI not later than the 15th working day of the following month and
shall be payable within 10 days from the billing date.
X. PERIODIC REPORTING
------------------
A. Monthly
-------
Rubicon shall make monthly reports to each User and RCI, respectively,
as appropriate, covering monthly billing detail, aniline
production/inventory, DPA production/inventory, benzene
inventory/consumption, reconciliation of cash advances, reconciliation
of construction bank account, and an analysis of the variable,
constant and capital based costs incurred with respect to each of
Rubicon's plants and each of the RCI plants, including those for
Off-sites and the allocation thereof.
8
<PAGE>
EXHIBIT B TO THE OPERATING AGREEMENT
------------------------------------
FORM OF LEASE
-------------
<PAGE>
EXHIBIT C TO THE OPERATING AGREEMENT
------------------------------------
FORM OF FINANCING AGREEMENT
---------------------------
<PAGE>
FINANCING AGREEMENT
AGREEMENT (for convenience called "Financing Agreement") entered into
as of the 28th day of December 1981, by and among Rubicon Inc. ("Rubicon"), a
Louisiana corporation having its principal office at Geismar, Louisiana,
Rubicon Chemicals Inc. ("RCI"), a Louisiana corporation having its principal
office at Geismar, Louisiana, ICI Americas Inc. ("ICI-AM"), a Delaware
corporation having its principal office at One Rollins Plaza, Wilmington,
Delaware 19897, ICI American Holdings Inc. ("ICI-AH"), a Delaware corporation
having its principal office at One Rollins Plaza, Wilmington, Delaware 19897,
and UNIROYAL, Inc. ("Uniroyal"), a New Jersey corporation having its principal
office at Benson Road, Middlebury, Connecticut 06749;
WHEREAS:
(1) RCI, ICI-AM and Uniroyal are the parties to a so-called Financing
Agreement ("Original Financing Agreement"), dated as of April 1, 1977; and
(2) RCI and Rubicon are the parties to a so-called Exchange Agreement
("Exchange Agreement") of even date herewith pursuant to which RCI transferred
certain assets to Rubicon and Rubicon assumed certain liabilities of RCI; and
(3) in furtherance of the Exchange Agreement, RCI wishes to assign its
rights and obligations under the Original Financing Agreement to Rubicon and
Rubicon wishes to accept and assume such right and obligations; and
(4) ICI-AM and Uniroyal wish to consent to such assignment of the
Original Financing Agreement; and
(5) coincident with the aforementioned assignment, the parties to the
Original Financing Agreement and this Financing Agreement wish to amend and
restate the Original Financing Agreement as set forth in this Financing
Agreement; and
(6) ICI-AH and Uniroyal are the owners, in equal parts, of all of the
shares of Rubicon; and
<PAGE>
(7) Rubicon operates its facilities solely for the benefit of ICI-AM
and RCI, both of which are wholly-owned subsidiaries of ICI-AH, and Uniroyal in
accordance with an agreement (the "Operating Agreement") of even date herewith
among ICI-AM, Uniroyal, RCI and Rubicon; and
(8) ICI-AH, ICI-AM and Uniroyal wish to provide certain of the
financing required by Rubicon for its fixed and working capital as hereinafter
set forth;
NOW, THEREFORE, in consideration of the covenants herein contained,
the parties hereto, intending to be legally bound hereby, agree as follows.
2. Assignment of Original Financing Agreement
and Its Amendment and Restatement
------------------------------------------
1.1 As of the date of this Financing Agreement, RCI hereby assigns
all of its rights and obligations under the Original Financing Agreement to
Rubicon, and Rubicon hereby accepts, assumes and agrees to perform all such
rights and obligations, ICI-AM and Uniroyal hereby consent to such assignment,
acceptance and assumption and hereby release RCI from any obligations to them
under the Original Financing Agreement.
1.2 As of the date of this Financing Agreement, the Original
Financing Agreement is hereby amended and restated in its entirety to read as
set forth in this Financing Agreement.
2. Definitions
-----------
2.1 All terms which are defined elsewhere in this Agreement or in the
Operating Agreement, including the Exhibits thereto, are used in this Agreement
as so defined.
3. Financing Commitments
---------------------
3.1 ICI-AH and ICI-AM (in solido but acting individually from time to
time as determined between them and hereinafter collectively called "ICI") on
the one hand, and Uniroyal, on the other hand, hereby each establishes in favor
of Rubicon a Fixed Capital Financing Commitment ("F.C.F. Commitment") in such
amount which, in the aggregate from time to time, is equal to that part of
Rubicon's
2
<PAGE>
fixed capital for which it is responsible as determined in accordance with the
Operating Agreement (deeming ICI's responsibility to be the responsibilities for
fixed capital allocated to ICI-AM and RCI), minus, for each, one half of the
sum, from time to time, of Rubicon's equity, capital surplus and retained
earnings. ICI and Uniroyal, respectively, shall lend funds to Rubicon pursuant
to their respective F.C.F. Commitments upon call by Rubicon as hereinafter
provided.
3.2 ICI and Uniroyal hereby each establishes in favor of Rubicon a
Working Capital Financing Commitment ("W.C.F. Commitment") in such amount which,
in the aggregate from time to time, is equal to that part of Rubicon's working
capital for which it is responsible in accordance with the Operating Agreement
(deeming ICI's responsibility to be the responsibilities for working capital
allocated to ICI-AM and RCI). ICI and Uniroyal, respectively, shall lend funds
to Rubicon pursuant to their respective W.C.F. Commitments upon call by Rubicon
as hereinafter provided.
3.3 The respective F.C.F. Commitments and W.C.F. Commitments
(hereinafter collectively referred to, for ICI or Uniroyal, as the "Commitment"
and, for both, as the "Commitments") are, as between ICI and Uniroyal, several
and not in solido, and neither ICI nor Uniroyal shall have any responsibility in
respect of the Commitment of the other.
4. Calls on the Commitments
------------------------
4.1 Rubicon shall, from time to time as required by it, call upon ICI
and Uniroyal, respectively, to lend to it funds pursuant to their respective
Commitments and, for this purpose, shall use its best efforts to estimate the
proper allocation of each such call and all such calls cumulatively between them
in the anticipated proportions of their respective cumulative Commitments. If
at any time and from time to time such calls, in the aggregate, have not been in
the proper proportions, Rubicon, ICI and Uniroyal shall adjust the Loans
referred to below accordingly.
5. Loans
-----
5.1 Upon the calls from Rubicon referred to in Section 4, ICI and
Uniroyal shall each make a loan ("Loan") to Rubicon in a principal amount equal
to its Commitment, adjusted from time to time as provided in paragraph 4.1.
Follow ing the making of the first Loans, all Loans made by ICI and Uniroyal,
pursuant to calls
3
<PAGE>
on their respective Commitments, shall be added to the outstanding principal
amount of their respective Loans.
5.2 The principal of each Loan shall be payable by Rubicon on the
15th workday of each month in an amount equal to the capital based costs, except
interest, incurred by Rubicon and allocated to ICI-AM and RCI, on the one hand,
and Uniroyal, on the other hand, respectively, in accordance with the Operating
Agreement, in the preceding month with respect to the fixed capital financed by
such Loan, plus any amount by which the respective then current W.C.F. Commit
ments are less than the principal amount of working capital included in the
Loans.
5.3 Each Loan shall bear interest on the unpaid principal amount
thereof outstanding, payable monthly in arrears on the 15th of each month,
commencing with the first such date after making said Loans, at the rate of 9%
per annum calculated on the basis of a year of 365 (or 366) days for the actual
number of days elapsed.
5.4 Payments of principal and interest on each Loan may be made by
Rubicon crediting the amounts thereof to the respective obligations of ICI-AM
and Uniroyal for capital based costs under the Operating Agreement or rent under
the Lease, or a combination thereof, as the case may be.
6. Revision of Commitments and Loans
---------------------------------
6.1 If, in accordance with the Operating Agreement, there are changes
in the respective fixed or working capital responsibilities of ICI (deeming
ICI's responsibility to be the responsibilities of ICI-AM and RCI) and Uniroyal,
their respective F.C.F. Commitments and W.C.F. Commitments shall be changed
accordingly as of the date of such change. If as a result of such changes the
outstanding principal of the respective Loans is lower or higher than the
respective Commitments, ICI and Uniroyal, respectively, shall forthwith lend to
Rubicon the amount, if any, by which its Loan is too low, and Rubicon shall
forthwith pay to ICI and Uniroyal, respectively, the amount, if any, by which
its Loan is too high.
7. Miscellaneous
-------------
7.1 The amount of each F.C.F. and W.C.F. Commitment and Loan shall be
subject to audit and verification by Rubicon's independent certified public
accountants from time to time and, if and to the extent found to be incorrect,
shall be appropriately adjusted as provided herein to reflect the correct
amounts. Subject to
4
<PAGE>
such audit and verification and appropriate adjustment, if any, the principal
amount of each F.C.F. and W.C.F. Commitment and Loan shall be as determined from
Rubicon's books and records.
7.2 Failure by any party to insist, in any one or more instances,
upon a strict performance of any of the terms of this Agreement or the waiver by
any party of any term or right or any default of any other party hereunder will
not be deemed or construed as a waiver or a relinquishment for the future of any
such term, right or default.
7.3 This Agreement may be amended by written instrument executed on
behalf of each party hereto (except RCI which is a party hereto only for the
purpose of the assignment in paragraph 1.1) by an authorized officer thereof.
7.4 All questions relating to the validity, interpretation or
performance of this Agreement will be determined in accordance with the law of
the State of Louisiana.
7.5 Any notice required or permitted to be given hereunder shall be
in writing and shall be deemed to have been properly given by one party to
another if the same shall have been mailed in a sealed envelope, postage
prepaid, certified or registered mail, addressed to Rubicon as follows:
One Rollins Plaza
Wilmington, Delaware 19897
Attention: Vice President
addressed to ICI-AH and ICI-AM as follows:
Wilmington, Delaware 19897
Attention: Secretary
addressed to Uniroyal as follows:
Benson Road
Middlebury, Connecticut 06749
Attention: Secretary
5
<PAGE>
or otherwise addressed with respect to any party as such party may designate by
written notice to the other parties.
7.6 This Agreement shall be binding upon and shall enure to the
benefit of the parties, their successors and permitted assigns. This Agreement
may not be assigned by RCI or Rubicon. It shall be assigned by ICI-AH and ICI-
AM, on the one hand, or by Uniroyal, on the other hand, in and only in
conjunction with an assignment of the Operating Agreement, as provided therein.
7.7 This Agreement shall continue in effect for as long as the
Operating Agreement continues in effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
quintuplicate as of the date first above written.
Rubicon Inc.
By______________________________________
Rubicon Chemicals Inc.
By______________________________________
ICI Americas Inc.
By______________________________________
ICI American Holdings Inc.
By______________________________________
6
<PAGE>
UNIROYAL, Inc.
By______________________________________
7
<PAGE>
EXHIBIT D TO THE OPERATING AGREEMENT
------------------------------------
FORM OF UTILITIES SERVICES AGREEMENT
------------------------------------
<PAGE>
EXHIBIT E TO THE OPERATING AGREEMENT
------------------------------------
BENZENE SPECIFICATIONS
----------------------
<PAGE>
EXHIBIT F TO THE OPERATING AGREEMENT
------------------------------------
ANHYDROUS AMMONIA SPECIFICATIONS
--------------------------------
<PAGE>
EXHIBIT G TO THE OPERATING AGREEMENT
------------------------------------
ANILINE SPECIFICATIONS
----------------------
<PAGE>
EXHIBIT 12.1
HUNTSMAN ICI LLC
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Predecessor Huntsman Specialty Huntsman ICI Pro Forma
------------------------------ --------------------------------------------------- -------------------------
Year Ended Ten Months Ten Months Year Three Months Three Months Year Three Months
December 31, Ended Ended Ended Ended Ended Ended Ended
---------------- February 28, December 31, December 31, March 31, March 31, December 31, March 31,
1994 1995 1996 1997 1997 1998 1998 1999 1998 1999
---- ---- ---- ------------ ------------ ------------ ------------ ------------ ------------ ------------
(dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest Expense
(includes
amortization of
deferred
financing
costs)......... $-- $-- $-- $-- $35 $40 $10 $ 9
Interest portion
of rent
expense........ -- 5 11 -- -- -- -- -- --
--- --- --- --- --- --- --- --- --- ---
Total Fixed
Charges......... $ 0 $ 5 $11 $ 0 $35 $40 $10 $ 9 $ 0 $ 0
=== === === === === === === === === ===
Earnings:
Income from
operations
operation
before taxes... $(9) $(2) $19 $(6) $ 5 $15 $ 1 $10
Fixed Charges: 0 5 11 0 35 40 10 9 0 0
Less:
Minority
interest in
pre-tax income
of
subsidiaries... -- -- -- -- -- -- -- -- 2 --
--- --- --- --- --- --- --- --- --- ---
Total Earnings... $(9) $ 3 $30 $(6) $40 $55 $11 $19 $ 2 $ 0
=== === === === === === === === === ===
Ratio of
Earnings to
Fixed Charges.. -- 0.6x 2.7x -- 1.1x 1.4x 1.1x 2.1x 1.0x .9x
Deficiency of
Earnings to
Fixed Charges.. -- $ 2 $ 6
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES
------------
U.S. ENTITIES
- -------------
Delaware
- --------
HUNTSMAN ICI FINANCIAL LLC
Louisiana
- ---------
LOUISIANA PIGMENT COMPANY
RUBICON INC.
Utah
- ----
HUNTSMAN POLYURETHANE FUND I, L.L.C.
HUNTSMAN POLYURETHANE FUND II, L.L.C.
HUNTSMAN POLYURETHANE FUND III, L.L.C.
HUNTSMAN POLYURETHANE FUND IV, L.L.C.
HUNTSMAN POLYURETHANE VENTURE I, L.L.C.
HUNTSMAN POLYURETHANE VENTURE II, L.L.C.
HUNTSMAN POLYURETHANE VENTURE III, L.L.C.
HUNTSMAN POLYURETHANE VENTURE IV, L.L.C.
