<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 16, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ARISTECH CHEMICAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 28 25-1534498
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
600 Grant Street
Pittsburgh, Pennsylvania 15219-2704
(412) 433-2747
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
Mark K. McNally
Senior Vice President, General Counsel
and Corporate Secretary
Aristech Chemical Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219-2704
(412) 433-2747
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPY TO:
Janice C. Hartman, Esq. Norman D. Slonaker, Esq.
Kirkpatrick & Lockhart LLP Brown & Wood LLP
1500 Oliver Building One World Trade Center
Pittsburgh, Pennsylvania 15222 New York, New York 10048
------------------------
Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6 7/8% Notes due 2006........ $150,000,000 100% $150,000,000 $45,455
================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated in accordance with Rule 457.
------------------------
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 16, 1996
PROSPECTUS
ARISTECH CHEMICAL CORPORATION
OFFER TO EXCHANGE ITS
6 7/8% NOTES DUE 2006
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
6 7/8% NOTES DUE 2006
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
------------------------
Aristech Chemical Corporation, a Delaware corporation (the "Company"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus as it may be amended or supplemented from time to time (the
"Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal" and together with this Prospectus, the "Exchange Offer"), to
exchange up to $150,000,000 aggregate principal amount of its 6 7/8% Notes due
2006 (the "New Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a registration statement
(the "Registration Statement") of which this Prospectus is a part, for a like
principal amount of its outstanding 6 7/8% Notes due 2006 (the "Old Notes), of
which $150,000,000 aggregate principal amount is outstanding as of the date
hereof.
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except that (i) the New Notes have been registered under
the Securities Act and therefore will not be subject to certain restrictions on
transfer applicable to the Old Notes and will not be entitled to registration
rights or other rights under the Registration Rights Agreement (as defined
below), (ii) the New Notes will be issuable in minimum denominations of $1,000
compared to minimum denominations of $250,000 for the Old Notes and (iii) the
New Notes will not provide for any increase in the interest rate thereon
pursuant to the Registration Rights Agreement. In that regard, the Old Notes
provide that the interest rate on the Old Notes is subject to adjustment in the
event that (i) a registration statement relating to the Exchange Offer is not
filed with the Securities and Exchange Commission (the "Commission") on or prior
to February 23, 1997, (ii) such registration statement is not declared effective
on or prior to May 24, 1997 or (iii) the Exchange Offer is not consummated or a
registration statement with respect to resale of the Old Notes is not declared
effective on or prior to the earlier of (x) the 30th day following the date on
which such registration statement is declared effective and (y) June 23, 1997.
See "Description of the Old Notes." The New Notes are being offered for exchange
in order to satisfy certain obligations of the Company under the Registration
Rights Agreement, dated as of November 25, 1996 (the "Registration Rights
Agreement"), between the Company and the Initial Purchasers (as defined herein)
of the Old Notes. The Old Notes and the New Notes will constitute a single
series of debt securities under the Indenture (as defined herein). In the event
that the Exchange Offer is consummated, any Old Notes that remain outstanding
after consummation of the Exchange Offer and the New Notes issued in the
Exchange Offer will vote together as a single class for purposes of determining
whether holders of the requisite percentage in outstanding principal amount of
Notes (as defined herein) have taken certain actions or exercised certain rights
under the Indenture. The New Notes and the Old Notes are sometimes collectively
referred to herein as the "Notes" and individually as a "Note." See "Description
of the New Notes" and "Description of the Old Notes."
CONTINUED ON FOLLOWING PAGE
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL ARE FIRST BEING MAILED TO ALL
HOLDERS OF OLD NOTES ON , 1997.
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR INFORMATION THAT SHOULD
BE CONSIDERED IN CONNECTION WITH THIS EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE> 3
Interest on the New Notes is payable semiannually on May 15 and November 15
of each year (each, an "Interest Payment Date"), commencing on the first such
date following the original issuance date of the New Notes. The New Notes will
mature on November 15, 2006. The New Notes are not entitled to any sinking fund
and are not redeemable prior to maturity. The New Notes will constitute
unsecured senior indebtedness of the Company and will rank pari passu with all
other unsecured senior indebtedness of the Company for borrowed money. See
"Capitalization" and "Description of the New Notes."
The Company is making the Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of the Commission as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, the Company has not sought its own interpretive letter and there can be
no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and subject
to the two immediately following sentences, the Company believes that New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such holder's business and that
such holder is not participating, and has no arrangement or understanding with
any person to participate, in a distribution (within the meaning of the
Securities Act) of such New Notes. However, any holder of Old Notes who is an
"affiliate" of the Company or who intends to participate in the Exchange Offer
for the purpose of distributing New Notes, or any broker-dealer who purchased
Old Notes from the Company to resell pursuant to Rule 144A under the Securities
Act ("Rule 144A") or any other available exemption under the Securities Act, (a)
will not be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such Old
Notes in the Exchange Offer and (c) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or other transfer of such Old Notes unless such sale is made pursuant to an
exemption from such requirements. In addition, as described below, if any
broker-dealer holds Old Notes acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Notes for New
Notes, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Notes.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that (i) it is not an
"affiliate" of the Company, (ii) any New Notes to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes, and (iv) if such holder is not
a broker-dealer, such holder is not engaged in, and does not intend to engage
in, a distribution (within the meaning of the Securities Act) of such New Notes.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as a result of market-making activities or other trading activities and
must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. 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. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, the Company believes that broker-dealers who acquired Old
Notes for their own accounts, as a result of market-making or other trading
activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Notes received upon exchange of
such Old Notes (other than Old Notes which represent an unsold allotment from
the original sale of the Old Notes) with a prospectus meeting the requirements
of the Securities Act, which may be the prospectus prepared for an exchange
offer so long as it contains a description of the plan of distribution with
respect to the resale of such New Notes. Accordingly, this Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
New Notes received in exchange for Old Notes where such Old Notes were acquired
by such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities.
2
<PAGE> 4
Subject to certain provisions set forth in the Registration Rights Agreement,
the Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Notes for a period ending 90 days after the
Expiration Date referred to below (subject to extension under certain limited
circumstances described below) or, if earlier, when all such New Notes have been
disposed of by such Participating Broker-Dealer. See "Plan of Distribution."
However, a Participating Broker-Dealer who intends to use this Prospectus in
connection with the resale of New Notes received in exchange for Old Notes
pursuant to the Exchange Offer must notify the Company, or cause the Company to
be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "The Exchange Offer--Exchange Agent." Any
Participating Broker-Dealer who is an "affiliate" of the Company may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer--Resales of New Notes."
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained herein, in light of the circumstances under which they were
made, not misleading or of the occurrence of certain other events specified in
the Registration Rights Agreement, such Participating Broker-Dealer will suspend
the sale of New Notes pursuant to this Prospectus until the Company has amended
or supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be. If the Company gives such notice to suspend the
sale of the New Notes, it shall extend the 90-day period referred to above
during which Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of New Notes by the number of days during the period
from and including the date of the giving of such notice to and including the
date when Participating Broker-Dealers shall have received copies of the amended
or supplemented Prospectus necessary to permit resales of the New Notes or to
and including the date on which the Company has given notice that the sale of
New Notes may be resumed, as the case may be.
The New Notes will be a new issue of securities for which there currently
is no market. Although the Initial Purchasers (as defined herein) have informed
the Company that they each currently intend to make a market in the New Notes,
they are not obligated to do so, and any such market making may be discontinued
at any time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Notes. The Company currently
does not intend to apply for listing of the New Notes on any securities exchange
or for quotation through the National Association of Securities Dealers
Automated Quotation System.
Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same rights and will be subject to
the same limitations applicable thereto under the Indenture (except for those
rights which terminate upon consummation of the Exchange Offer). Following
consummation of the Exchange Offer, the holders of Old Notes will continue to be
subject to the existing restrictions upon transfer thereof and the Company will
have no further obligation to such holders to provide for registration under the
Securities Act of the Old Notes held by them. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Notes could be adversely affected. See "Summary--Certain
Consequences of a Failure to Exchange Old Notes."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
3
<PAGE> 5
Old Notes may be tendered for exchange on or prior to 5:00 p.m., New York
City time, on , 1997 (such time on such date being hereinafter
called the "Expiration Date"), unless the Exchange Offer is extended by the
Company (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended). Tenders of Old Notes may be
withdrawn at any time on or prior to the Expiration Date. The Exchange Offer is
not conditioned upon any minimum principal amount of Old Notes being tendered
for exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Company and to the terms and provisions of
the Registration Rights Agreement. Old Notes may be tendered in whole or in part
in a principal amount of $1,000 and integral multiples thereof, provided that,
if any Old Note is tendered for exchange in part, the untendered principal
amount thereof must be $250,000, or any integral multiple of $1,000 in excess
thereof. The Company has agreed to pay all expenses of the Exchange Offer. See
"The Exchange Offer--Fees and Expenses." Each New Note will bear interest from
the most recent date to which interest has been paid or duly provided for on the
Old Note surrendered in exchange for such New Note or, if no such interest has
been paid or duly provided for on such Old Note, from November 25, 1996. Holders
of the Old Notes whose Old Notes are accepted for exchange will not receive
accrued interest on such Old Notes for any period from and after the last
Interest Payment Date to which interest has been paid or duly provided for on
such Old Notes prior to the original issue date of the New Notes or, if no such
interest has been paid or duly provided for, will not receive any accrued
interest on such Old Notes, and will be deemed to have waived the right to
receive any interest on such Old Notes accrued from and after such Interest
Payment Date or, if no such interest has been paid or duly provided for, from
and after November 25, 1996.
This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Old Notes as of , 1997.
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. No dealer-manager is being used in connection with this
Exchange Offer. See "Use of Proceeds" and "Plan of Distribution."
AVAILABLE INFORMATION
The Company has filed with the Commission the Registration Statement (which
term shall encompass any and all amendments thereto) on Form S-4 under the
Securities Act, with respect to the New Notes offered hereby. This Prospectus,
which is part of the Registration Statement, does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain items of which are omitted in accordance with the
rules and regulations of the Commission. Statements made in this Prospectus as
to the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is hereby
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such reference.
For further information with respect to the Company and the Notes, reference is
hereby made to the Registration Statement and such exhibits and schedules filed
as a part thereof, which may be inspected, without charge, at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at 7 World Trade Center, Suite 1300, New York, New York 10048
and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
all or any portion of the Registration Statement may be obtained from the Public
Reference Section of the Commission, upon payment of prescribed fees. The
Commission maintains a Web site at http://www.sec.gov that contains reports and
information regarding registrants, such as the Company, that file electronically
with the Commission. The Company will provide without charge to each person to
whom a copy of this Prospectus is delivered, upon the request of such person, a
copy of any or all of the contracts, agreements or other documents filed as an
exhibit to the Registration Statement and incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Aristech Chemical Corporation, 600 Grant Street, Pittsburgh, Pennsylvania
15219-2704, Attention: Corporate Secretary.
4
<PAGE> 6
After consummation of the Exchange Offer, the Company will be subject to
the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith will file reports and
other information with the Commission. Any such reports and other information to
be filed by the Company with the Commission may be inspected and copied at the
Public Reference Section of the Commission at the address set forth above, upon
payment of prescribed fees. Pursuant to the Indenture (as defined under
"Description of the New Notes--General"), so long as any of the Notes are
outstanding, and in the event the Company is not required to file information,
documents or reports pursuant to Section 13 or Section 15(d) of the Exchange
Act, the Company will file with the Trustee (as defined under "Description of
the New Notes--General"), in accordance with rules and regulations prescribed
from time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations.
5
<PAGE> 7
SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information and financial statements, including
the notes thereto, contained elsewhere in this Prospectus.
THE COMPANY
Aristech Chemical Corporation (the "Company") is a leading producer and
marketer of chemical and polymer products with total annual rated production
capacity in excess of three billion pounds. The Company's product base includes
phenol and related products; phthalic anhydride ("PA"), 2-ethylhexanol ("2-EH")
and plasticizers; and polypropylene and acrylic sheet. Avonite, Inc.
("Avonite"), a New Mexico-based corporation in which the Company has a 60%
ownership interest, produces and markets solid surface polyester sheet. These
products provide the Company with a diversified revenue base. While many of the
Company's products are considered commodities, the Company's production of
polypropylene and acrylic sheet has been increasingly directed toward more
specialized, higher margin products. There is significant vertical integration
among the Company's products, providing the Company with predictable supplies of
certain of its raw materials. The Company also has a diverse customer base, with
no customer accounting for more than 9% of revenues during 1995. End-use markets
for the Company's products include automotive components, home and office
construction, appliances, modular tubs/showers, whirlpools, spas, apparel,
packaging, medical supplies, signs and a wide range of consumer products.
The Company believes that the proximity of its principal facilities to
sources of raw materials provides it with a competitive cost advantage and an
enhanced ability to maintain production levels. In addition, the Company's West
Virginia polypropylene facility is situated near the important northeastern
United States market. The Company also believes that its disciplined approach to
planned plant maintenance results in highly reliable operations. Each of the
Company's product lines has its own dedicated sales force, which the Company
believes better enables it to address specific customer needs. In addition,
through its Aristech Total Performance approach to management, the Company is
committed to continuous improvement in products and processes using a broad
range of statistical tools. See "The Company."
The Company's strategy is to focus on and expand (i) its core businesses,
consisting principally of the manufacture and sale of products which consume
propylene- and aromatic-based raw materials, which currently are in abundant
supply in the United States; and (ii) its strategic acrylic sheet business,
which sells most of its products in higher margin specialty market segments that
the Company believes have strong growth potential. See "The Company--Business
Strategy."
Mitsubishi Corporation ("MC") beneficially owns 82.3% of the equity of the
Company. The Company is MC's largest chemical investment outside Japan. MC
provides the Company with access to customers and markets globally which would
require substantial resources for the Company to develop independently. In
addition, Mitsubishi Chemical Corporation ("MCC") and Mitsubishi Rayon Co., Ltd.
("MRC"), which are not affiliates of MC, are stockholders of the Company. Both
MCC and MRC are, among other things, chemical producers in Japan, and provide
the Company with access to product technologies not otherwise available to it.
See "Stockholders of the Company."
During 1996, MC, its wholly owned subsidiary, Mitsubishi International
Corporation ("MIC"), and MCC converted to equity an aggregate of $179.6 million
in principal amount of debentures of the Company and $44.9 million in stated
value of preferred stock of the Company, thereby significantly strengthening the
Company's financial position. The remaining $24.4 million in principal amount of
debentures and $6.1 million in stated value of preferred stock held by MRC were
redeemed for cash. See "Pro Forma Condensed Financial Information."
The principal executive office of the Company is located at 600 Grant
Street, Pittsburgh, Pennsylvania 15219-2704. The telephone number is (412)
433-2747.
6
<PAGE> 8
THE EXCHANGE OFFER
The Exchange Offer.............. Up to $150,000,000 aggregate principal
amount of New Notes are being offered in
exchange for a like aggregate principal
amount of Old Notes. Old Notes may be
tendered for exchange in whole or in part in
a principal amount of $1,000 and integral
multiples thereof, provided that, if any Old
Note is tendered for exchange in part, the
untendered principal amount thereof must be
$250,000 or any integral multiple of $1,000
in excess thereof. The Company is making the
Exchange Offer in order to satisfy its
obligations under the Registration Rights
Agreement relating to the Old Notes. For a
description of the procedures for tendering
Old Notes, see "The Exchange Offer
--Procedures for Tendering Old Notes."
Expiration Date................. 5:00 p.m., New York City time, on
, 1997, unless the Exchange Offer is
extended by the Company (in which case the
Expiration Date will be the latest date and
time to which the Exchange Offer is
extended). See "The Exchange Offer--
Expiration Date; Extensions; Amendments."
Certain Conditions to the
Exchange Offer.................. The Exchange Offer is subject to certain
conditions. The Company reserves the right
in its sole and absolute discretion, subject
to applicable law and the terms of the
Registration Rights Agreement, at any time
and from time to time, (i) to delay the
acceptance of the Old Notes for exchange,
(ii) to terminate the Exchange Offer if
certain specified conditions have not been
satisfied, (iii) to extend the Expiration
Date of the Exchange Offer and retain all
Old Notes tendered pursuant to the Exchange
Offer, subject, however, to the right of
holders of Old Notes to withdraw their
tendered Old Notes, or (iv) to waive any
condition or otherwise amend the terms of
the Exchange Offer in any respect. See "The
Exchange Offer-- Expiration Date;
Extensions; Amendments" and "--Certain
Conditions to the Exchange Offer."
Withdrawal Rights............... Tenders of Old Notes may be withdrawn at any
time on or prior to the Expiration Date by
delivering a written notice of such
withdrawal to the Exchange Agent (as defined
herein) in conformity with certain
procedures set forth below under "The
Exchange Offer--Withdrawal Rights."
Procedures for Tendering Old
Notes........................... Tendering holders of Old Notes must complete
and sign a Letter of Transmittal in
accordance with the instructions contained
therein and forward the same by mail,
facsimile or hand delivery, together with
any other required documents, to the
Exchange Agent, either with the Old Notes to
be tendered or in compliance with the
specified procedures for guaranteed delivery
of Old Notes. Certain brokers, dealers,
commercial banks, trust companies and other
nominees may also effect tenders by
book-entry transfer. Holders of Old Notes
registered in the name of a broker, dealer,
commercial bank, trust company or other
nominee are urged to contact such person
promptly if they wish to tender Old Notes
pursuant to the Exchange Offer.
7
<PAGE> 9
See "The Exchange Offer--Procedures for
Tendering Old Notes." Letters of Transmittal
and certificates representing Old Notes
should not be sent to the Company. Such
documents should only be sent to the
Exchange Agent. Questions regarding how to
tender and requests for information should
be directed to the Exchange Agent. See "The
Exchange Offer--Exchange Agent."
Resales of New Notes............ The Company is making the Exchange Offer in
reliance on the position of the staff of the
Division of Corporation Finance of the
Commission as set forth in certain
interpretive letters addressed to third
parties in other transactions. However, the
Company has not sought its own interpretive
letter and there can be no assurance that
the staff of the Division of Corporation
Finance of the Commission would make a
similar determination with respect to the
Exchange Offer as it has in such
interpretive letters to third parties. Based
on these interpretations by the staff of the
Division of Corporation Finance, and subject
to the two immediately following sentences,
the Company believes that New Notes issued
pursuant to the Exchange Offer in exchange
for Old Notes may be offered for resale,
resold and otherwise transferred by a holder
thereof (other than a holder who is a
broker-dealer) without further compliance
with the registration and prospectus
delivery requirements of the Securities Act,
provided that such New Notes are acquired in
the ordinary course of such holder's
business and that such holder is not
participating, and has no arrangement or
understanding with any person to
participate, in a distribution (within the
meaning of the Securities Act) of such New
Notes. However, any holder of Old Notes who
is an "affiliate" of the Company or who
intends to participate in the Exchange Offer
for the purpose of distributing the New
Notes, or any broker-dealer who purchased
the Old Notes from the Company to resell
pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will
not be able to rely on the interpretations
of the staff of the Division of Corporation
Finance of the Commission set forth in the
above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender
such Old Notes in the Exchange Offer and (c)
must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any sale
or other transfer of such Old Notes unless
such sale is made pursuant to an exemption
from such requirements. In addition, as
described below, if any broker-dealer holds
Old Notes acquired for its own account as a
result of market-making or other trading
activities and exchanges such Old Notes for
New Notes, then such broker-dealer must
deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resales of such New
Notes.
Each holder of Old Notes who wishes to
exchange Old Notes for New Notes in the
Exchange Offer will be required to represent
that (i) it is not an "affiliate" of the
Company, (ii) any New Notes to be received
by it are being acquired in
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<PAGE> 10
the ordinary course of its business, (iii)
it has no arrangement or understanding with
any person to participate in a distribution
(within the meaning of the Securities Act)
of such New Notes, and (iv) if such holder
is not a broker-dealer, such holder is not
engaged in, and does not intend to engage
in, a distribution (within the meaning of
the Securities Act) of such New Notes. Each
broker-dealer that receives New Notes for
its own account pursuant to the Exchange
Offer must acknowledge that it acquired the
Old Notes for its own account as the result
of market-making or other trading activities
and must agree that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resale
of such New Notes. 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. Based on the position taken
by the staff of the Division of Corporation
Finance of the Commission in the
interpretive letters referred to above, the
Company believes that broker-dealers who
acquired Old Notes for their own accounts as
a result of market-making or other trading
activities ("Participating Broker-Dealers")
may fulfill their prospectus delivery
requirements with respect to the New Notes
received upon exchange of such Old Notes
(other than Old Notes which represent an
unsold allotment from the original sale of
the Old Notes) with a prospectus meeting the
requirements of the Securities Act which may
be the prospectus prepared for an exchange
offer so long as it contains a description
of the plan of distribution with respect to
the resale of such New Notes. Accordingly,
this Prospectus, as it may be amended or
supplemented from time to time, may be used
by a Participating Broker-Dealer in
connection with resales of New Notes
received in exchange for Old Notes where
such Old Notes were acquired by such
Participating Broker-Dealer for its own
account as a result of market-making or
other trading activities. Subject to certain
provisions set forth in the Registration
Rights Agreement and to the limitations
described below under "The Exchange
Offer--Resale of New Notes," the Company has
agreed that this Prospectus, as it may be
amended or supplemented from time to time,
may be used by a Participating Broker-Dealer
in connection with resales of such New Notes
for a period ending 90 days after the
Expiration Date (subject to extension under
certain limited circumstances) or, if
earlier, when all such New Notes have been
disposed of by such Participating
Broker-Dealer. However, a Participating
Broker-Dealer who intends to use this
Prospectus in connection with the resale of
New Notes received in exchange for Old Notes
pursuant to the Exchange Offer must notify
the Company, or cause the Company to be
notified, on or prior to the Expiration
Date, that it is a Participating
Broker-Dealer. Such notice may be given in
the space provided for that purpose in the
Letter of Transmittal or may be delivered to
the Exchange Agent at one of the addresses
set forth herein under "The Exchange
Offer--Exchange Agent." See "Plan of
Distribu-
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<PAGE> 11
tion." Any Participating Broker-Dealer who
is an "affiliate" of the Company may not
rely on such interpretive letters and must
comply with the registration and prospectus
delivery requirements of the Securities Act
in connection with any resale transaction.
See "The Exchange Offer--Resales of New
Notes."
Exchange Agent.................. The exchange agent with respect to the
Exchange Offer is The Chase Manhattan Bank
(the "Exchange Agent"). The addresses,
telephone and facsimile numbers of the
Exchange Agent are set forth in "The
Exchange Offer--Exchange Agent" and in the
Letter of Transmittal.
Use of Proceeds................. The Company will not receive any cash
proceeds from the issuance of the New Notes
offered hereby. See "Use of Proceeds."
Certain United States Federal
Income Tax Considerations....... Holders of Old Notes should review the
information set forth under "Certain United
States Federal Income Tax Considerations"
prior to tendering Old Notes in the Exchange
Offer.
THE NEW NOTES
Securities Offered.............. Up to $150,000,000 aggregate principal
amount of 6 7/8% Notes due 2006 which have
been registered under the Securities Act.
The New Notes will be issued and the Old
Notes were issued under an Indenture dated
as of November 1, 1996 (the "Indenture")
between the Company and The Chase Manhattan
Bank, as trustee (the "Trustee"). The New
Notes and any Old Notes which remain
outstanding after consummation of the
Exchange Offer will constitute a single
series of debt securities under the
Indenture and, accordingly, will vote
together as a single class for purposes of
determining whether holders of the requisite
percentage in outstanding principal amount
thereof have taken certain actions or
exercised certain rights under the
Indenture. See "Description of the New
Notes--General." The terms of the New Notes
are identical in all material respects to
the terms of the Old Notes, except that (i)
the New Notes have been registered under the
Securities Act and therefore will not be
subject to certain restrictions on transfer
applicable to the Old Notes and will not be
entitled to registration rights or other
rights under the Registration Rights
Agreement, (ii) the New Notes are issuable
in minimum denominations of $1,000 compared
to minimum denominations of $250,000 for the
Old Notes and (iii) the New Notes will not
provide for any increase in the interest
rate thereon pursuant to the Registration
Rights Agreement. See "The Exchange
Offer--Purpose of the Exchange Offer,"
"Description of the New Notes," and
"Description of the Old Notes."
Maturity Date................... November 15, 2006.
Interest Rate................... 6 7/8% per annum.
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<PAGE> 12
Interest Payment Dates.......... Interest will accrue from the most recent
date to which interest has been paid or duly
provided for on the Old Notes surrendered in
exchange for such New Notes or, if no such
interest has been paid or duly provided for
on such Old Notes, from November 25, 1996,
the date of issuance of the Old Notes, and
will be payable semiannually on each May 15
and November 15, commencing May 15, 1997.
Denominations................... The New Notes will be issued in minimum
denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
Redemption...................... The New Notes may not be redeemed prior to
maturity.
Sinking Fund.................... None.
Ranking......................... The New Notes will constitute unsecured
senior indebtedness of the Company and will
rank pari passu with all other unsecured
senior indebtedness of the Company for
borrowed money.
Absence of Market for the New
Notes........................... The New Notes will be a new issue of
securities for which there currently is no
market. Although Merrill Lynch, Pierce,
Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Morgan Stanley & Co.
Incorporated, the initial purchasers of the
Old Notes (the "Initial Purchasers"), have
informed the Company that they each
currently intend to make a market in the New
Notes, they are not obligated to do so, and
any such market making may be discontinued
at any time without notice. Accordingly,
there can be no assurance as to the
development or liquidity of any market for
the New Notes. The Company currently does
not intend to apply for listing of the New
Notes on any securities exchange or for
quotation through the National Association
of Securities Dealers Automated Quotation
System.
For further information regarding the New Notes, see "Description of the New
Notes."
CERTAIN CONSEQUENCES OF A FAILURE TO EXCHANGE OLD NOTES
The Old Notes have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions, including the
Company's and the Trustee's right in certain cases to require the delivery of
opinions of counsel, certifications and other information prior to any such
transfer. Old Notes which remain outstanding after consummation of the Exchange
Offer will continue to bear a legend reflecting such restrictions on transfer.
In addition, upon consummation of the Exchange Offer, holders of Old Notes which
remain outstanding will not be entitled to any rights to have such Old Notes
registered under the Securities Act or to any similar rights under the
Registration Rights Agreement. The Company currently does not intend to register
under the Securities Act any Old Notes which remain outstanding after
consummation of the Exchange Offer.
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, any trading market for Old Notes which remain outstanding after the
Exchange Offer could be adversely affected. See "Risk Factors--Certain market
consequences of failure to exchange Old Notes."
11
<PAGE> 13
The New Notes and any Old Notes that 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 in outstanding principal
amount thereof have taken certain actions or exercised certain rights under the
Indenture. See "Description of the New Notes--General."
The Old Notes provide that, if the Exchange Offer is not consummated by the
earlier of the 30th day following the date on which the Registration Statement
is declared effective and June 23, 1997, the per annum interest rate borne by
the Old Notes will increase by 0.50% following such date until the Exchange
Offer is consummated. See "Description of the Old Notes." Following consummation
of the Exchange Offer, the Old Notes will not be subject to any increase in the
interest rate thereon.
12
<PAGE> 14
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following factors in connection
with the Exchange Offer and the New Notes offered hereby. Information contained
in this Prospectus contains "forward-looking statements" which can be identified
by the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," "projected," "contemplates" or "anticipates" or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy. See, e.g., "Summary--The Company," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "The Company--
General," "--Business Strategy" and "--Aristech Total Performance." No assurance
can be given that the future results covered by the forward-looking statements
will be achieved. The following matters constitute cautionary statements
identifying important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
vary materially from the future results covered in such forward-looking
statements. Other factors, such as the general state of the economy, could also
cause actual results to vary materially from the future results covered in such
forward-looking statements.
ABILITY TO PASS THROUGH FEEDSTOCK PRICE INCREASES AND PRICE VOLATILITY. Raw
materials account for approximately two-thirds of the Company's total production
cost. As a result, the Company's ability to pass on increases in feedstock costs
to customers has a significant impact on operating results. The ability to pass
on increases in feedstock costs is, to a large extent, related to market
conditions. While the Company generally has been able to pass increases in
feedstock costs on to customers, there can be no assurance that the Company will
be able to do so in the future. Substantial increases in capacity which are
anticipated in certain of the chemical markets in which the Company participates
can be expected to affect such ability. In addition, prices of feedstocks can be
subject to significant price fluctuations. Increases in costs may not be
accompanied by corresponding increases in selling prices for the Company's
products in all instances, regardless of market conditions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
DEPENDENCE ON SIGNIFICANT SUPPLIERS. A number of the Company's raw material
suppliers provide the Company with a significant amount of its feedstocks, and
if one significant supplier or a number of significant suppliers were unable to
meet their obligations under present supply arrangements, or if such
arrangements could not be renewed upon expiration, feedstock costs incurred by
the Company could rise significantly. See "The Company--Business."
CYCLICALITY OF INDUSTRIES. A substantial portion of the Company's sales are
to customers that manufacture products having end-use applications in the
automotive, housing or construction industries, and such manufacturers are
significantly affected by cyclical fluctuations in those industries. It is
anticipated that reductions in the business levels of these industries would
impact negatively on the Company's sales and profits.
COMPETITIVE INDUSTRY. The Company faces competition from a substantial
number of global and regional competitors, some of which have greater financial,
research and development, production and other resources than the Company.
Although competitive factors vary among the Company's product lines, in general
the Company's competitive position is based principally on selling prices,
product quality, manufacturing technology, access to raw materials, proximity to
markets and customer service and support. The Company's competitors can be
expected in the future to improve technologies, expand capacity, and, in certain
product lines, develop and introduce new products. While there can be no
assurances of its ability to do so, the Company believes that it will have
sufficient resources to maintain its current competitive position. See "The
Company--Business."
POTENTIAL LIABILITIES RELATING TO ENVIRONMENTAL, HEALTH AND SAFETY
REGULATIONS. The chemical industry is subject to numerous Federal, state and
local laws relating to the storage, handling, emission, transportation,
manufacture and use of chemicals, the discharge of materials into the
environment and the maintenance of safe conditions in the workplace. United
States chemical manufacturers, including the Company, have expended substantial
funds for compliance with such laws and regulations. Future legislation and
regulations could impose additional costs on the industry. Company production
facilities require permits and licenses that are subject to renewal or
modification. Violations of such permits or licenses could result in substantial
13
<PAGE> 15
sanctions, which could be civil, criminal, or both. Violations could also result
in the revocation of such permits or licenses. In addition, the operation of any
chemical manufacturing plant entails risk of adverse environmental effect,
including exposure to chemical products and by-products from the Company's
operations. The Company is also involved in investigative or cleanup projects at
24 waste disposal sites owned by other parties. The Company has agreed to
indemnify certain third parties against certain claims or liabilities, including
liabilities under laws relating to the protection of the environment and the
workplace, relating to assets acquired or divested by the Company. The markets
for most of the Company's products are very price competitive. Therefore, future
environmentally related capital expenditure requirements, liabilities and costs
could be a major factor in the Company's future sales and income, since it may
not always be possible to pass costs on to customers. See "The
Company--Business--Environmental, Health and Safety Matters" and "--Disposition
of Certain Businesses."
RELIANCE ON CONTINUED OPERATION AND SUFFICIENCY OF MANUFACTURING
FACILITIES. The Company's revenues are dependent on the continued operation of
its various manufacturing facilities. Although presently all operating plants
are considered to be in good condition, the operation of manufacturing plants
involves many risks, including the breakdown, failure or substandard performance
of equipment, power outages, the improper installation or operation of
equipment, natural disasters and the need to comply with directives of
governmental agencies. Except for polypropylene, each of the Company's product
lines is manufactured at only a single facility and production could not be
transferred to another site. The occurrence of material operational problems,
including but not limited to the above events, may adversely affect the
profitability of the Company during the period of such operational difficulties.
See "The Company--Business" and "--Plant Profile."