NON-U.S. ENTITIES
- -----------------
Argentina
- ---------
HUNTSMAN ICI (ARGENTINA) LIMITADA
Belgium
- -------
HUNTSMAN ICI (BELGIUM) BVBA
TIOXIDE EUROPE NV/SA
Brazil
- ------
HUNTSMAN ICI (BRASIL) LIMITADA
Canada
- ------
HUNTSMAN ICI (CANADA) CORPORATION
TIOXIDE CANADA INC.
Cayman Islands
- --------------
TIOXIDE AMERICAS INC.
1
<PAGE>
China
- -----
ICI PU (CHINA) LIMITED
Columbia
- --------
HUNTSMAN ICI COLOMBIA LIMITADA
France
- ------
TIOXIDE EUROPE SAS
Germany
- -------
HUNTSMAN ICI (GERMANY) GmbH
TIOXIDE EUROPE GmbH
Indonesia
- ---------
PT HUNTSMAN ICI POLYURETHANES INDONESIA
Italy
- -----
HUNTSMAN ICI (ITALIAN OPERATIONS) Srl
HUNTSMAN ICI (ITALY) Srl
Tioxide Europe Sr1
Japan
- -----
NIPPON POLYURETHANE INDUSTRY CO. LIMITED
Malaysia
- --------
PACIFIC IRON PRODUCTS Sdn Bhd
TIOXIDE (MALAYSIA) Sdn Bhd
Mexico
- ------
ICI MEX SA DE CV
Netherlands
- -----------
CHEMICAL BLENDING HOLLAND BV
EUROGEN CV
HUNTSMAN ICI (CANADIAN INVESTMENTS) BV
HUNTSMAN ICI HOLLAND BV
HUNTSMAN ICI INVESTMENTS (NETHERLANDS) BV
HUNTSMAN ICI IOTA BV
HUNTSMAN ICI (NETHERLANDS) BV
HUNTSMAN ICI PU (CHINA) HOLDINGS BV
HUNTSMAN ICI (SAUDI INVESTMENTS) B.V.
STEAMELEC BV
Saudi Arabia
- ------------
ARABIAN POLYOL COMPANY LIMITED
Singapore
- ---------
HUNTSMAN ICI PU (ASIA PACIFIC) PTE LIMITED
South Africa
- ------------
BRITISH TITAN PRODUCTS SOUTHERN AFRICA (PTY) LIMITED
TIOXIDE SOUTHERN AFRICA (PTY) LIMITED
Spain
- -----
HUNTSMAN ICI ESPANA S.L.
OLIGO SA
Tioxide Europe S.L.
2
<PAGE>
Sweden
- ------
TIOXIDE EUROPE AB
Taiwan
- ------
HUNTSMAN ICI (TAIWAN) LIMITED
Thailand
- --------
HUNTSMAN ICI (THAILAND) LIMITED
Turkey
- ------
TIOXIDE EUROPE TITANIUM PIGMENTLERI TICARET LTD. SIRKETI
U.K.
- ----
HUNTSMAN ICI EUROPE LIMITED
HUNTSMAN ICI (HOLDINGS) UK
HUNTSMAN ICI (UK) LIMITED
HUNTSMAN ICI PETROCHEMICALS (UK) LIMITED
HUNTSMAN ICI POLYURHTHANES SALES LIMITED
HUNTSMAN ICI POLYURETHANES (UK) LIMITED
HUNTSMAN ICI POLYURETHANES (UK) VENTURES LTD.
TIOXIDE EUROPE LIMITED
TIOXIDE GROUP
TIOXIDE GROUP SERVICES LIMITED
TIOXIDE OVERSEAS HOLDINGS LIMITED
3
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Huntsman ICI
Chemicals LLC on Form S-4 of our report dated February 26, 1999 (July 1, 1999
as to Note 14), appearing in the Prospectus, which is part of this Registration
Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
Deloitte & Touche LLP
Houston, Texas
August 12, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated February 14, 1997 included herein and to all references to our
Firm included in this Registration Statement of Huntsman ICI Chemicals LLC.
Arthur Andersen LLP
Houston, Texas
August 12, 1999
<PAGE>
EXHIBIT 23.3
The Board of Directors
Huntsman ICI Chemicals LLC
We consent to the inclusion in this Registration Statement on Form S-4 of
Huntsman ICI Chemicals LLC of our report dated June 2, 1999 with respect to the
combined balance sheets of the Businesses, as defined, as of December 31, 1998
and 1997 and the related profit and loss accounts, cash flow statements and
statements of total recognised gains and losses for each of the years in the
three year period ended December 31, 1998, which report appears herein and to
the reference to our firm under the heading "Experts" in the Registration
Statement.
KPMG Audit Plc
London
England
August 12, 1999
<PAGE>
EXHIBIT 25.1
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
BANK ONE, N.A.
Not Applicable 31-4148768
(State of Incorporation (I.R.S. Employer
if not a national bank) Identification No.)
100 East Broad Street, Columbus, Ohio 43271-0181
(Address of trustee's principal executive offices) (Zip Code)
c/o Bank One Trust Company, NA
100 East Broad Street
Columbus, Ohio 43271-0181
(614) 248-5811
(Name, address and telephone number of agent for service)
HUNTSMAN ICI CHEMICALS LLC
(Exact name of obligor as specified in its charter)
Delaware 87-0630358
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
500 Huntsman Way 84108
Salt Lake City, UT (Zip Code)
(Address of principal executive
office)
10 1/8% Senior Subordinated Notes, due 2009
(Title of the Indenture securities)
<PAGE>
GENERAL
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.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Cleveland, Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
The Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with Obligor and Underwriters.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
16. List of Exhibits
List below all exhibits filed as a part of this statement of eligibility
and qualification. (Exhibits identified in parentheses, on file with the
Commission, are incorporated herein by reference as exhibits hereto.)
Exhibit 1 - A copy of the Articles of Association of the trustee as now in
effect.
Exhibit 2 - A copy of the Certificate of Authority of the trustee to commence
business.
Exhibit 3 - A copy of the Authorization of the trustee to exercise corporate
trust powers.
Exhibit 4 - A copy of the Bylaws of the trustee as now in effect.
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Exhibit 7 - Report of Condition of the trustee as of the close of business on
June 30, 1999, published pursuant to the requirements of the Comptroller of the
Company, see attached.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
Items 3 through 15 are not answered pursuant to General Instruction B which
requires responses to Item 1, 2 and 16 only, if the obligor is not in default.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, Bank One, NA, a national banking association organized
under the National Banking Act, has duly caused this statement of eligibility
and qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in Columbus, Ohio, on August 12, 1999.
Bank One, NA
By: /s/ David B. Knox
Authorized Signer
<PAGE>
Exhibit 1
BANK ONE, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
-----------------------
FIRST. The title of this Association shall be Bank One, National
-----
Association.
SECOND. The main office of the Association shall be in Columbus, County of
------
Franklin, State of Ohio. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
-----
less than five nor more than twenty-five Directors, the exact number of
Directors within such minimum and maximum limits to be fixed and determined from
time-to-time by resolution of the shareholders at any annual or special meeting
thereof, provided, however, that the Board of Directors, by resolution of a
majority thereof, shall be authorized to increase the number of its members by
not more than two between regular meetings of the shareholders. Each Director,
during the full term of his directorship, shall own, as qualifying shares, the
minimum number of shares of either this Association or of its parent bank
holding company in accordance with the provisions of applicable law. Unless
otherwise provided by the laws of the United States, any vacancy in the Board of
Directors for any reason, including an increase in the number thereof, may be
filled by action of the Board of Directors.
<PAGE>
FOURTH. The annual meeting of the shareholders for the election of
------
Directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office of this Association or such other
place as the Board of Directors may designate, on the day of each year specified
therefor in the Bylaws, but if no election is held on that day, it may be held
on any subsequent business day according to the provisions of law; and all
elections shall be held according to such lawful regulations as may be
prescribed by the Board of Directors.
FIFTH. The authorized amount of capital stock of this Association shall be
-----
12,704,315 shares of common stock of the par value of Ten Dollars ($10) each;
but said capital stock may be increased or decreased from time-to-time, in
accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the
Association shall have the preemptive or preferential right of subscription to
any share of any class of stock of this Association, whether now or hereafter
authorized or to any obligations convertible into stock of this Association,
issued or sold, nor any right of subscription to any thereof other than such, if
any, as the Board of Directors, in its discretion, may from time-to-time
determine and at such price as the Board of Directors may from time-to-time fix.
This Association, at any time and from time-to-time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The Board of Directors shall appoint one of its members President
-----
of the Association, who shall be Chairman of the Board, unless the Board
appoints another director to be the Chairman. The Board of Directors shall have
the power to appoint one or more Vice Presidents and to appoint a Secretary and
such other officers and employees as may be required to transact the business of
this Association.
The Board of Directors shall have the power to define the duties of
the officers and employees of this Association; to fix the salaries to be paid
to them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the
<PAGE>
manner in which any increase of the capital of this Association shall be made;
to manage and administer the business and affairs of this Association; to make
all Bylaws that it may be lawful for them to make; and generally to do and
perform all acts that it may be legal for a Board of Directors to do and
perform.
SEVENTH. The Board of Directors shall have the power to change the
-------
location of the main office to any other place within the limits of the City of
Columbus, Ohio, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of this Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
------
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
-----
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time, place
and purpose of every annual and special meeting of the shareholders shall be
given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting to each shareholder of record at his address as shown
upon the books of this Association.
<PAGE>
TENTH. Every person who is or was a Director, officer or employee of the
-----
Association or of any other corporation which he served as a Director, officer
or employee at the request of the Association as part of his regularly assigned
duties may be indemnified by the Association in accordance with the provisions
of this paragraph against all liability (including, without limitation,
judgments, fines, penalties and settlements) and all reasonable expenses
(including, without limitation, attorneys' fees and investigative expenses) that
may be incurred or paid by him in connection with any claim, action, suit or
proceeding, whether civil, criminal or administrative (all referred to hereafter
in this paragraphs as "Claims") or in connection with any appeal relating
thereto in which he may become involved as a party or otherwise or with which he
may be threatened by reason of his being or having been a Director, officer or
employee of the Association or such other corporation, or by reason of any
action taken or omitted by him in his capacity as such Director, officer or
employee, whether or not he continues to be such at the time such liability or
expenses are incurred, provided that nothing contained in this paragraph shall
be construed to permit indemnification of any such person who is adjudged guilty
of, or liable for, willful misconduct, gross neglect of duty or criminal acts,
unless, at the time such indemnification is sought, such indemnification in such
instance is permissible under applicable law and regulations, including
published rulings of the Comptroller of the Currency or other appropriate
supervisory or regulatory authority, and provided further that there shall be no
indemnification of directors, officers, or employees against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by an appropriate regulatory agency which proceeding or action
results in a final order assessing civil money penalties or requiring
affirmative action by an individual or individuals in the form of payments to
the Association. Every person who may be indemnified under the provisions of
this paragraph and who has been wholly successful on the merits with respect to
any Claim shall be entitled to indemnification as of right. Except as provided
in the preceding sentence, any indemnification under this paragraph shall be at
the sole discretion of the Board of Directors and shall be made only if the
Board of Directors or the Executive Committee acting by a quorum consisting of
<PAGE>
Directors who are not parties to such Claim shall find or if independent legal
counsel (who may be the regular counsel of the Association) selected by the
Board of Directors or Executive Committee whether or not a disinterested quorum
exists shall render their opinion that in view of all of the circumstances then
surrounding the Claim, such indemnification is equitable and in the best
interests of the Association. Among the circumstances to be taken into
consideration in arriving at such a finding or opinion is the existence or non-
existence of a contract of insurance or indemnity under which the Association
would be wholly or partially reimbursed for such indemnification, but the
existence or non-existence of such insurance is not the sole circumstance to be
considered nor shall it be wholly determinative of whether such indemnification
shall be made. In addition to such finding or opinion, no indemnification under
this paragraph shall be made unless the Board of Directors or the Executive
Committee acting by a quorum consisting of Directors who are not parties to such
Claim shall find or if independent legal counsel (who may be the regular counsel
of the Association) selected by the Board of Directors or Executive Committee
whether or not a disinterested quorum exists shall render their opinion that the
Director, officer or employee acted in good faith in what he reasonably believed
to be the best interests of the Association or such other corporation and
further in the case of any criminal action or proceeding, that the Director,
officer or employee reasonably believed his conduct to be lawful. Determination
of any Claim by judgment adverse to a Director, officer or employee by
settlement with or without Court approval or conviction upon a plea of guilty or
of nolo contendere or its equivalent shall not create a presumption that a
---- ----------
Director, officer or employee failed to meet the standards of conduct set forth
in this paragraph. Expenses incurred with respect to any Claim may be advanced
by the Association prior to the final disposition thereof upon receipt of an
undertaking satisfactory to the Association by or on behalf of the recipient to
repay such amount unless it is ultimately determined that he is entitled to
indemnification under this paragraph. The rights of indemnification provided in
this paragraph shall be in addition to any rights to which any Director, officer
or employee may otherwise be entitled by contract or as a matter of law.
<PAGE>
Every person who shall act as a Director, officer or employee of this
Association shall be conclusively presumed to be doing so in reliance upon the
right of indemnification provided for in this paragraph.
ELEVENTH. These Articles of Association may be amended at any regular or
--------
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
<PAGE>
[Logo]
EXHIBITS 2, 3
Comptroller of the Currency
Administrator of National Banks
Washington, D.C. 20219
CERTIFICATE
I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of al National Banking
Associations.
2. "Bank One, National Association, "Columbus, Ohio, (Charter No. 7621) is a
National banking Association formed under the laws of the Untied States and is
authorized thereunder to transact the business of banking and exercise Fiduciary
Powers on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto subscribed my
name and caused my seal of office to be affixed to
these presents at the Treasury Department in the City
of Washington and District of Columbia, this 12/th/ day
of April, 1999.
/s/ John D. Hawke, Jr.