EFFECT OF PLANNED MAINTENANCE TURNAROUNDS. In addition to its routine
repair and maintenance activities, the Company has a program of planned
maintenance turnarounds under which certain facilities are temporarily taken out
of production for repairs and maintenance. To the degree that the cost of
planned maintenance turnarounds is not evenly spread over the program's normal
two-year cycle, year-to-year and quarterly variations in income can result.
Subject to regulatory inspections and maintaining the Company's safety
standards, the timing of maintenance turnarounds is largely at the discretion of
management. In determining the schedule of maintenance turnarounds, management
considers, among other things, the level of product demand, catalyst life and
the operating integrity of the production facility. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--General."
VOTING CONTROL BY PRINCIPAL STOCKHOLDER. MC beneficially owns an aggregate
of 82.3% of the outstanding shares of the Company's common stock, par value $.01
per share (the "Common Stock"). Accordingly, MC has sufficient voting power to
elect the entire Board of Directors of the Company, to determine the outcome of
any corporate transaction or other matter submitted to the stockholders for
approval, including mergers, consolidations and the sale of all or substantially
all of the Company's assets, and to prevent or effect a change in control of the
Company. The Board of Directors, among other things, establishes the Company's
dividend policy. The terms of the Notes do not give holders of the Notes the
right to require the Company to repurchase the Notes in the event of a decline
in the credit rating of the Company's debt securities resulting from a change in
control, recapitalization or similar restructuring. See "Stockholders of the
Company", "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Dividends" and "Description of the New Notes--Certain
Covenants."
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES. The New Notes will be a new
issue of securities for which there currently is no market. Although the Initial
Purchasers have informed the Company that they each currently intend to make a
market in the New Notes, they are not obligated to do so, and any such market
making may be discontinued at any time without notice. Accordingly, there can be
no assurance as to the development or liquidity of any market for the New Notes.
The Company does not intend to apply for listing of the New Notes on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System.
CERTAIN MARKET CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES. To the extent
that Old Notes are tendered and accepted for exchange pursuant to the Exchange
Offer, the trading market for Old Notes that remain outstanding may be
significantly more limited, which might adversely affect the liquidity of the
Old
14
<PAGE> 16
Notes not tendered for exchange. The extent of the market therefor and the
availability of price quotations would depend upon a number of factors,
including the number of holders of Old Notes remaining at such time and the
interest in maintaining a market in such Old Notes on the part of securities
firms. An issue of securities with a smaller outstanding market value available
for trading (the "float") may command a lower price than would a comparable
issue of securities with a greater float. Therefore, the market price for Old
Notes that are not exchanged in the Exchange Offer may be affected adversely to
the extent that the amount of Old Notes exchanged pursuant to the Exchange Offer
reduces the float. The reduced float also may make the trading price of the Old
Notes that are not exchanged more volatile.
CERTAIN CONSEQUENCES OF FAILURE TO VALIDLY TENDER. Issuance of the New
Notes in exchange for the Old Notes pursuant to the Exchange Offer will be made
following the prior satisfaction, or waiver, of the conditions set forth in "The
Exchange Offer--Certain Conditions to the Exchange Offer" and only after timely
receipt by the Exchange Agent of such Old Notes, a properly completed and duly
executed Letter of Transmittal and all other required documents. Therefore,
holders of Old Notes desiring to tender such Old Notes in exchange for New Notes
should allow sufficient time to ensure timely delivery of all required
documentation. Beneficial holders of Old Notes should also take into account the
fact that the delivery of documents to The Depository Trust Company ("DTC") in
accordance with DTC's procedures does not constitute delivery to the Exchange
Agent. Neither the Exchange Agent, the Company nor any other person is under any
duty to give notification of defects or irregularities with respect to the
tenders of Old Notes for exchange. Old Notes that may be tendered in the
Exchange Offer but which are not validly tendered will, following consummation
of the Exchange Offer, remain outstanding and will continue to be subject to the
same transfer restrictions currently applicable to such Old Notes.
15
<PAGE> 17
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Notes, the Company entered into the
Registration Rights Agreement with the Initial Purchasers, pursuant to which the
Company agreed to use its best efforts to file with the Commission a
registration statement with respect to the exchange of the Old Notes for debt
securities with terms identical in all material respects to the terms of the Old
Notes, except that (i) the New Notes have been registered under the Securities
Act and therefore will not be subject to certain restrictions on transfer
applicable to the Old Notes and will not be entitled to registration and other
rights under the Registration Rights Agreement, (ii) the New Notes are issuable
in minimum denominations of $1,000 compared to minimum denominations of $250,000
for the Old Notes and (iii) the New Notes will not provide for any increase in
the interest rate thereon pursuant to the Registration Rights Agreement. In that
regard, the Old Notes provide, among other things, that, if the Exchange Offer
is not consummated by the earlier of the 30th day following the date on which
the Registration Statement is declared effective and June 23, 1997, the per
annum interest rate borne by the Old Notes following such date will increase by
0.50% until the Exchange Offer is consummated. Upon consummation of the Exchange
Offer, holders of Old Notes will not be entitled to any increase in the rate of
interest thereon or any further registration rights under the Registration
Rights Agreement. See "Summary--Certain Consequences of a Failure to Exchange
Old Notes" and "Description of the Old Notes."
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $150,000,000 aggregate principal amount of New Notes for a like
aggregate principal amount of Old Notes validly tendered on or prior to the
Expiration Date (as defined below) and not withdrawn in accordance with the
procedures described below. The Company will issue, promptly after the
Expiration Date, an aggregate principal amount of up to $150,000,000 of New
Notes in exchange for a like principal amount of outstanding Old Notes tendered
and accepted in connection with the Exchange Offer. Holders may tender their Old
Notes in whole or in part in a principal amount of $1,000 and integral multiples
thereof, provided that, if any Old Note is tendered for exchange in part, the
untendered principal amount thereof must be $250,000 or any integral multiple of
$1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered. As of the date of this Prospectus, $150,000,000
aggregate principal amount of Old Notes is outstanding.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer. Old Notes which are not tendered for
exchange, are tendered but validly withdrawn or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Indenture, but will not be entitled to any further
registration rights under the Registration Rights Agreement.
Certificates for any tendered Old Notes that are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise will be returned, without expense, to the tendering holder
thereof promptly after the Expiration Date.
Holders who tender Old Notes in connection with the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes in connection with the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses."
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<PAGE> 18
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ALL OR ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS
OF OLD NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES TO
TENDER, AFTER READING CAREFULLY THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL
AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL
POSITIONS AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Expiration Date is 5:00 p.m., New York City time, on , 1997
unless the Exchange Offer is extended by the Company (in which case the
Expiration Date will be the latest date and time to which the Exchange Offer is
extended).
The Company expressly reserves the right in its sole and absolute
discretion, subject to applicable law and the terms of the Registration Rights
Agreement, at any time and from time to time, (i) to delay the acceptance of the
Old Notes for exchange, (ii) to terminate the Exchange Offer (whether or not any
Old Notes have theretofore been accepted for exchange) if the Company
determines, in its sole and absolute discretion, that any of the events or
conditions referred to under "-- Certain Conditions to the Exchange Offer" have
occurred or exist or have not been satisfied, (iii) to extend the Expiration
Date of the Exchange Offer and retain all Old Notes tendered pursuant to the
Exchange Offer, subject, however, to the right of holders of Old Notes to
withdraw their tendered Old Notes as described under "--Withdrawal Rights, " and
(iv) to waive any condition or otherwise amend the terms of the Exchange Offer
in any respect. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, or if the Company waives a material
condition of the Exchange Offer, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders of the Old Notes, and the Company will extend the Exchange
Offer to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to the Dow Jones News Service.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange, and will issue to the Exchange Agent, New Notes for Old
Notes validly tendered and not withdrawn (pursuant to the withdrawal rights
described under "--Withdrawal Rights") promptly after the Expiration Date.
In all cases, delivery of New Notes in exchange for Old Notes tendered and
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of (i) Old Notes or a book-entry
confirmation of a book-entry transfer of Old Notes into the Exchange Agent's
account at DTC, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and (iii)
any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at DTC.
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<PAGE> 19
Subject to the terms and conditions of the Exchange Offer, the Company will
be deemed to have accepted for exchange, and thereby exchanged, Old Notes
validly tendered and not withdrawn as, if and when the Company gives oral or
written notice to the Exchange Agent of the Company's acceptance of such Old
Notes for exchange pursuant to the Exchange Offer. The Exchange Agent will act
as agent for the Company for the purpose of receiving tenders of Old Notes,
Letters of Transmittal and related documents, and as agent for tendering holders
for the purpose of receiving Old Notes, Letters of Transmittal and related
documents and transmitting New Notes to validly tendering holders. Such exchange
will be made promptly after the Expiration Date. If, for any reason whatsoever,
acceptance for exchange or the exchange of any Old Notes tendered pursuant to
the Exchange Offer is delayed (whether before or after the Company's acceptance
for exchange of Old Notes) or the Company extends the Exchange Offer or is
unable to accept for exchange or exchange Old Notes tendered pursuant to the
Exchange Offer, then, without prejudice to the Company's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Company and
subject to Rule 14e-l(c) under the Exchange Act, retain tendered Old Notes and
such Old Notes may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Notes will warrant
and agree in the Letter of Transmittal that it has full power and authority to
tender, exchange, sell, assign and transfer Old Notes, that the Company will
acquire good, marketable and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances, and the Old
Notes tendered for exchange are not subject to any adverse claims or proxies.
The holder also will warrant and agree that it will, upon request, execute and
deliver any additional documents deemed by the Company or the Exchange Agent to
be necessary or desirable to complete the exchange, sale, assignment, and
transfer of the Old Notes tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD NOTES
VALID TENDER
Except as set forth below, in order for Old Notes to be validly tendered
pursuant to the Exchange Offer, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
any other required documents, must be received by the Exchange Agent at one of
its addresses set forth under "--Exchange Agent," and either (i) tendered Old
Notes must be received by the Exchange Agent, or (ii) such Old Notes must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation must be received by the Exchange Agent, in each case
on or prior to the Expiration Date, or (iii) the guaranteed delivery procedures
set forth below must be complied with.
If less than all of the Old Notes are tendered, a tendering holder should
fill in the amount of Old Notes being tendered in the appropriate box on the
Letter of Transmittal. The entire amount of Old Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER
The Exchange Agent will establish an account with respect to the Old Notes
at DTC for purposes of the Exchange Offer within two business days after the
date of this Prospectus. Any financial institution that is a participant in
DTC's book-entry transfer facility system may make a book-entry delivery of the
Old Notes by
18
<PAGE> 20
causing DTC to transfer such Old Notes into the Exchange Agent's account at DTC
in accordance with DTC's procedures for transfers. However, although delivery of
Old Notes may be effected through book-entry transfer into the Exchange Agent's
account at DTC, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees and any
other required documents, must in any case be delivered to and received by the
Exchange Agent at its address set forth under "--Exchange Agent" on or prior to
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES
Certificates for the Old Notes need not be endorsed and signature
guarantees on the Letter of Transmittal are unnecessary unless (a) a certificate
for the Old Notes is registered in a name other than that of the person
surrendering the certificate or (b) such registered holder completes the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" in
the Letter of Transmittal. In the case of (a) or (b) above, such certificates
for Old Notes must be duly endorsed or accompanied by a properly executed bond
power, with the endorsement or signature on the bond power and on the Letter of
Transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange, Inc. Medallion Signature Program or the Stock Exchanges
Medallion Program (each, an "Eligible Institution"), unless surrendered on
behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
GUARANTEED DELIVERY
If a holder desires to tender Old Notes pursuant to the Exchange Offer and
the certificates for such Old Notes are not immediately available or time will
not permit all required documents to reach the Exchange Agent on or before the
Expiration Date, or the procedures for book-entry transfer cannot be completed
on a timely basis, such Old Notes may nevertheless be tendered, provided that
all of the following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Notes, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees and any other documents required by
the Letter of Transmittal, are received by the Exchange Agent within five
New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, overnight
courier or mail or transmitted by facsimile to the Exchange Agent and must
include a guarantee by an Eligible Institution in the form set forth in such
notice.
Notwithstanding any other provision hereof, the delivery of New Notes in
exchange for Old Notes tendered and accepted for exchange pursuant to the
Exchange Offer will in all cases be made only after timely receipt by the
Exchange Agent of Old Notes, or of a book-entry confirmation with respect to
such Old Notes, and a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees and any
other documents required by the Letter of Transmittal. Accordingly,
19
<PAGE> 21
the delivery of New Notes might not be made to all tendering holders at the same
time, and will depend upon when Old Notes, book-entry confirmations with respect
to Old Notes and other required documents are received by the Exchange Agent.
The Company's acceptance for exchange of Old Notes tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering holder and the Company upon the terms and subject to the
conditions of the Exchange Offer.
DETERMINATION OF VALIDITY
All questions as to the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tendered Old Notes will be
determined by the Company, in its sole discretion, whose determination shall be
final and binding on all parties. The Company reserves the absolute right, in
its sole and absolute discretion, to reject any and all tenders determined by it
not to be in proper form or the acceptance of which, or exchange for, may, in
the view of counsel to the Company, be unlawful. The Company also reserves the
absolute right, subject to applicable law, to waive any of the conditions of the
Exchange Offer as set forth under "-- Certain Conditions to the Exchange Offer"
or any condition or irregularity in any tender of Old Notes of any particular
holder whether or not similar conditions or irregularities are waived in the
case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Notes will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. Neither the Company, any affiliates or assigns of the Company, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity
(except when New Notes are being issued to replace Old Notes registered in the
same name), such person should so indicate when signing and, unless waived by
the Company, proper evidence satisfactory to the Company, in its sole
discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Notes that are held by or registered in the name
of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW NOTES
The Company is making the Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of the Commission as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, the Company has not sought its own interpretive letter and there can be
no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and subject
to the two immediately following sentences, the Company believes that New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such holder's business and that
such holder is not participating, and has no arrangement or understanding with
any person to participate, in a distribution (within the meaning of the
Securities Act) of such New Notes. However, any holder of Old Notes who is an
"affiliate" of the Company or who intends to participate in the Exchange Offer
for the purpose of distributing New Notes, or any broker-dealer who purchased
Old Notes from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
20
<PAGE> 22
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Notes in the Exchange Offer and (c)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer of such Old Notes
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Notes acquired for
its own account as a result of market-making or other trading activities and
exchanges such Old Notes for New Notes, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Notes.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that (i) it is not an
"affiliate" of the Company, (ii) any New Notes to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes, and (iv) if such holder is not
a broker-dealer, such holder is not engaged in, and does not intend to engage
in, a distribution (within the meaning of the Securities Act) of such New Notes.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as the result of market-making or other trading activities and must
agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. 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. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, the Company believes that broker-dealers who acquired Old
Notes for their own accounts as a result of market-making or other trading
activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Notes received upon exchange of
such Old Notes (other than Old Notes which represent an unsold allotment from
the original sale of the Old Notes) with a prospectus meeting the requirements
of the Securities Act, which may be the prospectus prepared for an exchange
offer so long as it contains a description of the plan of distribution with
respect to the resale of such New Notes. Accordingly, this Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
New Notes received in exchange for Old Notes where such Old Notes were acquired
by such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, the Company has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Notes
for a period ending 90 days after the Expiration Date (subject to extension
under certain limited circumstances described below) or, if earlier, when all
such New Notes have been disposed of by such Participating Broker-Dealer.
However, a Participating Broker-Dealer who intends to use this Prospectus in
connection with the resale of New Notes received in exchange for Old Notes
pursuant to the Exchange Offer must notify the Company, or cause the Company to
be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "--Exchange Agent." See "Plan of
Distribution." Any Participating Broker-Dealer who is an "affiliate" of the
Company may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained herein, in light of the circumstances under which they were
made, not misleading, or of the occurrence of certain other events specified in
the Registration Rights Agreement, such Participating Broker-Dealer will suspend
the sale of New Notes pursuant to this Prospectus until the Company has amended
or supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed,
21
<PAGE> 23
as the case may be. If the Company gives such notice to suspend the sale of the
New Notes, it shall extend the 90-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of New Notes by the number of days during the period from and
including the date of the giving of such notice to and including the date when
Participating Broker-Dealers shall have received copies of the amended or
supplemented Prospectus necessary to permit resales of the New Notes or to and
including the date on which the Company has given notice that the sale of New
Notes may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent, at one of its addresses set forth below under "--Exchange
Agent," on or prior to the Expiration Date. Any such notice of withdrawal must
specify the name of the person who tendered the Old Notes to be withdrawn, the
aggregate principal amount of Old Notes to be withdrawn, and (if certificates
for such Old Notes have been tendered) the name of the registered holder of the
Old Notes as set forth on the Old Notes, if different from that of the person
who tendered such Old Notes. If Old Notes have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Notes, the tendering holder must submit the serial numbers shown on the
particular Old Notes to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case of
Old Notes tendered for the account of an Eligible Institution. If Old Notes have
been tendered pursuant to the procedures for book-entry transfer set forth in
"--Procedures for Tendering Old Notes," the notice of withdrawal must specify
the name and number of the account at DTC to be credited with the withdrawal of
Old Notes, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Notes may not be rescinded. Old Notes validly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described above under
"--Procedures for Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any affiliates or assigns of the Company, the Exchange
Agent nor any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Old Notes which have been tendered
but which are withdrawn on or prior to the Expiration Date will be returned to
the holder thereof promptly after withdrawal.
INTEREST ON THE NEW NOTES
Each New Note will bear interest at the rate of 6 7/8% per annum from the
most recent date to which interest has been paid or duly provided for on the Old
Note surrendered in exchange for such New Note or, if no interest has been paid
or duly provided for on such Old Note, from November 25, 1996. Interest on the
New Notes will be payable semiannually on May 15 and November 15 of each year,
commencing on the first such date following the original issuance date of the
New Notes.
Holders of Old Notes whose Old Notes are accepted for exchange will not
receive accrued interest on such Old Notes for any period from and after the
last Interest Payment Date to which interest has been paid or duly provided for
on such Old Notes prior to the original issue date of the New Notes or, if no
such interest has been paid or duly provided for, will not receive any accrued
interest on such Old Notes, and will be deemed to have waived the right to
receive any interest on such Old Notes accrued from and after such Interest
Payment Date or, if no such interest has been paid or duly provided for, from
and after November 25, 1996.
22
<PAGE> 24
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept for
exchange, or to exchange, any Old Notes for any New Notes, and, as described
below, may terminate the Exchange Offer (whether or not any Old Notes have
theretofore been accepted for exchange) or may waive any conditions to or amend
the Exchange Offer, if any of the following conditions have occurred or exists
or have not been satisfied:
(a) the Exchange Offer, or the making of any exchange by a holder,
violates any applicable law or any applicable interpretation of the staff
of the Commission;
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Company's judgment, would reasonably be
expected to impair the ability of the Company to proceed with the Exchange
Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Pennsylvania or New York state authorities which, in the
Company's judgment, would reasonably be expected to impair the ability of
the Company to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Company's
judgment, would reasonably be expected to impair the ability of the Company
to proceed with the Exchange Offer; or
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Company, threatened for that purpose.
If the Company determines in its sole and absolute discretion that any of
the foregoing events or conditions has occurred or exists or has not been
satisfied, the Company may, subject to applicable law, terminate the Exchange
Offer (whether or not any Old Notes have theretofore been accepted for exchange)
or may waive any such condition or otherwise amend the terms of the Exchange
Offer in any respect. If such waiver or amendment constitutes a material change
to the Exchange Offer, the Company will promptly disclose such waiver or
amendment by means of a prospectus supplement that will be distributed to the
registered holders of the Old Notes, and the Company will extend the Exchange
Offer to the extent required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
BY REGISTERED OR CERTIFIED MAIL:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Corporate Trust Department
(Aristech Chemical Corporation,
6 7/8% Notes due 2006)
BY OVERNIGHT DELIVERY OR HAND:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Corporate Trust Department
(Aristech Chemical Corporation,
6 7/8% Notes due 2006)
OR
23
<PAGE> 25
BY HAND ONLY:
The Chase Manhattan Bank
Institutional Trust Group
One Chase Manhattan Plaza, Floor 1B
New York, NY 10081
(Aristech Chemical Corporation,
6 7/8% Notes due 2006)
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(212) 946-3089
FACSIMILE TRANSMISSIONS:
(212) 946-8161
Delivery to other than one of the above addresses or facsimile numbers will
not constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Notes, and in tendering for their customers.
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 the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
The Company will not make any payment to brokers, dealers or others
soliciting acceptance of the Exchange Offer.
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the New Notes offered in the
Exchange Offer. In consideration for issuing the New Notes as contemplated in
this Prospectus, the Company will receive in exchange Old Notes in like
principal amount. The Old Notes surrendered in exchange for New Notes will be
retired and canceled and cannot be reissued. Accordingly, issuance of the New
Notes will not result in any increase in the indebtedness of the Company.
The net proceeds from the sale of the Old Notes (after discount and other
expenses of the offering of the Old Notes) were approximately $147.4 million.
Such proceeds were used to prepay $100.0 million in principal amount of a term
loan from MIC, which has been terminated, and the remainder will be used for
general corporate purposes.
24
<PAGE> 26
CAPITALIZATION
The following table sets forth the unaudited historical capitalization of
the Company as of September 30, 1996 and as adjusted to give effect to (i) the
issuance of the Old Notes and the use of proceeds from the sale thereof and (ii)
the implementation of a new discretionary working capital facility and the
application of borrowings thereunder. The following table should be read in
conjunction with the audited Consolidated Financial Statements and the notes
thereto, the unaudited Interim Financial Statements and the notes thereto and
the unaudited Pro Forma Condensed Financial Information and the notes thereto
included herein. The exchange of the New Notes for the Old Notes will have no
effect on the capitalization of the Company.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------------------
HISTORICAL ADJUSTMENTS ADJUSTED
---------- ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Short-term debt:
Old working capital facility(1)......................... $ 5.0 $ (5.0)(2) $ 0.0
New working capital facility............................ -- 40.0(2) 40.0
Mitsubishi International Corporation term loan.......... 100.0 (100.0)(3) 0.0
Revenue bond............................................ 0.1 -- 0.1
Long-term debt:
Mitsubishi Corporation term loan........................ 100.0 -- 100.0
Mitsubishi International Corporation revolving loan..... 137.0 (83.9)(4) 53.1
Old Notes............................................... -- 150.0(5) 150.0
Other................................................... 14.0 -- 14.0
Unamortized discount on Old Notes....................... -- (1.1) (1.1)
---------- ----------- --------
Total debt...................................... $356.1 $ -- $356.1
Stockholders' equity:
Common stock, $.01 par value; authorized-20,000 shares;
issued and outstanding-14,908 shares................. 0.0 -- 0.0
Additional paid-in capital.............................. 378.8 -- 378.8
Retained deficit........................................ (35.0) -- (35.0)
---------- ----------- --------
Total stockholders' equity...................... 343.8 -- 343.8
---------- ----------- --------
Total capitalization....................... $699.9 $ -- $699.9
========= =========== ========
</TABLE>
- ---------
(1) Represents the amount outstanding under a $20.0 million overnight facility
used to manage the Company's daily working capital fluctuations.
(2) On December 13, 1996, the Company entered into a new $50.0 million
discretionary working capital facility with a commercial lender to manage
the Company's daily working capital fluctuations. The Company initially used
$40.0 million under this facility to retire the old working capital facility
referred to in note (1) and a portion of the MIC revolving loan referred to
in note (4).
(3) Represents the prepayment of the MIC term loan from $100.0 million of the
proceeds from the sale of the Old Notes.
(4) Represents the repayment of $83.9 million of the MIC revolving loan from the
new discretionary working capital facility referred to in note (2) and
proceeds from the sale of the Old Notes.
(5) Represents the issuance of the Old Notes.
25
<PAGE> 27
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA
CONDENSED FINANCIAL DATA
The following table sets forth selected consolidated historical and pro
forma condensed financial data as of the dates and for the periods indicated.
The selected consolidated financial data as of December 31, 1994 and 1995 and
for the years ended December 31, 1993, 1994 and 1995 have been derived from the
Company's audited Consolidated Financial Statements included herein. The
selected consolidated financial data as of December 31, 1991, 1992 and 1993 and
for the years ended December 31, 1991 and 1992 have been derived from the
Company's audited Consolidated Financial Statements not included herein. The
selected consolidated financial data as of September 30, 1995 and 1996 and for
the nine months ended September 30, 1995 and 1996 have been derived from the
Company's unaudited Interim Financial Statements included herein. The unaudited
Interim Financial Statements have been prepared on the same basis as the audited
Consolidated Financial Statements included herein and, in the opinion of
management, reflect all adjustments necessary to fairly state results of
operations and cash flows for such interim periods. Such adjustments are of a
normal recurring nature. Results of operations for the nine months ended
September 30, 1996 are not necessarily indicative of results for the full year.
The selected pro forma condensed financial data as of September 30, 1996 and for
the year ended December 31, 1995 and the nine months ended September 30, 1996
have been derived from the Company's unaudited Pro Forma Condensed Financial
Information included herein. The following selected consolidated historical and
pro forma condensed financial data should be read in conjunction with the
audited Consolidated Financial Statements and the notes thereto, the unaudited
Interim Financial Statements and the notes thereto and the unaudited Pro Forma
Condensed Financial Information and the notes thereto included herein.
<TABLE>
<CAPTION>
DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
--------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------------- ---------------------------------
PRO PRO
FORMA FORMA
1991 1992 1993 1994 1995 1995(1) 1995 1996 1996(1)
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(FOR PERIOD)
Sales................. $ 848.3 $ 799.5 $ 788.5 $ 945.5 $1,023.3 $1,023.3 $ 786.7 $ 691.6 $ 691.6
Operating Costs
Cost of sales....... 680.7 634.6 669.4 763.5 758.9 758.9 579.4 536.0 536.0
Selling, general and
administrative
expenses.......... 48.4 60.5 61.7 61.3 43.6 43.6 32.0 35.2 35.2
Depreciation and
amortization...... 46.2 43.8 49.1 50.3 48.4 48.4 36.2 35.6 35.6
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total operating
costs........... 775.3 738.9 780.2 875.1 850.9 850.9 647.6 606.8 606.8
Operating income
(excludes items
shown below)........ 73.0 60.6 8.3 70.4 172.4 172.4 139.1 84.8 84.8
Other income
(expense)........... (0.1) (0.9) (0.1) (0.9) (20.1) (20.1) (9.4) (9.5) (9.5)
Interest
expense-net......... (73.0) (58.7) (53.9) (54.8) (47.7) (30.7) (36.5) (31.6) (19.8)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before
taxes on income..... (0.1) 1.0 (45.7) 14.7 104.6 121.6 93.2 43.7 55.5
Less provision
(benefit) for
estimated income
taxes............... (0.3) 0.4 (5.8) 9.5 44.4 51.6 40.2 19.7 25.0
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before
minority interest,
extraordinary loss
and changes in
accounting method... 0.2 0.6 (39.9) 5.2 60.2 70.0 53.0 24.0 30.5
-------- -------- -------- -------- -------- -------- -------- -------- --------
Minority interest..... -- -- -- -- -- -- -- 0.1 0.1
Extraordinary loss,
net of income tax
benefit of $3.2
million............. -- -- -- 5.1 -- -- -- -- --
Cumulative effect on
prior years of
change in accounting
for income taxes and
depreciation........ -- -- 0.2 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)..... $ 0.2 $ 0.6 $ (39.7) $ 0.1 $ 60.2 $ 70.0 $ 53.0 $ 24.1 $ 30.6
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
26
<PAGE> 28
<TABLE>
<CAPTION>
DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA
--------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------------- ---------------------------------
PRO PRO
FORMA FORMA
1991 1992 1993 1994 1995 1995(1) 1995 1996 1996(1)
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
(END OF PERIOD)
Working capital..... $ 50.9 $ 55.5 $ 25.3 $ 166.4(2) $ 174.9 -- $ 126.4 $ 26.6(3) $ 90.1(4)
Total assets.......... 1,038.5 1,027.5 1,134.9 1,183.4 1,090.0 -- 1,089.5 1,017.5 1,017.8
Short-term debt....... -- 9.0 12.8 -- 8.7 -- 12.6 5.0 40.1
Long-term debt due
within one year..... 25.1 32.8 46.0 -- -- -- -- 100.1 --
Long-term debt due
after one year...... 687.8 672.1 645.4 707.9 572.2 -- 593.2 251.0(5) 316.0
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total debt............ 712.9 713.9 704.2 707.9 580.9 -- 605.8 356.1 356.1
Redeemable preferred
stock and other
temporary equity.... 72.6 96.4 114.7 123.1 51.0 -- 51.0 0.0(6) 0.0
Shareholders'
equity.............. 73.8 57.7 6.4 1.3 133.7 -- 127.9 343.8 343.8
OTHER DATA
Ratio of earnings to
fixed charges(7).... 1.0x 1.0x 0.2x(8) 1.2x 3.0x 4.5x 3.3x 2.3x 3.7x
Total debt to total
capitalization...... 83.0% 82.2% 85.3% 85.1% 75.9% -- 77.2% 50.9% 50.9%
Book value per
share............... $ 9,839 $ 7,687 $ 839 $ 164 $ 13,307 -- $ 12,723 $ 23,062 $ 23,062
Dividends per share... 0 0 0 0 0 0 0 1,990 1,990
</TABLE>
- ---------
(1) The unaudited pro forma condensed financial information presented gives
effect to (i) the sale of $150.0 million aggregate principal amount of Old
Notes at an interest rate of 6 7/8%, plus an incremental interest cost of
0.34% due to the amortization of the debt discount on the Old Notes and the
cost to settle an interest rate hedging contract entered into on October 31,
1996, and the application of the net proceeds from the sale of the Old Notes
as described under "Use of Proceeds" and (ii) the implementation of a new
discretionary working capital facility and the application of borrowings
thereunder; and the pro forma income statement data also reflects the
conversion of $179.6 million of 10% Series A Convertible Subordinated
Payment-in-Kind Debentures due March 1, 2007 ("Payment-in-Kind Debentures")
to common equity of the Company and the redemption of $24.4 million of
Payment-in-Kind Debentures, as if each had occurred on January 1, 1995. The
unaudited pro forma condensed financial information presented is not
necessarily indicative of actual results that would have been achieved had
the aforementioned transactions been completed on the dates assumed and does
not purport to project the Company's financial position at any future date
or its results of operations for any future period.
(2) The increase in working capital is a result of the reclassification of the
net assets of the Company's unsaturated polyester resins ("UPR"), maleic
anhydride ("MA") and distribution businesses to current assets (net assets
held for sale) of $94.2 million, an increase in cash of $28.3 million
pending payments under the Company's performance option plan and an increase
in accounts receivable of $31.1 million due to higher sales in 1994.
(3) The decline in working capital is a result of the classification of the MIC
term loan in the principal amount of $100.0 million, which has a maturity
date of March 31, 1997, as long-term debt due within one year. For the years
ended December 31, 1994 and 1995, the maturity of the MIC term loan had been
extended annually to a date permitting classification as long-term debt. The
MIC term loan was prepaid in its entirety from the proceeds of the sale of
the Old Notes.
(4) The increase in working capital is a result of the retirement of the
long-term debt due within one year with a portion of the proceeds from the
sale of the Old Notes, partially offset by the use of $40.0 million of the
new $50.0 million discretionary working capital facility to retire a portion
of the existing MIC revolving loan. See "Capitalization."
(5) The decline in long-term debt due after one year is principally due to the
conversion of $179.6 million of Payment-in-Kind Debentures to common equity
and the Company's redemption of $24.4 million of Payment-in-Kind Debentures.
27
<PAGE> 29
(6) The decline in redeemable preferred stock and other temporary equity is due
to the conversion of $44.9 million of 10% Series A Convertible PIK Preferred
Stock ("Series A Preferred Stock") to common equity and the Company's
redemption of $6.1 million of Series A Preferred Stock.
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
were calculated by adding earnings of consolidated companies before income
taxes, amortization of debt discount, total interest expense and the portion
of rents representative of an interest factor. Fixed charges consist of
total interest expense, interest capitalized, the portion of the rents
representative of an interest factor and amortization of debt discount.
Earnings of consolidated companies, as defined, includes significant
non-cash charges for depreciation and amortization.