-------------------------------
Comptroller of the Currency
[SEAL OF COMPTROLLER]
<PAGE>
Exhibit 4
BY-LAWS
-------
OF
--
BANK ONE, NATIONAL ASSOCIATION
------------------------------
ARTICLE I
---------
MEETING OF SHAREHOLDERS
-----------------------
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the Shareholders of
- ----------------------------
the Bank for the election of Directors and for the transaction of such business
as may properly come before the meeting shall be held at its main banking house,
or other convenient place duly authorized by the Board of Directors, on the
third Monday of January of each year, or on the next succeeding banking day, if
the day fixed falls on a legal holiday. If from any cause, an election of
directors is not made on the day fixed for the regular meeting of shareholders
or, in the event of a legal holiday, on the next succeeding banking day, the
Board of Directors shall order the election to be held on some subsequent day,
as soon thereafter as practicable, according to the provisions of law; and
notice thereof shall be given in the manner herein provided for the annual
meeting. Notice of such annual meeting shall be given by or under the direction
of the Secretary or such other officer as may be designated by the Chief
Executive Officer by first-class mail, postage prepaid, to all shareholders of
record of the Bank at their respective addresses as shown upon the books of the
Bank mailed not less than ten days prior to the date fixed for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of this
- ------------------------------
Bank may be called at any time by the Board of Directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock of
this Bank. The notice of any special meeting of the shareholders called by the
Board of Directors, stating the time, place and purpose of the meeting, shall be
given by or under the direction of the Secretary, or such other officer as is
designated by the Chief Executive Officer, by first-class mail, postage prepaid,
to all shareholders of
<PAGE>
record of the Bank at their respective addresses as shown upon the books of the
Bank, mailed not less than ten days prior to the date fixed for such meeting.
Any special meeting of shareholders shall be conducted and its proceedings
recorded in the manner prescribed in these Bylaws for annual meetings of
shareholders.
SECTION 1.03. SECRETARY OF SHAREHOLDERS' MEETING. The Board of Directors may
- ------------------------------------------------
designate a person to be the Secretary of the meetings of shareholders. In the
absence of a presiding officer, as designated in these Bylaws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a Secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as Secretary
of the meeting.
The Secretary of the meetings of shareholders shall cause the returns made
by the judges and election and other proceedings to be recorded in the minute
book of the Bank. The presiding officer shall notify the directors-elect of
their election and to meet forthwith for the organization of the new board.
The minutes of the meeting shall be signed by the presiding officer and
the Secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many as
- --------------------------------
three shareholders to be judges of the election, who shall hold and conduct the
same, and who shall, after the election has been held, notify, in writing over
their signatures, the secretary of the shareholders' meeting of the result
thereof and the names of the Directors elected; provided, however, that upon
failure for any reason of any judge or judges of election, so appointed by the
directors, to serve, the presiding officer of the meeting shall appoint other
shareholders or their proxies to fill the vacancies. The judges of election at
the request of the chairman of the meeting, shall act as tellers of any other
vote by ballot taken at such meeting, and shall notify, in writing over their
signatures, the secretary of the Board of Directors of the result thereof.
<PAGE>
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
- ---------------------
record, who is qualified to vote under the provisions of Federal Law, shall have
the right to vote the number of shares of record in his name for as many persons
as there are Directors to be elected, or to cumulate such shares as provided by
Federal Law. In deciding all other questions at meetings of shareholders, each
shareholder shall be entitled to one vote on each share of stock of record in
his name. Shareholders may vote by proxy duly authorized in writing. All proxies
used at the annual meeting shall be secured for that meeting only, or any
adjournment thereof, and shall be dated, and if not dated by the shareholder,
shall be dated as of the date of receipt thereof. No officer or employee of this
Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
- --------------------
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting less
than a quorum may, without further notice, adjourn the meeting from time to time
until a quorum is obtained. A majority of the votes cast shall decide every
question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
<PAGE>
ARTICLE II
----------
DIRECTORS
---------
SECTION 2.01. MANAGEMENT OF THE BANK. The business of the Bank shall be managed
- ------------------------------------
by the Board of Directors. Each director of the Bank shall be the beneficial
owner of a substantial number of shares of BANC ONE CORPORATION and shall be
employed either in the position of Chief Executive Officer or active leadership
within his or her business, professional or community interest which shall be
located within the geographic area in which the Bank operates, or as an
executive officer of the Bank. A director shall not be eligible for nomination
and re-election as a director of the Bank if such person's executive or
leadership position within his or her business, professional or community
interests which qualifies such person as a director of Bank terminates. The age
of 70 is the mandatory retirement age as a director of the Bank. When a person's
eligibility as director of the Bank terminates, whether because of change in
share ownership, position, residency or age, within 30 days after such
termination, such person shall submit his resignation as a director to be
effective at the pleasure of the Board provided, however, that in no event shall
such person be nominated or elected as a director. Provided, however, following
a person's retirement or resignation as a director because of the age
limitations herein set forth with respect to election or re-election as a
director, such person may, in special or unusual circumstances, and at the
discretion of the Board, be elected by the directors as a Director Emeritus of
the Bank for a limited period of time. A Director Emeritus shall have the right
to participate in board meetings but shall be without the power to vote and
shall be subject to re-election by the Board at its organizational meeting
following the Bank's annual meeting of shareholders.
SECTION 2.02. QUALIFICATIONS. Each director shall have the qualification
- ------------------------------
prescribed by law. No person elected a director may exercise any of the powers
of his office until he has taken the oath of such office.
<PAGE>
SECTION 2.03. TERM OF OFFICE/VACANCIES. A director shall hold office until the
- --------------------------------------
annual meeting for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to his prior death,
resignation, or removal from office. Whenever any vacancy shall occur among the
directors, the remaining directors shall constitute the directors of the Bank
until such vacancy is filled by the remaining directors, and any director so
appointed shall hold office for the unexpired term of his or her successor.
Notwithstanding the foregoing, each director shall hold office and serve at the
pleasure of the Board.
SECTION 2.04. ORGANIZATION MEETING. The directors elected by the share- holders
- ----------------------------------
shall meet for organization of the new board at the time fixed by the presiding
officer of the annual meeting. If at the time fixed for such meeting there is no
quorum present, the Directors in attendance may adjourn from time to time until
a quorum is obtained. A majority of the number of Directors elected by the
shareholders shall constitute a quorum for the transaction of business.
SECTION 2.05. REGULAR MEETINGS. The regular meetings of the Board of Directors
- ------------------------------
shall be held on the third Monday of January, April, July and October, which
meetings will be held at 3:30 p.m. When any regular meeting of the Board falls
on a holiday, the meeting shall be held on such other day as the Board may
previously designate or should the Board fail to so designate, on such day as
the Chairman of the Board or President may fix. Whenever a quorum is not
present, the directors in attendance shall adjourn the meeting to a time not
later than the date fixed by the Bylaws for the next succeeding regular meeting
of the Board.
SECTION 2.06. SPECIAL MEETINGS. Special meetings of the Board of Directors shall
- ------------------------------
be held at the call of the Chairman of the Board or President, or at the request
of two or more Directors. Any special meeting may be held at such place in
Franklin County, Ohio, and at such time as may be fixed in the call. Written or
oral notice shall be given to each Director not later than the day next
preceding the day on which special meeting is to be held, which notice may be
waived in writing.
<PAGE>
The presence of a Director at any meeting of the Board shall be deemed a waiver
of notice thereof by him. Whenever a quorum is not present the Directors in
attendance shall adjourn the special meeting from day to day until a quorum is
obtained.
SECTION 2.07. QUORUM. A majority of the Directors shall constitute a quorum at
- --------------------
any meeting, except when otherwise provided by law; but a lesser number may
adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as herein
defined, but at least one-third and not less than two of the authorized number
of Directors are present at a meeting of the Directors, business of the Bank may
be transacted and matters before the Board approved or disapproved by the
unanimous vote of the Directors present.
SECTION 2.08. COMPENSATION. Each member of the Board of Directors shall receive
- --------------------------
such fees for, and transportation expenses incident to, attendance at Board and
Board Committee Meetings and such fees for service as a Director irrespective of
meeting attendance as from time to time are fixed by resolution of the Board;
provided, however, that payment hereunder shall not be made to a Director for
meetings attended and/or Board service which are not for the Bank's sole benefit
and which are concurrent and duplicative with meetings attended or board service
for an affiliate of the Bank for which the Director receives payment; and
provided further, that payment hereunder shall not be made in the case of any
Director in the regular employment of the Bank or of one of its affiliates.
SECTION 2.09. EXECUTIVE COMMITTEE. There shall be a standing committee of the
- ---------------------------------
Board of Directors known as the Executive Committee which shall possess and
exercise, when the Board is not in session, all powers of the Board that may
lawfully be delegated. The Executive Committee shall also exercise the powers of
the Board of Directors in accordance with the Provisions of the "Employees
Retirement Plan" and the "Agreement and Declaration of Trust" as the same now
exist or may be amended hereafter. The Executive Committee shall consist of not
fewer than four board members, including the Chairman of the Board and President
of the
<PAGE>
Bank, one of whom, as hereinafter required by these Bylaws, shall be the Chief
Executive Officer. The other members of the Committee shall be appointed by the
Chairman of the Board or by the President, with the approval of the Board and
shall continue as members of the Executive Committee until their successors are
appointed, provided, however, that any member of the Executive Committee may be
removed by the Board upon a majority vote thereof at any regular or special
meeting of the Board. The Chairman or President shall fill any vacancy in the
Committee by the appointment of another Director, subject to the approval of the
Board of Directors. The regular meetings of the Executive Committee shall be
held on a regular basis as scheduled by the Board of Directors. Special meetings
of the Executive Committee shall be held at the call of the Chairman or
President or any two members thereof at such time or times as may be designated.
In the event of the absence of any member or members of the Committee, the
presiding member may appoint a member or members of the Board to fill the place
or places of such absent member or members to serve during such absence. Not
fewer than three members of the Committee must be present at any meeting of the
Executive Committee to constitute a quorum, provided, however that with regard
to any matters on which the Executive Committee shall vote, a majority of the
Committee members present at the meeting at which a vote is to be taken shall
not be officers of the Bank and, provided further, that if, at any meeting at
which the Chairman of the Board and President are both present, Committee
members who are not officers are not in the majority, then the Chairman of the
Board or President, which ever of such officers is not also the Chief Executive
Officer, shall not be eligible to vote at such meeting and shall not be
recognized for purposes of determining if a quorum is present at such meeting.
When neither the Chairman of the Board nor President are present, the Committee
shall appoint a presiding officer. The Executive Committee shall keep a record
of its proceedings and report its proceedings and the action taken by it to the
Board of Directors.
SECTION 2.10 COMMUNITY REINVESTMENT ACT AND COMPLIANCE POLICY COMMITTEE. There
- -----------------------------------------------------------------------
shall be a standing committee of the Board of Directors known as the Community
Reinvestment Act and Compliance Policy Committee the duties of which shall be,
at least once in each calendar year, to review, develop and recommend
<PAGE>
policies and programs related to the Bank's Community Reinvestment Act
Compliance and regulatory compliance with all existing statutes, rules and
regulations affecting the Bank under state and federal law. Such Committee shall
provide and promptly make a full report of such review of current Bank policies
with regard to Community Reinvestment Act and regulatory compliance in writing
to the Board, with recommendations, if any, which may be necessary to correct
any unsatisfactory conditions. Such Committee may, in its discretion, in
fulfilling its duties, utilize the Community Reinvestment Act officers of the
Bank, Banc One Ohio Corporation and Banc One Corporation and may engage outside
Community Reinvestment Act experts, as approved by the Board, to review, develop
and recommend policies and programs as herein required. The Community
Reinvestment Act and regulatory compliance policies and procedures established
and the recommendations made shall be consistent with, and shall supplement, the
Community Reinvestment Act and regulatory compliance programs, policies and
procedures of Banc One Corporation and Banc One Ohio Corporation. The Community
Reinvestment Act and Compliance Policy Committee shall consist of not fewer than
four board members, one of whom shall be the Chief Executive Officer and a
majority of whom are not officers of the Bank. Not fewer than three members of
the Committee, a majority of whom are not officers of the Bank, must be present
to constitute a quorum. The Chairman of the Board or President of the Bank,
whichever is not the Chief Executive Officer, shall be an ex officio member of
the Community Reinvestment Act and Compliance Policy Committee. The Community
Reinvestment Act and Compliance Policy Committee, whose chairman shall be
appointed by the Board, shall keep a record of its proceedings and report its
proceedings and the action taken by it to the Board of Directors.
SECTION 2.11. TRUST COMMITTEES. There shall be two standing Committees known
- ---------------------------------
as the Trust Management Committee and the Trust Examination Committee appointed
as hereinafter provided.
SECTION 2.12. OTHER COMMITTEES. The Board of Directors may appoint such
- --------------------------------
special committees from time to time as are in its judgment necessary in the
interest of the Bank.
<PAGE>
ARTICLE III
-----------
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
----------------------------------------
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
- --------------------------------------------
(a) The officers of the Bank shall include a President, Secretary and
Security Officer and may include a Chairman of the Board, one or
more Vice Chairmen, one or more Vice Presidents (which may include
one or more Executive Vice Presidents and/or Senior Vice
Presidents) and one or more Assistant Secretaries, all of whom
shall be elected by the Board. All other officers may be elected
by the Board or appointed in writing by the Chief Executive
Officer. The salaries of all officers elected by the Board shall
be fixed by the Board. The Board from time-to-time shall designate
the President or Chairman of the Board to serve as the Bank's
Chief Executive Officer.
(b) The Chairman of the Board, if any, and the President shall be
elected by the Board from their own number. The President and
Chairman of the Board shall be re-elected by the Board annually at
the organizational meeting of the Board of Directors following the
Annual Meeting of Shareholders. Such officers as the Board shall
elect from their own number shall hold office from the date of
their election as officers until the organization meeting of the
Board of Directors following the next Annual Meeting of
Shareholders, provided, however, that such officers may be
relieved of their duties at any time by action of the Board in
which event all the powers incident to their office shall
immediately terminate.
(c) Except as provided in the case of the elected officers who are
members of the Board, all officers, whether elected or appointed,
shall hold office at the pleasure of the Board. Except as
otherwise limited by law or these Bylaws, the Board assigns to
Chief Executive Officer and/or his
<PAGE>
designees the authority to appoint and dismiss any elected or
appointed officer or other member of the Bank's management staff
and other employees of the Bank, as the person in charge of and
responsible for any branch office, department, section, operation,
function, assignment or duty in the Bank.
(d) The management staff of the Bank shall include officers elected by
the Board, officers appointed by the Chief Executive Officer, and
such other persons in the employment of the Bank who, pursuant to
written appointment and authorization by a duly authorized officer
of the Bank, perform management functions and have management
responsibilities. Any two or more offices may be held by the same
person except that no person shall hold the office of Chairman of
the Board and/or President and at the same time also hold the
office of Secretary.
(e) The Chief Executive Officer of the Bank and any other officer of
the Bank, to the extent that such officer is authorized in writing
by the Chief Executive Officer, may appoint persons other than
officers who are in the employment of the Bank to serve in
management positions and in connection therewith, the appointing
officer may assign such title, salary, responsibilities and
functions as are deemed appropriate by him, provided, however,
that nothing contained herein shall be construed as placing any
limitation on the authority of the Chief Executive Officer as
provided in this and other sections of these Bylaws.
SECTION 3.02. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Bank
- -------------------------------------
shall have general and active management of the business of the Bank and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. Except as otherwise prescribed or limited by these Bylaws, the Chief
Executive Officer shall have full right, authority and power to control all
personnel, including elected and appointed officers, of the Bank, to employ or
direct the
<PAGE>
employment of such personnel and officers as he may deem necessary, including
the fixing of salaries and the dismissal of them at pleasure, and to define and
prescribe the duties and responsibility of all Officers of the Bank, subject to
such further limitations and directions as he may from time-to-time deem proper.
The Chief Executive Officer shall perform all duties incident to his office and
such other and further duties, as may, from time-to-time, be required of him by
the Board of Directors or the shareholders. The specification of authority in
these Bylaws wherever and to whomever granted shall not be construed to limit in
any manner the general powers of delegation granted to the Chief Executive
Officer in conducting the business of the Bank. The Chief Executive Officer or,
in his absence, the Chairman of the Board or President of the Bank, as
designated by the Chief Executive Officer, shall preside at all meetings of
shareholders and meetings of the Board. In the absence of the Chief Executive
Officer, such officer as is designated by the Chief Executive Officer shall be
vested with all the powers and perform all the duties of the Chief Executive
Officer as defined by these Bylaws. When designating an officer to serve in his
absence, the Chief Executive Officer shall select an officer who is a member of
the Board of Directors whenever such officer is available.
SECTION 3.03. POWERS OF OFFICERS AND MANAGEMENT STAFF. The Chief Executive
- -----------------------------------------------------
Officer, the Chairman of the Board, the President, and those officers so
designated and authorized by the Chief Executive Officer are authorized for an
on behalf of the Bank, and to the extent permitted by law, to make loans and
discounts; to purchase or acquire drafts, notes, stock, bonds, and other
securities for investment of funds held by the Bank; to execute and purchase
acceptances; to appoint, empower and direct all necessary agents and attorneys;
to sign and give any notice required to be given; to demand payment and/or to
declare due for any default any debt or obligation due or payable to the Bank
upon demand or authorized to be declared due; to foreclose any mortgages, to
exercise any option, privilege or election to forfeit, terminate, extend or
renew any lease; to authorize and direct any proceedings for the collection of
any money or for the enforcement of any right or obligation; to adjust, settle
and compromise all claims of every kind and description in favor of or against
the Bank, and to give receipts, releases and discharges therefor; to borrow
money and in connection therewith to make, execute and deliver
<PAGE>
notes, bonds or other evidences of indebtedness; to pledge or hypothe- cate any
securities or any stocks, bonds, notes or any property real or personal held or
owned by the Bank, or to rediscount any notes or other obligations held or owned
by the Bank, to employ or direct the employment of all personnel, including
elected and appointed officers, and the dismissal of them at pleasure, and in
furtherance of and in addition to the powers herein above set forth to do all
such acts and to take all such proceedings as in his judgment are necessary and
incidental to the operation of the Bank.
Other persons in the employment of the Bank, including but not limited to
officers and other members of the management staff, may be authorized by the
Chief Executive Officer, or by an officer so designated and authorized by the
Chief Executive Officer, to perform the powers set forth above, subject,
however, to such limitations and conditions as are set forth in the
authorization given to such persons.
SECTION 3.04. SECRETARY. The Secretary or such other officers as may be
- -----------------------
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Chief Executive
Officer or the Board of Directors as Assistant Secretary to perform the duties
of the Secretary.
SECTION 3.05. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
- ------------------------------------
the Board, President, any officer being a member of the Bank's management staff
who is also a person in charge of and responsible for any department within the
Bank and any other officer to the extent such officer is so designated and
authorized by the Chief Executive Officer, the Chairman of the Board, the
President, or any other officer who is a member of the Bank's management staff
who is in charge of and responsible for any department within the Bank, are
hereby authorized on behalf of the Bank to sell, assign, lease, mortgage,
transfer, deliver and convey any real or personal property now or hereafter
owned by or standing in the name of the Bank or its nominee, or held by this
Bank as collateral security, and to execute and deliver such deeds, contracts,
leases, assignments, bills of sale, transfers or other
<PAGE>
papers or documents as may be appropriate in the circumstances; to execute any
loan agreement, security agreement, commitment letters and financing statements
and other documents on behalf of the Bank as a lender; to execute purchase
orders, documents and agreements entered into by the Bank in the ordinary course
of business, relating to purchase, sale, exchange or lease of services, tangible
personal property, materials and equipment for the use of the Bank; to execute
powers of attorney to perform specific or general functions in the name of or on
behalf of the Bank; to execute promissory notes or other instruments evidencing
debt of the Bank; to execute instruments pledging or releasing securities for
public funds, documents submitting public fund bids on behalf of the Bank and
public fund contracts; to purchase and acquire any real or personal property
including loan portfolios and to execute and deliver such agreements, contracts
or other papers or documents as may be appropriate in the circumstances; to
execute any indemnity and fidelity bonds, proxies or other papers or documents
of like or different character necessary, desirable or incidental to the conduct
of its banking business; to execute and deliver settlement agreements or other
papers or documents as may be appropriate in connection with a dismissal
authorized by Section 3.01(c) of these Bylaws; to execute agreements,
instruments, documents, contracts or other papers of like or difference
character necessary, desirable or incidental to the conduct of its banking
business; and to execute and deliver partial releases from and discharges or
assignments of mortgages, financing statements and assignments or surrender of
insurance policies, now or hereafter held by this Bank.
The Chief Executive Officer, Chairman of the Board, President, any officer
being a member of the Bank's management staff who is also a person in charge of
and responsible for any department within the Bank, and any other officer of the
Bank so designated and authorized by the Chief Executive Officer, Chairman of
the Board, President or any officer who is a member of the Bank's management
staff who is in charge of and responsible for any department within the Bank are
authorized for and on behalf of the Bank to sign and issue checks, drafts, and
certificates of deposit; to sign and endorse bills of exchange, to sign and
countersign foreign and domestic letters of credit, to receive and receipt for
payments of principal, interest, dividends, rents, fees and payments of every
kind and description paid to the Bank, to sign receipts for property acquired by
or entrusted to the Bank, to guarantee the genuineness of signatures on
assignments of stocks, bonds or other securities, to sign certifications of
<PAGE>
checks, to endorse and deliver checks, drafts, warrants, bills, notes,
certificates of deposit and acceptances in all business transactions of the
Bank.
Other persons in the employment of the Bank and of its subsidiaries,
including but not limited to officers and other members of the management staff,
may be authorized by the Chief Executive Officer, Chairman of the Board,
President or by an officer so designated by the Chief Executive Officer,
Chairman of the Board, or President to perform the acts and to execute the
documents set forth above, subject, however, to such limitations and conditions
as are contained in the authorization given to such person.
SECTION 3.06. PERFORMANCE BOND. All officers and employees of the Bank shall
- --------------------------------
be bonded for the honest and faithful performance of their duties for such
amount as may be prescribed by the Board of Directors.
<PAGE>
ARTICLE IV
----------
TRUST DEPARTMENT
----------------
SECTION 4.01. TRUST DEPARTMENT. Pursuant to the fiduciary powers granted to this
- ------------------------------
Bank under the provisions of Federal Law and Regulations of the Comptroller of
the Currency, there shall be maintained a separate Trust Department of the Bank,
which shall be operated in the manner specified herein.
SECTION 4.02. TRUST MANAGEMENT COMMITTEE. There shall be a standing Committee
- ----------------------------------------
known as the Trust Management Committee, consisting of at least five members, a
majority of whom shall not be officers of the Bank. The Committee shall consist
of the Chairman of the Board who shall be Chairman of the Com- mittee, the
President, and at least three other Directors appointed by the Board of
Directors and who shall continue as members of the Committee until their
successors are appointed. Any vacancy in the Trust Management Committee may be
filled by the Board at any regular or special meeting. In the event of the
absence of any member or members, such Committee may, in its discretion, appoint
members of the Board to fill the place of such absent members to serve during
such absence. Three members of the Committee shall constitute a quorum. Any
member of the Committee may be removed by the Board by a majority vote at any
regular or special meeting of the Board. The Committee shall meet at such times
as it may determine or at the call of the Chairman, or President or any two
members thereof.
The Trust Management Committee, under the general direction of the Board
of Directors, shall supervise the policy of the Trust Department which shall be
formulated and executed in accordance with Law, Regulations of the Comptroller
of the Currency, and sound fiduciary principles.
<PAGE>
SECTION 4.03. TRUST EXAMINATION COMMITTEE. There shall be a standing Commit- tee
- -----------------------------------------
known as the Trust Examination Committee, consisting of three directors
appointed by the Board of Directors and who shall continue as members of the
committee until their successors are appointed. Such members shall not be active
officers of the Bank. Two members of the Committee shall constitute a quorum.
Any member of the Committee may be removed by the Board by a majority vote at
any regular or special meeting of the Board. The Committee shall meet at such
times as it may determine or at the call of two members thereof.
This Committee shall, at least once during each calendar year and within
fifteen months of the last such audit, or at such other time(s) as may be
required by Regulations of the Comptroller of the Currency, make suitable audits
of the Trust Department or cause suitable audits to be made by auditors
responsible only to the Board of Directors, and at such time shall ascertain
whether the Department has been administered in accordance with Law, Regulations
of the Comptroller of the Currency and sound fiduciary principles.
The Committee shall promptly make a full report of such audits in writing
to the Board of Directors of the Bank, together with a recommendation as to what
action, if any, may be necessary to correct any unsatisfactory condition. A
report of the audits together with the action taken thereon shall be noted in
the Minutes of the Board of Directors and such report shall be a part of the
records of this Bank.
SECTION 4.04. MANAGEMENT. The Trust Department shall be under the management and
- ------------------------
supervision of an officer of the Bank or of the trust affiliate of the Bank
designated by and subject to the advice and direction of the Chief Executive
Officer. Such officer having supervisory responsibility over the Trust
Department shall do or cause to be done all things necessary or proper in
carrying on the business of the Trust Department in accordance with provisions
of law and applicable regulations.
<PAGE>
SECTION 4.05. HOLDING OF PROPERTY. Property held by the Trust Department may
- ---------------------------------
be carried in the name of the Bank in its fiduciary capacity, in the name of
Bank, or in the name of a nominee or nominees.
SECTION 4.06. TRUST INVESTMENTS. Funds held by the Bank in a fiduciary capacity
- -------------------------------
awaiting investment or distribution shall not be held uninvested or
undistributed any longer than is reasonable for the proper management of the
account and shall be invested in accordance with the instrument establishing a
fiduciary relationship and local law. Where such instrument does not specify the
character or class of investments to be made and does not vest in the Bank any
discretion in the matter, funds held pursuant to such instrument shall be
invested in any investment which corporate fiduciaries may invest under local
law.
The investments of each account in the Trust Department shall be kept
separate from the assets of the Bank, and shall be placed in the joint custody
or control of not less than two of the officers or employees of the Bank or of
the trust affiliate of the Bank designated for the purpose by the Trust
Management Committee.
SECTION 4.07. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
- ------------------------------------
the Board, President, any officer of the Trust Department, and such other
officers of the trust affiliate of the Bank as are specifically designated and
authorized by the Chief Executive Officer, the President, or the officer in
charge of the Trust Department, are hereby authorized, on behalf of this Bank,
to sell, assign, lease, mortgage, transfer, deliver and convey any real property
or personal property and to purchase and acquire any real or personal property
and to execute and deliver such agreements, contracts, or other papers and
documents as may be appropriate in the circumstances for property now or
hereafter owned by or standing in the name of this Bank, or its nominee, in any
fiduciary capacity, or in the name of any principal for whom this Bank may now
or hereafter be acting under a power of attorney, or as agent and to execute and
deliver partial releases from any discharges or assignments or mortgages and
assignments or surrender of insurance policies, to execute and deliver deeds,
contracts, leases, assignments, bills of
<PAGE>
sale, transfers or such other papers or documents as may be appropriate in the
circumstances for property now or hereafter held by this Bank in any fiduciary
capacity or owned by any principal for whom this Bank may now or hereafter be
acting under a power of attorney or as agent; to execute and deliver settlement
agreements or other papers or documents as may be appropriate in connection with
a dismissal authorized by Section 3.01(c) of these Bylaws; provided that the
signature of any such person shall be attested in each case by any officer of
the Trust Department or by any other person who is specifically authorized by
the Chief Executive Officer, the President or the officer in charge of the Trust
Department.
The Chief Executive Officer, Chairman of the Board, President, any officer
of the Trust Department and such other officers of the trust affiliate of the
Bank as are specifically designated and authorized by the Chief Executive
Officer, the President, or the officer in charge of the Trust Department, or any
other person or corporation as is specifically authorized by the Chief Executive
Officer, the President or the officer in charge of the Trust Department, are
hereby authorized on behalf of this Bank, to sign any and all pleadings and
papers in probate and other court proceedings, to execute any indemnity and
fidelity bonds, trust agreements, proxies or other papers or documents of like
or different character necessary, desirable or incidental to the appointment of
the Bank in any fiduciary capacity and the conduct of its business in any
fiduciary capacity; also to foreclose any mortgage, to execute and deliver
receipts for payments of principal, interest, dividends, rents, fees and
payments of every kind and description paid to the Bank; to sign receipts for
property acquired or entrusted to the Bank; also to sign stock or bond
certificates on behalf of this Bank in any fiduciary capacity and on behalf of
this Bank as transfer agent or registrar; to guarantee the genuineness of
signatures on assignments of stocks, bonds or other securities, and to
authenticate bonds, debentures, land or lease trust certificates or other forms
of security issued pursuant to any indenture under which this Bank now or
hereafter is acting as Trustee. Any such person, as well as such other persons
as are specifically authorized by the Chief Executive Officer or the officer in
charge of the Trust Department, may sign checks, drafts and orders for the
payment of money executed by the Trust Department in the course of its business.