(8) Earnings were inadequate to cover fixed charges in 1993. The coverage
deficiency for 1993 was $45.9 million.
28
<PAGE> 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in connection with the information contained
in the Consolidated Financial Statements and the notes thereto and Interim
Financial Statements and the notes thereto included elsewhere in this
Prospectus.
GENERAL
The Company is a leading producer and marketer of chemical and polymer
products. The Company had sales of $788.5 million, $945.5 million and $1,023.3
million for the years ended December 31, 1993, 1994 and 1995, respectively, and
sales of $786.7 million and $691.6 million for the nine months ended September
30, 1995 and 1996, respectively. The growth in the Company's revenues during the
last three fiscal years has been primarily due to capacity expansion in
conjunction with improved domestic and international economies resulting in
stronger demand for the Company's products. Although shipments for the first
nine months of 1996 were higher than the comparable period in 1995, selling
prices were lower due to worldwide industry capacity expansion in several of the
Company's product lines and the cyclical nature of the industry.
Raw materials account for approximately two-thirds of the Company's total
production cost. As a result, the Company's ability to pass on increases in
feedstock costs to customers has a significant impact on operating results. The
ability to pass on increases in feedstock costs is, to a large extent, related
to market conditions. While the Company generally has been able to pass
increases in feedstock costs on to customers, there can be no assurance that the
Company will be able to do so in the future. Substantial increases in capacity
which are anticipated in certain of the chemical markets in which the Company
participates can be expected to affect such ability. In addition, prices of
feedstocks can be subject to significant price fluctuations. Increases in costs
may not be accompanied by corresponding increases in selling prices for the
Company's products in all instances, regardless of market conditions.
Sales and operating results in the last quarter of each year are generally
lower than in the first three quarters. The fourth quarter is generally
adversely affected by lower demand in some of the Company's principal end-use
markets, particularly construction.
In addition to its routine repair and maintenance activities, the Company
has a program of planned maintenance turnarounds under which certain facilities
are temporarily taken out of production for repairs and maintenance. To the
degree that the cost of planned maintenance turnarounds is not evenly spread
over the program's normal two-year cycle, year-to-year and quarterly variations
in income can result. Subject to regulatory inspections and maintaining the
Company's safety standards, the timing of maintenance turnarounds is largely at
the discretion of management. In determining the schedule of maintenance
turnarounds, management considers, among other things, the level of product
demand, catalyst life and the operating integrity of the production facility.
Costs of planned maintenance turnarounds for 1993, 1994, 1995 and the first nine
months of 1996 were $3.8 million, $1.3 million, $8.5 million and $6.7 million,
respectively.
In March 1995, the Company terminated and paid out the restricted stock
award plan and the performance option plan for key management, which were
adopted in connection with a going-private transaction effected in 1990 by MC,
certain other investors and certain members of management of the Company. An
aggregate of $19.0 million, $18.0 million and $1.0 million was accrued for these
programs in 1993, 1994 and 1995, respectively. In 1996, the Company adopted a
new program of performance-based incentive and other benefit plans for key
management. Approximately $3.2 million was accrued in the first nine months of
1996 for such plans, including $2.2 million for certain multiple performance
periods which began January 1, 1995 under a long-term incentive plan.
In December 1987, the Company acquired a 50% interest in Avonite, a New
Mexico-based corporation that produces and markets premium solid surface
polyester sheet, and markets the Company's Acrystone(R) solid surface sheet. In
July 1996, the Company increased its ownership in Avonite to 60%. Avonite had
been reflected on an equity basis for financial reporting purposes and is now a
consolidated subsidiary under the
29
<PAGE> 31
Company's control. Avonite had revenues of $18.7 million and an operating loss
of $0.6 million for its fiscal year ended November 30, 1995.
On September 30, 1996, the Company called for redemption all of its
outstanding Payment-in-Kind Debentures and Series A Preferred Stock. All such
securities were held by the holders of the Common Stock. See "Stockholders of
the Company." Certain holders elected to exercise their right to convert $179.6
million in principal amount of Payment-in-Kind Debentures and $44.9 million in
stated value of Series A Preferred Stock into Common Stock. The remaining
Payment-in-Kind Debentures in the principal amount of $24.4 million and Series A
Preferred Stock with a stated value of $6.1 million were redeemed for cash.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1995
Operating income for the first nine months of 1996 was $84.8 million on
sales of $691.6 million compared with operating income of $139.1 million on
sales of $786.7 million in the first nine months of 1995. The reduction in
operating income reflects reduced margins in most of the Company's product lines
and more extensive planned maintenance turnaround activity in 1996. The lower
margins in the first nine months of 1996 are principally due to selling prices
falling at a faster rate than the cost of the Company's principal feedstocks.
Decreases in selling prices are primarily due to worldwide industry capacity
expansion in several of the Company's product lines and the cyclical nature of
the industry. On average, selling prices for phenol and related products, PA,
2-EH, plasticizers and polypropylene, declined 15.5%. In addition, the Company's
operating income was reduced due to the sale of the Company's coal chemicals
business in March 1996. This business contributed $2.6 million in operating
income in the first nine months of 1996 and $8.0 million in operating income in
the first nine months of 1995. Sales volumes were relatively unchanged for
phenol and related products and 12.3% higher for other chemicals and
polypropylene. The increase in sales volumes for other chemicals and
polypropylene was principally due to capacity expansions at the Company's
Pasadena, Texas and Neal, West Virginia facilities.
Selling, general and administrative expenses increased $3.2 million or
10.0% in the first nine months of 1996 compared to the same period in 1995 due
to expenses related to new performance-based incentive and other benefit plans
for key management adopted in 1996.
Interest expense was $32.3 million for the first nine months of 1996
compared to $38.1 million for the first nine months of 1995. The $5.8 million
decrease in interest expense primarily reflects the reduction of debt from
application of the proceeds of the sale of the Company's coal chemicals
business.
The provision for estimated income taxes in the first nine months of 1996
was $19.7 million, compared with a provision of $40.2 million in the first nine
months of 1995. The provision in the first nine months of 1996 included a
reversal of a $5.0 million deferred tax benefit relating to the Company's 50%
equity interest in Avonite as a result of the acquisition of an additional 10%
of Avonite's common equity.
Giving effect to the above mentioned factors, the Company's net income was
$24.1 million in the first nine months of 1996, a decrease of $28.9 million
compared with net income of $53.0 million in the same period in 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994
Operating income was $172.4 million on sales of $1,023.3 million in 1995,
compared with operating income of $70.4 million on sales of $945.5 million in
1994. The $102.0 million increase in operating income was principally due to
increases in the Company's selling prices which outpaced rising feedstock costs,
higher plant operating rates and record trade shipment volumes for certain
higher margin products. On average, selling prices increased 15.9%. Total trade
shipments decreased 6.6% due to the sale of the Company's UPR, MA and
distribution businesses in April 1995. The improvement in operating rates and
higher selling prices also reflected an improvement in certain international
economies and increased domestic demand.
30
<PAGE> 32
Selling, general and administrative expenses declined to $43.6 million in
1995 compared to $61.3 million in 1994. This decrease of $17.7 million primarily
reflects the reduced accrual for the restricted stock award program and
performance option plan, which were terminated and paid out in March 1995. The
accrual for these programs was $1.0 million and $18.0 million in 1995 and 1994,
respectively.
Interest expense declined to $49.8 million in 1995 compared to $56.0
million in 1994. This decrease of $6.2 million primarily reflects the reduction
of debt from application of the proceeds of the sale of the Company's UPR, MA
and distribution businesses.
The provision for estimated income taxes was $44.4 million in 1995,
compared with a provision of $9.5 million in 1994. The increase primarily
reflects the improved profitability of the Company during 1995.
In 1994, the Company extinguished its leveraged buyout financing package
and refinanced with long-term debt from a variety of sources. The extinguishment
of this debt caused the Company to write off as an extraordinary item, net of
taxes, the unamortized deferred financing charges from the leveraged buyout
banking syndicate. This extraordinary charge in 1994, net of taxes, was $5.1
million.
Giving effect to the above-mentioned factors, the Company's net income for
1995 was $60.2 million, compared with net income of $0.1 million in the prior
year.
YEAR ENDED DECEMBER 31, 1994 COMPARED WITH YEAR ENDED DECEMBER 31, 1993
In 1994, the Company generated operating income of $70.4 million on sales
of $945.5 million, compared with operating income of $8.3 million on sales of
$788.5 million in 1993. The improvement in operating results reflects
improvement in certain international economies and domestic markets resulting in
increased demand, improved operating rates and higher selling prices. On
average, the Company's selling prices increased 7.1%. Trade shipments increased
11.9%.
Selling, general and administrative expenses were $61.3 million in 1994
compared to $61.7 million in 1993. Included in 1993 and 1994 were accruals of
$19.0 million and $18.0 million, respectively, for the restricted stock award
program and the performance option plan for certain key managers.
The provision for estimated income taxes was $9.5 million in 1994, compared
with a benefit of $5.8 million in 1993. The increase primarily reflects the
significant improvement in 1994 pre-tax income.
Giving effect to the above-mentioned factors, the Company's net income for
1994 was $0.1 million, compared with a net loss of $39.7 million in the prior
year.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Cash from operations totaled $33.4 million in the first nine months of 1995
compared to $62.3 million in the first nine months of 1996. The improvement in
cash from operations in the first nine months of 1996 reflects the one time
payment to key management in early 1995 of $27.0 million to satisfy the
obligations of the performance option plan. Cash from operations was also
negatively impacted in 1995 by increased receivables and inventories, a
reduction in trade payables and other current liabilities and federal income tax
payments. Cash provided from operations for the years ended December 31, 1993,
1994 and 1995 was $51.3 million, $77.9 million and $85.5 million, respectively.
Expenditures for property, plant and equipment in the first nine months of
1995 totaled $38.3 million, compared with $28.6 million in the first nine months
of 1996. Annual expenditures for property, plant and equipment totaled $21.6
million in 1993, $33.4 million in 1994 and $55.3 million in 1995. The increase
in expenditures over the three periods reflects the Company's plans to increase
capacity at its facilities and improve production processes. Reduced
expenditures in the first nine months of 1996 compared to the same period in
1995 reflects completion in 1995 of the polypropylene expansion. See "--Capital
Expenditures" below.
31
<PAGE> 33
Cash from disposal of assets totaled $91.9 million in 1995, reflecting the
sale of the Company's UPR, MA and distribution businesses. Cash from disposal of
assets totaled $39.0 million in the first nine months of 1996, reflecting the
proceeds from the sale of the Company's coal chemicals business. These
divestitures reflect the Company's strategy to focus on its core businesses.
The Company has historically been a net generator of cash and believes that
cash generated from operations, supplemented as necessary with cash expected to
be available under the Company's revolving credit agreement or any long term
refinancing, will provide it with sufficient resources to meet present and
reasonably foreseeable future working capital and cash needs.
On September 30, 1996, the Company called for redemption all of its
outstanding Payment-in-Kind Debentures and Series A Preferred Stock. All such
securities were held by the holders of the Company's Common Stock. See
"Stockholders of the Company." Certain holders elected to exercise their right
to convert $179.6 million in principal amount of Payment-in-Kind Debentures and
$44.9 million in stated value of Series A Preferred Stock into Common Stock. The
remaining Payment-in-Kind Debentures in the principal amount of $24.4 million
and Series A Preferred Stock with a stated value of $6.1 million were redeemed
for cash. Interest and dividends on such securities had been paid in cash since
June 1, 1995, and amounted to $16.9 million of interest and $4.2 million of
dividends for the nine months ended September 30, 1996 and $15.3 million of
interest and $3.8 million of dividends for the year ended December 31, 1995.
The Company entered into a term loan agreement, dated as of August 1, 1994,
with MC in the amount of $203.0 million and which has a maturity date of July
31, 2002 (the "MC Term Loan"). As of September 30, 1996, $100.0 million was
outstanding under the MC Term Loan. The Company also entered into a term loan
and revolving credit agreement with MIC, dated as of August 1, 1994 (the "MIC
Term Loan" and the "MIC Revolving Loan", respectively). The MIC Term Loan
provided for a term loan in the principal amount of $100.0 million, all of which
was outstanding as of September 30, 1996. The MIC Term Loan had a maturity date
of March 31, 1997 and was prepaid in its entirety with a portion of the proceeds
from the sale of the Old Notes and terminated. The MIC Revolving Loan provides
for revolving credit loans in the principal amount of $150.0 million with a
final maturity date of April 18, 2002. As of September 30, 1996, $137.0 million
was outstanding under the MIC Revolving Loan. On January 4, 1995, the Company
also entered into a discretionary credit facility in the principal amount of
$20.0 million with PNC Bank, National Association and The Chase Manhattan Bank
(the "Old Working Capital Facility") to manage its daily working capital
fluctuations. The Old Working Capital Facility had $5.0 million outstanding as
of September 30, 1996. The Company has replaced the Old Working Capital Facility
with a new $50.0 million discretionary working capital facility as described
below.
MC guaranteed the MIC Term Loan, the MIC Revolving Loan and the Old Working
Capital Facility (collectively, the "Loans"). In consideration of the guarantee,
the Company agreed to pay MC a guarantee fee calculated on a daily basis in an
amount equal to 0.60% of the outstanding balance under the Loans for Loans
extending to June 3, 1996 and in an amount equal to 0.30% for Loans effective
June 3, 1996 and thereafter. The fee is payable semiannually.
The Company has arranged for a $50.0 million discretionary working capital
facility with a commercial lender (the "New Working Capital Facility") to manage
the Company's daily working capital fluctuations. The Company initially used
$40.0 million under the New Working Capital Facility to retire the Old Working
Capital Facility, as well as a portion of the MIC Revolving Loan. The New
Working Capital Facility constitutes unsecured senior indebtedness of the
Company and ranks pari passu with all other unsecured senior indebtedness of the
Company for borrowed money, including the Notes. Under the New Working Capital
Facility, the Company expects to indirectly access the commercial paper market
at market rates equivalent to A1/P1 commercial paper, plus a reasonable loan
margin typical for a company with a credit rating similar to that of the
Company.
On October 31, 1996, the Company entered into an interest rate hedging
contract with a commercial bank that effectively fixed at 6.404% the treasury
rate component of the all-in interest cost (treasury rate component plus credit
margin) to the Company of the $150.0 million in principal amount of Notes. The
Company settled the interest rate hedging contract at a cost of approximately
$2.5 million on November 22, 1996.
32
<PAGE> 34
CAPITAL EXPENDITURES
The Company's spending for property, plant and equipment in the period
January 1, 1993 to September 30, 1996 has focused on a mix of small projects for
process and quality improvement; large projects that increased capacity;
projects designed to improve the Company's environmental, health and safety
performance; and projects that increased operational reliability and utilization
of energy and raw materials.
Capital spending for the last quarter of 1996 is estimated at $22.0
million, reflecting ongoing spending for projects to optimize the phenol process
and alphamethylstyrene ("AMS") unit at the Company's Haverhill, Ohio facility;
to change catalyst at the PA unit at the Company's Pasadena, Texas facility; to
implement process and quality improvements at the Company's Neal, West Virginia
and LaPorte, Texas facilities; and to expand the acrylics unit at the Florence,
Kentucky facility. For a description of the operations of the Company, see "The
Company--Business."
The Company has planned a $235.0 million capital spending program for the
years 1997-1999. Included in the 1997-1999 capital spending program is
approximately $10.0 million for projects to improve the Company's environmental,
health and safety performance. The Company intends to finance this capital
spending program primarily through internally generated cash.
Contractual commitments for capital expenditures for property, plant and
equipment totaled $12.7 million and $10.2 million at December 31, 1995 and
September 30, 1996, respectively.
DIVIDENDS
It is the current intention of the Company to declare and pay cash
dividends on the Common Stock. The declaration and payment of dividends is at
the discretion of the Board of Directors of the Company. With respect to 1995,
the Board of Directors declared a regular dividend on the Common Stock of $9.7
million in the aggregate and a special dividend on the Common Stock of $10.3
million in the aggregate. The regular dividend was declared subsequent to a
recommendation of the Executive Committee of the Board of Directors providing
for a dividend yield equivalent to 6% per year on the stockholders' invested
common equity capital. A special dividend was paid with respect to 1995 in
recognition of the significant level of earnings achieved in 1995 and the
absence of any dividend on the Common Stock since the going-private transaction
in 1990. The declaration and payment of future dividends and the amount thereof
will be dependent upon the Company's results of operations, financial condition,
cash requirements for its businesses, future prospects and other factors deemed
relevant by the Board of Directors.
ORDER BACKLOG
Normally, significant customer orders are placed during the same month that
shipment is requested and orders placed for future delivery are subject to
revision or cancellation. For these reasons, the Company does not consider order
backlog to be a meaningful indication of future business activity for its
businesses.
33
<PAGE> 35
THE COMPANY
GENERAL
The Company is a leading producer and marketer of chemical and polymer
products with total annual rated production capacity in excess of three billion
pounds. The Company's product base includes phenol and related products; PA,
2-EH and plasticizers; and polypropylene and acrylic sheet. Avonite produces and
markets solid surface polyester sheet. These products provide the Company with a
diversified revenue base. While many of the Company's products are considered
commodities, the Company's production of polypropylene and acrylic sheet has
been increasingly directed toward more specialized, higher margin products.
There is significant vertical integration among the Company's products,
providing the Company with predictable supplies of certain of its raw materials.
The Company also has a diverse customer base, with no customer during 1995
accounting for more than 9% of revenues. End-use markets for the Company's
products include automotive components, home and office construction,
appliances, modular tubs/showers, whirlpools, spas, apparel, packaging, medical
supplies, signs and a wide range of consumer products.
The Company believes that the proximity of its principal facilities to
sources of raw materials provides it with a competitive cost advantage and an
enhanced ability to maintain production levels. In addition, the Company's West
Virginia polypropylene facility is situated near the important northeastern
United States market. The Company also believes that its disciplined approach to
planned plant maintenance results in highly reliable operations. Each of the
Company's product lines has its own dedicated sales force, which the Company
believes better enables it to address specific customer needs.
The Company was incorporated under the laws of the State of Delaware on
October 14, 1986 as a wholly-owned subsidiary of USX Corporation ("USX"). On
December 4, 1986, USX transferred substantially all of the assets and
liabilities of its USS Chemicals Division to the Company, and the Company's
Common Stock was offered and sold to the public. The USS Chemicals Division was
formed by USX in 1966 to build upon its basic position in coke oven by-products.
USX expanded the business into petro-chemical based products prior to its
transfer to the Company. On March 7, 1990, MC, certain other investors and
certain members of management of the Company acquired the Company in a
going-private transaction. The interests of certain of the investors, including
the management investors, have subsequently been reacquired, and 82.3% of the
Company's Common Stock is currently beneficially owned by MC. See "Stockholders
of the Company" and "Relationship with MC."
BUSINESS STRATEGY
CORE BUSINESSES
The Company's strategy is to focus on and expand its core businesses,
consisting principally of the manufacture and sale of products which consume
propylene- and aromatic-based raw materials. Those products include phenol,
acetone, aniline, diphenylamine ("DPA"), bisphenol-A ("BPA"), polypropylene,
2-EH, PA and plasticizers. The Company's predominant feedstock is propylene,
which currently is in abundant supply in the United States, providing the
Company with a cost advantage over non-United States producers of
propylene-based products. The Company's other feedstocks currently are also in
abundant supply. In furtherance of its strategy, the Company divested its UPR,
MA and distribution businesses and its coal chemicals business during 1995 and
1996, respectively. See "--Business--Disposition of Certain Businesses".
The Company has planned expansions to enhance the competitive position of
its core businesses. The Company plans to expand primarily through internal
development, but will pursue strategic alliances or joint venture arrangements
where the economics and potential synergies are considered advantageous to the
Company.
A feasibility study is underway for the addition of a third phenol
production unit at the Haverhill, Ohio facility at a cost of approximately
$100.0 million. Expansion at the Haverhill location is expected to enhance the
Company's competitive position due to the facility's close proximity to the
Company's markets and a major raw material source. A debottlenecking project at
a cost of approximately $14.0 million is currently
34
<PAGE> 36
underway at Haverhill which will increase current production of phenol by
approximately 10%, as well as increasing production of acetone and AMS.
A third line for the production of polypropylene at the Company's LaPorte,
Texas plant is in the engineering phase. The total estimated cost of the
polypropylene expansion is $150.0 million. The Company is evaluating the
possibility of a joint venture for this expansion involving a partner which
would contribute up to 50% of its cost.
ACRYLIC SHEET
The Company considers acrylic sheet a strategic business, with most of its
production occurring in higher margin specialty market segments that the Company
believes have strong growth potential. In order to position the acrylic sheet
business to more effectively and efficiently compete with the major producers of
acrylics in the world market, the Company has entered into a nonbinding letter
of intent which contemplates a joint venture with MRC. MRC is, among other
things, a Japan-based producer and seller of methyl methacrylate ("MMA") and
acrylic sheet with a strong base in acrylic sheet research and technology. No
definitive agreement has been reached with respect to the joint venture, and
there can be no assurance as to the ultimate terms of the venture, the timing of
its formation or whether it will be consummated. See "--Business--Acrylics and
Related Products--Possible Joint Venture."
The Company believes that its 1/8" Acrystone(R) acrylic solid surface
product represents a significant advancement over conventional solid surface
material. The Company has planned $55.0 million in capital projects for its
acrylics business, including capacity enhancement principally to meet the
projected demand for Acrystone(R).
ARISTECH TOTAL PERFORMANCE
The Company has had in place for several years a commitment to Total
Quality Management ("TQM"), known as Aristech Total Performance ("ATP"). Through
the ATP approach to management, the Company is committed to continuous
improvement in products and processes using a broad range of statistical tools.
ATP involves working collectively with suppliers and customers to reduce waste
and provide quality products that meet agreed upon customer requirements.
As part of the Company's quality improvement effort, the Company's Neal,
West Virginia, Haverhill, Ohio and LaPorte, Texas plants have been certified
under ISO 9000 standards with respect to production and shipping. The Pasadena,
Texas and Neville Island, Pennsylvania plants are also in the process of seeking
certification under ISO 9000 standards for production and shipping.
The Company's commitment to continuous improvement extends to its
environmental, health and safety ("EH&S") performance. This commitment is
demonstrated by the establishment of EH&S performance objectives and the
management systems necessary to implement them. The Responsible Care(R)
initiative of the Chemical Manufacturers Association ("CMA"), in which the
Company voluntarily participates, establishes more than 100 performance
objectives to improve the EH&S function. The Company's implementation of the
Responsible Care(R) initiative is ahead of the implementation timetable
established by the CMA. The Company's EH&S performance has been recognized in
the following instances:
- Of the 1,300 companies participating in the United States Environmental
Protection Agency's ("U.S. EPA") voluntary 33/50 program, the Company is
one of only 21 organizations nationwide to be selected for an award by
Chemical Engineering and Environmental Engineering World, publications of
The McGraw-Hill Companies, Inc., in cooperation with the U.S. EPA, which
recognizes outstanding achievement in reducing releases of certain
chemicals to the environment.
- The Company's Haverhill, Ohio facility was awarded STAR status in the
Occupational Safety and Health Administration's ("OSHA") Voluntary
Protection Program. This status is OSHA's highest classification for
safety and health program performance, and required the Haverhill, Ohio
facility to demonstrate that its safety systems surpassed compliance
requirements. The Haverhill, Ohio facility is currently one of less than
250 STAR sites nationwide.
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<PAGE> 37
BUSINESS
The Company operates in a single business segment. Each of the Company's
product lines has its own dedicated sales force responsible for domestic sales;
international sales, which accounted for approximately 21% of total sales in
1995, are either handled directly, through distributors or with independent
representatives. The following table sets forth certain information concerning
sales of the Company's principal classes of products, chemicals and polymers,
for the past five years. A description of these classes of products follows the
table.
SALES DATA
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
------------------------------------------------ SEPTEMBER 30,
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Chemicals......................... $420.6 $393.0 $371.2 $437.3 $ 595.0 $ 396.4
Polymers.......................... 427.7 406.5 417.3 508.2 428.3 295.2
------ ------ ------ ------ -------- -------
Total Sales.................. $848.3 $799.5 $788.5 $945.5 $1,023.3 $ 691.6
====== ====== ====== ====== ======== =======
</TABLE>
CHEMICALS
The chemicals produced and marketed by the Company are phenol and related
products, PA and 2-EH and plasticizers.
Phenol and Related Products
Phenol and related products consist of phenol, acetone, AMS, cumene
hydroperoxide ("CHP"), BPA, aniline and DPA. These products are organic chemical
intermediates with a variety of end uses, primarily in products targeted for the
automotive, consumer and construction industries.
All of the Company's products in this category are produced with processes
using licensed technology, except for CHP and DPA technologies which were
developed by the Company. The production facility at Haverhill, Ohio is located
along the Ohio River next to the mainline of the Norfolk Southern Railroad and
U.S. Route 52. The plant is in an advantageous position to receive feedstocks
and ship finished products.
Phenol. The largest single use of phenol is in making adhesives for plywood
and chipboard. Other important uses are high impact phenolic resins and
pharmaceuticals. Phenol, when used as a chemical intermediate, becomes a
component of nylon, herbicides and pesticides, and is used as a feedstock for
the production of BPA and aniline. Competition is based primarily on price. High
and efficient utilization of its facilities, proximity to a major supplier of
cumene and to the key domestic markets, and the high quality as well as
reliability of its product, are the Company's main competitive advantages.
The main raw material for phenol is cumene, which is first oxidized to form
CHP which is then distilled to produce phenol, acetone and AMS. Cumene is
obtained by the Company from several sources under competitively priced supply
agreements, and is also available on the spot market. The Company also obtains
phenol through arms'-length purchases from MCC to supply markets on the West
Coast of the United States.
In 1995, the Company sold approximately 44% of its total production of
phenol into the merchant market. Exports of phenol represented approximately 20%
of the Company's total phenol trade sales in 1995.
Acetone. Acetone is used as a solvent for paints, varnishes, lacquers and
vinyl resins, and as a raw material for a wide range of chemicals such as MMA,
BPA, diacetone alcohol and others. Approximately 7% of the Company's acetone
production was used as a raw material for the toll production of MMA for its
acrylics business in 1995, with the remainder being sold to the merchant market.
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<PAGE> 38
AMS. High-purity AMS, a low volume product, is used to provide heat
distortion resistance and strength in certain polymers, making it ideal for
specialty grades of plastics, rubber and protective coatings. The Company's
production is sold in the merchant market or hydrogenated to cumene.
BPA. BPA is an organic chemical intermediate that is produced from phenol
and acetone. BPA is consumed mainly in the production of polycarbonate and epoxy
resins, for which high impact and high heat resistance properties are desirable,
but increasing amounts are used to produce flame retardants, polysulfone resins,
phenoxy resins and polyester resins. Substitution of polycarbonate resins for
other plastic resins and metals in the automotive and consumer markets has
resulted in strong growth in sales of this product. The feedstocks for BPA are
internally produced phenol and acetone. Approximately 67% of the Company's
production was sold overseas in 1995, particularly in Japan, Israel and Italy.
CHP. CHP is an intermediate compound extracted from the phenol and acetone
facilities using a process developed by the Company's research laboratory. CHP
is sold to the domestic market primarily for use as a polymerization catalyst.
Aniline. Aniline is predominantly consumed in the production of MDI-based
isocyanates that are in turn used to make polyurethane foams and coating resins.
Polymeric isocyanates have been growth products used in construction (mainly as
building insulation) and in the automotive industry. Aniline is also consumed in
the production of rubber, photographic developers, agricultural chemicals and
dyes. Aniline is produced from on-site phenol and purchased ammonia which is
readily available from nearby sources. The Company is one of two in the world
that produces aniline from phenol.
DPA. DPA is utilized in rubber processing chemicals as well as in
pharmaceutical intermediates, dyes and as a stabilizer for petroleum and plastic
products. The Company produces DPA by its own proprietary process from
internally produced aniline. The Company is one of the two domestic producers of
DPA selling to the merchant market. Production capacity was expanded to 25
million pounds in April 1996 through a debottlenecking of the Company's
aniline/DPA facility.
PA and 2-EH
PA. PA is a commodity intermediate chemical used in the manufacture of
organic chemical products, such as plasticizers, unsaturated polyester resins,
alkyd paint and molding resins. PA is manufactured from orthoxylene, a readily
available petrochemical commodity purchased from a number of sources.
Approximately 27% of PA production in 1995 was used by the Company to make
plasticizers. The remainder of the output of PA is sold by the Company in the
merchant market. Since PA is a commodity, competition is based primarily on
price. PA is produced at the Company's facility on the Houston Ship Channel at
Pasadena, Texas, near raw material sources.
2-EH. 2-EH is also a commodity intermediate chemical used in the
manufacture of organic chemical products. Plasticizers are the major market for
2-EH and account for almost half of total 2-EH consumption. The feedstocks for
2-EH are natural gas and propylene. The Company's domestic supply of propylene
provides it with an advantage in the world market because of availability and
relatively lower cost. The Company has entered into supply contracts for natural
gas and propylene, but both are also available on the spot market. Approximately
31% of 2-EH output in 1995 was consumed by the Company in the production of
plasticizers. The remainder of the output of 2-EH is sold by the Company in the
merchant market. Approximately 79% of the 2-EH marketed by the Company in 1995
was sold for export. Competition is based primarily on price. 2-EH is produced
at the Company's facility on the Houston Ship Channel at Pasadena, Texas.
Plasticizers
Plasticizers are organic esters produced primarily in high volume commodity
grades. Plasticizers are used principally in the manufacture of flexible
polyvinyl chloride ("PVC") plastic products. PVC products are sold in a wide
variety of markets, including consumer (rainwear, toys and boots), housing
(flooring and wall coverings), automotive (seat and dashboard covers and vinyl
roofs) and industrial (wire and cable insulation).
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<PAGE> 39
Plasticizers are made from a variety of dibasic acids (primarily PA) and
linear and branched alcohols, including 2-EH. The Company produces its own
supply of PA and 2-EH at its Pasadena, Texas plant, which are the most
significant raw materials used in plasticizers.
The Company produces a complete line of plasticizers, suited for both
general and specialized applications, all of which is sold into the merchant
market. Competition is based chiefly on price. Flexible PVC is a mature,
cyclical market in which imports and other materials and plastics have made
inroads in recent years.
The Company manufactures plasticizers utilizing well-developed batch
process technology at its facility located on the Ohio River at Neville Island,
Pennsylvania. The plant is well situated to serve markets in the midwestern and
eastern United States.
POLYMERS
Polymers consist of the Company's polypropylene and acrylic sheet products
and Avonite's polyester sheet products.
Polypropylene
Polypropylene is a major thermoplastic resin produced by the Company in
both commodity and specialty grades. The major markets for polypropylene are:
synthetic fibers used in carpet backing, carpet face yarns, upholstery fabrics,
geotextiles and disposable diapers; automotive applications, including battery
cases and interior trim parts; packaging films for food and non-food
applications; injection-molded caps and closures; medical applications (syringes
and vials); and a wide range of other consumer products. The Company believes
that the polypropylene market has potential for continued growth due to
increasing applications for the product and continuing technological
improvements permitting the substitution of polypropylene for other more
expensive resins.
Propylene is the principal raw material used in the production of
polypropylene. The Company's LaPorte, Texas plant obtains its supply of chemical
grade propylene primarily via pipeline under agreements with Mobil Oil
Corporation and Lyondell Petrochemical Company, and the remainder on the spot
market. The Company's Neal, West Virginia plant is supplied with refinery grade
propylene via pipeline from the nearby refinery of Ashland Inc. ("Ashland") and
refinery and chemical grade propylene by rail from other refiners in the
northern tier of the United States and Canada. Both plants operate propylene
splitters which permit the upgrading of lower cost refinery and chemical grade
propylene to polymer grade feedstocks.
The Company sells substantially all of its output of polypropylene to the
merchant market. Exports, primarily to the Far East, represented approximately
10% of polypropylene sales in 1995. Imports are not a significant factor in the
domestic market.
The Company is one of 14 producers of polypropylene in the United States.
Competition among producers of commodity grade polypropylene is primarily on the
basis of price, as well as quality and service. In specialty grades, competition
is based primarily on product development, quality and service. To help direct
the Company's product mix toward the more specialized, higher margin products, a
technical services group provides assistance to customers to develop specialty
formulations to meet their specific product requirements. A new polypropylene
technical center is being built in Pittsburgh, Pennsylvania, further
strengthening the Company's commitment to customer service and focus on
specialty products. See "--Research and Development." Control of raw materials
supply and cost, utilization of the latest production technology and proximity
to markets are also important competitive factors.
The Neal, West Virginia plant utilizes the latest Spheripol(R) technology
developed by Montedison S.p.A. and licensed from Technipol B.V. The LaPorte,
Texas plant utilizes licensed high-yield catalyst technology.
38
<PAGE> 40
Acrylics and Related Products
Acrylics. Acrylic sheet is a polymeric product produced in specialty and
general purpose grades. It has excellent optical properties and resistance to
sunlight, weather and many chemicals. Applications include bathtubs, modular
tubs/showers, spas, whirlpool units, glazing, skylights, sign facia, vanity and
kitchen countertops and other decorative uses.
The primary feedstock for acrylic sheet is MMA, which the Company currently
obtains through third party toll conversion using acetone produced at the
Company's Haverhill, Ohio plant.
The Company sells all of its output in the merchant market. The Company has
positioned itself as a specialty producer with emphasis on solid surface,
plumbingware, spa and sign applications. Approximately 80% of the Company's
acrylic sheet sales occurred in these specialty market segments during 1995. The
Company is a leader in the research and development of premium acrylic products,
which the Company believes will expand market opportunities and establish
durable product advantages. The Company's most recent product advancement is
Acrystone(R), a mineral filled acrylic sheet designed for countertops, furniture
and miscellaneous building applications. Other product advancements include
Altair Plus(R) (acrylic/ABS composite) for spa, plumbingware, marine, camper top
and sign uses; Acrysteel M(R) (impact opaque sheet) for marine parts and tub
wall surrounds; and Quarite(R) (textured granite appearance acrylic sheet) for
many miscellaneous applications including spas and shower pans. In addition, a
new hybrid urethane foam product tradenamed Hyrizon(R) was introduced in late
1993 to provide a low volatile hydrocarbon emission, low labor-consuming system
to rigidize and reinforce its sheet products where required. General purpose
acrylic sheet, which accounted for approximately 20% of the Company's acrylics
sales in 1995, is a relatively low margin product in a highly competitive market
and is used for glazing, skylights, sign facia and merchandise displays.
The Company believes that its 1/8" Acrystone(R) solid surface sheet
represents a significant proprietary advancement over conventional 1/2" solid
surface material, permitting the same appearance at significantly lower cost.
The Company has entered into an agreement with Wilsonart International Inc.
("Wilsonart"), a leading manufacturer of decorative laminate and other surfacing
options, granting Wilsonart the exclusive right in the Americas to purchase all
1/8" Acrystone(R) sheet produced by the Company, except for sales for use in
exterior applications and certain sales to Avonite. Wilsonart sells the 1/8"
Acrystone(R) sheet and a proprietary adhesive as the Wilsonart(R) Solid
Surfacing Veneer laminate system to the countertop market as an economical solid
surface option.
The Company produces acrylic sheet using the continuous cast method. This
process permits the Company to produce cross-linked sheet products of
significantly greater widths and lengths than are obtainable from the more
commonly used cell-cast or extrusion methods. The Company's acrylic sheet is
produced at its Florence, Kentucky plant which is equipped with three continuous
casters. Design, operation and maintenance of the continuous casters represent
significant proprietary technology of the Company. The Company is one of four
domestic producers of cast acrylic sheet products and one of two which use the
continuous cast method.
Possible Joint Venture. On May 22, 1996, the Company entered into a
non-binding letter of intent (the "Letter of Intent") with MRC which
contemplates the formation of a joint venture for the production and sale of
acrylic sheet products and decorative surfacing materials. MRC is, among other
things, a Japan-based producer and seller of MMA and acrylic sheet with a strong
base in acrylic sheet research and technology. See "Stockholders of the
Company." The Company believes that the respective acrylics businesses of the
Company and MRC have complementary strengths, and that the relationships
contemplated by the Letter of Intent would enable the joint venture to compete
effectively on a global basis. No definitive agreement has been reached with
respect to the proposed joint venture, and there can be no assurance as to the
ultimate terms of the venture, the timing of its formation or whether it will be
consummated.
Avonite. Avonite, a 60%-owned subsidiary of the Company, produces premium
solid surface polyester sheet under the tradename Avonite(R). Avonite(R) is used
for countertops, wall cladding and other decorative/architectural applications.
Avonite's production facility in Belen, New Mexico is a small, yet significant
force in the premium solid surface products market. Avonite produces its sheet
from unsaturated polyester
39
<PAGE> 41
resins purchased in the highly competitive resin market. In addition, Avonite
purchases and resells certain of the Company's Acrystone(R) acrylic solid
surface sheet products made at the Florence, Kentucky facility. The recent
increase in ownership by the Company to a controlling position in Avonite will
permit the development of common market objectives and strategies.
PLANT PROFILE
The Company's six production facilities are located near major suppliers of
raw materials and transportation sources and are generally operating near or at
capacity. Avonite has one facility located in Belen, New Mexico, which is
mortgaged to secure an industrial revenue bond.
<TABLE>
<CAPTION>
PRODUCT ANNUAL CURRENT TYPICAL END PLANT
PRODUCED RATED CAPACITY USE PRODUCTS LOCATIONS
- ------------------------ ------------------- -------------------------------- -------------------
<S> <C> <C> <C>
CHEMICALS
Phenol 630 Million Lbs. Phenolic Resins and Other Haverhill, OH
Plastics
Acetone 390 Million Lbs. Solvent and Acrylic Plastic Haverhill, OH
Alphamethylstyrene 35 Million Lbs. Automotive Plastics Haverhill, OH
Cumene Hydroperoxide 16 Million Lbs. Polymerization Catalyst Haverhill, OH
Bisphenol-A 215 Million Lbs. Polycarbonate Engineering Haverhill, OH
Plastics, Epoxy Resins and
Adhesives, Specialty Resins and
Inks
Aniline 150 Million Lbs. Polyurethane Foams, Dyes and Haverhill, OH
Photographic Chemicals
Diphenylamine 25 Million Lbs. Rubber Chemicals and Haverhill, OH
Antioxidants
Phthalic Anhydride 265 Million Lbs. Plasticizers, Unsaturated Pasadena, TX
Resins, Alkyd Paints and Molding
Resins
2-Ethylhexanol 280 Million Lbs. Plasticizers, Acrylates, Resins, Pasadena, TX
Surfactants, Defoamers and Lube
and Oil Additives
Plasticizers 190 Million Lbs. Vinyl Plastics Neville Island, PA
POLYMERS
Polypropylene 828 Million Lbs. Automotive Parts, Monofilament LaPorte, TX and
Fibers, Battery Casings, Neal, WV
Consumer and Medical Products,
Packaging Films, Strapping and
Housewares
Acrylic Sheet 56 Million Lbs. Outdoor Signs, Lighting Florence, KY
Fixtures, Modular Tub and Shower
Units, Spas, Whirlpools and
Vanity and Kitchen Countertops
Avonite(R) Solid 2.5 Million Square Vanity and Kitchen Countertops, Belen, NM
Surface Sheet Feet (84,000 Wall Cladding and Other
sheets) Decorative/Architectural
Applications
</TABLE>
40
<PAGE> 42
EMPLOYEE RELATIONS
The Company employs approximately 1,500 people. Avonite employs
approximately 180 people. The operating personnel at the Company's Florence,
Kentucky, Neal, West Virginia, and Neville Island, Pennsylvania facilities are
represented by the International Chemical Workers, the Oil, Chemical and Atomic
Workers International Union and the United Steelworkers of America (the "USW"),
respectively. Historically, operations have generally not been interrupted by
strikes. The Company's other facilities are not represented by unions.
RESEARCH AND DEVELOPMENT
The Company's research and development activities are conducted at a
research center at Monroeville, Pennsylvania and augmented by product
development and technical service groups directly attached to the acrylic sheet,
polypropylene and plasticizer businesses. Expenditures for these activities were
$13.7 million in 1994 and $12.6 million in 1995.
Research and development is conducted by a staff of 45 professionals. To
support research in existing business lines, pilot facilities for the production
of polypropylene and acrylic sheet are located at the research center. Projects
rely on scientific and engineering applications of synthetic organic chemistry,
polymer science, analytical chemistry, catalysis and process simulation and
modeling. The mission of the research program is to maintain the Company's
strong technological position in the product lines in which it participates and
to provide technological support for growth in related areas. Research programs
have led to commercialization of a new aniline catalyst, redesign of the aniline
process for co-production of DPA, and an improved process for reactivating the
2-EH plant catalyst. The research program has developed new products including a
functionalized polypropylene (Unite(R)). The research program is also developing
enhancements to two licensed technologies, a new crystalline form of
polypropylene (Bepol(TM)) and a hybrid rigidizing foam (Hyrizon(R)).
An additional 30 professionals are engaged in product development and
associated research activities. Significant emphasis is placed on providing
technical services to customers as a value-added service. These technical
services assist customers in designing new downstream products and permit
increased specification of the Company's products. With respect to
polypropylene, examples of these services include working with automotive
company materials design teams on concept projects several years ahead of
product introduction and educating customers in the use of the Company's
products for their specific requirements.
On January 10, 1996, the Company announced that it will build a new
polypropylene technical center in Pittsburgh, Pennsylvania. The new facility,
with state-of-the-art laboratories, is designed to enhance the Company's
competitive position in the marketplace for polypropylene. See
"--Business--Polymers-- Polypropylene." Construction on the building to house
the new facility began in June 1996, with occupancy expected in mid-1997. The
new center will provide the polypropylene technical department with laboratories
for polymer characterization and physical testing, and will contain processing
equipment for fibers, film, extrusion, injection molding and compounding,
including a bank of bench scale reactors especially suited for product and
catalyst studies.
PATENTS AND TRADEMARKS
The Company possesses a substantial body of technical know-how and trade
secrets and owns approximately 87 United States patents applicable to all phases
of its business, including product formulations and production processes. The
Company considers its know-how, trade secrets and patents important to the
conduct of its business although no individual item is considered to be material
to the business. Certain plants use technology licensed from others. Royalty
expense on these licenses amounted to $2.6 million in 1995. The Company also has
licensed its Acrysteel(R) technology to MRC. The Company is also entitled to
receive royalties under certain circumstances for two stage cleavage technology
used in the production of phenol and acetone, which is licensed by a third party
to MCC.
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<PAGE> 43
LEGAL PROCEEDINGS
The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its business.
The Company is a defendant in a patent infringement suit filed by Phillips
Petroleum Company ("Phillips") in 1987, in the United States District Court for
the Southern District of Texas, captioned Phillips Petroleum Company v. Aristech
Chemical Corporation, Civil Action No. H87-3445. The complaint alleges
infringement of two patents related to the production of polypropylene, which
have since expired. The Company and Phillips each filed motions for summary
judgment which were referred to a Special Master. The Special Master issued a
lengthy recommendation to find in the Company's favor, and Phillips filed a
motion to reject the Special Master's recommendation. A hearing on this motion
was held on October 21, 1996. On November 13, 1996, the District Court granted
the Company's motion for summary judgment and entered that order on November 19,
1996. The order is subject to appeal. The Company believes that the outcome of
this matter will not have a material adverse effect on the Company.
The Company becomes involved from time to time in proceedings involving
environmental matters. See "--Environmental, Health and Safety Matters" below.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
The Company (and the industry in which it competes) is subject to pervasive
environmental laws and regulations concerning the production of chemicals,
emissions to the air, discharges to waterways and the generation, handling,
storage, transportation, treatment and disposal of waste materials and is also
subject to other Federal and state laws and regulations regarding health and
safety matters. These laws and regulations are constantly evolving and it is
impossible to predict accurately the effect these laws and regulations will have
on the Company in the future.
Each of the Company's six production facilities has permits and licenses
regulating air emissions and water discharges. Each of these production
facilities that requires permits for the treatment, storage or disposal of
hazardous waste has interim permits. Some permits and licenses, including all
for hazardous waste treatment, storage or disposal, require that the holder meet
financial responsibility criteria. The Company meets the financial
responsibility criteria required for holding hazardous waste permits and
licenses through letters of credit from a national commercial bank and corporate
guarantees provided by MC.
It is the Company's policy to comply with all applicable environmental,
health and safety laws and regulations. Nonetheless, in the course of conducting
its business, regulatory compliance issues can arise with regard to the
Company's operations or its products. In addition, environmental laws and
regulations establish requirements for recordkeeping and other administrative
efforts. Resolving such issues and satisfying recordkeeping and other
administrative requirements can require the Company to incur ongoing operating
costs and/or make capital expenditures to achieve or maintain compliance with
such laws and regulations. The Company has expended substantial funds for such
compliance in the past, and expects to continue to do so. Future requirements
arising from new laws and regulations can also give rise to additional
compliance costs. The Company is unable to predict the magnitude of its
aggregate future compliance costs. Violations of environmental permits or
licenses could result in substantial sanctions, which could be civil, criminal,
or both. Violations could also result in the revocation of such permits or
licenses. In addition, the operation of any chemical manufacturing plant entails
risk of adverse environmental effect, including exposure to chemical products
and by-products from the Company's operations.
In some cases, compliance can only be achieved by capital expenditures. In
the first nine months of 1996, the Company spent $7.4 million for
environmentally related capital expenditures. For the remainder of 1996 and all
of 1997, the Company anticipates environmentally related capital expenditures of
$0.8 million and $3.6 million, respectively. For periods beyond 1997, the
Company cannot accurately predict what capital expenditures will be required.
Based upon preliminary estimates of capital expenditures for environmental
projects at existing facilities and without any detailed engineering or other
technical planning, the Company broadly estimates that expenditures for 1998 and
1999 will total $6.0 million in the aggregate.
42
<PAGE> 44
On September 28, 1994, the U.S. EPA issued an administrative complaint
alleging that the Company's Haverhill, Ohio facility had violated regulations
issued under the Resource Conservation and Recovery Act ("RCRA") regarding the
burning of hazardous waste in boilers. The Company denied most of the
allegations and vigorously disputed the U.S. EPA's interpretation of the
applicable regulations. By letter dated April 17, 1996, the U.S. EPA notified
the Company of additional compliance issues regarding the Company's operation of
its boilers at the Haverhill Plant. The Company and the U.S. EPA have executed
an agreement, effective November 27, 1996, that resolves all outstanding issues
to both parties' satisfaction. As part of this settlement, the Company is
obligated to pay a cash penalty in the amount of $229,311. The Company is also
committed to a project relating to the Company's practice of burning hazardous
waste at Haverhill, entailing a capital expenditure and related costs of
approximately $750,000. The Company expects to complete this project by April
1997.
The Company continues to encounter problems with air pollution control
equipment recently installed at the Pasadena, Texas facility as part of its 2-EH
expansion. Although the Company is continuing its attempts to resolve these
problems, the Texas Natural Resources and Conservation Commission has suggested
that it may require the Company to revert to pre-expansion permit conditions
until the air emissions control devices are operating properly.
The Company's facilities for many years have shipped waste materials to
third party sites for treatment and/or disposal. As a result of these practices,
the Company is currently involved in investigative or cleanup projects under the
Comprehensive Environmental Response Compensation and Liability Act ("CERCLA")
or comparable state laws at 24 sites. Based on currently available information,
the Company has reserved $3.6 million in the aggregate for its share of costs
associated with certain of these sites. No amount has been reserved for a
majority of such sites, since amounts are included only when costs are
reasonably estimable. At ten of the sites, either the regulatory agency has
indicated that no further action will be required or the Company has settled out
as a de minimis party. It is possible that the Company may be involved in future
investigations and cleanups of other sites to which the Company sent waste
materials. The Company cannot predict such future liabilities with accuracy.
RCRA requires the Company to estimate the closure and post-closure costs
for its hazardous waste treatment, storage and disposal facilities. The Company
estimates total closure and post-closure costs for its existing facilities, and
any former facilities for which the Company contractually retained liability, to
be approximately $10.0 million. The Company revises these costs at least
annually to reflect inflation, and at other times to address changed conditions.
The Company has closed hazardous waste management facilities at its Linden, New
Jersey and Florence, Kentucky facilities and at its former facility at Colton,
California. The Company is awaiting regulatory acceptance of these closures and
it is not known whether additional closure requirements will be imposed.
The New Jersey Industrial Sites Recovery Act requires that the Company
investigate site conditions at its former manufacturing facility in Linden, New
Jersey (currently operated as a warehouse and distribution facility) to assess
the type and extent of contamination that may be present. The Company has
submitted a Remedial Investigation/Remedial Action Plan (the "Plan") to the New
Jersey Department of Environmental Protection (the "NJDEP") with respect to this
facility. The Company has performed certain remedial actions pursuant to the
Plan with the approval of the NJDEP at a cost of approximately $25,000. The
remaining remedial actions proposed by the Plan, currently estimated to cost
$775,000, have not been approved by the NJDEP. The Company cannot predict
whether the NJDEP will approve the remainder of the Plan as proposed, whether
additional cleanup conditions, if any, may be imposed, or the costs of any such
additional cleanup conditions.
The Company has been investigating an area of its former Colton, California
facility at the request of the Santa Ana Regional Water Quality Control Board.
Soil sampling has revealed residual contamination and groundwater monitoring
wells have been installed. Groundwater sampling is planned at an estimated cost
of $25,000. It is not possible to estimate the costs of further investigation or
cleanup, if any, at this time.
RCRA can also impose corrective action requirements at facilities where
hazardous waste treatment, storage and disposal occurs or has occurred.
Corrective action requirements include investigation, and
43
<PAGE> 45
remedial action for impacted soils and groundwater. While preliminary
investigations have occurred at some of the Company's facilities, it is not
possible to predict the timing or extent of the remedial actions which
ultimately might be required.
Some studies suggest that certain industrial chemicals, including
phthalates and BPA, mimic the effect of hormones in people and animals, and
adversely influence the reproductive process. Some phthalate esters have been
implicated in unverified screening tests. The Company believes that this effect
is not associated with its phthalate ester product line, based on the results of
independent and industry sponsored testing. BPA has also been implicated by the
same screening tests. To address this allegation, the Company and the other
United States BPA producers have established an extensive reproductive health
testing program that the Company believes will demonstrate that BPA does not
cause estrogenic effects in animals or humans. Newly enacted legislation
associated with the safety of drinking water and the food supply contains
requirements for performing estrogenicity screens. While BPA and certain
phthalate esters will most likely be targeted by these requirements, the Company
believes that voluntary testing completed or currently underway will mitigate or
obviate the need for additional estrogenicity testing.
Certain plasticized esters, particularly DEHP (di-ethylhexyl phthalate,
also known as dioctyl phthalate, or DOP) have been under public attention and
close scrutiny by health and environmental agencies during recent years. While
there are no government regulations in force or proposed that restrict their
marketing, sale or use, issues of public safety may eventually affect a segment
of the market for DOP plasticizers.
The chemical industry was formerly subject to the tax imposed on petroleum
and chemical feedstocks under CERCLA, which last expired December 31, 1995. The
reauthorization of this tax is anticipated and it could be retroactive to
January 1, 1996. Accordingly, the Company estimates an annualized accrual for
this tax for 1996 in the amount of $2.5 million. As under previous law, a
portion of this tax liability may be passed on to customers.
The Company's domestic competitors are subject to the same environmental,
health and safety laws and regulations and the Company believes that its issues
and potential expenditures are comparable to those faced by its major domestic
competitors. As noted in the discussion of individual product lines, the markets
for most of the Company's products are very price competitive. Therefore, future
environmentally related capital expenditure requirements, liabilities and costs
could be a major factor in the Company's future sales and income, since it may
not always be possible to pass costs on to customers.
DISPOSITION OF CERTAIN BUSINESSES
COAL CHEMICALS BUSINESS
In March 1996, the Company sold to Koppers Industries, Inc. ("Koppers")
substantially all of its assets related to the production and sale of coal
chemicals (the "Coal Chemicals Business"), and Koppers assumed certain of the
liabilities in connection with the Coal Chemicals Business. The Company has
agreed to indemnify Koppers against liabilities arising from (i) breaches of the
Company's representations, warranties and covenants contained in the asset
purchase agreement and (ii) claims relating to the Coal Chemicals Business
arising out of events occurring prior to the sale. The Company's representations
and warranties expire September 30, 1997, and any claim by Koppers for
indemnification for breach of the expired representations and warranties must be
made by October 15, 1997. The Company's indemnification obligations for breaches
of representations and warranties extend only to amounts in excess of $100,000
in aggregate claims and are capped at $2.5 million in the aggregate. None of the
foregoing limitations is applicable to liabilities retained by the Company,
including, among others, the environmental liabilities described below.
Under the Reorganization Agreement dated October 14, 1986, under which the
Coal Chemicals Business was transferred from USX to the Company, USX generally
retained responsibility for pre-1986 environmental conditions on the properties.
Koppers generally assumed (with certain exceptions) all environmental
compliance, toxic exposure, environmental damage and environmental response cost
liabilities arising after 1986 with respect to the Coal Chemicals Business. The
Company retained, and agreed to indemnify Koppers for, liabilities arising from
specific listed environmental "incidents," although the Company is not aware of
any
44
<PAGE> 46
asserted or overtly threatened claims likely to lead to material liabilities
related to any of the enumerated incidents.
The Company also agreed to retain liabilities related to: (i) claims of
personal injury arising from exposure to regulated substances released between
December 4, 1986 and the sale; (ii) claims of property value diminution arising
from releases to the air of regulated substances by the Company occurring
between December 4, 1986 and the sale (but only if those claims are asserted
within 24 months of the sale); (iii) claims related to the shipment, treatment
or disposal of regulated substances at off-site locations during the period of
the Company's operations of the facilities; and (iv) enforcement actions and
penalties relating to violations of environmental laws resulting from operations
of the business or use of the property during the period of the Company's
ownership. As of the date of this Offering Memorandum, the Company is not aware
of any actual or threatened claim for indemnification arising under these
provisions.
POLYESTER BUSINESS
In April 1995, the Company sold to Ashland substantially all of its assets
related to the manufacture and sale of UPR and MA and the distribution of UPR
and other polyester products (collectively, the "Polyester Business"). Ashland
also assumed certain of the Company's liabilities in connection with the
Polyester Business. The Company retained ownership of the land underlying the
production facility for the Polyester Business located at Neville Island,
Pennsylvania. The Company continues to manufacture plasticizers at Neville
Island. Ashland generally purchased all physical assets at the Neville Island
facility primarily used in the production of UPR and MA, and the Company
retained those primarily used to manufacture plasticizers. The Company granted
to Ashland an irrevocable easement for the land beneath the structures
transferred to Ashland and certain areas around and between those structures,
and each party granted the other rights to permit access to and maintenance of
the other party's assets, as necessary.
Ashland and the Company also entered into a services agreement whereby each
agreed to supply the other with certain services related to the other party's
operations at the Neville Island facility. The prices charged for such services
are generally designed to approximate the supplier's cost of providing the
services. The services agreement contains a mutual release and indemnification
provision whereby each party, as a recipient of services, releases and
indemnifies the other, as a service provider, from and against claims arising
from the acts of the service provider's employees or claims asserted by such
employees in connection with the furnishing of services under the agreement.
The Company has agreed to indemnify Ashland against liabilities arising
from (i) breaches of the Company's representations, warranties and agreements
contained in the asset purchase agreement and related documents and (ii) the
Company's operation of the Polyester Business prior to the sale. Most of the
Company's representations and warranties have expired. The Company's aggregate
indemnification obligations for breach of any representation or warranty
(whether or not expired) are capped at $30 million. The parties' respective
obligations with respect to environmental matters are not covered by the
foregoing provisions.
With respect to environmental matters, the Company: (1) retained liability
for any claims that might be asserted regarding previous shipments of regulated
substances from the businesses to off-site treatment and disposal facilities;
(2) agreed to indemnify Ashland from enforcement proceedings or penalties
arising from alleged violations of environmental laws resulting from business
operations that may have occurred prior to the closing; and (3) agreed to make
certain modifications of the incinerator at the Jacksonville, Arkansas site to
assure compliance with applicable air quality permit requirements and
performance criteria.
With respect to the Neville Island facility: (1) the Company agreed
(subject to a number of limitations) to indemnify Ashland against claims arising
from pre-closing environmental contamination conditions, if any, and any
contamination caused by future releases from the Company's operations; (2)
Ashland agreed to indemnify the Company from environmental conditions arising
from future releases caused by Ashland; and (3) an allocation arrangement is
established under which responsibility for an environmental condition may be
shared. Because an environmental assessment has not been completed at the
Neville Island facility, the nature and extent of potential environmental
contamination has not been ascertained.
45
<PAGE> 47
With respect to the other UPR and MA production facilities, the Company
agreed to indemnify Ashland for any required investigation and remediation of:
(1) certain former waste management units at the Colton, California site; (2)
phosphate contamination in groundwater at the Bartow, Florida site, caused by
nearby mining operations; and (3) contamination in a former waste pond at
Bartow. The Company also agreed to complete closure of certain listed former
waste management units at those production facilities, and to be responsible for
certain additional assessments or investigations of specifically identified
areas affected by various former solid waste management units and
previously-removed underground storage tanks. The Company has reserved $24,813
for the estimated costs of completing the required investigations and closure
work, although any estimate of the costs associated with certain of that work
cannot be made until further investigations have been completed. As to
remediation of environmental conditions arising from previous solid waste units,
the Company and Ashland agreed to share such expenses in excess of an annual
deductible amount, under a sliding scale that reduces the Company's share from
100% to 0% over 25 years. With respect to other environmental conditions
(including presently unknown and unidentified conditions), the Company agreed to
share with Ashland costs of additional investigations and remedial actions, with
the Company's share of such costs based on a sliding scale which decreases over
a 21-year period. Those obligations to indemnify Ashland are subject to an
annual deductible amount of $20,000 per facility and $40,000 in the aggregate.
As to the distribution facilities (all of which were leased properties),
the Company retained liability for pre-closing environmental conditions, if any,
only until the expiration of the then pending leases. The last of those leases
will expire on October 30, 1998. Special provisions govern the allocation of
responsibilities at the leased Ankeny, Iowa distribution facility, as to
contamination resulting from the former operations of the Albaugh Chemical
Company, to the extent that such matters are not covered under an
indemnification provided by the lessor of that property.
All of the Company's indemnification obligations relating to environmental
conditions at the former UPR and MA business facilities, including Neville
Island, are subject to a cap of $34.0 million, which value is escalated on a
quarterly basis based upon the producer price index. The Company's current
accrual for financial reporting purposes for known matters covered by this
indemnification is $24,813.
MC entered into a letter agreement with Ashland to provide certain
assurances to Ashland with respect to the Company's environmental
indemnification obligations to Ashland. The letter agreement prohibits MC, in
its capacity as a controlling stockholder of the Company, from (i) dissolving
the Company or (ii) causing the Company to transfer assets such that the value
of its remaining tangible assets falls below $40.0 million, unless MC provides
to Ashland reasonable security or other financial assurance regarding such
obligations. The letter agreement expires the earliest of (i) April 28, 2020,
(ii) effectuation by the Company of a public offering of its equity securities,
(iii) MC and its subsidiaries ceasing to own over 50% of the Company's
outstanding equity securities and (iv) the Company becoming the subject of a
bankruptcy proceeding.
Also in connection with the sale, Ashland and the Company entered into
supply contracts for the purchase and sale of MA (the "MA Supply Contract"), PA
(the "PA Supply Contract") and 2-EH (the "2-EH Supply Contract"). The MA Supply
Contract obligates the Company to purchase from Ashland all of its annual North
American consumption requirement of MA for the facilities and businesses owned
by the Company as of April 28, 1995. The PA Supply Contract obligates Ashland to
purchase from the Company all of Ashland's North American consumption
requirement of PA for the facilities and businesses owned by Ashland as of April
28, 1995. The 2-EH Supply Contract requires Ashland to purchase from the Company
all the 2-EH used by Ashland to produce UPR. The MA and PA Supply Contracts
terminate on April 28, 2000, subject to the parties' obligation to negotiate in
good faith the terms and conditions of an additional 60-month supply agreement.
The 2-EH Supply Contract has a term expiring on December 31, 1999 and continuing
from year to year thereafter unless terminated by prior notice of either party.
OLEFINS BUSINESS
In November 1987, the Company sold to Mobil Oil Corporation ("Mobil")
certain assets of the Company's olefins operations (the "Olefins Business") and
Mobil assumed certain liabilities in connection
46
<PAGE> 48
with the Olefins Business. Mobil assumed no pre-existing environmental
liabilities related to the Olefins Business. The Company has agreed to indemnify
Mobil for environmental liabilities related to the Olefins Business existing on
or prior to the sale. As of the date of this Offering Memorandum, there are no
pending or threatened claims for indemnification arising under these provisions.
With respect to environmental claims arising from actions of parties other than
the Company and USX prior to the ownership of the Olefins Business by USX, the
Company's indemnification obligations expired in November 1992, since Mobil made
no demand for such indemnification within five years of the closing. The maximum
aggregate liability of the Company for indemnification of Mobil for
environmental claims is $5.0 million.
Mobil agreed to indemnify the Company for all environmental liabilities
related to actions taken or the failure to take actions by Mobil relating to the
Olefins Business on or after the sale.
47
<PAGE> 49
MANAGEMENT
DIRECTORS
The By-Laws of the Company provide that the Board of Directors will consist
of 13 members, which number may be increased or decreased by an amendment to the
By-Laws, but in any event the number of directors may not be less than three.
There currently are nine members of the Board of Directors. The members of the
Board of Directors will serve until the 1997 annual meeting of stockholders or
until their successors are elected and qualified. The Board of Directors has
established an Executive Committee to act between meetings of the Board on all
matters which may be legally delegated to a committee of the Board. Directors of
the Company currently receive no fees or remuneration for service as a member of
the Board or any Board Committee. Information with respect to those persons who
serve as directors is set forth below:
<TABLE>
<CAPTION>
NAME, AGE AND OCCUPATION
- -----------------------------------
<S> <C>
Jiro Kamimura (61) Jiro Kamimura became Chairman and Chief Executive
Chairman and Chief Executive Officer in April 1995 and became Chairman-elect and
Officer; Member of Executive Chief Executive Officer in October 1994. Mr. Kamimura
Committee became Vice Chairman and a Director in January 1994. Mr.
Kamimura was previously the Senior Assistant to the
Senior Managing Director--Chemicals of MC for more than
five years. Mr. Kamimura joined MC's Chemicals
Department in 1958.
Charles W. Hamilton (58) Charles W. Hamilton became President and Chief Operating
President and Chief Operating Officer on January 1, 1994 and has been a Director since
Officer; Member of Executive January 1991. Previously, he held the positions of
Committee Executive Vice President from March 1993 to January 1994
and Senior Vice President--Intermediate Chemicals and
Special Products Division from May 1989 to March 1993.
Michael J. Egan (43) Michael J. Egan became Senior Vice President, Chief
Senior Vice President and Financial Officer and a Director in April 1995.
Chief Financial Officer; Member Previously, Mr. Egan was Vice President--Planning and
of Executive Committee Control of ARCO Chemical Company--Americas from 1993 to
1995; Controller, ARCO Chemical Company from 1991 to
1993; and Controller, ARCO Alaska, Inc. from 1988 to
1991.
Masatake Bando (53) Masatake Bando became a Director in August 1996. Mr.
Director Bando has been Senior Vice President and Chief Operating
Officer--Chemicals of MIC, since June 1996. Mr. Bando
was General Manager of Aromatics Petrochemicals
Department of MC from May 1994 to June 1996; General
Manager of Corporate Planning, Eastern Petrochemical Co.
from May 1992 to April 1994; and Deputy General Manager
of Aromatics Petrochemicals Department of MC from
January 1991 to May 1992.