<PAGE>
SECTION 4.08. VOTING OF STOCK. The Chairman of the Board, President, any officer
- -----------------------------
of the Trust Department, any officer of the trust affiliate of the Bank and such
other persons as may be specifically authorized by Resolution of the Trust
Management Committee or the Board of Directors, may vote shares of stock of a
corporation of record on the books of the issuing company in the name of the
Bank or in the name of the Bank as fiduciary, or may grant proxies for the
voting of such stock of the granting if same is permitted by the instrument
under which the Bank is acting in a fiduciary capacity, or by the law applicable
to such fiduciary account. In the case of shares of stock which are held by a
nominee of the Bank, such shares may be voted by such person(s) authorized by
such nominee.
<PAGE>
ARTICLE V
---------
STOCKS AND STOCK CERTIFICATES
-----------------------------
SECTION 5.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
- --------------------------------
evidenced by certificates which shall bear the signature of the Chairman of the
Board, the President, or a Vice President (which signature may be engraved,
printed or impressed), and shall be signed manually by the Secretary, or any
other officer appointed by the Chief Executive Officer for that purpose.
In case any such officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such before such
certificate is issued, it may be issued by the Bank with the same effect as if
such officer had not ceased to be such at the time of its issue. Each such
certificate shall bear the corporate seal of the Bank, shall recite on its fact
that the stock represented thereby is transferable only upon the books of the
Bank properly endorsed and shall recite such other information as is required by
law and deemed appropriate by the Board. The corporate seal may be facsimile
engraved or printed.
SECTION 5.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank shall be
- --------------------------------------
transferable only upon the stock transfer books of the Bank and except as
hereinafter provided, no transfer shall be made or new certificates issued
except upon the surrender for cancellation of the certificate or certificates
previously issued therefor. In the case of the loss, theft, or destruction of
any certificate, a new certificate may be issued in place of such certificate
upon the furnishing of any affidavit setting forth the circumstances of such
loss, theft, or destruction and indemnity satisfactory to the Chairman of the
Board, the President, or a Vice President. The Board of Directors, or the Chief
Executive Officer, may authorize the issuance of a new certificate therefor
without the furnishing of indemnity. Stock Transfer Books, in which all
transfers of stock shall be recorded, shall be provided.
<PAGE>
The stock transfer books may be closed for a reasonable period and under
such conditions as the Board of Directors may at any time determine for any
meeting of shareholders, the payment of dividends or any other lawful purpose.
In lieu of closing the transfer books, the Board may, in its discretion, fix a
record date and hour constituting a reasonable period prior to the day
designated for the holding of any meeting of the shareholders or the day
appointed for the payment of any dividend or for any other purpose at the time
as of which shareholders entitled to notice of and to vote at any such meeting
or to receive such dividend or to be treated as shareholders for such other
purpose shall be determined, and only shareholders of record at such time shall
be entitled to notice of or to vote at such meeting or to receive such dividends
or to be treated as shareholders for such other purpose.
<PAGE>
ARTICLE VI
----------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 6.01. SEAL. The impression made below is an impression of the seal
- ------------------
adopted by the Board of Directors of Bank One, National Association. The Seal
may be affixed by any officer of the Bank to any document executed by an
authorized officer on behalf of the Bank, and any officer may certify any act,
proceedings, record, instrument or authority of the Bank.
SECTION 6.02. BANKING HOURS. Subject to ratification by the Executive Committee,
- ---------------------------
the Bank and each of its Branches shall be open for business on such days and
during such hours as the Chief Executive Officer of the Bank shall, from time to
time, prescribe.
SECTION 6.03. MINUTE BOOK. The organization papers of this Bank, the Articles of
- -------------------------
Association, the returns of the judges of elections, the Bylaws and any
amendments thereto, the proceedings of all regular and special meetings of the
shareholders and of the Board of Directors, and reports of the committees of the
Board of Directors shall be recorded in the minute book of the Bank. The minutes
of each such meeting shall be signed by the presiding officer and attested by
the secretary of the meetings.
SECTION 6.04. AMENDMENT OF BY-LAWS. These Bylaws may be amended by vote of a
- -----------------------------------
majority of the Directors.
<PAGE>
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
CONSENT
-------
The undersigned, designated to act as Trustee under the Indenture for Huntsman
ICI Chemicals LLC described in the attached Statement of Eligibility and
Qualification, does hereby consent that reports of examinations by Federal,
State, Territorial, or District Authorities may be furnished by such authorities
to the Commission upon the request of the Commission.
This Consent is given pursuant to the provision of Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Bank One, NA
Dated: August 12, 1999 By: /s/ David B. Knox
-------------------
Authorized Signer
<PAGE>
EXHIBIT 7
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin (1)___________ 0081 977.157 1.a
b. Interest-bearing balances (2)____________________________________ 0071 2.800 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B column A)________ 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)_____ 1773 3,284,179 2.b
3. Federal funds sold and securities purchased under agreements to resell____ 1350 2,948,288 3
4. Loans and lease financing receivables: RCFD
----
a. Loans and leases, net of unearned income (from Schedule RC-C)____ 2122 20,187,154 4.a
b. LESS: Allowance for loan and lease losses________________________ 3123 351,697 4.b
c. LESS: Allocated transfer risk reserve____________________________ 3128 0 4.c
d. Loans and leases, net of unearned income. RCFD
____________________ ----
allowance, and reserve (item 4.a minus 4.b and 4.c)______________ 2125 19,835,457 4.d
5. Trading assets (from Schedule RC-D)____ 3545 0 5.
6. Premises and fixed assets (including capitalized leases)____ 2145 358,221 6.
7. Other real estate owned (from Schedule RC-M)____ 2150 14,281 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule
RC-M)_______________________________________________________________ 2130 194,877 8.
9. Customers' liability to this bank on acceptances outstanding____ 2155 0 9.
10. Intangible assets (from Schedule RC-M)____ 2143 87,725 10.
11. Other assets (from Schedule RC-F)____ 2160 1,521,370 11.
12. Total assets (sum of items 1 through 11)____ 2170 29,224,355 12.
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading
2
<PAGE>
Schedule RC - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
13. Deposits: RCON
----
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E part 1) 2200 14,551,186 13.a
RCON
(1) Noninterest-bearing (1) ______________________________________ ----
(2) Interest-bearing______________________________________________ 6631 3,416,531 13.a.1
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs 6636 11,134,655 13.a.2
(from Schedule RC-E part II)
RCFN RCFN 1,041,215 13.b
(1) Noninterest-bearing __________________________________________ ---- ----
(2) Interest-bearing______________________________________________ 6631 0 2200 13.b1
6636 1,041,215 RCFD 13.b2
------------------ ----
14. Federal funds purchased and securities sold under agreements to repurchase__________ 2800 6,263,621 14
RCON
----
15. a. Demand notes issued to the U.S. Treasury____ 2840 60,000 15.a
RCFD
----
b. Trading liabilities (from Schedule RC-D)________________________ 3548 0 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized
leases):
a. With a remaining maturity of one year or less___________________ 2332 698,209 16.a
b. With a remaining maturity of more than one year through three years_______ A547 53,603 16.b
c. With a remaining maturity of more than three years A548 591,556 16.c
17. Not applicable ___________________
18. Bank's liability on acceptances executed and outstanding____ 2920 0 18
19. Subordinated notes and debentures (2)____ 3200 829,193 19
20. Other liabilities (from Schedule RC-G)____ 2930 3,176,168 20
21. Total liabilities (sum of items 13 through 20)____ 2948 27,264,751 21
22. Not applicable
EQUITY CAPITAL ___________________
23. Perpetual preferred stock and related surplus____ 3838 0 23
24. Common stock____ 3230 127,044 24
25. Surplus (exclude all surplus related to preferred stock)____ 3839 1,099,382 25
26. a. Undivided profits and capital reserves____ 3632 760,498 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities____ 3434 (27,320) 26.b
c. Accumulated not gains (losses) on cash flow hedges___________________ 4336 0 26.c
27. Cumulative foreign currency translation adjustments____ 3284 0 27
28. Total equity capital (sum of items 23 through 27)____ 3210 1,959,604 28
29. Total liabilities and equity capital (sum of items 21 and 28)____ 3300 29,224,355 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes
the most comprehensive level of auditing work performed for the bank by independent RCFD Number
----
external auditors as of any date during 1998______________________________________________ 6724 N/A M.1
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
3
<PAGE>
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CIK> 0001089748
<NAME> HUNTSMAN ICI CHEMICALS LLC
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 2-MOS 10-MOS YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 FEB-28-1997 DEC-31-1997 DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1996 JAN-01-1997 MAR-01-1997 JAN-01-1998 JAN-01-1998
<PERIOD-END> DEC-31-1996 FEB-28-1997 DEC-31-1997 DEC-31-1998 MAR-31-1998
<CASH> 0 0 10,093 2,574 0
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 0 0 49,038 50,497 0
<ALLOWANCES> 0 0 0 0 0
<INVENTORY> 0 0 23,102 19,687 0
<CURRENT-ASSETS> 0 0 83,862 73,620 0
<PP&E> 0 0 412,188 422,596 0
<DEPRECIATION> 0 0 16,920 37,505 0
<TOTAL-ASSETS> 0 0 593,672 577,633 0
<CURRENT-LIABILITIES> 0 0 43,449 43,253 0
<BONDS> 0 0 454,573 427,562 0
0 0 67,682 71,909 0
0 0 0 0 0
<COMMON> 0 0 0 0 0
<OTHER-SE> 0 0 25,396 30,645 0
<TOTAL-LIABILITY-AND-EQUITY> 0 0 593,672 577,633 0
<SALES> 404,653 52,457 307,861 286,161 73,767
<TOTAL-REVENUES> 415,077 61,009 348,527 338,669 85,949
<CGS> 377,173 64,935 300,051 276,538 72,018
<TOTAL-COSTS> 396,124 66,732 308,128 284,398 74,505
<OTHER-EXPENSES> 0 0 (581) (1,913) (233)
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 0 0 35,985 40,925 10,433
<INCOME-PRETAX> 18,953 (5,723) 4,995 15,259 1,244
<INCOME-TAX> 6,643 (2,035) 1,917 5,783 467
<INCOME-CONTINUING> 12,310 (3,688) 3,078 9,476 777
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 12,310 (3,688) 3,078 9,476 777
<EPS-BASIC> 0 0 0 0 0
<EPS-DILUTED> 0 0 0 0 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
HUNTSMAN ICI CHEMICALS LLC
Offer for all Outstanding
10 1/8% Senior Subordinated Notes due 2009
Denominated in Dollars
in Exchange for
10 1/8% Senior Subordinated Notes due 2009
Denominated in Dollars
That Have Been Registered Under
the Securities Act of 1933, as amended,
Pursuant to the Prospectus, dated , 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT NEW YORK CITY
TIME, ON , 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
Bank One, N.A.
By Hand Delivery or Overnight Courier:
Bank One Trust Company, NA
Corporate Trust Operations, OH1-0184
235 West Schrock Rd.
Westerville, OH 43081
Attention: Lora Marsch - Confidential
By Mail:
Bank One Trust Company, NA
Corporate Trust Operations, OH1-0184
P.O. Box 710184
Columbus, OH 43271-0184
Attn: Lora Marsch - Confidential
By Facsimile Transmission:
(for Eligible Institutions Only)
614-248-9987
Confirm by Telephone:
800-346-5153
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY OF THIS LETTER OF TRANSMITTAL.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1999 (the "Prospectus"), of Huntsman ICI Chemicals
LLC, a Delaware limited liability company (the "Issuer") and this Letter of
Transmittal (the "Letter of Transmittal" or the "Letter"), which together
constitute the Issuer's offer (the "Exchange Offer") to exchange an aggregate
principal amount of up to $600,000,000 of the Issuer's 10 1/8% Senior
Subordinated Notes due 2009 that have been registered under the Securities Act
of 1933, as amended (the "New Notes"), for a like principal amount denominated
in dollars, in the aggregate, of the Issuer's issued and outstanding 10 1/8%
Senior Subordinated Notes due 2009 (the "Old Notes") from the registered holders
thereof. This Letter does not relate to the Issuer's EU200,000,000 10 1/8%
Senior Subordinated Notes due 2009. Holders of euro-denominated notes will
receive a separate Letter of Transmittal relating to those euro-denominated
notes and, accordingly, should not list their euro-denominated notes on this
Letter.
<PAGE>
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid. Accordingly, registered holders of New Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid. Old Notes accepted for exchange
will cease to accrue interest from and after the date of consummation of the
Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange
will not receive any payment in respect of accrued interest on such Old Notes
otherwise payable on any interest payment date the record date for which occurs
on or after consummation of the Exchange Offer.
This Letter is to be completed by a holder of Old Notes either if
certificates for such Old Notes are to be forwarded herewith or if a tender is
to be made by book-entry transfer to the account maintained by Bank One, N.A.,
as Exchange Agent for the Exchange Offer (the "Exchange Agent"), at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in "The Exchange Offer--Book-Entry Transfers" section of
the Prospectus and an Agent's Message is not delivered. Tenders by book-entry
transfer may also be made by delivering an Agent's Message in lieu of this
Letter. The term "Agent's Message" means a message, transmitted by the Book-
Entry Transfer Facility to and received by the Exchange Agent and forming a part
of a Book-Entry Confirmation (as defined below), which states that the Book-
Entry Transfer Facility has received an express acknowledgment from the
tendering participant, which acknowledgment states that such participant has
received and agrees to be bound by this Letter and that the Issuer may enforce
this Letter against such participant. Holders of Old Notes whose certificates
are not immediately available, or who are unable to deliver their certificates
or confirmation of the book-entry tender of their Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, must tender their Old Notes according
to the guaranteed delivery procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures" section of the Prospectus. See Instruction 1.
Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Old Notes should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES 1 2 3
- ------------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered holder(s) Certificate Aggregate Principal
(Please fill in, if blank) Number(s)* Principal Amount
Amount of Tendered**
Old Note(s)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old Notes represented by the Old
Notes indicated in column 2. See Instruction 2. Old Notes tendered hereby must be in denominations of principal amount of $1,000 and
any integral multiple thereof. See Instruction 1.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
2
<PAGE>
Name of Tendering Institution _____________________________________________
Account Number___________________ Transaction Code Number ____________
By crediting the Old Notes to the Exchange Agent's account at the Book-
Entry Transfer Facility's Automated Tender Offer Program ("ATOP") and by
complying with applicable ATOP procedures with respect to the Exchange Offer,
including transmitting to the Exchange Agent a computer-generated Agent's
Message in which the holder of the Old Notes acknowledges and agrees to be bound
by the terms of, and makes the representations and warranties contained in, the
Letter, the participant in the Book-Entry Transfer Facility confirms on behalf
of itself and the beneficial owners of such Old Notes all provisions of this
Letter (including all representations and warranties) applicable to it and such
beneficial owner as fully as if it had completed the information required herein
and executed and transmitted this Letter to the Exchange Agent.
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered holder(s) ___________________________________________
Window Ticket Number (if any) _____________________________________________
Date of Execution of Notice of Guaranteed Delivery ________________________
Name of Institution Which Guaranteed Delivery _____________________________
If Delivered by Book-entry Transfer, Complete the Following:
Account Number ____________________________________________________________
Transaction Code Number ___________________________________________________
Name of Tendering Institution _____________________________________________
[_] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: __________________________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of market-
making activities or other trading activities, it acknowledges that it will
deliver a prospectus meeting the requirements of the Securities Act of 1933, as
amended, in connection with any resale of such New Notes; however, by so
acknowledging and by delivering such a prospectus the undersigned will not
3
<PAGE>
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended. If the undersigned is a broker-dealer that
will receive New Notes, it represents that the Old Notes to be exchanged for the
New Notes were acquired as a result of market-making activities or other trading
activities.
4
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Issuer the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Issuer all right, title and interest
in and to such Old Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Old Notes, with full power of substitution, among other
things, to cause the Old Notes to be assigned, transferred and exchanged. The
undersigned hereby represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Old Notes, and to acquire
New Notes issuable upon the exchange of such tendered Old Notes, and that, when
the same are accepted for exchange, the Issuer will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Issuer. The undersigned hereby further represents that any New Notes
acquired in exchange for Old Notes tendered hereby will have been acquired in
the ordinary course of business of the person receiving such New Notes, whether
or not such person is the undersigned, that neither the holder of such Old Notes
nor such other person has any arrangement or understanding with any person to
participate in the distribution of such New Notes and that neither the holder of
such Old Notes nor any such other person is an "affiliate," as defined in Rule
405 under the Securities Act of 1933, as amended (the "Securities Act"), of the
Issuer.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Old Notes may be offered for resale, resold and otherwise transferred by
holders or other persons receiving the New Notes thereof (other than any such
holder or other person that is an "affiliate" of the Issuer 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 business of the person receiving
such New Notes, whether or not such person is the holder, and neither the holder
nor such other person has any arrangement or understanding with any person to
participate in the distribution of such New Notes. However, the SEC has not
considered the Exchange Offer in the context of a no-action letter and there can
be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offer as in other circumstances. If the
undersigned is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of New Notes and
has no arrangement or understanding to participate in a distribution of New
Notes. If any holder is an affiliate of the Issuer, is engaged in or intends to
engage in or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such holder (i) could not rely on the applicable interpretations of the staff of
the SEC and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
If the undersigned is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes, it represents that the Old Notes to be
exchanged for the New Notes were acquired by it as a result of market-making
activities or other trading activities and acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Notes; however, by so acknowledging and by delivering a
prospectus meeting the requirements of the Securities Act, the undersigned will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
5
<PAGE>
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Issuer to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section
of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
<TABLE>
<S> <C>
- ------------------------------------------------------------ ------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
- ------------------------------------------------------------ ------------------------------------------------------------
To be completed ONLY if certificates for Old Notes not
exchanged and/or New Notes are to be issued in the name of
someone other than the person or persons whose signature(s)
appear(s) on this Letter above, or if Old Notes delivered To be completed ONLY if certificates for Old Notes
by book-entry transfer which are not accepted for not exchanged and/or New Notes are to be sent to someone
exchange are to be returned by credit to an account other than the person or persons whose signature(s)
maintained at the Book-Entry Transfer Facility other appear(s) on this Letter above or to such person or
than the account indicated above. persons at an address other than shown in the box
entitled "Description of Old Notes" on this Letter above.
Issue: New Notes and/or Old Notes to:
Name(s)................................................
(Please Type or Print) Mail: New Notes and/or Old Notes to:
.......................................................
(Please Type or Print)
Address................................................ Name(s)..............................................
(Please Type or Print)
.......................................................
(Zip Code)
(Complete Substitute Form W-9)
.....................................................
(Please Type or Print)
Credit unexchanged Old Notes delivered by
book-entry transfer to the Book-Entry Transfer
Facility account set forth below.
Address................................................
- -------------------------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable) .......................................................
(Zip Code)
- ------------------------------------------------------------ ------------------------------------------------------------
</TABLE>
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO MIDNIGHT, NEW
YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
6
<PAGE>
- --------------------------------------------------------------------------------
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Dated:..................................................., 1999
x ......................................................, 1999
x ......................................................, 1999
Signature(s) of Owner Date
Area Code and Telephone Number...................
This Letter must be signed by the registered Holder(s) as the name(s)
appear(s) on the certificate(s) for the Old Notes hereby tendered or on a
security position, on listing or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s):............................................
....................................................
(Please Type or Print)
Capacity:...........................................
Address:............................................
....................................................
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution: ................................
(Authorized Signature)
.........................................................
.........................................................
(Title)
.........................................................
(Name And Firm)
Dated: ........................................, 1999
- --------------------------------------------------------------------------------
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
DENOMINATED IN DOLLARS
OF HUNTSMAN ICI CHEMICALS LLC IN EXCHANGE FOR THE
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
DENOMINATED IN DOLLARS
THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by holders of Old Notes either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfers" section of the Prospectus and an Agent's Message is
not delivered. Tenders by book-entry transfer may also be made by delivering an
Agent's Message in lieu of this Letter. The term "Agent's Message" means a
message, transmitted by the Book-Entry Transfer Facility to and received by the
Exchange Agent and forming a part of a Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of Transmittal and
that the Issuer may enforce the Letter of Transmittal against such participant.
Certificates for all physically tendered Old Notes, or Book-Entry Confirmation,
as the case may be, as well as a properly completed and duly executed Letter (or
manually signed facsimile hereof or Agent's Message in lieu thereof) and any
other documents required by this Letter, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date, or the
tendering holder must comply with the guaranteed delivery procedures set forth
below. Old Notes tendered hereby must be in denominations of principal amount of
$1,000 and any integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution,
(ii) prior to p.m., New York City time, on the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form
provided by the Issuer (by telegram, telex, 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 (3) 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, together with a
properly completed and duly executed Letter (or facsimile thereof or Agent's
Message in lieu thereof) with any required signature guarantees and any other
documents required by this Letter 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, together with a properly completed and duly executed Letter (or
facsimile thereof or Agent's Message in lieu thereof) with any required
signature guarantees and all other documents required by this Letter, are
received by the Exchange Agent within three (3) NYSE trading days after the date
of execution of the Notice of Guaranteed Delivery. An "Eligible Institution" is
a firm which is a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer
8
<PAGE>
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchanges Medallion Program.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be
registered mail, properly insured, with return receipt requested, made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to p.m., New York City time, on the Expiration
Date. No Letters of Transmittal or Old Notes should be sent directly to the
Issuer.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not applicable to holders who tender by book-entry
transfer).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of Old
Notes--Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Old Notes will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this Letter, promptly after the
Expiration Date. ALL OF THE OLD NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE
DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the holder of the Old Notes tendered hereby,
the signature must correspond exactly with the name as written on the face of
the certificates or on the Book-Entry Transfer Facility's security position
listing as the holder of such Old Notes without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
written instrument or instruments of transfer or exchange are required. If,
however, the Old Notes are registered in the name of a person other than a
signer of the Letter, the Old Notes surrendered for exchange must be endorsed
by, or be accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by the Issuer in its sole
discretion, duly executed by the registered national securities exchange with
the signature thereon guaranteed by an Eligible Institution.
If this Letter is signed by a person or persons other than the registered
holder or holders of Old Notes, such Old Notes must be endorsed or accompanied
by appropriate powers of attorney, in either case signed exactly as the name or
names of the registered holder or holders that appear on the Old Notes.
If this Letter or any Old Notes or powers of attorneys are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Issuer,
proper evidence satisfactory to the Issuer of their authority to so act must be
submitted with the Letter.
9
<PAGE>
Endorsements on certificates for Old Notes or signatures on powers of
attorneys required by this instruction 3 must be guaranteed by an Eligible
Institution.
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Old Notes) who has not completed
the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this letter, or (ii) for the account of an Eligible
Institution.
4. Special Issuance and Delivery Instructions
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Holders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such holder may designate hereon. If no such instructions are given,
such Old Notes not exchanged will be returned to the name and address of the
person signing this Letter.
5. Taxpayer Identification Number.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Issuer (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering holder who is an individual, is his or
her social security number. If the Issuer is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering holder of New Notes may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Exchange Agent a completed Form W-8,
Certificate of Foreign Status. If the Old Notes are in more than one name or are
not in the name of the actual owner, such holder should consult the W-9
Guidelines for information on which TIN to report. If such holder does not have
a TIN, such holder should consult the W-9 Guidelines for instructions on
applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write
10
<PAGE>
"applied for" in lieu of its TIN. Note: Checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. Checking this box also
requires that the holder complete the Certificate of Awaiting Taxpayer
Identification Number form attached to the Substitute Form W-9. If such holder
does not provide its TIN to the Exchange Agent within 60 days, backup
withholding will begin and continue until such holder furnishes its TIN to the
Exchange Agent.
The information requested above should be directed to the Exchange Agent at
the following address:
Delivery To: Bank One, N.A., Exchange Agent
Bank One, N.A.
By Hand Delivery or Overnight Courier:
Bank One Trust Company, NA
Corporate Trust Operations, OH1-0184
235 West Schrock Rd.
Westerville, OH 43081
Attention: Lora Marsch - Confidential
By Mail:
Bank One Trust Company, NA
Corporate Trust Operations, OH1-0184
P.O. Box 710184
Columbus, OH 43271-0184
Attn: Lora Marsch - Confidential
By Facsimile Transmission:
(for Eligible Institutions Only)
614-248-9987
Confirm by Telephone:
800-346-5153
6 Transfer Taxes.
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith. If, however, New Notes are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of the Old Notes tendered, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with this Letter, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for transfer
tax stamps to be affixed to the Old Notes specified in this Letter.
11
<PAGE>
7 Waiver of Conditions.
The Issuer reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to any particular Old Note
either before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer).
8 No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter or an
Agent's Message in lieu thereof, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
Neither the Issuer, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to p.m.,
New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth above prior to
p.m., New York City time, on the Expiration Date. Any such notice of withdrawal
must: (i) specify the name of the person having tendered the Old Notes to be
withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn
(including the principal amount of such Old Notes), and (iii) (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the Depositor. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then prior to the release of such certificates the Depositor
must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such Depositor is an Eligible Institution. If Old
Notes have been tendered pursuant to the procedure for book-entry transfer set
forth in "The Exchange Offer--Book-Entry Transfers" section of the Prospectus,
any notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Issuer, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Any Old Notes that 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 (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 set forth in "The Exchange Offer--Book-
Entry Transfers" section of the Prospectus, such Old Notes will be credited to
an account maintained with the Book-Entry Transfer Facility for the Old Notes)
as soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Old Notes may be retendered by
12
<PAGE>
following the procedures described above at any time on or prior to p.m.,
New York City time, on the Expiration Date.
11. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
13
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: [NAME OF EXCHANGE AGENT]
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY BY TIN:
SIGNING AND DATING BELOW. ___________________________________
Social Security Number Or
SUBSTITUTE Employer Identification Number
- --------------------------------------------------------------------------------------------------------------------
Form W-9 Part 2--TIN Applied For [_]
- --------------------------------------------------------------------------------------------------------------------
Department of the Payor's Request For Taxpayer Identification Number ("Tin") and
Certification
Treasury Internal Revenue CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Service
Payor's Request for (1) the number shown on this form is my correct Taxpayer
Taxpayer Identification Number (or I am waiting for a number to be
Identification Number issued to
("TIN") and (2) I am not subject to backup withholding either because:
Certification (a) I am exempt from backup withholding, or (b) I have
not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends,
or (c) the IRS has notified me that I am no longer subject
to backup withholding, and
(3) any other information provided on this form is true and
correct.
SIGNATURE.........................................
DATE.................................
- --------------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the IRS that
you are subject to backup withholding because of underreporting of interest or dividends on your
tax return and you have not been notified by the IRS that you are no longer subject to backup
withholding.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
---------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application
in the near future. I understand that if I do not provide a taxpayer
identification number by the time of the exchange, 31% of all reportable
payments made to me thereafter will be withheld until I provide a
number.
---------------------------------------------------------------------------
14
<PAGE>
---------------------------------------------------------------------------
Signature Date
---------------------------------------------------------------------------
15
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY FOR
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
DENOMINATED IN DOLLARS OF
HUNTSMAN ICI CHEMICALS LLC
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Huntsman ICI Chemicals LLC (the "Issuer) made pursuant to the
Prospectus, dated , 1999 (the "Prospectus"), if certificates
for the outstanding 10 1/8% Senior Subordinated Notes due 2009 denominated in
dollars of the Issuer (the "Old Notes") are not immediately available or if the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach Bank One, N.A., as exchange
agent (the "Exchange Agent") prior to p.m., New York City time, on the
Expiration Date of the Exchange Offer. Such form may be delivered or transmitted
by facsimile transmission, mail or hand delivery to the Exchange Agent as set
forth below. Capitalized terms not defined herein are defined in the Prospectus.
Delivery To:
Bank One, N.A., Exchange Agent
By Hand Delivery or Overnight Courier:
Bank One Trust Company, NA
Corporate Trust Operations, OH1-0184
235 West Schrock Rd.
Westerville, OH 43081
Attention: Lora Marsch - Confidential
By Mail:
Bank One Trust Company, NA
Corporate Trust Operations, OH1-0184
P.O. Box 710184
Columbus, OH 43271-0184
Attn: Lora Marsch - Confidential
By Facsimile Transmission:
(for Eligible Institutions Only)
614-248-9987
Confirm by Telephone:
800-346-5153
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus, the undersigned
hereby tenders to the Issuer the principal amount of Old Notes set forth below
pursuant to the guaranteed delivery procedure described in "The Exchange Offer--
Guaranteed Delivery Procedures" section of the Prospectus.
Principal Amount of Old Notes Tendered:*
$_____________________________________________
If Old Notes will be delivered
Certificate Nos. (if available): by book-entry transfer to The
Depository Trust Company,
provide account number.
Total Principal Amount Represented by
Old Notes Certificate(s): Account Number_______________
$___________________________________________
________________________________________________________________________________
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
________________________________________________________________________________
PLEASE SIGN HERE
X __________________________ _________
X __________________________ _________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:_______________________
Must be signed by the Holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered Holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
Please print name(s) and address(es)
Name(s): _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Capacity: _________________________________________________________________
Address(es): _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible 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
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed Letter of Transmittal (or facsimile thereof
or Agent's Message in lieu thereof) with any required signature guarantees and
any other documents required by the Letter of Transmittal, will be received by
the Exchange Agent at the address set forth above, within three (3) New York
Stock Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and the Old Notes tendered hereby to the Exchange Agent within the time period
set forth above and that failure to do so could result in a financial loss to
the undersigned.
_______________________________________
Name of Firm Authorized Signature
_______________________________________
Address Title
Name:__________________________________
Zip Code (Please Type or Print)
Area Code and Tel. No._______________ Dated:_________________________________
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES
FOR OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY
EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99.3
LETTER OF TRANSMITTAL
HUNTSMAN ICI CHEMICALS LLC
Offer for all Outstanding
10 1/8% Senior Subordinated Euro Notes due 2009
Denominated in Euros
in Exchange for
10 1/8% Senior Subordinated Euro Notes due 2009
Denominated in Euros
That Have Been Registered Under
the Securities Act of 1933, as amended,
Pursuant to the Prospectus, dated , 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT LONDON TIME, ON
, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO MIDNIGHT, LONDON TIME, ON THE EXPIRATION DATE.
- -------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
Bank One, N.A.
By Mail or Hand Delivery or Overnight Courier:
[Name of Exchange Agent]
[Street Address]
[City, State, Zip Code]
Attention: [Authorized Agent] - Confidential
By Facsimile Transmission:
(for Eligible Institutions Only)
[( ) - ]
Confirm by Telephone:
[( ) - ]
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY OF THIS LETTER OF TRANSMITTAL.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1999 (the "Prospectus"), of Huntsman ICI Chemicals LLC, a
Delaware limited liability company (the "Issuer") and this Letter of Transmittal
(the "Letter of Transmittal" or the "Letter"), which together constitute the
Issuer's offer (the "Exchange Offer") to exchange an aggregate principal amount
of up to EU200,000,000 of the Issuer's 10 1/8% Senior Subordinated Notes due
2009 that have been registered under the Securities Act of 1933, as amended (the
"New Notes"), for a like principal amount denominated in euros, in the
aggregate, of the Issuer's issued and outstanding 10 1/8% Senior Subordinated
Notes due 2009 (the "Old Notes") from the registered holders thereof. This
Letter does not relate to the Issuer's $600,000,000 10 1/8% Senior Subordinated
Notes due 2009. Holders of dollar-denominated notes will receive a separate
Letter of Transmittal relating to those dollar-denominated notes and,
accordingly, should not list their dollar-denominated notes on this Letter.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid. Accordingly, registered holders of New Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid. Old Notes accepted for exchange
will cease to accrue interest from and after the date of consummation of the
Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange
will not receive any
<PAGE>
payment in respect of accrued interest on such Old Notes otherwise payable on
any interest payment date the record date for which occurs on or after
consummation of the Exchange Offer.
This Letter is to be completed by a holder of Old Notes either if
certificates for such Old Notes are to be forwarded herewith or if a tender is
to be made by book-entry transfer to the account maintained by Bank One, N.A.,
as Exchange Agent for the Exchange Offer (the "Exchange Agent"), at Euroclear or
Cedelbank (the "Book-Entry Transfer Facility") pursuant to the procedures set
forth in "The Exchange Offer--Book-Entry Transfers" section of the Prospectus
and an Agent's Message is not delivered. Tenders by book-entry transfer may also
be made by delivering an Agent's Message in lieu of this Letter. The term
"Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility to and received by the Exchange Agent and forming a part of a Book-
Entry Confirmation (as defined below), which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the tendering participant,
which acknowledgment states that such participant has received and agrees to be
bound by this Letter and that the Issuer may enforce this Letter against such
participant. Holders of Old Notes whose certificates are not immediately
available, or who are unable to deliver their certificates or confirmation of
the book-entry tender of their Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter to the Exchange Agent on or prior to the
Expiration Date, must tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus. See Instruction 1.
Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Old Notes should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES 1 2 3
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name(s) and Address(es) of Registered Certificate Aggregate Principal
holder(s) Number(s)* Principal Amount
(Please fill in, if blank) Amount of Tendered**
Old Note(s)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old
Notes represented by the Old Notes indicated in column 2. See Instruction 2. Old Notes tendered hereby must
be in denominations of principal amount of EU1,000 and any integral multiple thereof. See Instruction 1.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution____________________________________________
Account Number____________________ Transaction Code Number____________
By crediting the Old Notes to the Exchange Agent's account at the Book-
Entry Transfer Facility's Automated Tender Offer Program ("ATOP") and by
complying with applicable ATOP procedures with
2
<PAGE>
respect to the Exchange Offer, including transmitting to the Exchange Agent a
computer-generated Agent's Message in which the holder of the Old Notes
acknowledges and agrees to be bound by the terms of, and makes the
representations and warranties contained in, the Letter, the participant in the
Book-Entry Transfer Facility confirms on behalf of itself and the beneficial
owners of such Old Notes all provisions of this Letter (including all
representations and warranties) applicable to it and such beneficial owner as
fully as if it had completed the information required herein and executed and
transmitted this Letter to the Exchange Agent.
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered holder(s)____________________________________________
Window Ticket Number (if any)______________________________________________
Date of Execution of Notice of Guaranteed Delivery_________________________
Name of Institution Which Guaranteed Delivery______________________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number_____________________________________________________________
Transaction Code Number____________________________________________________
Name of Tendering Institution______________________________________________
[_] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:___________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of market-
making activities or other trading activities, it acknowledges that it will
deliver a prospectus meeting the requirements of the Securities Act of 1933, as
amended, in connection with any resale of such New Notes; however, by so
acknowledging and by delivering such a prospectus the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933, as amended. If the undersigned is a broker-dealer that will receive
New Notes, it represents that the Old Notes to be exchanged for the New Notes
were acquired as a result of market-making activities or other trading
activities.
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Issuer the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Issuer all right, title and interest
in and to such Old Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Old Notes, with full power of substitution, among other
things, to cause the Old Notes to be assigned, transferred and exchanged. The
undersigned hereby represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Old Notes, and to acquire
New Notes issuable upon the exchange of such tendered Old Notes, and that, when
the same are accepted for exchange, the Issuer will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Issuer. The undersigned hereby further represents that any New Notes
acquired in exchange for Old Notes tendered hereby will have been acquired in
the ordinary course of business of the person receiving such New Notes, whether
or not such person is the undersigned, that neither the holder of such Old Notes
nor such other person has any arrangement or understanding with any person to
participate in the distribution of such New Notes and that neither the holder of
such Old Notes nor any such other person is an "affiliate," as defined in Rule
405 under the Securities Act of 1933, as amended (the "Securities Act"), of the
Issuer.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Old Notes may be offered for resale, resold and otherwise transferred by
holders or other persons receiving the New Notes thereof (other than any such
holder or other person that is an "affiliate" of the Issuer 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 business of the person receiving
such New Notes, whether or not such person is the holder, and neither the holder
nor such other person has any arrangement or understanding with any person to
participate in the distribution of such New Notes. However, the SEC has not
considered the Exchange Offer in the context of a no-action letter and there can
be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offer as in other circumstances. If the undersigned
is not a broker-dealer, the undersigned represents that it is not engaged in,
and does not intend to engage in, a distribution of New Notes and has no
arrangement or understanding to participate in a distribution of New Notes. If
any holder is an affiliate of the Issuer, is engaged in or intends to engage in
or has any arrangement or understanding with respect to the distribution of the
New Notes to be acquired pursuant to the Exchange Offer, such holder (i) could
not rely on the applicable interpretations of the staff of the SEC and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. If the undersigned is
a broker-dealer that will receive New Notes for its own account in exchange for
Old Notes, it represents that the Old Notes to be exchanged for the New Notes
were acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus meeting the
requirements of the Securities Act, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
4
<PAGE>
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Issuer to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section
of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
<TABLE>
<CAPTION>
------------------------------------------------------------- ----------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
- --------------------------------------------------------------- ----------------------------------------------------------
<S> <C>
To be completed ONLY if certificates for Old Notes not
exchanged and/or New Notes are to be issued in the name of
someone other than the person or persons whose signature(s) To be completed ONLY if certificates for Old
appear(s) on this Letter above, or if Old Notes delivered by Notes not exchanged and/or New Notes are to be sent
book-entry transfer which are not accepted for exchange are to to someone other than the person or persons whose
be returned by credit to an account maintained at the signature(s) appear(s) on this Letter above or to such
Book-Entry Transfer Facility other than the account indicated person or persons at an address other than shown in the
above. box entitled "Description of Old Notes" on this
Letter above.
Issue: New Notes and/or Old Notes to:
Name(s)...............................................
(Please Type or Print) Mail: New Notes and/or Old Notes to:
......................................................
(Please Type or Print)
Name(s)................................................
Address................................................ (Please Type or Print)
....................................................... ........................................................
(Zip Code) (Please Type or Print)
(Complete Substitute Form W-9)
Credit unexchanged Old Notes delivered by book-entry transfer
to the Book-Entry Transfer Facility account set forth below.
Address..................................................
- ---------------------------------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable) .........................................................
(Zip Code)
- ---------------------------------------------------------------- --------------------------------------------------------------
</TABLE>
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO MIDNIGHT, LONDON TIME,
ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
5
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 on reverse side)
Dated:.................................................................., 1999
x ......................................................................, 1999
x ......................................................................, 1999
Signature(s) of Owner Date
Area Code and Telephone Number....................................
This Letter must be signed by the registered Holder(s) as the name(s)
appear(s) on the certificate(s) for the Old Notes hereby tendered or on a
security position, on listing or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s):......................................................
..............................................................
(Please Type or Print)
Capacity:.....................................................
Address:......................................................
..............................................................
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:.............................................
(Authorized Signature)
.....................................................................
(Title)
.....................................................................
(Name and Firm)
Dated: ......................................................., 1999
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer for the
10 1/8% Senior Subordinated Euro Notes due 2009
Denominated in Euros
of Huntsman ICI Chemicals LLC in Exchange for the
10 1/8% Senior Subordinated Euro Notes due 2009
Denominated in Euros
That Have Been Registered Under the
Securities Act of 1933, As Amended
1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures.
This Letter is to be completed by holders of Old Notes either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer-Book-Entry Transfers" section of the Prospectus and an Agent's Message is
not delivered. Tenders by book-entry transfer may also be made by delivering an
Agent's Message in lieu of this Letter. The term "Agent's Message" means a
message, transmitted by the Book-Entry Transfer Facility to and received by the
Exchange Agent and forming a part of a Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of Transmittal and
that the Issuer may enforce the Letter of Transmittal against such participant.
Certificates for all physically tendered Old Notes, or Book-Entry Confirmation,
as the case may be, as well as a properly completed and duly executed Letter (or
manually signed facsimile hereof or Agent's Message in lieu thereof) and any
other documents required by this Letter, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date, or the
tendering holder must comply with the guaranteed delivery procedures set forth
below. Old Notes tendered hereby must be in denominations of principal amount of
EU1,000 and any integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer-
Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to such
procedures, (i) such tender must be made through an Eligible Institution, (ii)
prior to p.m., London time, on the Expiration Date, the Exchange Agent
must receive from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Issuer (by telegram, telex, 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 (3) 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, together with a properly
completed and duly executed Letter (or facsimile thereof or Agent's Message in
lieu thereof) with any required signature guarantees and any other documents
required by this Letter 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, together with a properly completed and duly executed Letter (or
facsimile thereof or Agent's Message in lieu thereof) with any required
signature guarantees and all other documents required by this Letter, are
received by the Exchange Agent within three (3) NYSE trading days after the date
of execution of the Notice of Guaranteed Delivery. An "Eligible Institution" is
a firm which is a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer
7
<PAGE>
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchanges Medallion Program.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be
registered mail, properly insured, with return receipt requested, made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to p.m., London time, on the Expiration Date. No
Letters of Transmittal or Old Notes should be sent directly to the Issuer.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not applicable to holders who tender by book-entry
transfer).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of Old
Notes-Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Old Notes will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this Letter, promptly after the
Expiration Date. All of the Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the holder of the Old Notes tendered hereby,
the signature must correspond exactly with the name as written on the face of
the certificates or on the Book-Entry Transfer Facility's security position
listing as the holder of such Old Notes without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
written instrument or instruments of transfer or exchange are required. If,
however, the Old Notes are registered in the name of a person other than a
signer of the Letter, the Old Notes surrendered for exchange must be endorsed
by, or be accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by the Issuer in its sole
discretion, duly executed by the registered national securities exchange with
the signature thereon guaranteed by an Eligible Institution.