</TABLE>
48
<PAGE> 50
<TABLE>
<CAPTION>
NAME, AGE AND OCCUPATION
- -----------------------------------
<S> <C>
Hajime Koga (54) Hajime Koga became a Director in April 1990. Mr. Koga
Director; Member of Executive has been General Manager of Aristech Department and
Committee General Manager of Basic Chemicals Division B of MC
since June 1996. Mr. Koga was General Manager of
Aristech Department and Senior Assistant to Managing
Director--Chemicals of MC from June 1995 to June 1996;
General Manager of Aristech Department of MC from April
1995 to May 1995; Senior Staff of Managing
Director--Chemicals of MC from August 1994 to March
1995; Senior Vice President, Chief Operating Officer--
Chemicals of MIC from April 1993 to June 1994; and Vice
President, General Manager of Basic Chemicals Department
of MIC from September 1988 to March 1993.
Yoshizo Shimizu (61) Yoshizo Shimizu became a Director in June 1996. Mr.
Director Shimizu has been a Managing Director of MRC since 1991
and has been Executive Managing Director, Corporate
Administration Division of MRC since June 1996.
Yasuo Sone (57) Yasuo Sone became a Director in August 1996. Mr. Sone
Director has been Managing Director--Chemicals of MC since April
1996. Mr. Sone was Director and Senior Assistant to
Managing Director--Chemicals of MC from March 1995 to
March 1996; Director of MC and Executive Vice President
of MIC from June 1994 to February 1995; Executive Vice
President of MIC from April 1993 to June 1994; and
Senior Vice President, Chief Operating
Officer--Chemicals of MIC from April 1991 to March 1993.
Muneo Suzuki (57) Mr. Suzuki became a Director in July 1996. Mr. Suzuki
Director has been Managing Director and President of Industrial
Chemicals Company of MCC since June 1996. Mr. Suzuki was
Managing Director and President of Fiber Intermediates
Company of MCC from June 1995 to June 1996; Director and
President of Fiber Intermediates Company of MCC from
October 1994 to June 1995; Board Director, General
Manager of Synthetic Chemicals Division and Polyester
Division of Mitsubishi Kasei Corporation ("MKC") (a
predecessor of MCC) from January 1994 to September 1994;
Board Director, General Manager of Synthetic Chemicals
Division of MKC from June 1992 to January 1994; and
General Manager, Synthetic Chemicals Division, Organic
Chemical Products Business Group of MKC from March 1988
to June 1992.
Takayori Tsuboi (59) Takayori Tsuboi became a Director in July 1996. Mr.
Director Tsuboi has been President of Mitsubishi Chemical America
Inc. since June 1996 and Managing Director of MCC since
June 1995. Mr. Tsuboi was Managing Director,
Petrochemical Planning Department and Overseas
Department of MCC from October 1994 to June 1995;
Director, Corporate Planning Department and Management
Planning Department of Mitsubishi Petrochemical Co.,
Ltd. ("MPC") (a predecessor of MCC) from June 1993 to
September 1994; Director, Osaka branch of MPC from June
1992 to June 1993; and Director, Personnel Department of
MPC from June 1990 to June 1992.
</TABLE>
49
<PAGE> 51
EXECUTIVE OFFICERS
Set forth below is certain information relating to the ages and business
experience of the non-director executive officers of the Company.
<TABLE>
<CAPTION>
NAME, AGE AND OCCUPATION
- -----------------------------------
<S> <C>
Mark K. McNally (50) Mark K. McNally became Senior Vice President, General
Senior Vice President, Counsel and Corporate Secretary in April 1995. He was
General Counsel and previously Vice President--Environmental Affairs,
Corporate Secretary Occupational Health and Safety from 1992 to 1995,
Director--Environmental Affairs, Occupational Health and
Safety from 1991 to 1992 and Senior Counsel of the
Company from 1986 to 1991.
James J. Driscoll Jr. (58) James J. Driscoll Jr. became Senior Vice
Senior Vice President--Polymers President--Polymers in June 1994. He was previously
Senior Vice President--Thermoplastic Polymers from
March 1993 to June 1994, and was Vice President and
General Manager--Thermoplastic Polymers Division from
May 1989 to March 1993.
Charles P. Costanza (55) Charles P. Costanza became Senior Vice
Senior Vice President--Chemicals President--Chemicals in September 1996. He was
previously Vice President-- Chemicals from June 1994 to
August 1996, Vice President--Intermediate Chemicals
from March 1993 to June 1994, and General
Manager--Dibasics and Alcohols from June 1990 to March
1993.
William D. Walston (60) William D. Walston became Treasurer in January 1994. He
Treasurer was previously Corporate Comptroller from 1986 to
January 1994.
Michael J. Prendergast (48) Michael J. Prendergast became Corporate Comptroller in
Corporate Comptroller January 1994. He was previously Director, Tax, Human
Resources and Internal Audit from May 1990 to January
1994, and Director, Tax and Internal Audit from May 1988
to May 1990.
</TABLE>
50
<PAGE> 52
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation of
the Company's Chairman of the Board and Chief Executive Officer and the four
other most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
OTHER ANNUAL LONG TERM ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)(1) COMPENSATION($)(2)
- ---------------------------- ---- --------- -------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Jiro Kamimura 1995 256,667(3) 0(4) 80,033(5) 0 4,239
Chairman and
Chief Executive Officer
Charles W. Hamilton 1995 270,089 271,649 -- 5,077,177 3,369
President and
Chief Operating Officer
James J. Driscoll 1995 213,335 214,895 -- 1,233,438 4,136
Senior Vice President--
Polymers
Mark K. McNally 1995 164,308 165,868 -- 785,927 3,042
Senior Vice President,
General Counsel and
Corporate Secretary
Charles P. Costanza 1995 160,000 161,560 -- 726,016 3,636
Senior Vice President--
Chemicals
</TABLE>
- ---------
(1) Reflects cash payments under the Company's Performance Option Plan ("POP")
and, in the case of Mr. Hamilton, includes cashout of restricted stock and
anti-dilution options. The POP was a long-term, performance-based
compensation plan established as a successor to a stock option plan which,
along with restricted stock and anti-dilution stock option arrangements, was
implemented in 1990 in connection with the going-private transaction
effected by MC, certain other investors and certain members of management of
the Company. The POP and the other arrangements were terminated and paid out
in 1995.
(2) Includes matching contributions under the Company's 401(k) plan, allowances
under the Company's welfare cafeteria plan and the cost of group-term life
insurance in excess of $50,000 of coverage.
(3) Pursuant to an agreement between MC and Mr. Kamimura, Mr. Kamimura remits to
MC quarterly the amount necessary to reconcile his total compensation to the
MC executive pay scale.
(4) Mr. Kamimura does not participate in the Company's bonus plans, nor in any
of the Company's executive benefit plans.
(5) Includes reimbursement of $69,633 for Mr. Kamimura's housing cost and
related costs and $10,400 for his automobile expenses.
CHANGE IN CONTROL AGREEMENTS
The Company has entered into change in control agreements with Messrs.
Hamilton, Egan, Driscoll, McNally and Costanza. Each such agreement has an
initial term of three years, subject to automatic annual renewals, but the
agreements will become operative only if and when a change in control (as
defined in the agreements) occurs during the term of the agreement or if the
executive's employment is terminated in connection with or in anticipation of a
change in control. From the date of any change in control until the third
anniversary of such date the executive shall be entitled to remain employed by
the Company and receive compensation at least as favorable as that in effect
prior to the change in control.
Upon a discharge of the executive other than for cause (as defined in the
agreements) or a resignation by the executive for good reason (as defined in the
agreements) during this three-year employment period, the
51
<PAGE> 53
executive will be entitled to receive (i) payment of certain obligations accrued
at the effective date of termination (e.g., salary, earned but unpaid bonus,
vacation pay and other cash entitlements), (ii) benefits payable under plans,
practices, programs and policies of the Company and (iii) a lump sum cash
payment consisting of: (a) a proportionate bonus based upon the executive's
average bonus for the three most recent completed fiscal years and (b) the
product of 2.99 times the sum of the executive's base salary and the executive's
average bonus for the three most recent completed fiscal years. In addition, the
executive is entitled to continued employee welfare benefits for three years
after the date of termination. Payments under the agreements are capped so that
no excise tax will be payable under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), provided that this cap will only
apply if it results in the executive receiving greater benefits on an after-tax
basis than if the cap does not apply.
PENSION BENEFITS
The Company maintains the Aristech Salaried Pension Plan (the "Salaried
Pension Plan") for eligible salaried employees not otherwise covered by hourly
or pre-existing special purpose pension plans. The Salaried Pension Plan is a
non-contributory defined benefit plan for salaried employees who were
participants in the USX Employee Pension Plan on December 4, 1986, and new
salaried employees on the first of January following date of hire. Benefits
under the Salaried Pension Plan are payable in the form of a monthly annuity or
lump sum.
The Company adopted the 1996 Supplemental Pension Plan (the "Supplemental
Pension Plan") effective February 22, 1996 to provide certain supplemental
pension benefits on a nonqualified basis to key employees designated as eligible
by the Board of Directors. A grantor trust established with Wachovia Bank of
North Carolina, N.A. allows for the accumulation of assets to pay benefits under
the Supplemental Pension Plan. Benefits under the Supplemental Pension Plan are
payable in the form of a monthly annuity or lump sum.
The following table shows the total annual non-contributory pension
benefits for retirement at age 65 (or earlier under certain circumstances) under
the Salaried Pension Plan and the Supplemental Pension Plan, before any
deduction for Social Security and certain other government-administered
benefits, where applicable, and reductions for benefits payable under the USX
Employee Pension Plan or certain other pre-existing pension plans or benefit
plans, for various levels of covered compensation which would be payable to
employees retiring with representative years of service.
<TABLE>
<CAPTION>
YEARS OF SERVICE
COVERED --------------------------------------------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- ------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$125,000................. $ 56,250 $ 62,500 $ 68,750 $ 75,000 $ 81,250 $ 87,500
150,000................. 67,500 75,000 82,500 90,000 97,500 105,000
175,000................. 78,750 87,500 96,250 105,000 113,750 122,500
200,000................. 90,000 100,000 110,000 120,000 130,000 140,000
225,000................. 101,250 112,500 123,750 135,000 146,250 157,500
250,000................. 112,500 125,000 137,500 150,000 162,500 175,000
300,000................. 135,000 150,000 165,000 180,000 195,000 210,000
350,000................. 157,500 175,000 192,500 210,000 227,500 245,000
400,000................. 180,000 200,000 220,000 240,000 260,000 280,000
450,000................. 202,500 225,000 247,500 270,000 292,500 315,000
</TABLE>
Covered compensation for purposes of the Salaried Pension Plan includes
salary and some other forms of compensation from the Company, but excludes
executive bonuses, merit bonuses, performance bonuses and other recognition-type
payments. Benefits under the Salaried Pension Plan are offset by benefits
payable under the USX Employee Pension Plan, but are not offset by Social
Security benefits. Covered compensation under the Supplemental Pension Plan
includes base salary and incentive compensation. Benefits under the Supplemental
Pension Plan are offset by benefits payable under the Salaried Pension Plan, the
USX
52
<PAGE> 54
Employee Pension Plan and 50% of the participant's Social Security old age
insurance benefits. As of December 1, 1996, Messrs. Hamilton, Driscoll, McNally
and Costanza had 35, 25, 17 and 28 years of service, respectively, and $324,953,
$258,408, $178,055 and $160,495 in covered compensation, respectively, for
purposes of the Supplemental Pension Plan.
Mr. Kamimura participates in the Salaried Pension Plan but not the
Supplemental Pension Plan. For purposes of the Salaried Pension Plan, Mr.
Kamimura has two years of service and covered compensation of $150,000. The
following table shows the total annual non-contributory pension benefits for
retirement at age 65 (or earlier under certain circumstances) under the Salaried
Pension Plan, before any deduction for Social Security and certain other
government-administered benefits, where applicable, and reductions for benefits
payable under the USX Employee Pension Plan or certain other pre-existing
pension plans or benefit plans, for various levels of covered compensation which
would be payable to employees retiring with representative years of service.
<TABLE>
<CAPTION>
YEARS OF SERVICE
COVERED --------------------------------------------------------------------------------------
COMPENSATION 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------ -------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$125,000............... $ 9,375 $18,750 $28,125 $37,500 $46,875 $56,250 $65,625
150,000............... 11,250 22,500 33,750 45,000 56,250 67,500 78,750
</TABLE>
Directors who have not been employees of the Company will not receive any
benefits under the Salaried Pension Plan or the Supplemental Pension Plan.
53
<PAGE> 55
STOCKHOLDERS OF THE COMPANY
The following table sets forth certain information concerning the
beneficial ownership of shares of Common Stock as of September 30, 1996 by each
person known to the Company to be a beneficial owner of outstanding Common
Stock.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF STOCKHOLDER SHARES CLASS
- ------------------- --------- ----------
<S> <C> <C>
Mitsubishi Corporation
6-3, Marunouchi 2-Chome
Chiyoda-Ku, Tokyo 100.............................................. 11,589(1) 77.73%(1)
Mitsubishi Chemical Corporation(2)
Mitsubishi Building
5-2, Marunouchi 2-Chome
Chiyoda-Ku, Tokyo 100.............................................. 2,200 14.76%
Mitsubishi International Corporation
520 Madison Avenue
New York, NY 10022................................................. 678 4.55%
Mitsubishi Rayon Co., Ltd.(2)
3-19, Kyobashi 2-Chome
Chuo-Ku, Tokyo 104................................................. 441 2.96%
--------- ----------
Total.................................................... 14,908 100.00%
</TABLE>
- ---------
(1) Excludes 678 shares held by MIC, a New York corporation and a wholly owned
subsidiary of MC. Including the shares owned by MIC, MC beneficially owns
82.3% of the outstanding Common Stock.
(2) MC does not have a controlling interest in either MCC or MRC.
CERTAIN TRANSACTIONS
In August 1994, the Company refinanced its original credit arrangements
entered into in connection with the going-private transaction in 1990 as well as
a subordinated loan entered into in March 1994, through a combination of loans
provided by MC, MIC and certain commercial banks. The Company entered into the
MC Term Loan in August 1994, which provides for a term loan in the amount of
$203.0 million and which has a maturity date of July 31, 2002. As of September
30, 1996, $100.0 million was outstanding under the MC Term Loan. Since January
1, 1995, the largest aggregate amount outstanding under the MC Term Loan was
$203.0 million. Interest was payable on the MC Term Loan at a variable rate
equal to the London Interbank Offered Rate ("LIBOR") plus a margin of 1.375% for
loans extending to June 3, 1996 and a margin of 0.55% for loans from June 3,
1996 and thereafter. The weighted average interest rate for 1995 was 7.4%.
Effective November 1, 1996, the interest rate for the MC Term Loan declined to
LIBOR plus a margin of .4875%.
The MIC Term Loan entered into in August 1994 provided for a term loan in
the principal amount of $100.0 million, all of which was outstanding as of
September 30, 1996. The MIC Term Loan had a maturity date of March 31, 1997 and
was prepaid in its entirety with a portion of the proceeds from the sale of the
Old Notes and terminated. Interest was payable on the MIC Term Loan at a
variable rate equal to LIBOR plus a margin of 0.15%, which resulted in a
weighted average interest rate of 6.2% for 1995. The MIC Revolving Loan entered
into in August 1994 provided for revolving credit loans in the aggregate
principal amount of $100.0 million. In January 1995 the Company's commercial
bank financing was repaid in its entirety and the revolving loan commitment of
MIC under the MIC Revolving Loan was increased from $100.0 million to $250.0
million. Since January 1, 1995, the largest aggregate amount outstanding under
the MIC Revolving Loan was $235.0 million. Interest was payable on the MIC
Revolving Loan during 1995 at a variable rate equal to LIBOR plus a margin of
0.15%, which resulted in a weighted average interest rate of 6.2% for 1995. The
MIC Revolving Loan currently provides for a commitment in the principal amount
of $150.0 million with
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<PAGE> 56
a final maturity date of April 18, 2002. As of September 30, 1996, $137.0
million was outstanding under the MIC Revolving Loan. Effective with the
settlement date of the Old Notes, (i) $100.0 million in principal amount of the
revolving loan commitment terminated, and (ii) the interest rate for the MIC
Revolving Loan increased to LIBOR plus a margin of .1875%. On January 4, 1995,
the Company also entered into the Old Working Capital Facility in the principal
amount of $20.0 million with PNC Bank, National Association and The Chase
Manhattan Bank to manage its daily working capital fluctuations. The Old Working
Capital Facility had $5.0 million outstanding as of September 30, 1996. The
Company has replaced the Old Working Capital Facility with the $50.0 million New
Working Capital Facility.
MC guaranteed the MIC Term Loan, the MIC Revolving Loan and the Old Working
Capital Facility. In consideration of the guarantee, the Company has agreed to
pay MC a guarantee fee calculated on a daily basis in an amount equal to 0.60%
of the outstanding balance under these Loans for Loans extending to June 3, 1996
and in an amount equal to 0.30% for Loans effective June 3, 1996 and thereafter.
The fee is payable semiannually. Guarantee fees of $1.9 million and $0.9 million
were paid in 1995 and for the nine months ended September 30, 1996,
respectively.
In March 1995, the Company repurchased all of the shares of Common Stock
held by Blackstone Capital Partners, L.P., Blackstone Family Investment
Partnership, L.P. and certain individuals who were then directors and executive
officers of the Company, including Charles W. Hamilton, currently President and
Chief Operating Officer of the Company, for an aggregate purchase price of
approximately $74.5 million, which amount had been determined through
negotiations among the parties in 1993. To fund the purchase of such shares, MC
and MIC concurrently purchased from the Company an equivalent amount of Common
Stock. MC and MIC purchased at the same per share price an additional $3.0
million in shares of Common Stock at the same time, representing shares of
Common Stock which had been repurchased by the Company in prior years.
On September 30, 1996, pursuant to the Company's call for redemption of all
of the outstanding Payment-in-Kind Debentures and Series A Preferred Stock, an
aggregate of $24.4 million in principal amount of Payment-in-Kind Debentures and
$6.1 million in stated value of Series A Preferred Stock held by MRC were
redeemed for cash. In addition, an aggregate of $130.9 million in principal
amount of Payment-in-Kind Debentures and $32.7 million in stated value of Series
A Preferred Stock held by MC and MIC, and an aggregate of $48.7 million in
principal amount of Payment-in-Kind Debentures and $12.2 million in stated value
of Series A Preferred Stock held by MCC, were converted into shares of Common
Stock in accordance with the terms of the securities.
During the year ended December 31, 1995, MC and MIC also engaged in
transactions in the ordinary course of business with the Company for the
purchase or sale of raw materials or finished products in the aggregate amount
of $100.6 million.
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<PAGE> 57
DESCRIPTION OF THE NEW NOTES
GENERAL
The Old Notes were issued and the New Notes are to be issued under an
Indenture, dated as of November 1, 1996 (as amended and supplemented from time
to time, the "Indenture"), between the Company and The Chase Manhattan Bank, as
trustee (the "Trustee"). The following summaries of certain provisions of the
Indenture, the Old Notes and the New Notes do not purport to be complete and are
subject to and are qualified in their entirety by reference to all of the
provisions of the Indenture, the Old Notes and the New Notes, which provisions
of the Indenture, the Old Notes and the New Notes, are incorporated herein by
reference. Capitalized terms used herein and not otherwise defined in this
Prospectus shall have the meaning ascribed thereto in the Indenture. The
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. A copy of the Indenture is available upon request
from the Company. See "Available Information."
The Indenture does not limit the aggregate principal amount of senior debt
securities which may be issued thereunder and provides that senior debt
securities may be issued thereunder from time to time in one or more series. The
senior debt securities which may be issued under the Indenture (including the
Old Notes and the New Notes) are collectively referred to herein as the
"Securities."
The Old Notes and the New Notes will constitute a single series of
Securities under the Indenture. If the Exchange Offer is consummated, holders of
Old Notes who do not exchange their Old Notes for New Notes will vote together
with holders of the New Notes for all relevant purposes under the Indenture. In
that regard, the Indenture requires that certain actions by the holders
thereunder (including acceleration following an Event of Default) must be taken,
and certain rights must be exercised, by specified minimum percentages of the
aggregate principal amount of the outstanding debt securities of the relevant
series. In determining whether holders of the requisite percentage in principal
amount have given any notice, consent or waiver or taken any other action
permitted under the Indenture, any Old Notes which remain outstanding after the
Exchange Offer will be aggregated with the New Notes and the holders of such Old
Notes and the New Notes will vote together as a single series for all such
purposes. Accordingly, all references herein to specified percentages in
aggregate principal amount of the outstanding Notes shall be deemed to mean, at
any time after the Exchange Offer is consummated, such percentages in aggregate
principal amount of the Old Notes and the New Notes then outstanding.
The New Notes will be unsecured senior obligations of the Company and will
be limited to an aggregate principal amount of $150,000,000. Each New Note will
bear interest at the rate of 6 7/8% per annum from the most recent date to which
interest has been paid or duly provided for on the Old Note surrendered in
exchange for such New Note or, if no interest has been paid or duly provided for
on such Old Note, from November 25, 1996, payable semiannually on May 15 and
November 15 in each year (each, an "Interest Payment Date"), commencing with the
first Interest Payment Date occurring after the date of original issuance of
such New Note, to the person in whose name such New Note is registered at the
close of business on the April 30 or October 31 next preceding such Interest
Payment Date. Interest on the New Notes will be calculated on the basis of a
360-day year of twelve 30-day months. The New Notes will mature on November 15,
2006. The New Notes will not be redeemable prior to maturity and will not be
subject to any sinking fund.
The New Notes will not provide for any increase in the interest rate
thereon. For a discussion of the circumstances in which the interest rate on the
Old Notes may be adjusted, see "Description of the Old Notes."
All moneys paid by the Company to the Trustee or any Paying Agent for the
payment of principal of and interest on any New Note which remain unclaimed for
two years after such principal or interest shall have become due and payable may
be repaid to the Company and thereafter the holder of such New Note shall look
only to the Company for payment thereof.
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<PAGE> 58
FORM, DENOMINATION AND REGISTRATION
The New Notes will be issued only in fully registered form, without
coupons, in minimum denominations of $1,000 and any integral multiple of $1,000
in excess thereof. The New Notes will be deposited with, or on behalf of, DTC.
The New Notes will be represented by one or more Global Notes registered in the
name of Cede & Co., as nominee of DTC.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the Global
Notes will be shown on, and the transfer of these ownership interests 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).
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the New Notes represented by such Global Note for all
purposes under the Indenture and the New 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 applicable procedures (in addition to those under the
Indenture referred to herein).
Payments on Global Notes will be made to DTC or its nominee, as the
registered owner thereof. Neither the Company, the Trustee nor any paying agent
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.
The Company expects that DTC or its nominee will credit direct
participants' accounts on the payable date with payments in respect of a Global
Note in amounts proportionate to their respective beneficial interest in the
principal amount of such Global Note as shown on the records of DTC or its
nominee, unless DTC has reason to believe that it will not receive payment on
the payable date. The Company 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.
Transfers between participants in DTC will be effected in accordance with
DTC rules. The laws of some states require that certain persons take physical
delivery of securities in definitive form. Consequently, the ability to transfer
beneficial interests in a Global Note to such persons may be limited. Because
DTC can only act on behalf of participants, who in turn act on behalf of
indirect participants (defined below) 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 otherwise take actions
in respect of such interest, may be affected by the lack of a physical
certificate of such interest.
The Company believes that it is the policy of DTC that it will take any
action permitted to be taken by a holder of New Notes only at the direction of
one or more participants to whose account interests in the Global Notes are
credited and only in respect of such portion of the aggregate principal amount
of the New Notes as to which such participant or participants has or have given
such direction.
The Indenture provides that if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository or if the Depository ceases
to be eligible under the Indenture and a successor depository is not appointed
by the Company within 90 days of written notice, (ii) the Company determines
that the New Notes shall no longer be represented by Global Notes and executes
and delivers to the Trustee a Company Order to such effect or (iii) an Event of
Default with respect to the New Notes shall have occurred and be continuing, the
Global Notes will be exchanged for New Notes in definitive form of like tenor
and of an equal aggregate principal amount, in authorized denominations. Such
definitive New Notes shall be registered in such name or names as the Depository
shall instruct the Trustee. It is expected that such instructions may be based
upon directions received by the Depository from participants with respect to
ownership of beneficial interests in Global Notes.
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<PAGE> 59
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC holds securities that its participants
deposit with DTC and facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its direct participants, including the Initial Purchasers, and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a direct
participant, either directly or indirectly ("indirect participants"). The rules
applicable to DTC and its participants are on file with the Commission.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among participants of DTC, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the Trustee
will have any responsibility for the performance by DTC or its participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
RANKING
The Old Notes constitute, and the New Notes will constitute, unsecured
senior indebtedness of the Company and rank and will rank pari passu with all
other unsecured senior indebtedness of the Company for borrowed money.
CERTAIN COVENANTS
The Indenture does not limit the amount of indebtedness or lease
obligations that may be incurred by the Company and its subsidiaries. The
Indenture does not contain provisions which would give holders of the Securities
(including the Notes) the right to require the Company to repurchase their
Securities in the event of a decline in the credit rating of the Company's debt
securities resulting from a change in control, recapitalization or similar
restructuring.
LIMITATION ON LIENS
In the Indenture, the Company covenants that, so long as the Notes and any
other applicable series of Securities are outstanding, it will not, nor will it
permit any Restricted Subsidiary (as defined below) to, create, incur, assume or
guarantee any Debt (as defined below) that is secured by a mortgage, pledge,
lien, security interest or other encumbrance (a "Lien") on any property
(including shares of capital stock or Debt) of the Company or any Restricted
Subsidiary, whether now owned or hereafter acquired, without in any such case
effectively providing, concurrently with the creation, incurrence, assumption or
guarantee of any such Debt, that the Notes and any other applicable series of
Securities shall, so long as such other Debt is so secured (and, if the Company
shall so determine, any other existing Debt (or Debt thereafter in existence)
created, incurred, assumed or guaranteed by the Company or any Restricted
Subsidiary), be secured by any such Lien equally and ratably with or prior to
any and all other Debt thereby secured; provided that Debt secured by such Liens
may be created, incurred, assumed or guaranteed, without equally and ratably
securing the Notes and any other applicable series of Securities, if the
aggregate principal amount of all Debt then outstanding secured by Liens on
property (including shares of capital stock or Debt) of the Company and of any
Restricted Subsidiary (not including Debt described in (i) through (viii) below)
plus Attributable Debt (as defined below) of the Company and its Restricted
Subsidiaries in respect of sale/leaseback transactions described under
"Limitation on Sale/Leaseback Transactions" below that would otherwise be
subject to the restrictions described under "Limitation on Sale/Leaseback
Transactions" below, does not at the time such Debt is incurred exceed 15% of
Consolidated Net Tangible Assets (as defined below).
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<PAGE> 60
The foregoing restrictions shall not apply to Debt secured by (i) Liens on
property of the Company or any Restricted Subsidiary existing on the date of
original issuance of the Notes or such other applicable series of Securities
issued pursuant to the Indenture or such other date as may be specified for an
applicable series of Securities issued pursuant to the Indenture; (ii) Liens on
property acquired by the Company or any Restricted Subsidiary (including
acquisition through merger or consolidation); provided that such Liens were in
existence prior to and were not created in contemplation of such acquisition and
shall not extend to any other property of the Company or any Restricted
Subsidiary; (iii) Liens on property (including in the case of a plant or
facility, the land on which it is erected and fixtures comprising a part
thereof) of the Company or any Restricted Subsidiary securing the payment of all
or any part of the purchase price or construction cost thereof or securing any
Debt created, incurred, assumed or guaranteed prior to or at the time of the
acquisition of such property or the completion of such construction, whichever
is later, for the purpose of financing all or any part of the purchase price or
construction cost thereof (provided, in the case of Liens securing the payment
of all or any part of the purchase price of any property of the Company or any
Restricted Subsidiary, as the case may be, or securing any Debt created,
incurred, assumed or guaranteed for the purposes of financing all or any part of
such purchase price, such Liens are limited to the property then being acquired
and fixed improvements thereon and the capital stock of any Person formed to
acquire such property and provided, further, in the case of Liens securing the
payment of all or any part of the construction cost of any property of the
Company or any Restricted Subsidiary, as the case may be, or securing any Debt
created, incurred, assumed or guaranteed for the purpose of financing all or any
part of such construction cost, such Liens are limited to the assets or property
then being constructed and the land on which such property is erected and
fixtures comprising a part thereof); (iv) Liens on property of the Company or
any Restricted Subsidiary to secure all or any part of the cost of development,
construction, alteration, repair or improvement of all or any part of such
property, or to secure Debt created, incurred, assumed or guaranteed prior to or
at the time of the completion of such development, construction, alteration,
repair or improvement, whichever is later, for the purpose of financing all or
any part of such cost (provided such Liens do not extend to or cover any
property of the Company or any Restricted Subsidiary other than the property
then being developed, constructed, altered, repaired or improved and the land on
which such property is erected and fixtures comprising a part thereof); (v)
Liens in favor of the Company or a Restricted Subsidiary securing Debt of the
Company or a Restricted Subsidiary; (vi) Liens created in connection with tax
assessments or legal proceedings and mechanic's and materialman's liens and
other similar liens created in the ordinary course of business; (vii) Liens on
property of the Company or any Restricted Subsidiary (except Liens on the
capital stock or Debt of the Company or any Restricted Subsidiary) in favor of
the United States of America or any State thereof, or any department, agency or
instrumentality or political subdivision of either, or in favor of any other
country, or any department, agency or instrumentality or political subdivision
thereof, in each case to secure payments pursuant to contract or statute or to
secure Debt created, incurred, assumed or guaranteed for the purpose of
financing all or any part of the purchase price or the cost of construction or
improvement of the property subject to such Liens, including Liens created in
connection with pollution control, industrial revenue bond or other similar
financing; and (viii) certain permitted extensions, renewals or replacements (or
successive extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses (i) through (vii), inclusive.
For purposes of the "Limitation on Liens" covenant described herein, the
creation of a Lien on property (including shares of capital stock or Debt) of
the Company or of any Restricted Subsidiary to secure Debt which existed prior
to the creation of such Lien will be deemed to involve the creation of Debt
secured by a Lien in an amount equal to the principal amount secured by such
Lien.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The Indenture provides that neither the Company nor any Restricted
Subsidiary will enter into any arrangement after the date of original issuance
of the Notes or any other applicable series of Securities issued pursuant to the
Indenture, or such other date as may be specified for an applicable series of
Securities issued pursuant to the Indenture, with any Person (other than the
Company or a Restricted Subsidiary) providing for the leasing to the Company or
a Restricted Subsidiary for a period of more than three years of any property
which has been, or is to be, sold or transferred by the Company or such
Restricted Subsidiary to such Person or to any Person (other than the Company or
a Restricted Subsidiary) to which funds have been or are to be
59
<PAGE> 61
advanced by such Person on the security of the leased property unless either (a)
the Company or such Restricted Subsidiary would be permitted, pursuant to the
provisions described under "Limitations on Liens" above, to incur Debt in a
principal amount equal to or exceeding the Attributable Debt in respect of such
sale/leaseback transaction, secured by a Lien on the property to be leased,
without equally and ratably securing the Notes and other applicable series of
Securities; (b) since the date of the Indenture and within a period commencing
six months prior to the consummation of such arrangement and ending six months
after the consummation thereof, the Company or such Restricted Subsidiary has
expended or will expend for any property (including amounts expended for the
acquisition thereof and for additions, alterations, improvements and repairs
thereto) an amount up to the net proceeds of such arrangement and the Company
elects to designate such amount as a credit against such arrangement (with any
such amount not being so designated to be applied as set forth in (c) below); or
(c) the Company, during or immediately after the expiration of the 12 months
after the consummation of such transaction, applies or causes such Restricted
Subsidiary to apply to the voluntary retirement, redemption or defeasance of
Securities of any series or other Funded Debt (as defined below) of the Company
(other than Funded Debt subordinated to the Securities) or Funded Debt of such
Restricted Subsidiary an amount equal to the greater of the net proceeds of the
sale or transfer of the property leased in such transaction and the fair value,
in the opinion of the Board of Directors of the Company, of such property at the
time of entering into such transaction (in either case adjusted to reflect the
remaining term of the lease and any amount utilized by the Company as set forth
in (b) above), less an amount equal to the principal amount of any such Funded
Debt of the Company or such Restricted Subsidiary, other than Securities,
voluntarily retired by the Company or such Restricted Subsidiary during such 12
month period.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company may not (i) consolidate with or
merge into any Person or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to any Person, or (ii) permit any
Person to consolidate with or merge into the Company, or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to the Company, unless (a) in the case of (i) above, such Person is organized
and existing under the laws of the United States of America, any State thereof
or the District of Columbia and shall expressly assume, by supplemental
indenture satisfactory in form to the Trustee, the due and punctual payment of
the principal of and premium, if any, and interest on all of the Securities,
including the Notes, and the performance of the Company's obligations under the
Indenture and the Securities, including the Notes; (b) immediately after giving
effect to such transaction and treating any indebtedness which becomes an
obligation of the Company or a Subsidiary as a result of such transaction as
having been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which after notice or lapse of
time or both would become an Event of Default, shall have happened and be
continuing; and (c) certain other conditions are met.
DEFINITION OF CERTAIN TERMS
The term "Attributable Debt" as used in the Indenture means, in respect of
any sale/leaseback transaction described under "Limitation on Sale/Leaseback
Transactions" above, at any date as of which the amount thereof is to be
determined, the total net amount of rent required to be paid by the lessee of
the property subject to such sale/leaseback transaction under the lease included
in such transaction during the remaining term thereof (including any period for
which such lease has been extended), discounted from the respective due dates
thereof to such date at the rate per annum of 10%, compounded semi-annually. The
net amount of rent required to be paid under any such lease for any such period
shall be the aggregate amount of the rent payable by the lessee with respect to
such period after excluding amounts required to be paid on account of
maintenance and repairs, services, insurance, taxes, assessments, water rates
and similar charges and contingent rents (such as those based on sales). In the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount of rent shall include the lesser of (i) the total
discounted net amount of rent required to be paid from the later of the first
date upon which such lease may be so terminated or the date of the determination
of such amount of rent, as the case may be, and (ii) the amount of such penalty
(in which event no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated).
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<PAGE> 62
The term "Consolidated Net Tangible Assets" as used in the Indenture means,
as of any particular time, the aggregate amount of the Consolidated Assets (as
defined in the Indenture) of the Company and its Restricted Subsidiaries (less
depreciation, amortization and other applicable reserves and other items
deductible therefrom under generally accepted accounting principles) after
deducting therefrom (i) all current liabilities (excluding any which are by
their terms extendible or renewable at the option of the obligor to a time more
than 12 months after the time as of which the amount is being computed), (ii)
all goodwill, tradenames, trademarks, patents and other intangibles, in each
case net of applicable amortization, and (iii) appropriate adjustments on
account of minority interests of other Persons holding stock of Restricted
Subsidiaries, all as would be shown on a consolidated balance sheet of the
Company and its Restricted Subsidiaries, prepared in accordance with generally
accepted accounting principles, as of the date of the most recent quarterly
consolidated balance sheet of the Company and its subsidiaries, prepared in
accordance with generally accepted accounting principles, provided that, in the
case of a balance sheet as of the end of the first, second or fourth quarterly
fiscal periods of the Company, the date of such balance sheet is not more than
135 days prior to the date of determination and, in the case of a balance sheet
as of the end of the third quarterly fiscal period of the Company, the date of
such balance sheet is not more than 180 days prior to the date of determination.
The term "Debt" as used in the Indenture means (a) any liability of the
Company or any Restricted Subsidiary (1) for borrowed money, or under any
reimbursement obligation relating to a letter of credit, or (2) evidenced by a
bond, note, debenture or similar instrument, or (3) for payment obligations
arising under any conditional sale or other title retention arrangement
(including a purchase money obligation) given in connection with the acquisition
of any businesses, properties or assets of any kind, or (4) for the payment of
money relating to a capitalized lease obligation; (b) any liability of others of
a type described in the preceding clause (a) that the Company or any Restricted
Subsidiary has guaranteed or that is otherwise its legal liability; and (c) any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (a) and (b) above.
The term "Funded Debt" as used in the Indenture means indebtedness created,
assumed or guaranteed by a Person for money borrowed which matures by its terms,
or is renewable by the borrower to a date, more than 12 months after the date of
original creation, assumption or guarantee.
The term "Restricted Subsidiary" as used in the Indenture means any
Subsidiary other than Avonite; provided that, notwithstanding the foregoing,
Avonite shall be deemed a "Restricted Subsidiary" for purposes of the Indenture
from and after such time as (i) the Company and/or one or more Subsidiaries owns
or controls directly or indirectly 100% of the outstanding shares of Avonite's
Voting Stock (except for qualifying shares) or (ii) the Company's and its other
Subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of Avonite exceeds 10% of the total assets of the Company and its
Subsidiaries consolidated as of the end of the most recently completed fiscal
year or (iii) the Company's and its other Subsidiaries' equity in the income
from continuing operations, before income taxes, interest expense, extraordinary
items and cumulative effect of a change in accounting principle, of Avonite
exceeds 10% of such income of the Company and its Subsidiaries consolidated for
the most recently completed fiscal year.
The term "Subsidiary" as used in the Indenture means any corporation of
which at the time of determination the Company and/or one or more Subsidiaries
owns or controls directly or indirectly more than 50% of the voting power of the
shares of its Voting Stock.
The term "Voting Stock" as used in the Indenture means stock of a
corporation of the class or one of the classes having general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of such corporation (irrespective of whether or not at the
time stock of any other class or classes has or might have voting power by
reason of the happening of any contingency).
EVENTS OF DEFAULT
Each of the following events will constitute an Event of Default with
respect to any series of Securities, including the Notes, issued under the
Indenture (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or
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order of any court or any order, rule or regulation of any administrative or
governmental body): (i) default in the payment of any interest on any Security
of such series, or any Additional Amounts payable with respect thereto, when
such interest becomes or such Additional Amounts become due and payable, and
continuance of such default for a period of 30 days; (ii) default in the payment
of the principal of or any premium on any Security of such series, or any
Additional Amounts payable with respect thereto, when such principal or premium
becomes or such Additional Amounts become due and payable either at maturity,
upon any redemption, by declaration of acceleration or otherwise; (iii) default
in the deposit of any sinking fund payment, when and as due by the terms of any
Security of such series; (iv) default in the performance, or breach, of any
covenant or warranty of the Company contained in the Indenture for the benefit
of such series or in the Securities of such series, and the continuance of such
default or breach for period of 60 days after there has been given written
notice as provided in the Indenture; (v) if any event of default as defined in
any mortgage, indenture or instrument under which there may be issued, or by
which there may be secured or evidenced, any Debt of the Company, whether such
Debt now exists or shall hereafter be created, shall happen and shall result in
such Debt in principal amount in excess of $25,000,000 becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable, and such acceleration shall not be rescinded or annulled within
a period of 30 days after there shall have been given written notice as provided
in the Indenture; (vi) the Company shall fail within 60 days to pay, bond or
otherwise discharge any uninsured judgment or court order for the payment of
money in excess of $25,000,000, which is not stayed on appeal or is not
otherwise being appropriately contested in good faith; (vii) certain events in
bankruptcy, insolvency or reorganization of the Company; and (viii) any other
Event of Default provided in or pursuant to the Indenture with respect to
Securities of such series.
If an Event of Default with respect to the Securities of any series (other
than an Event of Default described in (vii) of the preceding paragraph) occurs
and is continuing, either the Trustee or the holders of at least 25% in
principal amount of the outstanding Securities of such series by written notice
as provided in the Indenture may declare the principal amount (or such lesser
amount as may be provided for in the Securities of such series) of all
outstanding Securities of such series to be due and payable immediately. At any
time after a declaration of acceleration has been made, but before a judgment or
decree for payment of money has been obtained by the Trustee, and subject to
applicable law and certain other provisions of the Indenture, the holders of a
majority in aggregate principal amount of the Securities of such series may,
under certain circumstances, rescind and annul such acceleration. An Event of
Default described in (vii) of the preceding paragraph shall cause the principal
amount and accrued interest (or such lesser amount as provided for in the
Securities of such series) to become immediately due and payable without any
declaration or other act by the Trustee or any holder.
The Indenture provides that, within 90 days after the occurrence of any
event which is, or after notice or lapse of time or both would become, an Event
of Default thereunder with respect to the Securities of any series (a
"default"), the Trustee shall transmit, in the manner set forth in the
Indenture, notice of such default to the holders of the Securities of such
series unless such default has been cured or waived; provided, however, that
except in the case of a default in the payment of principal of, or premium, if
any, or interest, if any, on, or Additional Amounts or any sinking fund or
purchase fund installment with respect to, any Security of such series, the
Trustee may withhold such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the best interest of the holders of Securities of such series; and
provided, further, that in the case of any default of the character described in
(v) of the second preceding paragraph, no such notice to holders will be given
until at least 30 days after the occurrence thereof.
If an Event of Default occurs and is continuing with respect to the
Securities of any series, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the holders of Securities of such
series by all appropriate judicial proceedings.
The Indenture provides that, subject to the duty of the Trustee during any
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders of Securities, unless such holders
shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, and
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subject to applicable law and certain other provisions of the Indenture, the
holders of a majority in aggregate principal amount of the outstanding
Securities of any series will 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, with respect to the
Securities of such series.
MODIFICATION AND WAIVER
Modification and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Securities of each series affected
thereby; provided, however, that no such modification or amendment may, without
the consent of the holder of each outstanding Security affected thereby, (a)
change the Stated Maturity of the principal of, or any premium or installment of
interest on, or any Additional Amounts with respect to, any Security, (b) reduce
the principal amount of, or the rate (or modify the calculation of such rate) of
interest on, or any Additional Amounts with respect to, or any premium payable
upon the redemption of, any Security, (c) change the obligation of the Company
to pay Additional Amounts with respect to any Security or reduce the amount of
the principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof or the amount
thereof provable in bankruptcy, (d) change the redemption provisions of any
Security or adversely affect the right of repayment at the option of any holder
of any Security, (e) change the place of payment or the coin or currency in
which the principal of, any premium or interest on or any Additional Amounts
with respect to any Security is payable, (f) impair the right to institute suit
for the enforcement of any payment on or after the Stated Maturity of any
Security (or, in the case of redemption, on or after the Redemption Date or, in
the case of repayment at the option of any holder, on or after the date for
repayment), (g) reduce the percentage in principal amount of the outstanding
Securities, the consent of whose holders is required in order to take certain
actions, (h) reduce the requirements for quorum or voting by holders of
Securities in Section 15.4 of the Indenture, (i) modify any of the provisions in
the Indenture regarding the waiver of past defaults and the waiver of certain
covenants by the holders of Securities except to increase any percentage vote
required or to provide that certain other provisions of the Indenture cannot be
modified or waived without the consent of the holder of each Security affected
thereby, (j) make any change that adversely affects the right to convert or
exchange any Security into or for common stock of the Company or other
securities in accordance with its terms, or (k) modify any of the above
provisions.
The holders of at least a majority in aggregate principal amount of the
Securities of any series may, on behalf of the holders of all Securities of such
series, waive compliance by the Company with certain restrictive provisions of
the Indenture. The holders of not less than a majority in aggregate principal
amount of the outstanding Securities of any series may, on behalf of the holders
of all Securities of such series, waive any past default and its consequences
under the Indenture with respect to the Securities of such series, except a
default (a) in the payment of principal of (or premium, if any), any interest on
or any Additional Amounts with respect to Securities of such series or (b) in
respect of a covenant or provision of the Indenture that cannot be modified or
amended without the consent of the holder of each Security of any series.
Under the Indenture, the Company is required to furnish the Trustee
annually a statement as to performance by the Company of certain of its
obligations under the Indenture and as to any default in such performance. The
Company is also required to deliver to the Trustee, within five days after
occurrence thereof, written notice of any Event of Default or any event which
after notice or lapse of time or both would constitute an Event of Default.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of any series of
Securities that have not already been delivered to the Trustee for cancellation
and that either have become due and payable or will become due and payable
within one year (or scheduled for redemption within one year) by depositing with
the Trustee, in trust, funds in U.S. dollars or in the Foreign Currency in which
such Securities are payable in an amount sufficient to pay the entire
indebtedness on such Securities with respect to principal (and premium, if
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any) and interest to the date of such deposit (if such Securities have become
due and payable) or to the Maturity thereof, as the case may be.
The Indenture provides that, unless the provisions of Section 4.2 thereof
are made inapplicable to the Securities of or within any series pursuant to
Section 3.1 thereof, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Securities (except
for, among other things, the obligation to pay Additional Amounts, if any, upon
the occurrence of certain events of taxation, assessment or governmental charge
with respect to payments on such Securities and other obligations to register
the transfer or exchange of such Securities, to replace temporary or mutilated,
destroyed, lost or stolen Securities, to maintain an office or agency with
respect to such Securities and to hold moneys for payment in trust)
("defeasance") or (b) to be released from its obligations with respect to such
Securities under the covenants described under "Limitation on Liens" and
"Limitation on Sale/Leaseback Transactions" above or, if provided pursuant to
Section 3.1 of the Indenture, its obligations with respect to any other
covenant, and any omission to comply with such obligations shall not constitute
a default or an Event of Default with respect to such Securities ("covenant
defeasance"). Defeasance or covenant defeasance, as the case may be, shall be
conditioned upon the irrevocable deposit by the Company with the Trustee, in
trust, of an amount in U.S. dollars or in the Foreign Currency in which such
Securities are payable at Stated Maturity, or Government Obligations (as defined
below), or both, applicable to such Securities which through the scheduled
payment of principal and interest in accordance with their terms will provide
money in an amount sufficient to pay the principal of (and premium, if any) and
interest on such Securities on the scheduled due dates therefor.
Such a trust may only be established if, among other things, (i) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the Indenture or any other material
agreement or instrument to which the Company is a party or by which it is bound,
(ii) no Event of Default or event which with notice or lapse of time or both
would become an Event of Default with respect to the Securities to be defeased
shall have occurred and be continuing on the date of establishment of such a
trust and, with respect to defeasance only, at any time during the period ending
on the 123rd day after such date and (iii) the Company has delivered to the
Trustee an Opinion of Counsel (as specified in the Indenture) to the effect that
the holders of such Securities will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to U.S. federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such Opinion of Counsel,
in the case of defeasance, must refer to and be based upon a letter ruling of
the Internal Revenue Service received by the Company, a Revenue Ruling published
by the Internal Revenue Service or a change in applicable U.S. federal income
tax law occurring after the date of the Indenture.
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the ECU, issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments.
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government or the governments in the
confederation which issued the Foreign Currency in which the Securities of a
particular series are payable, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America or
such government or governments which issued the Foreign Currency in which the
Securities of such series are payable, the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government or governments, which, in the case of
clauses (i) and (ii), are not callable or redeemable at the option of the issuer
or issuers thereof, and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such Government Obligation or
a specific payment of interest on or principal of or any other amount with
respect to any such Government Obligation held by such custodian for the account
of the holder of such depository receipt, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian with respect to the Government Obligation or the specific payment of
interest on or principal of or any other amount with respect to the Government
Obligation evidenced by such depository receipt.
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If after the Company has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Securities of any
series, (a) the holder of a Security of such series is entitled to, and does,
elect pursuant to Section 3.1 of the Indenture or the terms of such Security to
receive payment in a currency other than that in which such deposit has been
made in respect of such Security, or (b) a Conversion Event (as defined below)
occurs in respect of the Foreign Currency in which such deposit has been made,
the indebtedness represented by such Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest, if any, on such Security as such Security
becomes due out of the proceeds yielded by converting the amount or other
properties so deposited in respect of such Security into the currency in which
such Security becomes payable as a result of such election or such Conversion
Event based on (x) in the case of payments made pursuant to clause (a) above,
the applicable market exchange rate for such currency in effect on the second
business day prior to such payment date, or (y) with respect to a Conversion
Event, the applicable market exchange rate for such Foreign Currency in effect
(as nearly as feasible) at the time of the Conversion Event.
"Conversion Event" means the cessation of use of (i) a Foreign Currency
other than the ECU both by the government of the country or the confederation
which issued such Foreign Currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Union or (iii) any currency unit or composite currency other than the ECU for
the purposes for which it was established. All payments of principal of (and
premium, if any) and interest on any Security that are payable in a Foreign
Currency that ceases to be used by the government or confederation of issuance
shall be made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to any
Securities and such Securities are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default with respect
to Sections 10.5 and 10.6 of the Indenture (which Sections would no longer be
applicable to such Securities after such covenant defeasance) or with respect to
any other covenant as to which there has been covenant defeasance, the amount in
such Foreign Currency in which such Securities are payable, and Government
Obligations on deposit with the Trustee, will be sufficient to pay amounts due
on such Securities at the time of the Stated Maturity but may not be sufficient
to pay amounts due on such Securities at the time of the acceleration resulting
from such Event of Default. However, the Company would remain liable to make
payment of such amounts due at the time of acceleration.
GOVERNING LAW
The Indenture, the Old Notes and the New Notes will be governed by, and
construed in accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Trustee is permitted to engage in other transactions with the Company
and its subsidiaries from time to time, provided that if the Trustee acquires
any conflicting interest it must eliminate such conflict upon the occurrence of
an Event of Default, or else resign.
DESCRIPTION OF THE OLD NOTES
The terms of the Old Notes are identical in all material respects to the
New Notes, except that (i) the Old Notes have not been registered under the
Securities Act, are subject to certain restrictions on transfer and are entitled
to certain registration rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer), (ii) the Old
Notes are issuable in minimum denominations of $250,000 compared to minimum
denominations of $1,000 for the New Notes and (iii) the Old Notes provide for an
increase in the interest rate thereon pursuant to the Registration Rights
Agreement. In that regard, the Old Notes provide that, in the event that the
Exchange Offer is not consummated or a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the Old Notes is not
declared effective on or prior to the earlier of the 30th day following the date
on which the Registration Statement is
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declared effective and June 23, 1997, the per annum interest rate on the Old
Notes will increase by 0.50% following such date; provided, however, that if the
Company requests holders of Old Notes to provide certain information called for
by the Registration Rights Agreement for inclusion in any such Shelf
Registration Statement, then Old Notes owned by holders who do not deliver such
information to the Company or who do not provide comments on the Shelf
Registration Statement when required pursuant to the Registration Rights
Agreement will not be entitled to any such increase in the interest rate
pursuant to the Registration Rights Agreement. Upon the consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, after the earlier of such 30th day following the date on which the
Registration Statement is declared effective and June 23, 1997, the interest
rate on any Old Notes which remain outstanding will be reduced, from the date of
such consummation or effectiveness, as the case may be, to 6 7/8% per annum and
the Old Notes will not thereafter be entitled to any increase in the interest
rate thereon pursuant to the Registration Rights Agreement. The New Notes are
not entitled to any such increase in the interest rate thereon. Holders of Old
Notes should review the information set forth under "Summary--Certain
Consequences of a Failure to Exchange Old Notes" and "Description of the New
Notes."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States Federal income tax
considerations to holders of the New Notes who are subject to U.S. income tax
with respect to the New Notes ("U.S. persons") and who will hold the New Notes
as capital assets. There can be no assurance that the U.S. Internal Revenue
Service (the "IRS") will take a similar view of the purchase, ownership or
disposition of the New Notes. This discussion is based upon the provisions of
the Internal Revenue Code and regulations, rulings and judicial decisions now in
effect, all of which are subject to change. It does not include any description
of the tax laws of any state, local or foreign governments or any estate or gift
tax considerations that may be applicable to the New Notes or holders thereof,
it does not discuss all aspects of U.S. Federal income taxation that may be
relevant to a particular investor in light of his particular investment
circumstances or to certain types of investors subject to special treatment
under the U.S. Federal income tax laws (for example, dealers in securities or
currencies, S corporations, life insurance companies, tax-exempt organizations,
taxpayers subject to the alternative minimum tax and non-U.S. persons) and also
does not discuss the treatment of New Notes held as a hedge against currency
risks or as part of a straddle with other investments or as part of a "synthetic
security" or other integrated investment (including a "conversion transaction")
comprised of a New Note and one or more other investments, or situations in
which the functional currency of the holders is not the U.S. dollar.
Holders of Old Notes contemplating acceptance of the Exchange Offer should
consult their own tax advisors with respect to their particular circumstances
and with respect to the effects of state, local or foreign tax laws to which
they may be subject.
EXCHANGE OF NOTES
The exchange of Old Notes for New Notes should not be a taxable event to
holders for federal income tax purposes. The exchange of Old Notes for New Notes
pursuant to the Exchange Offer should not be treated as an "exchange" for
federal income tax purposes because the New Notes should not be considered to
differ materially in kind or extent from the Old Notes. If, however, the
exchange of the Old Notes for the New Notes were treated as an exchange for
federal income tax purposes, such exchange should constitute a recapitalization
for federal income tax purposes. Accordingly, a holder should have the same
adjusted basis and holding period in the New Notes as it had in the Old Notes
immediately before the exchange.
INTEREST ON THE NEW NOTES
A holder of a New Note will be required to report as ordinary interest
income for U.S. Federal income tax purposes interest earned on the New Note in
accordance with the holder's method of tax accounting.
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DISPOSITION OF NEW NOTES
A holder's tax basis for a New Note generally will be the holder's purchase
price for the Old Note. Upon the sale, exchange, redemption, retirement or other
disposition of a New Note, a holder will recognize gain or loss equal to the
difference (if any) between the amount realized and the holder's tax basis in
the New Note. Such gain or loss will be long-term capital gain or loss if the
New Note has been held for more than one year and otherwise will be short-term
capital gain or loss (with certain exceptions to the characterization as capital
gain if the New Note was acquired at a market discount).
BACKUP WITHHOLDING
A holder of a New Note may be subject to backup withholding at the rate of
31% with respect to interest paid on the New Note and proceeds from the sale,
exchange, redemption or retirement of the New Note, unless such holder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates that fact or (b) provides a correct taxpayer identification number,
certifies as to no loss of exemption from backup withholding and otherwise
complies with applicable requirements of the backup withholding rules. A holder
of a New Note who does not provide the Company with his correct taxpayer
identification number may be subject to penalties imposed by the IRS.
A holder of a New Note who is not a U.S. person will generally be exempt
from backup withholding and information reporting requirements, but may be
required to comply with certification and identification procedures in order to
obtain an exemption from backup withholding and information reporting.
Any amount paid as backup withholding will be creditable against the
holder's U.S. Federal income tax liability.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in
connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by
Participating Broker-Dealers during the period referred to below in connection
with resales of New Notes received in exchange for Old Notes if such Old Notes
were acquired by such Participating Broker-Dealers for their own accounts as a
result of market-making or other trading activities. The Company has agreed that
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of such New
Notes for a period ending 90 days (subject to extension under certain limited
circumstances described herein) after the Expiration Date or, if earlier, when
all such New Notes have been disposed of by such Participating Broker-Dealer.
However, a Participating Broker-Dealer who intends to use this Prospectus in
connection with the resale of New Notes received in exchange for Old Notes
pursuant to the Exchange Offer must notify the Company, or cause the Company to
be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "The Exchange Offer--Exchange Agent." See
"The Exchange Offer--Resales of New Notes."
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. New Notes received by broker-dealers for their own
accounts in connection with 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 New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such New Notes.
Any broker-dealer that resells New Notes that were received by it for its
own account in connection with the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be
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deemed to be an "underwriter" within the meaning of the Securities Act, and any
profit on any such resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
LEGAL MATTERS
Certain legal matters in connection with the New Notes will be passed upon
for the Company by Mark K. McNally, Senior Vice President, General Counsel and
Corporate Secretary of the Company.
EXPERTS
The financial statements of the Company as of December 31, 1995 and 1994
and for each of the three years in the period ended December 31, 1995 included
in this Prospectus and the related financial statement schedule included
elsewhere in the Registration Statement have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports appearing herein and
elsewhere in the Registration Statement (which reports express an unqualified
opinion and include an explanatory paragraph referring to changes in accounting
methods for income taxes, depreciation and postretirement benefits other than
pensions), and have been so included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report.......................................................... F-2
Consolidated Statements of Income for the years ended December 31, 1993, 1994 and
1995................................................................................ F-3
Consolidated Balance Sheets as of December 31, 1994 and 1995.......................... F-4
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995................................................................................ F-5
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994 and 1995.......................................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statements of Income for the nine months ended September 30, 1995 and
1996................................................................................ F-20
Consolidated Balance Sheets as of December 31, 1995 and September 30, 1996............ F-21
Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and
1996................................................................................ F-22
Selected Notes to Interim Financial Statements........................................ F-23
PRO FORMA CONDENSED FINANCIAL INFORMATION (UNAUDITED)
Pro Forma Condensed Statement of Income............................................... F-25
Pro Forma Condensed Balance Sheet..................................................... F-26
Notes to Pro Forma Condensed Financial Statements..................................... F-27
</TABLE>
F-1
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INDEPENDENT AUDITORS' REPORT
Aristech Chemical Corporation:
We have audited the accompanying consolidated balance sheets of Aristech
Chemical Corporation and its subsidiaries as of December 31, 1994 and 1995, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company and its
subsidiaries as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements, the
Company changed its methods of accounting for income taxes, depreciation, and
postretirement benefits other than pensions in 1993.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 29, 1996, except for Note 19, as to
which the date is November 19, 1996
F-2
<PAGE> 72
ARISTECH CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------
1993 1994 1995
------ ------ --------
<S> <C> <C> <C>
Sales............................................................. $788.5 $945.5 $1,023.3
Operating Costs:
Cost of sales................................................... 669.4 763.5 758.9
Selling, general and administrative expenses.................... 61.7 61.3 43.6
Depreciation and amortization................................... 49.1 50.3 48.4
------ ------ --------
Total Operating Costs........................................ 780.2 875.1 850.9
------ ------ --------
Operating Income.................................................. 8.3 70.4 172.4
Loss on Disposal of Assets........................................ (.3) (4.3) (19.0)
Other (Expense) Income............................................ .2 3.4 (1.1)
Interest Income................................................... .7 1.2 2.1
Interest Expense.................................................. (54.6) (56.0) (49.8)
------ ------ --------
Income (Loss) Before Provision for Taxes on Income and
Extraordinary Loss.............................................. (45.7) 14.7 104.6
Provision (Benefit) for Taxes on Income........................... (5.8) 9.5 44.4
------ ------ --------
Income (Loss) Before Extraordinary Loss........................... (39.9) 5.2 60.2
Extraordinary Loss, Net of Income Tax Benefit of $3.2............. -- 5.1 --
Cumulative Effect on Prior Years of Change in Accounting for
Income Taxes and Change in Depreciation Method.................. .2 -- --
------ ------ --------
Net Income (Loss)................................................. $(39.7) $ .1 $ 60.2
====== ====== =======
Pro forma amounts assuming the accounting change for depreciation
had been applied retroactively:
Loss before Cumulative Effect of Change in Accounting
Principles...................................................... $(39.9) $ -- $ --
Net (Loss)........................................................ $(43.7) $ -- $ --
Related party transactions:
Sales............................................................. $ 39.8 $ 52.6 $ 83.4
Interest Expense.................................................. $ 22.7 $ 31.4 $ 50.6
Purchases......................................................... $ 9.5 $ 15.7 $ 27.2
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 73
ARISTECH CHEMICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents........................................................ $ 28.7 $ .4
Short-term investments...................................................... -- 17.0
Receivables (less allowance for doubtful accounts of $.8 for 1994 and $.6
for 1995)................................................................. 134.1 121.3
Inventories................................................................. 85.7 101.1
Net assets held for sale.................................................... 94.2 42.3
Deferred income taxes....................................................... -- 8.7
Other current assets........................................................ 3.8 5.0
-------- --------
Total Current Assets...................................................... 346.5 295.8
Property, plant and equipment, net of accumulated depreciation................ 623.6 602.3
Excess cost over assets acquired, net......................................... 193.5 174.6
Other assets.................................................................. 19.8 17.3
-------- --------
Total Assets.............................................................. $1,183.4 $1,090.0
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other current liabilities.............................. $ 126.6 $ 91.9
Payroll and benefits payable................................................ 40.0 11.9
Accrued taxes............................................................... 10.2 8.4
Deferred income taxes....................................................... 3.3 --
Short-term borrowings....................................................... -- 8.7
-------- --------
Total Current Liabilities................................................. 180.1 120.9
Long-term debt--related parties............................................... 551.8 572.0
Long-term debt--other......................................................... 156.1 .2
Deferred income taxes......................................................... 139.2 177.7
Other liabilities............................................................. 31.8 34.5
Commitment and contingencies.................................................. -- --
-------- --------
Total liabilities......................................................... 1,059.0 905.3
-------- --------
Redeemable preferred stock, series A, convertible (no par, 1,000,000 shares
authorized, 556,989 shares issued at December 31, 1994 and 509,983 at
December 31, 1995).......................................................... 55.7 51.0
Common stock ($.01 par value, 2,245 shares issued at December 31, 1994)....... -- --
Additional paid-in capital.................................................... 68.3 --
Deferred compensation......................................................... (.9) --
-------- --------
Redeemable Preferred and Other Temporary Equity............................. 123.1 51.0
-------- --------
Common stock ($.01 par value, 20,000 shares authorized, 7,605 shares issued at
December 31, 1994 and 10,050 shares issued at December 31, 1995)............ -- --
Additional paid-in capital.................................................... 80.0 154.5
Treasury stock, at cost (105 shares at December 31, 1994)..................... (3.0) --
Retained deficit.............................................................. (75.7) (20.8)
-------- --------
Total Stockholders' Equity................................................ 1.3 133.7
-------- --------
Total Liabilities and Equity.............................................. $1,183.4 $1,090.0
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 74
ARISTECH CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------
1993 1994 1995
------ ------- -------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss)............................................................ $(39.7) $ .1 $ 60.2
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation............................................................... 43.5 44.7 43.4
Amortization of excess cost over assets acquired........................... 5.6 5.6 5.6
Amortization of merger expenses............................................ 3.1 2.6 1.9
Amortization of deferred compensation...................................... 7.6 5.3 .9
Amortization of compensation and anti-dilution option liabilities.......... 10.4 12.3 --
Deferred income taxes...................................................... (5.9) 9.4 26.5
Loss on disposal of assets................................................. .3 4.3 19.0
Loss from equity investee.................................................. .1 .1 1.2
Decrease (increase) in accounts receivable................................. (2.3) (53.5) 2.7
Decrease (increase) in inventories......................................... 3.6 3.2 (17.8)
(Decrease) increase in accounts payable and other current liabilities...... 7.9 38.5 (57.3)
Payment-in-kind debenture interest expense................................. 19.0 20.9 5.7
All other.................................................................. (1.7) (20.7) (6.5)
Extraordinary loss......................................................... -- 5.1 --
Cumulative effect of changes in accounting principles...................... (.2) -- --
------ ------- -------
Net Cash Provided by Operating Activities.................................... 51.3 77.9 85.5
Cash Flows From Investing Activities:
Capital expenditures......................................................... (21.6) (33.4) (55.3)
Purchase of short-term investment............................................ -- -- (17.0)
Cash received on disposal of assets.......................................... -- 3.0 91.9
------ ------- -------
Net Cash Provided by (Used in) Investing Activities.......................... (21.6) (30.4) 19.6
Cash Flows From Financing Activities:
Short-term debt increase (decrease).......................................... 3.8 (12.8) 8.7
Repayment of long-term debt.................................................. (33.5) (531.4) (155.9)
Proceeds from issuance of long-term debt..................................... 1.0 527.0 39.0
Dividends paid............................................................... -- -- (3.8)
Payments for purchase of treasury stock...................................... (1.0) (2.0) (68.3)
Redemption of preferred stock................................................ -- -- (6.1)
Redemption of PIK debentures................................................. -- -- (24.5)
Issuance of common stock..................................................... -- -- 77.5
------ ------- -------
Net Cash Used in Financing Activities........................................ (29.7) (19.2) (133.4)
Net (Decrease) Increase in Cash and Equivalents................................ -- 28.3 (28.3)
Cash and equivalents, beginning of year........................................ .4 .4 28.7
------ ------- -------
Cash and equivalents, end of year.............................................. $ .4 $ 28.7 $ .4
====== ======= =======
Supplemental disclosure of cash flow information:
Cash paid during period for:
Interest................................................................... $ 34.9 $ 34.6 $ 46.7
Income taxes............................................................... 3.1 .9 13.8
</TABLE>
Non-cash investing activities include the pending sale of $55.6 million and
$28.2 million of net property, plant and equipment at December 31, 1994 and
1995, respectively, resulting in a decrease in net property, plant and equipment
and a corresponding increase in assets held for sale.