If this Letter is signed by a person or persons other than the registered
holder or holders of Old Notes, such Old Notes must be endorsed or accompanied
by appropriate powers of attorney, in either case signed exactly as the name or
names of the registered holder or holders that appear on the Old Notes.
If this Letter or any Old Notes or powers of attorneys are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Issuer,
proper evidence satisfactory to the Issuer of their authority to so act must be
submitted with the Letter.
8
<PAGE>
Endorsements on certificates for Old Notes or signatures on powers of
attorneys required by this Instruction 3 must be guaranteed by an Eligible
Institution.
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Old Notes) who has not completed
the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
4. Special Issuance and Delivery Instructions
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Holders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such holder may designate hereon. If no such instructions are given,
such Old Notes not exchanged will be returned to the name and address of the
person signing this Letter.
5. Taxpayer Identification Number.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Issuer (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering holder who is an individual, is his or
her social security number. If the Issuer is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering holder of New Notes may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Exchange Agent a completed Form W-8,
Certificate of Foreign Status. If the Old Notes are in more than one name or are
not in the name of the actual owner, such holder should consult the W-9
Guidelines for information on which TIN to report. If such holder does not have
a TIN, such holder should consult the W-9 Guidelines for instructions on
applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write
"applied for" in lieu of its TIN. Note: Checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or that
such holder intends
9
<PAGE>
to apply for one in the near future. Checking this box also requires that the
holder complete the Certificate of Awaiting Taxpayer Identification Number form
attached to the Substitute Form W-9. If such holder does not provide its TIN to
the Exchange Agent within 60 days, backup withholding will begin and continue
until such holder furnishes its TIN to the Exchange Agent.
The information requested above should be directed to the Exchange Agent at
the following address:
Delivery To: Bank One, N.A., Exchange Agent
By Mail or Hand Delivery or Overnight Courier:
[Name of Exchange Agent]
[Street Address]
[City, State, Zip Code]
Attention: [Authorized Agent] - Confidential
By Facsimile Transmission:
(for Eligible Institutions Only)
[( ) - ]
Confirm by Telephone:
[( ) - ]
6. Transfer Taxes.
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith. If, however, New Notes are to be
delivered to, or are to be issued in the name of, any person other than the
registered holder of the Old Notes tendered, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with this Letter, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for transfer
tax stamps to be affixed to the Old Notes specified in this Letter.
7. Waiver of Conditions.
The Issuer reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to any particular Old Note
either before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer).
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter or an
Agent's Message in lieu thereof, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
10
<PAGE>
Neither the Issuer, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to p.m.,
London time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth above prior to
p.m., London time, on the Expiration Date. Any such notice of
withdrawal must: (i) specify the name of the person having tendered the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the principal amount of such Old Notes), and (iii) (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the Depositor. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then prior to the release of such certificates the Depositor
must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such Depositor is an Eligible Institution. If Old
Notes have been tendered pursuant to the procedure for book-entry transfer set
forth in "The Exchange Offer--Book-Entry Transfers" section of the Prospectus,
any notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Issuer, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Any Old Notes that 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 (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 set forth in "The Exchange Offer--Book-Entry
Transfers" section of the Prospectus, such Old Notes will be credited to an
account maintained with the Book-Entry Transfer Facility for the Old Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following the
procedures described above at any time on or prior to p.m., London time,
on the Expiration Date.
11. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
11
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: [NAME OF EXCHANGE AGENT]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Part 1--PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY BY TIN:
SIGNING AND DATING BELOW. _________________________________
Social Security Number or
SUBSTITUTE Employer Identification Number
-----------------------------------------------------------------------------------------------
Form W-9 Part 2-TIN Applied For [_]
- --------------------------------------------------------------------------------------------------------------
Department of Payor's Request For Taxpayer Identification Number ("TIN") and Certification
the
Treasury
Internal CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Revenue
Service
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am
Payor's waiting for a number to be issued to
Request for
Taxpayer (2) I am not subject to backup withholding either because: (a) I am exempt from backup
Identification withholding, or (b) I have not been notified by the Internal Revenue Service (the
("TIN") and "IRS") that I am subject to backup withholding as a result of a failure to report all
Certification interest or dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE.................................................
DATE.................................
- ------------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the IRS
that you are subject to backup withholding because of underreporting of interest or
dividends on your tax return and you have not been notified by the IRS that you are no
longer subject to backup withholding.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
Signature Date
12
<PAGE>
EXHIBIT 99.4
NOTICE OF GUARANTEED DELIVERY FOR
10 1/8% SENIOR SUBORDINATED NOTES DUE 2009
DENOMINATED IN EUROS OF
HUNTSMAN ICI CHEMICALS LLC
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Huntsman ICI Chemicals LLC (the "Issuer) made pursuant to the
Prospectus, dated , 1999 (the "Prospectus"), if
certificates for the outstanding 10 1/8% Senior Subordinated Notes due 2009
denominated in euros of the Issuer (the "Old Notes") are not immediately
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach Bank One,
N.A., as exchange agent (the "Exchange Agent") prior to p.m., London time,
on the Expiration Date of the Exchange Offer. Such form may be delivered or
transmitted by facsimile transmission, mail or hand delivery to the Exchange
Agent as set forth below. Capitalized terms not defined herein are defined in
the Prospectus.
Delivery To: Bank One, N.A., Exchange Agent
By Mail or Hand Delivery or Overnight Courier:
[Name of Exchange Agent]
[Street Address]
[City, State, Zip Code]
Attention: [Authorized Agent] - Confidential
By Facsimile Transmission:
(for Eligible Institutions Only)
[( ) - ]
Confirm by Telephone:
[( ) - ]
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus, the undersigned
hereby tenders to the Issuer the principal amount of Old Notes set forth below
pursuant to the guaranteed delivery procedure described in "The Exchange Offer--
Guaranteed Delivery Procedures" section of the Prospectus.
Principal Amount of Old Notes Tendered:*
EU_______________________________________
If Old Notes will be delivered by
Certificate Nos. (if available): book-entry transfer to The Depository
Trust Company, provide account number.
Total Principal Amount Represented by
Old Notes Certificate(s): Account Number _______________________
EU_______________________________________
________________________________________________________________________________
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
________________________________________________________________________________
PLEASE SIGN HERE
X ____________________________ _______
X ____________________________ _______
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number: ____________________
Must be signed by the Holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered Holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
Please print name(s) and address(es)
Name(s): ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
Capacity: ___________________________________________________________________
Address(es): ___________________________________________________________________
__________________________________________________________________
_________________________________________________________________
_____________________
*Must be in denominations of principal amount of EU1,000 and any integral
multiple thereof.
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible 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
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed Letter of Transmittal (or facsimile thereof
or Agent's Message in lieu thereof) with any required signature guarantees and
any other documents required by the Letter of Transmittal, will be received by
the Exchange Agent at the address set forth above, within three (3) New York
Stock Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and the Old Notes tendered hereby to the Exchange Agent within the time period
set forth above and that failure to do so could result in a financial loss to
the undersigned.
____________________________________________
Name of Firm Authorized Signature
____________________________________________
Address Title
Name: ______________________________________
Zip Code (Please Type or Print)
Area Code and Tel. No. __________ Dated: _____________________________________
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES
FOR OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY
EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99.5
HUNTSMAN ICI CHEMICALS LLC
Offer for all Outstanding
10 1/8% Senior Subordinated Notes due 2009
in Exchange for
10 1/8% Senior Subordinated Notes due 2009
That Have Been Registered Under
the Securities Act of 1933,
As Amended
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Huntsman ICI Chemicals LLC (the "Issuer") is offering, upon and subject to
the terms and conditions set forth in the prospectus dated , 1999 (the
"Prospectus"), and the enclosed letters of transmittal (the "Letters of
Transmittal"), to exchange (the "Exchange Offer") their 10 1/8% Senior
Subordinated Notes due 2009 that have been registered under the Securities Act
of 1933, as amended, for their outstanding 10 1/8% Senior Subordinated Notes due
2009 (the "Old Notes"). The Exchange Offer is being made in order to satisfy
certain obligations of the Issuer contained in the exchange and registration
rights agreement in respect of the Old Notes, dated June 30, 1999, by and among
the Issuer and the initial purchasers referred to therein.
We are requesting that you contact your clients for whom you hold Old Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated , 1999;
2. A Letter of Transmittal relating to the Old Notes denominated in
dollars for your use and for the information of your clients;
3. A Letter of Transmittal relating to the Old Notes denominated in euros
for your use and for the information of your clients;
4. A Notice of Guaranteed Delivery relating to the Old Notes denominated
in dollars and a Notice of Guaranteed Delivery relating to the Old Notes
denominated in euros, each of which is to be used to accept the Exchange Offer
if certificates for Old Notes are not immediately available or time will not
permit all required documents to reach the Exchange Agent prior to the relevant
Expiration Date (as defined below) or if the procedure for book-entry transfer
cannot be completed on a timely basis;
<PAGE>
5. A form of letter which may be sent to your clients for whose account
you hold Old Notes registered in your name or the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Exchange Offer; and
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at p.m.,
New York City time, on , 1999 with respect to the Old Notes denominated in
dollars and at p.m., London time, on , 1999 with respect to the Old Notes
denominated in euros, unless, in each case, extended by the Issuer (each, an
"Expiration Date"). Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time before the relevant Expiration Date.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal relating to the proper denomination of Old Notes
(or facsimile thereof or Agent's Message in lieu thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the Old Notes, or a timely
confirmation of a book-entry transfer of such Old Notes, should be delivered to
the Exchange Agent, all in accordance with the instructions set forth in the
Letters of Transmittal and the Prospectus.
If a registered holder of Old Notes desires to tender, but 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 relevant
Expiration Date, or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures."
The Issuer will, upon request, reimburse brokers, dealers, commercial banks
and trust companies for reasonable and necessary costs and expenses incurred by
them in forwarding the Prospectus and the related documents to the beneficial
owners of Old Notes held by them as nominee or in a fiduciary capacity. The
Issuer will not make any payments to brokers, dealers, or others soliciting
acceptances of the Exchange Offer. The Holders will not be obligated to pay or
cause to be paid all stock transfer taxes applicable to the exchange of Old
Notes pursuant to the Exchange Offer.
2
<PAGE>
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to
, the Exchange Agent for the Exchange Offer, at its address and telephone number
set forth on the front of the Letter of Transmittal.
Very truly yours,
Huntsman ICI Chemicals LLC
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE ISSUER OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
3
<PAGE>
EXHIBIT 99.6
HUNTSMAN ICI CHEMICALS LLC
Offer for all Outstanding
10 1/8% Senior Subordinated Notes due 2009
in Exchange for
10 1/8% Senior Subordinated Notes due 2009
That Have Been Registered Under
the Securities Act of 1933,
As Amended
To Our Clients:
Enclosed for your consideration is a prospectus dated , 1999 (the
"Prospectus"), and the related letters of transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Huntsman ICI
Chemicals LLC (the "Issuer") to exchange their 10 1/8% Senior Subordinated Notes
due 2009 that have been registered under the Securities Act of 1933, as amended,
for their outstanding 10 1/8% Senior Subordinated Notes due 2009 (the "Old
Notes"), upon the terms and subject to the conditions described in the
Prospectus and the Letters of Transmittal. The Exchange Offer is being made in
order to satisfy certain obligations of the Issuer contained in the exchange and
registration rights agreement in respect of the Old Notes, dated June 30, 1999,
by and among the Issuer and the initial purchasers referred to therein.
This material is being forwarded to you as the beneficial owner of the Old
Notes held by us for your account but not registered in your name. A tender of
such Old Notes may only be made by us as the holder of record and pursuant to
your instructions.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Notes held by us for your account, pursuant to the terms and
conditions set forth in the enclosed Prospectus and Letters of Transmittal.
Your instructions should be forwarded to us as promptly as possible in order
to permit us to tender the Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at
p.m., New York City time, on , 1999 with respect to the Old Notes
denominated in dollars and at p.m., London time, on , 1999 with
respect to the Old Notes denominated in euros (each, an "Expiration Date"),
unless extended by the Issuer. Any Old Notes tendered pursuant to the Exchange
Offer may be withdrawn at any time before the relevant Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
<PAGE>
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Certain Conditions to
the Exchange Offer."
3. Subject to the terms and conditions in the Prospectus and the Letters of
Transmittal, any transfer taxes incident to the transfer of Old Notes from the
Holder to the Issuer will be paid by the Issuer.
4. The Exchange Offer expires at , New York City time, on ,
1999, with respect to the notes denominated in dollars and at , London
time, on , 1999, with respect to the notes denominated in euros, unless,
in each case, extended by the Issuer.
If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. The Letters of Transmittal are furnished to you for information
only and may not be used directly by you to tender Old Notes.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Huntsman ICI
Chemicals LLC with respect to their Old Notes.
This will instruct you to tender the Old Notes held by you for the account of
the undersigned, upon and subject to the terms and conditions set forth in the
Prospectus and the related Letter of Transmittal.
The undersigned expressly agrees to be bound by the enclosed Letter of
Transmittal and that such Letter of Transmittal may be enforced against the
undersigned.
Please tender the Old Notes held by you for my account as indicated below:
<TABLE>
<CAPTION>
Aggregate Principal Amount of Old Notes
---------------------------------------
<S> <C>
10 1/8% Senior Subordinated Notes due 2009..... $_____________________________________________________
10 1/8% Senior Subordinated Notes due 2009..... EU____________________________________________________
[_] Please do not tender any Old Notes held
by you for my account. ____________________________________________
Dated: ____________________________, 1999 ____________________________________________
Signature(s)
____________________________________________
____________________________________________
Please print name(s) here
____________________________________________
____________________________________________
____________________________________________
Address(es)
____________________________________________
Area Code and Telephone Number
____________________________________________
Tax Identification or Social Security No(s).
</TABLE>
None of the Old Notes held by us for your account will be tendered unless
we receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for your
account.