Non-cash financing activities include debentures issued in lieu of cash payments
for interest of $19.0 million in 1993, $20.9 million in 1994, and $5.7 million
in 1995. Such activities also include the issuance of additional shares for
dividends on the Redeemable Series A Convertible PIK Preferred Stock of $4.7
million in 1993, $5.2 million in 1994, and $1.5 million in 1995.
Non cash activities resulting from the implementation of SFAS 109 "Accounting
for Income Taxes," during the First Quarter 1993, resulted in an increase in the
cost basis of property, plant and equipment of $130.7 million with a
corresponding increase in deferred income taxes.
Non cash activities, resulting from the change in depreciation method in 1993,
resulted in an increase in net property of $6.4 million and an increase in
deferred income taxes of $2.4 million.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 75
ARISTECH CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------- ADDITIONAL
NUMBER TREASURY PAID-IN TREASURY RETAINED
OF SHARES SHARES CAPITAL STOCK EARNINGS
--------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance--December 31, 1992............... 7,500 -- $ 77.0 $ -- $(19.3)
Dividend on Series A Convertible
Preferred Stock........................ -- -- -- -- (4.7)
Transfer from temporary equity........... 36 -- 1.0 -- .1
Fair market value adjustment of acquired
shares................................. -- -- -- -- (7.0)
Treasury stock purchased................. -- (36) -- (1.0) --
Net loss--1993........................... -- -- -- -- (39.7)
------ ------ ------ ------ ------
Balance--December 31, 1993............... 7,536 (36) 78.0 (1.0) (70.6)
Dividend on Series A Convertible
Preferred Stock........................ -- -- -- -- (5.2)
Transfer from temporary equity........... 69 -- 2.0 -- --
Treasury stock purchased................. -- (69) -- (2.0) --
Net Income--1994......................... -- -- -- -- .1
------ ------ ------ ------ ------
Balance--December 31, 1994............... 7,605 (105) 80.0 (3.0) (75.7)
Dividend on Series A Convertible
Preferred Stock........................ -- -- -- -- (5.3)
Transfer from temporary equity........... 2,245 -- 68.3 -- --
Treasury stock purchased................. -- (2,245) -- (68.3) --
Treasury stock retired................... -- 2,350 -- 71.3 --
Shares canceled.......................... (2,350) -- (71.3) -- --
Shares issued............................ 2,550 -- 77.5 -- --
Net Income--1995......................... -- -- -- -- 60.2
------ ------ ------ ------ ------
Balance--December 31, 1995............... 10,050 -- $154.5 $ -- $(20.8)
====== ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 76
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
On March 7, 1990, a tender offer was completed by which ACC Acquisition
Corporation ("Acquisition"), an indirect wholly owned subsidiary of ACC Holdings
Corporation ("Holdings"), acquired all the shares of Aristech Chemical
Corporation ("Aristech") common stock for $27 per share. Subsequent to
completion of the tender offer, Acquisition was merged with and into Aristech.
All of Aristech's outstanding common stock was then owned by ACC Middle
Corporation ("Middle") which was a wholly owned subsidiary of Holdings. The
acquisition of Aristech was accounted for as a purchase transaction with the
purchase price being allocated to assets and liabilities based on their fair
values as of the date of acquisition. The excess cost over the net assets
acquired totaled $235.6 million.
At the time of acquisition, 76.1% of the common stock of Holdings was held
by Mitsubishi Corporation ("MC") and Mitsubishi International Corporation
("MIC") with the balance held by Aristech senior management, Blackstone Capital
Partners, L.P., and Blackstone Family Investment Partnership, L.P.
During 1990, MC sold a portion of its shares to Mitsubishi Kasei
Corporation, Mitsubishi Gas Chemical Company, Inc. ("MGCC"), Mitsubishi
Petrochemical Co., Ltd., and Mitsubishi Rayon Co., Ltd. ("Minority Owners"),
thereby reducing its share of ownership in the Company to 55.7%. Mitsubishi
Kasei Corporation and Mitsubishi Petrochemical Co., Ltd. subsequently merged to
form Mitsubishi Chemical Corporation.
Middle was merged with and into Holdings on August 1, 1994. Holdings was
merged with and into Aristech under the name of Aristech Chemical Corporation
(the "Company") on December 30, 1994. The 1993 financial statements have been
restated to reflect comparative consolidated information.
Combined and separate results of Aristech and Holdings during the periods
preceding the merger were as follows:
<TABLE>
<CAPTION>
(IN MILLIONS) ARISTECH HOLDINGS COMBINED
- ------------- -------- -------- --------
<S> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1993
Sales........................................................ $788.5 -- $788.5
Net (loss)................................................... $(35.4) $ (4.3) $(39.7)
FOR THE PERIOD ENDED DECEMBER 30, 1994
Sales........................................................ $945.5 -- $945.5
Extraordinary loss........................................... $ (5.1) -- $ (5.1)
Net income (loss)............................................ $ 12.6 $(12.5) $ .1
</TABLE>
In March, 1995, the Company purchased all outstanding shares held by the
Blackstone partnerships, and all the outstanding shares and options held by
Aristech senior management. At the same time, 2,550 shares were issued to MC and
MIC. The purchased shares, as well as shares previously held as Treasury Stock,
were retired. In April, 1995, MC acquired all the shares held by MGCC. The
allocation of the 10,050 shares of common stock outstanding at December 31, 1995
is as follows:
<TABLE>
<S> <C>
Mitsubishi Corporation.............................................................. 80.9%
Mitsubishi International Corporation................................................ 5.9%
Mitsubishi Chemical Corporation..................................................... 8.8%
Mitsubishi Rayon Company, Ltd....................................................... 4.4%
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. Investments in other entities over which the
Company exercises significant influence are carried on the equity basis. Certain
1994 amounts have been reclassified to conform with the 1995 presentation.
F-7
<PAGE> 77
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company has not completed the process of evaluating the impact that
will result from adopting Statement of Financial Accounting Standard ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." The Company is therefore unable to disclose the
impact that adopting SFAS No. 121 will have on its financial position and
results of operations when such statement is adopted.
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
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
INVENTORIES
Inventories are stated at the lower of aggregate cost or market. Cost is
determined primarily by the last-in, first-out ("LIFO") method. Inventory costs
include direct and indirect manufacturing costs associated with the production
of product.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost. Major replacements and
improvements which extend the life of the property are capitalized, while
maintenance and repairs are expensed as incurred. The Company capitalizes the
interest cost associated with major property additions while in progress and
amortizes the amount over the useful lives of the related assets. Depreciation
of plant and equipment is computed on the straight-line method.
When a plant or major facility within a plant is sold or otherwise disposed
of, any gain or loss is reflected in the consolidated statement of income.
Proceeds from the sale of other facilities depreciated on a group basis are
credited to the depreciation reserve.
EXCESS COST OVER ASSETS ACQUIRED
The excess cost over the fair value of assets acquired is being amortized
on a straight-line basis over a 40 year period. Such amount has been allocated
to each of the Company's businesses based on historical operating results prior
to the acquisition. Accumulated amortization of the excess costs over assets
acquired was $38.4 million and $44.0 million at December 31, 1994 and 1995.
PENSIONS
The Company maintains defined benefit pension plans with benefits based on
compensation and years of service for substantially all of its employees. The
Company's funding practice is to contribute annually not less than the
actuarially determined minimum funding requirements of the Employee Retirement
Income Security Act of 1974 nor more than the maximum funding limitation under
the Internal Revenue Code. Contributions are intended to provide benefits for
service to date and for benefits expected to be earned in the future.
The Company also maintains defined contribution plans which cover certain
eligible salaried and hourly employees. The Company's cost is determined based
on a percentage of compensation as defined by the plans (see Note 5).
INCOME TAXES
Income taxes are accounted for in accordance with SFAS No. 109, "Accounting
for Income Taxes." Under SFAS No. 109, deferred income taxes are recognized for
the estimated taxes ultimately payable or
F-8
<PAGE> 78
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
recoverable based on enacted tax law. The deferred income taxes are computed
annually for differences between book and tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future (see Note 6).
INCOME RECOGNITION
Sales and related costs of sales are included in income when goods are
shipped or services are rendered to the customer.
CASH EQUIVALENTS
The Company considers all highly liquid instruments with a maturity of
three months or less at the date of purchase to be cash equivalents. Such
investments are carried at cost which approximates market.
SHORT-TERM INVESTMENTS
Instruments with a maturity greater than three months but less than one
year at the time of purchase are considered short-term investments. At December
31, 1995, the Company held a $17.0 million investment in a time deposit maturing
in February, 1996 for purposes of securing various letters of credit. The
Company intends to hold such investment to maturity, therefore, the investment
is reported at amortized cost which approximates fair value.
INTEREST RATE SWAP AGREEMENTS
The differential to be paid or received is accrued as interest rates change
over the life of the agreements (see Note 11).
3. ACCOUNTING CHANGES
In 1993, the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," requiring the accrual of
postretirement benefits over the period during which active employees become
eligible for such benefits. Previously, the Company recognized the cost of
providing these benefits as the benefits were paid. The Company has chosen to
amortize the transition obligation of $5.9 million related to SFAS No. 106 over
a 20 year period. This accounting change resulted in a charge to 1993 net income
of $1.4 million (see Note 5).
As discussed in Note 2, the Company adopted SFAS No. 109, "Accounting for
Income Taxes," in 1993. The cumulative effect as of January 1, 1993, of the
adoption of SFAS No. 109 was a charge of $3.8 million. The effect of the
accounting change in 1993 was to decrease the net loss by $.7 million.
Effective January 1, 1993, the Company changed its method of accounting for
depreciation of plant and equipment from a modified straight-line basis to a
straight-line basis. The new method of depreciation was adopted as the
preferable method because the Company believes that it is the most common method
used by the chemical industry. The effect of the change in 1993 was to decrease
the loss before income taxes by $7.9 million. The adjustment of $4.0 million
(after reduction of income taxes of $2.4 million) to apply retroactively the new
method is included in the loss for 1993. The pro forma amounts shown on the
income statement have been adjusted for the effect of retroactive applications
on depreciation and related income taxes.
F-9
<PAGE> 79
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACCOUNTING CHANGES (CONTINUED)
4. LINES OF BUSINESS
The Company's operations are conducted in one business segment, the
production and marketing of chemical and polymer products. The Company does not
derive significant revenue from any single customer. The Company's products are
sold in domestic and international markets primarily to manufacturers of
automotive parts, construction materials and consumer products.
The Company exported chemical products with a total sales revenue of $97.2
million in 1993, $134.5 million in 1994, and $186.8 million in 1995.
5. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees of the Company are covered by various defined
benefit or defined contribution plans. The cost of such plans was $4.0 million
in 1993, $4.4 million in 1994, and $4.9 million in 1995.
Defined benefit pension cost for 1993, 1994, and 1995 includes the
following components:
<TABLE>
<CAPTION>
(IN MILLIONS) 1993 1994 1995
- ------------- ---- ---- ----
<S> <C> <C> <C>
Cost of benefits earned during the period........................... $ 3.0 $ 3.9 $ 3.2
Interest cost on projected benefit obligation....................... 3.4 3.8 3.8
Actual return on plan assets........................................ (4.8) (.7) (7.6)
Net amortization and deferral....................................... 1.8 (3.0) 4.7
----- ----- -----
Total............................................................. $ 3.4 $ 4.0 $ 4.1
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
ASSUMPTIONS 1993 1994 1995
- ----------- ---- ---- ----
<S> <C> <C> <C>
Discount rate, net periodic pension cost............................ 9.0 % 7.5% 8.5%
Rate of increase in compensation levels, net periodic pension
cost.............................................................. 4.5 % 3.5% 4.0%
Expected long-term rate of return on assets......................... 9.0 % 10.0% 9.0%
Discount rate, projected benefit obligation......................... 7.5 % 8.5% 7.25%
Rate of increase in compensation levels, projected benefit
obligation........................................................ 3.5 % 3.0% 4.0%
</TABLE>
The following table sets forth the defined benefit plans' funded status and
amounts recognized in the Company's balance sheets at December 31, 1994 and
1995:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
----------------- ----------------
(IN MILLIONS) 1994 1995 1994 1995
- ------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation............................. $(27.7) $(25.1) $(4.2) $ (9.4)
====== ====== ===== ======
Accumulated benefit obligation........................ $(31.0) $(28.1) $(4.3) $(10.4)
====== ====== ===== ======
Projected benefit obligation.......................... $(45.8) $(41.2) $(4.6) $(17.1)
Plan assets at fair value............................... 34.2 28.9 1.7 8.8
------ ------ ----- ------
Plan assets less than projected benefit obligation...... (11.6) (12.3) (2.9) (8.3)
Unrecognized net (gain) loss............................ 5.9 8.0 (.2) 3.4
Unrecognized prior service cost......................... (.2) (.3) 1.0 1.9
------ ------ ----- ------
Accrued pension cost recognized in the balance sheets... $ (5.9) $ (4.6) $(2.1) $ (3.0)
====== ====== ===== ======
</TABLE>
As a result of the pending sale of the coal chemicals business (see Note
18), an additional cost of $.8 million has been reflected in the 1995 income
statement and balance sheet due to the curtailment of the
F-10
<PAGE> 80
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. PENSIONS AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
associated pension plan. Amounts recognized due to the sale of the Polyester
Group (see Note 18) were not significant.
Plan assets are invested primarily in listed stocks and bonds.
In addition to providing pension benefits, the Company provides certain
medical and life insurance benefits to eligible retired employees. Under the
terms of the benefit plans, which are unfunded, the Company reserves the right
to modify or discontinue the plans.
A transition obligation of $5.9 million existed at the date of adoption of
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Company, as permitted by SFAS No. 106, has chosen to amortize
this transition obligation on a straight-line basis over 20 years.
The expense for other postretirement benefits was $1.4 million in 1993,
$1.4 million in 1994, and $2.1 million in 1995. The cash payments for such
benefits were $.5 million in 1993, $.6 million in 1994, and $.7 million in 1995.
Postretirement benefit cost for 1993, 1994 and 1995 included the following
components:
<TABLE>
<CAPTION>
(IN MILLIONS) 1993 1994 1995
- ------------- ---- ---- ----
<S> <C> <C> <C>
Cost of benefits earned during the period............................ $ .5 $ .5 $ .4
Interest cost on accumulated postretirement obligation............... .6 .6 1.4
Amortization of transition obligation................................ .3 .3 .3
---- ---- ----
Total.............................................................. $1.4 $1.4 $2.1
==== ==== ====
</TABLE>
For measurement purposes, the discount rates used for calculating the
present value of postretirement benefit liabilities were 4.0% for 1993, 8.75%
for 1994, and 7.25% for 1995, respectively.
The following table sets forth the plans' postretirement benefit liability
as of December 31, 1994 and 1995:
<TABLE>
<CAPTION>
(IN MILLIONS) 1994 1995
- ------------- ---- ----
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................................ $ (6.2) $ (7.3)
Fully eligible active plan participants................................. (3.1) (3.6)
Other active plan participants.......................................... (7.1) (7.0)
------ ------
Total................................................................ (16.4) (17.9)
Unrecognized loss......................................................... .7 1.0
Unrecognized transition obligation........................................ 5.3 4.6
------ ------
Accrued postretirement benefit liability recognized in the balance
sheet................................................................... $(10.4) $(12.3)
====== ======
</TABLE>
A health care cost trend rate starting at 8.0% and declining to 4.0% over a
six-year period to the year 2002 was assumed for 1995. A 1.0% increase in the
health care cost trend rate would increase the accumulated postretirement
benefit obligation as of December 31, 1995 by 6.1% and the sum of the service
and interest costs in 1995 by 7.4%.
F-11
<PAGE> 81
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. TAX PROVISION
Provision for taxes on income is as follows:
<TABLE>
<CAPTION>
(IN MILLIONS) 1993 1994 1995
- ------------- ---- ---- ----
<S> <C> <C> <C>
Current federal income taxes....................................... $ .1 $1.1 $16.3
Current state and local income taxes............................... -- 1.5 3.3
Deferred income taxes.............................................. 3.1 6.9 24.8
Benefit of net operating loss carryforwards........................ (13.0) -- --
Statutory tax rate change.......................................... 4.0 -- --
------ ---- -----
Total provision (benefit)........................................ $ (5.8) $9.5 $44.4
====== ==== =====
</TABLE>
A reconciliation of the differences between income taxes computed at the
federal statutory rate of 35% to the total provision for income taxes is as
follows:
<TABLE>
<CAPTION>
(IN MILLIONS) 1993 1994 1995
- ------------- ---- ---- ----
<S> <C> <C> <C>
Statutory rate applied to income (loss) before tax................. $(16.0) $5.1 $36.6
Foreign Sales Corporation benefits & other tax credits............. (.3) (.5 ) (.7)
Goodwill amortization.............................................. 2.0 2.0 2.1
Goodwill write-off................................................. -- 2.3 5.9
State income taxes after federal income tax benefit................ (.6) .1 1.4
Statutory tax rate change.......................................... 4.0 -- --
NOL benefit limitation............................................. 4.8 -- --
Other.............................................................. .3 .5 (.9)
------ ---- -----
Total provision for income taxes................................. $ (5.8) $9.5 $44.4
====== ==== =====
</TABLE>
The tax effect of the significant temporary differences which comprise the
deferred tax assets and liabilities at December 31, 1994 and 1995 follows:
<TABLE>
<CAPTION>
(IN MILLIONS) 1994 1995
- ------------- ---- ----
<S> <C> <C>
Deferred tax assets:
Deferred compensation................................................... $ 22.3 $ --
Interest expense........................................................ 10.9 --
Accruals different than payments........................................ 14.4 16.5
Net operating loss...................................................... 19.5 --
Other tax credit carryforwards.......................................... 10.2 10.6
Other................................................................... .1 .1
------ ------
Gross deferred tax assets............................................... 77.4 27.2
------ ------
Deferred tax liabilities:
Property................................................................ 221.9 197.0
Losses from equity investee............................................. (4.0) (4.3)
Accrual different than payments......................................... -- 2.3
Other................................................................... 2.0 1.2
------ ------
Gross deferred tax liabilities.......................................... 219.9 196.2
------ ------
Net deferred tax liabilities............................................ $142.5 $169.0
====== ======
</TABLE>
During 1994, the Company settled an IRS examination relating to audit years
which preceded the acquisition of Aristech on March 7, 1990. Also, during 1995,
the Company changed its best estimate of the ultimate settlement for an IRS
examination relating to other audit years preceding the acquisition. Since this
acquisition was accounted for as a purchase business combination, the Company
followed the accounting in
F-12
<PAGE> 82
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. TAX PROVISION (CONTINUED)
Emerging Issues Task Force ("EITF") Abstract No. 93-7, "Uncertainties Related to
Income Taxes in a Purchase Business Combination." As a result, the excess cost
over assets acquired account was increased by $2.8 million and $1.7 million
during 1994 and 1995, respectively.
7. INVENTORIES
<TABLE>
<CAPTION>
(IN MILLIONS) 1994 1995
- ------------- ---- ----
<S> <C> <C>
Raw materials............................................................. $ 32.7 $ 28.8
Finished products......................................................... 50.6 61.5
Supplies and sundry items................................................. 16.8 15.7
------ ------
Total Inventory......................................................... 100.1 106.0
Less inventory held for sale.............................................. 14.4 4.9
------ ------
Net Inventory........................................................... $ 85.7 $101.1
====== ======
</TABLE>
The current cost of inventories at December 31, 1994 and 1995 was $101.0
million and $98.5 million, respectively.
The Company had LIFO liquidations resulting in an increase in cost of sales
of $.2 million in 1993, a decrease in cost of sales of $2.6 million in 1994, and
an increase in cost of sales of $.1 million in 1995.
8. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
(IN MILLIONS) 1994 1995
- ------------- ---- ----
<S> <C> <C>
Land...................................................................... $ 13.2 $ 13.5
Buildings................................................................. 42.4 37.1
Machinery and equipment................................................... 820.3 794.2
------ ------
Total property, plant and equipment..................................... 875.9 844.8
Less accumulated depreciation........................................... 196.7 214.3
Less net property, plant and equipment held for sale.................... 55.6 28.2
------ ------
Net property, plant and equipment....................................... $623.6 $602.3
====== ======
</TABLE>
9. EQUITY INVESTMENT
On December 15, 1987, the Company acquired for $5.0 million a 50% interest
in Avonite, Inc. ("Avonite") of Belen, New Mexico, a producer and marketer of
premium unsaturated polyester sheet. The investment is accounted for under the
equity method. As of December 31, 1994 and 1995, the Company had made loans to
Avonite totaling $8.8 million for working capital and construction of a new
production facility completed in 1989. Interest receivable relating to the loans
at December 31, 1994 and 1995 was $4.9 million and $5.9 million, respectively.
The Company also guaranteed an Industrial Revenue Bond obtained by Avonite for
construction of the new production facility. The outstanding balance of the bond
at December 31, 1994 and 1995 was $.7 million for each year. In the ordinary
course of business, the Company sells products to Avonite. The outstanding
receivable balance relating to these sales at December 31, 1994 and 1995 was
$2.6 million for each year.
10. LEASE COMMITMENTS
The Company has operating leases primarily for buildings, railway
equipment, data processing and automotive equipment. Capital leases are
immaterial.
F-13
<PAGE> 83
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. LEASE COMMITMENTS (CONTINUED)
Minimum annual rentals for operating leases with initial or remaining lease
terms in excess of one year were as follows at December 31, 1995:
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
1996............................................... $12.8
1997............................................... 12.0
1998............................................... 8.9
1999............................................... 6.8
2000............................................... 5.6
Later years........................................ 7.3
-----
Total minimum lease payments......................... $53.4
=====
</TABLE>
Operating lease rental expense for 1993 was $13.0 million, $12.0 million
for 1994, and $11.0 million for 1995.
11. LONG-TERM DEBT
<TABLE>
<CAPTION>
INTEREST
(IN MILLIONS) MATURITY RATES 1994 1995
- ------------- -------- -------- ---- ----
<S> <C> <C> <C> <C>
Term Loan--MC...................................... 2002 Variable $203.0 $203.0
Term Loan--MIC..................................... 1997 Variable 100.0 100.0
Revolving Loan--MIC................................ 1997 Variable 26.0 65.0
Bank Term Loans.................................... 1995 Variable 156.0 --
Subordinated PIK Debentures........................ 2005-2007 10% 222.8 204.0
Capital lease obligations.......................... 1996-1998 .1 .2
------ ------
Total............................................ $707.9 $572.2
====== ======
</TABLE>
On August 1, 1994, the Company refinanced the prior $825.0 million Credit
Agreement dated April 18, 1990 through a combination of permanent and temporary
financing. The permanent financing was provided by MC in the form of a $203.0
million Term Loan due July 31, 2002. The agreement governing this financing
provides for interest on outstanding borrowings at a variable rate based on the
London Interbank Offered Rate (LIBOR), plus 1.375%. The temporary financing,
which was guaranteed by MC, was arranged through MIC and three commercial banks.
The MIC financing was provided in the form of a $100 million Term Loan and a
Revolving Loan with a maximum commitment of $100.0 million, with both facilities
maturing March 31, 1995. The commercial bank financing was provided in the form
of three Term Loans totaling $156.0 million and a Revolving Loan with a maximum
commitment of $20 million, all maturing on March 31, 1995.
Due to this refinancing, the unamortized portion of deferred finance
charges related to the Credit Agreement of $8.3 million was recognized as a
loss. This amount, net of the related income tax benefit of $3.2 million, is
presented as an extraordinary loss in the 1994 consolidated statement of income.
Effective January 4, 1995, the commercial bank financing was repaid in its
entirety by increasing the commitment amount of the MIC Revolving Loan to $250.0
million and by replacing the previous $20.0 million committed Revolving Loan
with a $20.0 million discretionary line of credit available through two
commercial banks. The original maturity of the MIC financing scheduled for March
31, 1995, has been extended annually and is currently due on March 31, 1997.
This financing is renewable upon mutual consent of the parties. The increase in
financing through MIC is also guaranteed by MC. Due to the subsequent
refinancings, the MIC loans and the bank Term Loans are presented as long-term
debt on the December 31, 1994 consolidated balance sheet. Likewise, the MIC
loans are presented as long-term debt on the December 31, 1995 consolidated
balance sheet.
F-14
<PAGE> 84
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. LONG-TERM DEBT (CONTINUED)
The discretionary line of credit expires January 3, 1997. The interest
charged on the outstanding balance is based upon a mutually agreed upon rate.
This rate was 6.1% at December 31, 1995 and the outstanding balance at that date
was $8.7 million.
During 1992, the Company hedged some of its exposure to upward movements in
interest rates by entering into interest rate swap arrangements on $250 million
of debt by fixing the effective rate of interest at approximately 7.4%. These
swaps consisted of varying maturity dates ranging from January 1994 to July
1995. As of December 31, 1994, $200 million in swap arrangements remained
outstanding. There are no swap arrangements outstanding as of December 31, 1995.
On March 7, 1990, the Company issued $80.0 million in 10% Series A
Convertible Subordinated Payment-In-Kind ("PIK") Debentures to MC and MIC. An
additional $64.0 million of PIK debentures was issued to the Minority Owners on
November 27, 1990. Interest on these debentures was paid from issue date to
March 1, 1995, in the form of additional debentures bearing the same terms as
the original issue. Additional issues of debentures in lieu of cash payments for
interest were $19.0 million in 1993, $20.9 million in 1994 and $5.7 million in
1995. Commencing with the June 1, 1995, payment date, interest is payable at
Aristech's option, either in cash or Series B (non-convertible) PIK debentures.
From June 1, 1995, to December 1, 1995, Aristech elected to pay interest in
cash. Total cash interest payments for 1995 were $15.3 million. On March 23,
1995, the Company redeemed all of the debentures held by MGCC for $24.5 million.
The PIK debentures are convertible at the option of the holder(s) into 28%
of the Fully Diluted Common Stock of the Company as defined in the Debenture
Certificate. The conversion rights are exercisable upon the first to occur of
March 1, 1995, Change in Control (as defined in the Debenture Certificate), or
the closing of an initial public offering of the Company's common stock. To
date, no conversion rights have been exercised.
It is not practical to estimate the fair value of the PIK debentures. The
instrument is carried at its face amount plus accrued interest. The debt is not
traded and the cost is prohibitive to have a valuation of the Company performed
in order to establish the fair value of the conversion feature.
Based on the borrowing rates currently available to the Company for bank
loans with similar terms and average maturities, the fair value of long-term
debt approximates carrying value.
The Company has agreed to pay MC a guarantee fee of 2% annually on the
outstanding principal balance of the Guaranteed Subordinated Term Loan (which
was repaid in entirety on August 1, 1994) and 1.125% annually on all subsequent
financings (other than that directly provided by MC) in consideration for their
guarantee of payment of the Company's obligation on these loans. Effective
January 4, 1995, the annual guarantee fee was revised to .60% calculated on a
daily basis on the outstanding principal balance of the MIC Term Loan and
Revolving Loan and the discretionary line of credit with the commercial banks.
The guarantee fee expense for 1993 was $3.6 million, $4.3 million for 1994, and
$2.2 million for 1995.
Of the $572.2 million in debt outstanding as of December 31, 1995, $165.0
million is scheduled to mature during 1997. No other repayments are due within
the next five years.
12. OTHER ITEMS
<TABLE>
<CAPTION>
(IN MILLIONS) 1993 1994 1995
- ------------- ---- ---- ----
<S> <C> <C> <C>
Operating costs include:
Maintenance and repairs of plant and equipment.................... $28.3 $28.3 $31.8
Research and development.......................................... $12.5 $13.1 $11.9
</TABLE>
F-15
<PAGE> 85
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. EQUITY
The Subscription and Stockholders Agreement ("Stockholders Agreement"),
dated January 31, 1990, among MC, MIC, Blackstone Capital Partners L.P.,
Blackstone Family Investment Partnership L.P., Holdings, Middle, Acquisition and
certain management investors provided for the initial capitalization of
Holdings. Under the Stockholders Agreement, management investors acquired from
Holdings 1,250 shares of common stock ("Acquired Shares") in return for shares
of Aristech common stock and cash with a combined total value of $12.5 million.
MC and MIC together acquired from Holdings 7,500 shares of common stock for
$84.7 million and the Blackstone partnerships together acquired from Holdings
250 shares of common stock for $2.8 million. In addition, management investors
received, at no cost, 850 shares of Holding's common stock ("Restricted
Shares"). The Restricted Shares are subject to vesting and forfeiture as
provided by the Stockholders Agreement.
As defined in the Stockholders Agreement, after March 7, 1995, or upon the
occurrence of certain events, the shares held by management investors and the
Blackstone partnerships may be put by the holder or called by the Company. On
January 4, 1993, the Stockholders Agreement was amended to establish an Assigned
Value Per Share ("Fixed Price") of $30,431 per share of common stock. Therefore,
such shares have been presented at the Fixed Price and recorded in the temporary
equity section of the 1994 consolidated balance sheet.
On March 23, 1995, the Company exercised its call option with respect to
2,245 shares of common stock held by the management investors and the Blackstone
partnerships at the Fixed Price, in addition to options on 200 shares granted to
the management investors by the Performance Option Plan ("POP")(see Note 15).
The shares and options were purchased using proceeds obtained from issuing 2,550
shares of common stock to MC and MIC at the Fixed Price.
Deferred compensation was recognized for the Fixed Price of the Restricted
Shares and for the difference between the Fixed Price of the Acquired Shares and
the amount paid by management investors for such shares. The deferred
compensation attributable to Restricted Shares was amortized to expense over the
restriction period beginning on March 8, 1990 and ending on March 23, 1995.
14. REDEEMABLE PREFERRED STOCK
The redeemable Series A Convertible PIK Preferred Stock ("Series"), of
which 1,000,000 shares are authorized, has a liquidation value of $100 per share
plus all accumulated and unpaid dividends to the date of final distribution. No
other stock shall rank senior to this Series upon liquidation. Dividends are
payable quarterly at the rate of 10% per annum. Prior to June 1, 1995, dividends
were paid in additional shares of this Series (the payment-in-kind feature)
rather than in cash. Specifically, each quarter, holders received .025 shares of
this Series for each share held. Additional shares issued in lieu of cash
dividends were $4.7 million in 1993, $5.2 million in 1994, and $1.5 million in
1995. Shares issued as a dividend carry the same liquidation rights and
preferences as the originally issued preferred stock in this Series. All
dividends payable on or after June 1, 1995 are to be paid in cash. Total cash
dividends for 1995 were $3.8 million. This Series is convertible at the option
of the holder(s) into 7% of the Fully-Diluted Common Stock of the Company as
defined in the Certificate of Designation for this issuance. The conversion
rights are exercisable upon the first to occur of March 1, 1995, a Change in
Control (as defined in the Certificate of Designation), or the closing of an
initial public offering of the Company's common stock. To date, no conversion
rights have been exercised. The shares are also subject to redemption at the
Company's option after March 1, 1995. Such redemptions would be at the
liquidation value plus accrued and unpaid dividends. On March 23, 1995, the
Company redeemed all of the shares held by MGCC for $6.1 million. From March 1,
2005 through March 1, 2007, each holder of this Series may require the Company
to redeem any or all shares held by the holder at a price equal to the
liquidation value plus accrued and unpaid dividends.
F-16
<PAGE> 86
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. REDEEMABLE PREFERRED STOCK (CONTINUED)
It is not practical to estimate the fair value of this Series. The
instrument is carried at its face amount plus accrued dividends. The preferred
stock is not traded and the cost is prohibitive to have a valuation of the
Company performed in order to establish the fair value of the conversion
feature.
15. PERFORMANCE STOCK OPTION PLAN, PERFORMANCE OPTION PLAN AND EMPLOYMENT
COMPENSATION AGREEMENTS
The Performance Stock Option Plan was replaced by the POP in 1992 and, on
January 4, 1993, the Stockholders Agreement was amended to terminate the POP and
the Company entered into an Employment Compensation Agreement with each
participant. This agreement provided for the payment of a fixed cash settlement
amount to each participant. The payment of the settlement took place on January
3, 1995, amounting to $27.0 million. Amounts recorded to expense for this
liability were $9.3 million in 1993 and $10.1 million in 1994.
16. OTHER RELATED PARTY TRANSACTIONS
The Company had sales of $39.8 million for 1993, $52.6 million for 1994,
and $83.4 million for 1995 to MIC and MGCC associated with shipments of chemical
products. Accounts receivable due from MIC were $6.1 million and $9.7 million at
December 31, 1994 and 1995, respectively. Accounts receivable due from MGCC were
$.7 million and $.9 million at December 31, 1994 and 1995, respectively. The
Company purchased chemical products from MIC and MGCC in the amount of $9.5
million in 1993, $15.7 million in 1994, and $27.2 million in 1995. Accounts
payable due to MIC were $.3 million and $.5 million at December 31, 1994 and
1995, respectively.
17. COMMITMENTS AND CONTINGENCIES
Contract commitments for capital expenditures for property, plant and
equipment totaled $10.2 million and $12.7 million at December 31, 1994 and 1995,
respectively.
The Company has agreed to indemnify USX Corporation ("USX") against certain
claims or liabilities which USX may incur relating to USX's prior ownership and
operation of the facilities transferred to the Company in 1986, including
liabilities under laws relating to the protection of the environment and the
workplace. Such liabilities have been provided for in the financial statements.
USX has retained responsibility for environmental liabilities relating to
occurrences at the Company's operating facilities located in Clairton,
Pennsylvania during USX's ownership. The Company has agreed to share in certain
costs relating to this site providing the Company's share does not exceed
$500,000.
As of December 31, 1994 and 1995, the Company had outstanding irrevocable
standby letters of credit in the amount of $16.8 million and $16.0 million,
respectively, primarily in connection with environmental matters.
Phillips Petroleum filed suit against the Company in November 1987,
alleging that the Company had infringed Phillips' patents relating to copolymer
produced at the LaPorte, Texas plant. A Special Master appointed by the court to
hear cross motions for summary judgment recommended in September 1991 that the
Phillips' motion be denied and the Company's motion for summary judgment be
granted. Exceptions have been filed by Phillips seeking disqualification of the
Special Master and rejection of his recommendations. On October 6, 1993, the
court denied Phillips' request for disqualification, but has taken no action on
the motion filed by Phillips for rejection of the Special Master's
recommendation.
The Company is subject to pervasive environmental laws and regulations
concerning the production, handling, storage, transportation, emission, and
disposal of waste materials and is also subject to other federal and state laws
and regulations regarding health and safety matters. These laws and regulations
are constantly
F-17
<PAGE> 87
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. COMMITMENTS AND CONTINGENCIES (CONTINUED)
evolving, and it is impossible to predict accurately the effect these laws and
regulations will have on the Company in the future.
The Company is also the subject of, or party to, a number of other pending
or threatened legal actions involving a variety of matters. In the opinion of
management, any ultimate liability arising from these contingencies, to the
extent not otherwise provided for, should not have a material adverse effect on
the consolidated financial position, results of operations, or cash flows of the
Company.
18. ASSETS HELD FOR SALE
In November 1994, the Company announced that a letter of intent had been
signed with Ashland Inc. for the purchase of the Company's unsaturated polyester
resin, polyester distribution and maleic anhydride businesses (the "Polyester
Group"). The sale was completed in April, 1995 for $91.9 million. Losses of $6.2
million in 1994 and $3.5 million in 1995 were recorded primarily due to the
write-off of excess cost over assets acquired, anticipated severance costs and
less than projected operating income of the Polyester Group through April 1995.
The net sales and operating income of the Polyester Group, excluding certain
corporate charges, for 1993 and 1994 were as follows:
<TABLE>
<CAPTION>
(IN MILLIONS) 1993 1994
------------- ---- ----
<S> <C> <C>
Net sales................................................. $123.6 $135.3
Operating income.......................................... 2.9 3.9
</TABLE>
The assets purchased by Ashland Inc. totaled $94.2 million at December 31,
1994 and are reflected on the 1994 consolidated balance sheet as "Net assets
held for sale". Such assets included accounts receivable of $22.4 million,
inventory of $14.4 million and net property, plant and equipment of $55.6
million.
In November 1995, the Company announced that a letter of intent had been
signed with Koppers Industries, Inc. for the purchase of the Company's coal
chemicals business. A loss of $7.9 million is included in the 1995 loss on sale
of assets as a result of the pending sale, primarily due to the write-off of
excess cost over assets acquired.
The net sales and operating income of coal chemicals, excluding certain
corporate charges, for 1993, 1994, and 1995 were as follows:
<TABLE>
<CAPTION>
(IN MILLIONS) 1993 1994 1995
------------- ---- ---- ----
<S> <C> <C> <C>
Net sales........................................... $66.0 $69.1 $76.0
Operating income.................................... $10.8 $ 9.1 $10.3
</TABLE>
The net assets to be purchased by Koppers Industries, Inc. totaling $42.3
million at December 31, 1995 are reflected on the consolidated balance sheet as
"Net assets held for sale" and include accounts receivable of $10.3 million,
inventory of $4.9 million, net property, plant and equipment of $28.2 million
and accounts payable of $9.0 million.
19. SUBSEQUENT EVENTS
In March 1996, the maturity date of the MIC financing (see Note 10) was
extended to March 31, 1997.
On February 22, 1996, a cash dividend of $1,990 per share was declared to
holders of record of the Company's common stock as of that date and paid in June
1996.
In March 1996, the Company settled certain issues relating to prior years
with the IRS. The 1995 consolidated balance sheet has been adjusted to reflect
these amounts.
F-18
<PAGE> 88
ARISTECH CHEMICAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. SUBSEQUENT EVENTS (CONTINUED)
On March 31, 1996 the Company completed the sale of the coal chemicals
business to Koppers Industries, Inc.
On July 1, 1996, the Company acquired an additional 10% of the outstanding
common stock of Avonite in exchange for cancellation of $1 million of loans the
Company had previously made to Avonite. As a result, Avonite became a
consolidated subsidiary of the Company.
On September 30, 1996, all of the PIK debentures and all outstanding shares
of Series preferred stock were converted or redeemed. As a result, the Company
issued 4,858 shares of common stock and paid cash of $30.5 million. As a result
of the transaction, common stock ownership consists of MC, 11,589 shares;
Mitsubishi Chemical Corporation, 2,200 shares; MIC, 678 shares; and Mitsubishi
Rayon Co., Ltd., 441 shares.
On November 19, 1996, the district court entered an order that granted the
Company's motion for summary judgment in the Phillips litigation described in
Note 17. The order is subject to appeal.
F-19
<PAGE> 89
ARISTECH CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS ENDING
SEPTEMBER 30,
-------------------
1995 1996
------ ------
<S> <C> <C>
Sales................................................................... $786.7 $691.6
Operating Costs:
Cost of sales......................................................... 579.4 536.0
Selling, general and administrative expenses.......................... 32.0 35.2
Depreciation and amortization......................................... 36.2 35.6
------ ------
Total Operating Costs.............................................. 647.6 606.8
------ ------
Operating Income........................................................ 139.1 84.8
Loss on Disposal of Assets.............................................. (8.5) (8.8)
Other Expense........................................................... (.9) (.7)
Interest Income......................................................... 1.6 .7
Interest Expense........................................................ (38.1) (32.3)
------ ------
Income Before Taxes on Income........................................... 93.2 43.7
Provision for Taxes on Income........................................... 40.2 19.7
------ ------
Income Before Minority Interest......................................... 53.0 24.0
------ ------
Minority Interest in Subsidiary......................................... -- .1
------ ------
Net Income.............................................................. $ 53.0 $ 24.1
====== ======
Related party transactions:
Sales................................................................... $ 56.6 $ 59.7
Interest Expense........................................................ $ 38.7 $ 31.1
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE> 90
ARISTECH CHEMICAL CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and equivalents......................................... $ .4 $ 1.2
Short term investments....................................... 17.0 --
Receivables (less allowance for doubtful accounts of $.6).... 121.3 124.1
Inventories.................................................. 101.1 102.7
Net assets held for sale..................................... 42.3 --
Deferred income taxes........................................ 8.7 8.7
Other current assets......................................... 5.0 1.0
-------- --------
Total Current Assets...................................... 295.8 237.7
Property, plant and equipment, net of accumulated
depreciation................................................. 602.3 596.1
Excess cost over assets acquired............................... 174.6 174.1
Other assets................................................... 17.3 9.6
-------- --------
Total Assets.............................................. $1,090.0 $1,017.5
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other current liabilities............... $ 91.9 $ 86.6
Payroll and benefits payable................................. 11.9 13.9
Accrued taxes................................................ 8.4 5.5
Short-term borrowing......................................... 8.7 5.0
Long-term debt due within one year........................... -- 100.1
-------- --------
Total Current Liabilities................................. 120.9 211.1
Long-term debt--related parties................................ 572.0 237.0
Long-term debt--other.......................................... .2 14.0
Deferred income taxes.......................................... 177.7 179.0
Other liabilities.............................................. 34.5 32.6
Commitments and contingencies.................................. -- --
-------- --------
Total liabilities......................................... 905.3 673.7
-------- --------
Redeemable preferred stock, series A, convertible (no par,
1,000,000 shares authorized, 509,983 shares issued at
December 31, 1995)........................................... 51.0 --
Common stock ($.01 par value, 20,000 shares authorized, 10,050
shares issued at December 31, 1995 and 14,908 shares issued
at September 30, 1996)....................................... -- --
Additional paid-in capital..................................... 154.5 378.8
Retained deficit............................................... (20.8) (35.0)
-------- --------
Total Stockholders' Equity................................ 133.7 343.8
-------- --------
Total Liabilities and Equity.............................. $1,090.0 $1,017.5
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE> 91
ARISTECH CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS ENDING
SEPTEMBER 30,
---------------------
1995 1996
------- -------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income.......................................................... $ 53.0 $ 24.1
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation..................................................... 32.6 31.7
Amortization of excess cost over assets acquired................. 4.0 3.9
Amortization of merger expenses.................................. 1.5 1.5
Amortization of deferred compensation............................ .9 --
Amortization of anti-dilution option liabilities................. .4 --
Deferred income taxes............................................ 16.1 1.3
Loss on disposal of assets....................................... 4.3 8.8
Loss from equity investee........................................ .9 .5
Change in assets and liabilities net of effects from purchase of
Avonite:
Increase in accounts receivable................................ (4.2) (2.9)
Decrease (increase) in inventories............................. (20.4) 1.4
Decrease in accounts payable and other current liabilities..... (64.1) (7.4)
Payment-in-kind debenture interest expense....................... 5.7 --
All other........................................................ 2.7 (.6)
------- -------
Net Cash Provided by Operating Activities........................... 33.4 62.3
Cash Flows From Investing Activities:
Capital expenditures................................................ (38.3) (28.6)
Cash received on disposal of assets................................. 91.9 39.0
Maturation of short-term investment................................. -- 17.0
Cash acquired, purchase of Avonite.................................. -- .7
------- -------
Net Cash Provided by Investing Activities........................... 53.6 28.1
Cash Flows From Financing Activities:
Short-term debt increase (decrease)................................. 12.6 (3.7)
Repayment of long-term debt......................................... (156.0) (103.0)
Proceeds from issuance of long-term debt............................ 60.0 72.0
Dividends paid...................................................... (2.4) (24.2)
Payments for purchase of treasury stock............................. (68.3) --
Redemption of preferred stock....................................... (6.1) (6.2)
Redemption of PIK debentures........................................ (24.5) (24.5)
Issuance of common stock............................................ 77.5 --
------- -------
Net Cash Used in Financing Activities............................... (107.2) (89.6)
Net Increase (Decrease) in Cash and Equivalents....................... (20.2) .8
Cash and equivalents, beginning of period............................. 28.7 .4
------- -------
Cash and equivalents, end of period................................... $ 8.5 $ 1.2
======= =======
Supplemental disclosure of cash flow information:
Cash Paid during period for:
Interest......................................................... $ 34.3 $ 32.6
Income taxes..................................................... $ 19.2 $ 21.7
</TABLE>
Non-cash financing activities include the conversion of debentures of $179.5
million and Redeemable Series A Convertible PIK Preferred Stock of $44.8 million
for common stock totaling $224.3 million.
The accompanying notes are an integral part of these financial statements.
F-22
<PAGE> 92
SELECTED NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 AND
DECEMBER 31, 1995
1. In the opinion of management, the unaudited financial information for the
nine months ended September 30, 1996 and September 30, 1995, reflects all
adjustments necessary to fairly state the results of operations and the
changes in financial position for such interim periods. Such adjustments are
of a normal recurring nature.
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
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
2. In March 1995, the Company purchased all the outstanding shares held by the
Blackstone partnerships, and all the outstanding shares and options held by
Aristech senior management. At the same time, 2,550 shares were issued to MC
and MIC. The purchased shares, as well as shares previously held as Treasury
Stock, were retired. In April 1995, MC acquired all the shares held by MGCC.
The allocation of the 14,908 shares of common stock currently outstanding is
as follows:
<TABLE>
<S> <C>
Mitsubishi Corporation............................................ 77.7%
Mitsubishi International Corporation.............................. 4.5%
Mitsubishi Chemical Corporation................................... 14.8%
Mitsubishi Rayon Company, Ltd..................................... 3.0%
</TABLE>
3. Inventories are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
(DOLLARS IN MILLIONS) 1995 1996
--------------------- ----------- ------------
<S> <C> <C>
Raw materials................................................ $ 28.8 $ 25.7
Finished products............................................ 61.5 56.5
Supplies and sundry items.................................... 15.7 20.5
------- ------
Total Inventory............................................ 106.0 102.7
Less inventory held for sale................................. 4.9 0.0
------- ------
Net Inventory................................................ $ 101.1 $102.7
</TABLE>
Inventory at current cost was $98.5 million and $93.7 million at December
31, 1995 and September 30, 1996 respectively.
4. The Company adopted Statement of Financial Accounting Standard ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." Adoption did not have a material effect on
financial position and results of operations.
5. Other expense for the first nine months of 1996 included a loss provision of
$3.6 million relating to the sale of the Company's coal chemicals business,
and writeoffs of obsolete equipment and facilities totaling $5.2 million.
Other expense for the first nine months of 1995 included a loss provision of
$3.7 million relating to the sale of the Company's unsaturated polyester
resin, distribution, and maleic anhydride businesses and writeoffs of
obsolete equipment and facilities totaling $4.8 million.
6. The provision for U.S. income taxes is based upon tax rates and amounts
which recognize management's best estimate of annual financial and taxable
income.
7. On September 30, 1996, three holders of the PIK debentures and Series
preferred stock exercised their option to convert their debentures and
preferred shares into Common Stock of the Company. Mitsubishi Corporation,
Mitsubishi International Corporation, and Mitsubishi Chemical Corporation
converted PIK Debentures of $127.6 million, $3.3 million and $48.7 million,
respectively, into 2,763 common shares, 70 common shares and 1,055 common
shares, respectively, and converted preferred stock of $31.9 million,
F-23
<PAGE> 93
$818 thousand and $12.2 million, respectively, into 690 common shares, 17
common shares and 263 common shares, respectively. On September 30, 1996,
the Company exercised its right to redeem the PIK debentures and Series
preferred stock held by Mitsubishi Rayon Company, Ltd. for $24.4 million and
$6.1 million, respectively.
8. On February 22, 1996, a cash dividend of $1,990 per share was declared to
holders of record of the Company's common stock as of that date and paid in
June 1996.
9. On January 3, 1995, the Company paid $27.0 million in full settlement of
incentive and stock option plans granted to key management.
10. On July 1, 1996, the Company acquired an additional 10% of the outstanding
common stock of Avonite in exchange for cancellation of $1.0 million in debt
owed by Avonite to the Company. As a result, Avonite became a consolidated
subsidiary of the Company. Previously, the Company accounted for Avonite
using the equity method of accounting. On July 1, 1996, the balance sheet of
Avonite included the following:
<TABLE>
<S> <C>
Current assets.................................................. $ 7.2
Noncurrent assets............................................... 2.0
------
Total assets.......................................... $ 9.2
======
Current liabilities............................................. $ 2.6
Noncurrent liabilities.......................................... 30.1
Common stock and paid-in capital................................ 5.2
Retained deficit................................................ (28.7)
------
Total liabilities and equity.......................... $ 9.2
======
</TABLE>
The Company had recognized a deferred tax benefit related to its cumulative
equity losses in Avonite. Subsequent to the July 1, 1996 consolidation of
Avonite the deferred tax benefit was reversed pending satisfaction of the
recognition criteria of SFAS No. 109 "Accounting for Income Taxes" related
to net operating losses.
11. On October 31, 1996, the Company entered into an interest rate hedging
contract with a commercial bank that effectively fixed at 6.404% the
treasury rate component of the all-in interest cost (treasury rate component
plus credit margin) to the Company of $150.0 million in principal amount of
notes due 2006. The Company settled the interest rate hedging contract at a
cost of approximately $2.5 milion on November 22, 1996.
F-24
<PAGE> 94
PRO FORMA CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
The following tables set forth pro forma condensed financial information of
the Company. The information in these tables should be read in conjunction with
the section captioned "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in the Prospectus, the
Consolidated Financial Statements and notes thereto and the Interim Financial
Statements and notes thereto.
The historical information set forth below was derived from the
Consolidated Financial Statements and the notes thereto and the unaudited
Interim Financial Statements and the notes thereto. The unaudited Interim
Financial Statements have been prepared on the same basis as the audited
Consolidated Financial Statements and, in the opinion of management, reflect all
adjustments necessary to fairly state results of operations and cash flows for
such interim periods. Such adjustments are of a normal recurring nature. Results
of operations for the nine months ended September 30, 1996 are not necessarily
indicative of results to be expected for the full year.
The unaudited pro forma condensed financial information set forth below
gives effect to (i) the sale of $150.0 million aggregate principal amount of
6 7/8% notes due 2006 (the "Old Notes"), plus an incremental interest cost of
0.34% due to the amortization of the debt discount on the Notes and the cost to
settle the interest rate hedging contract entered into on October 31, 1996, and
the application of the net proceeds from the sale of the Old Notes as described
under "Use of Proceeds" in the Prospectus and (ii) the implementation of a new
discretionary working capital facility and the application of borrowings
thereunder. The Pro Forma Condensed Statement of Income also reflects the
conversion of $179.6 million of 10% Series A Convertible Subordinated
Payment-in-Kind Debentures due March 1, 2007 ("Payment-in-Kind Debentures") to
common equity of the Company, and the redemption of $24.4 million of
Payment-in-Kind Debentures, as if each had occurred on January 1, 1995. The
unaudited pro forma condensed financial information presented is not necessarily
indicative of actual results that would have been achieved had the
aforementioned transactions been completed on the dates assumed and does not
purport to project the Company's financial position at any future date or its
results of operations for any future period.
PRO FORMA CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, 1995 SEPTEMBER 30, 1996
---------------------------------- ----------------------------------
(DOLLARS IN MILLIONS) HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
--------------------- ---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
SALES................................ $1,023.3 $ -- $1,023.3 $ 691.6 $ -- $ 691.6
OPERATING COSTS:
Cost of sales...................... 758.9 -- 758.9 536.0 -- 536.0
Selling, general and administrative
expenses......................... 43.6 -- 43.6 35.2 -- 35.2
Depreciation and amortization...... 48.4 -- 48.4 35.6 -- 35.6
-------- ------- -------- --------- ------- --------
Total operating costs............ 850.9 -- 850.9 606.8 -- 606.8
-------- ------- -------- --------- ------- --------
OPERATING INCOME (excludes items
shown below)....................... 172.4 -- 172.4 84.8 -- 84.8
Other income (expense)............... (20.1) -- (20.1) (9.5) -- (9.5)
Interest expense-net................. (47.7) 17.0 (30.7) (31.6) 11.8 (19.8)
-------- ------- -------- --------- ------- --------
TOTAL INCOME BEFORE TAXES ON
INCOME............................. 104.6 17.0 121.6 43.7 11.8 55.5
Less provision for estimated
income taxes....................... 44.4 7.2 51.6 19.7 5.3 25.0
-------- ------- -------- --------- ------- --------
Net Income Before Minority
Interest........................... 60.2 9.8 70.0 24.0 6.5 30.5
-------- ------- -------- --------- ------- --------
Minority Interest.................... -- -- -- 0.1 -- 0.1
-------- ------- -------- --------- ------- --------
NET INCOME........................... $ 60.2 $ 9.8 $ 70.0 $ 24.1 $ 6.5 $ 30.6
======== ======= ======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
F-25
<PAGE> 95
PRO FORMA CONDENSED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
--------------------------------------
(DOLLARS IN MILLIONS) HISTORICAL ADJUSTMENTS PRO FORMA
- --------------------- ---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash................................................... $ 1.2 $ (1.2) $ 0.0
Receivables (less allowance for doubtful accounts of
$0.6)............................................... 124.1 -- 124.1
Inventories............................................ 102.7 -- 102.7
Other current assets................................... 9.7 -- 9.7
-------- ------- --------
Total current assets................................... 237.7 (1.2) 236.5
Property, plant and equipment, net of accumulated
depreciation........................................... 596.1 -- 596.1
Goodwill................................................. 174.1 -- 174.1
Other assets............................................. 9.6 1.5 11.1
-------- ------- --------
Total assets........................................ $1,017.5 $ .3 $1,017.8
======== ======= ========
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, including payroll and benefits
payable............................................. $ 100.5 $ .3 $ 100.8
Accrued taxes and interest............................. 5.5 -- 5.5
Short-term debt and long-term debt due within one
year................................................ 105.1 (65.0) 40.1
-------- ------- --------
Total current liabilities........................... 211.1 (64.7) 146.4
Long-term debt........................................... 251.0 65.0 316.0
Deferred income taxes.................................... 179.0 -- 179.0
Other liabilities........................................ 32.6 32.6
-------- ------- --------
Total liabilities................................... 673.7 .3 674.0
Equity:
Common shareholders' equity............................ 378.8 -- 378.8
Retained deficit....................................... (35.0) -- (35.0)
-------- ------- --------
Total shareholders' equity.......................... 343.8 -- 343.8
-------- ------- --------
Total liabilities and equity........................ $1,017.5 $ .3 $1,017.8
======== ======= ========
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
F-26
<PAGE> 96
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(a) Underwriting fees and issuance fees for the Old Notes and the 6 7/8% notes
due 2006 which have been registered under the Securities Act of 1933, as
amended (the "New Notes," and collectively with the Old Notes, the "Notes")
are estimated to be $1.5 million. Issuance fees consist of SEC filing fees,
accounting, printing, issuer's counsel and trustee expenses. The $1.5
million will be recorded as a deferred charge on the Company's balance sheet
and charged to expense ratably over the ten year term of the Notes.
(b) The Company maintained an agreement to pay MC a guarantee fee of 1.125%
annually on the outstanding principal balance of all financings (other than
that directly provided by MC) in consideration for their guarantee of
payment of the Company's obligation on these loans. Effective January 4,
1995 and June 3, 1996, the annual guarantee fee was revised to 0.6% and 0.3%
respectively, calculated on a daily basis on the outstanding balance of the
MIC Term Loan and MIC Revolving Loan and the Company's old discretionary
line of credit with certain commercial banks. The guarantee fee payment for
the first nine months of 1996 and the year ended 1995 was $0.9 million and
$1.9 million, respectively. The Old Notes have not been, and the New Notes
will not be, guaranteed by MC.
(c) For purposes of the pro forma calculations, the net interest cost to the
Company of the Notes will be at an interest rate of 6 7/8%, plus an
incremental interest cost of 0.34% due to the amortization of the debt
discount on the Notes and the cost to settle the interest rate hedging
contract entered into on October 31, 1996, which in the aggregate is higher
than the current cost of the Company's variable rate debt instruments. It is
estimated by the Company that such increase in interest costs would amount
to $1.2 million and $0.6 million in the first nine months of 1996 and the
year ended 1995, respectively.
(d) The adjustment to the total provision for estimated income taxes recognizes
the effect of the above adjustments to total income before taxes.
F-27
<PAGE> 97
------------------------------------------------------
------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF ITS AFFILIATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL FOR SUCH PERSON
TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 4
Summary................................ 6
Risk Factors........................... 13
The Exchange Offer..................... 16
Use of Proceeds........................ 24
Capitalization......................... 25
Selected Consolidated Historical and
Pro Forma Condensed Financial Data... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 29
The Company............................ 34
Management............................. 48
Stockholders of the Company............ 54
Certain Transactions................... 54
Description of the New Notes........... 56
Description of the Old Notes........... 65
Certain United States Federal Income
Tax Considerations................... 66
Plan of Distribution................... 67
Legal Matters.......................... 68
Experts................................ 68
Index to Financial Statements.......... F-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
LOGO
ARISTECH CHEMICAL
CORPORATION
OFFER TO EXCHANGE ITS
6 7/8% NOTES DUE 2006
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS
OUTSTANDING 6 7/8% NOTES DUE 2006
---------------------------------------------
PROSPECTUS
---------------------------------------------
, 1997
------------------------------------------------------
------------------------------------------------------
<PAGE> 98
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a corporation, in its certificate of incorporation, to eliminate or
limit the personal liability of a director to the corporation or its
stockholders for monetary damages for breaches of fiduciary duty as a director,
except for the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for dividends or stock repurchases that are illegal under Delaware
law, or (iv) for any transaction from which the director derived an improper
personal benefit. In accordance with the DGCL, Article Third, Section 3 of the
Registrant's restated certificate of incorporation, as amended ( the
"Certificate of Incorporation"), provides that the personal liability of
directors of the Registrant is eliminated, except for liability of directors (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for dividends or
stock repurchases that are illegal under Delaware law, or (iv) for any
transaction from which the director derived an improper personal benefit.
Pursuant to the provisions of Section 145 of the DGCL, every Delaware
corporation has the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in right of the corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of another corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding. The power to indemnify applies
only if such person acted in good faith and in a manner he reasonably believed
to be in the best interest, or not opposed to the best interest, of the
corporation and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Under the DGCL, the power to indemnify applies to actions brought by or in
the right of the corporation as well, but only to the extent of defense and
settlement expenses and to any satisfaction of a judgment or settlement of the
claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication or liability
unless the court, in its discretion, believes that in light of all circumstances
indemnification should apply.
To the extent any of the persons referred to in the two immediately
preceding paragraphs is successful in the defense of the actions referred to
therein, such person is entitled, pursuant to Section 145, to indemnification as
described above.
Article Sixth of the Registrant's Certificate of Incorporation provides
that the Registrant will indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Registrant, by reason of the fact
that he, or the person whose legal representative he is, (1) is or was a
stockholder, director, officer, employee or agent of the Registrant (including
the incorporator thereof), or (2) is or was serving at the request of the
Registrant as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (3) is or was a
director, officer or employee of the Registrant serving at the request of the
Registrant as a fiduciary of an employee benefit plan or trust maintained for
the benefit of employees of the Registrant or employees of any such other
enterprise, partnership, joint venture, trust or other enterprise, against
judgments, fines, penalties, amounts paid in settlement, and expenses, including
attorneys' fees, actually and reasonably incurred by him and the person whose
legal representative he is, in connection with such action, suit or proceeding,
or any appeal therein, to the fullest extent permitted by the DGCL. In addition,
Article V of the Registrant's By-Laws provides that the Registrant will
indemnify its officers, directors, employees and agents to the fullest extent
permitted by the
II-1
<PAGE> 99
DGCL. Article Sixth of the Registrant's Certificate of Incorporation further
provides that expenses that may be indemnifiable under such Article Sixth
incurred in defending an action, suit or proceeding may be paid by the
Registrant in advance of the final disposition of such action, suit or
proceeding as authorized by the board of directors of the Registrant upon
agreement by or on behalf of the stockholder, director, officer, employee or
agent, or his legal representative, to repay such amount if he is later found
not entitled to be indemnified by the Registrant as authorized in such Article
Sixth. Article Sixth further provides that the Registrant shall not indemnify
any stockholder, director, officer, employee or agent against judgments, fines,
amounts paid in settlement and expenses, including attorneys' fees, to an extent
greater than that authorized by such Article Sixth, but the Registrant may
procure insurance providing greater indemnification and may share the premium
cost with any stockholder, director, officer, employee or agent on such basis as
may be agreed upon. Mitsubishi Corporation, the principal stockholder of the
Registrant, maintains a policy of liability insurance which insures the
Registrant's officers and directors against losses resulting from certain
wrongful acts committed by them in their capacity as officers and directors of
the Registrant.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS. The following exhibits are filed as part of this
Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
- --------- -------------------------------------------------------- -------------------------
<C> <S> <C>
3.01 Restated Certificate of Incorporation of Aristech
Chemical Corporation, as amended
3.02 By-Laws of Aristech Chemical Corporation, as amended
4.01 Indenture dated as of November 1, 1996 between Aristech
Chemical Corporation, as Issuer, and The Chase Manhattan
Bank, as Trustee
4.02 Registration Rights Agreement dated as of November 25,
1996 among Aristech Chemical Corporation, as Issuer, and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, J.P. Morgan Securities Inc. and
Morgan Stanley & Co. Incorporated, as Initial Purchasers
4.03 Form of Security for 6 7/8% Notes due 2006, originally
issued by Aristech Chemical Corporation on November 25,
1996
4.04 Form of Security for 6 7/8% Notes due 2006, to be issued
by Aristech Chemical Corporation and registered under
the Securities Act of 1933
5.01 Opinion of Mark K. McNally, General Counsel of Aristech
Chemical Corporation
10.01 Term Loan Agreement dated as of August 1, 1994 between
Aristech Chemical Corporation and Mitsubishi
Corporation, as amended through September 30, 1996
10.02 Term Loan and Revolving Credit Agreement dated as of
August 1, 1994 between Aristech Chemical Corporation and
Mitsubishi International Corporation, as amended through
September 30, 1996
10.03 Discretionary Credit Agreement dated as of January 4,
1995 among Aristech Chemical Corporation, Mitsubishi
Corporation, The Chase Manhattan Bank and PNC Bank,
National Association, as amended through December 20,
1995
</TABLE>
II-2
<PAGE> 100
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
- --------- -------------------------------------------------------- -------------------------
<C> <S> <C>
10.04 Agreement regarding Guarantees dated January 4, 1995
between Aristech Chemical Corporation and Mitsubishi
Corporation, as amended through June 3, 1996
10.05 Asset Purchase Agreement dated as of April 28, 1995
between Ashland Inc. and Aristech Chemical Corporation
10.06 Form of Change in Control Agreement between Aristech
Chemical Corporation and each of Charles W. Hamilton,
Michael J. Egan, James J. Driscoll, Mark K. McNally and
Charles P. Costanza
10.07 Aristech Chemical Corporation Deferred Compensation Plan
10.08 Aristech Chemical Corporation Long Term Incentive Plan*
10.09 Aristech Chemical Corporation Executive Life Insurance
Plan
10.10 Summary of Aristech Chemical Corporation Long Term
Disability Plan
10.11 Aristech Chemical Corporation 1996 Supplemental Pension
Plan
10.12 Aristech Chemical Corporation Variable Bonus Program
10.13 Letter of Intent between Aristech Chemical Corporation
and Mitsubishi Rayon Co., Ltd.*
12.01 Statement re: Computation of Ratio of Earnings to Fixed
Charges
23.01 Consent of Mark K. McNally, General Counsel of Aristech
Chemical Corporation (included in Exhibit 5.01)
23.02 Consent of Deloitte & Touche LLP
24.01 Powers of Attorney (included on signature page)
25.01 Statement re: Eligibility of Trustee
27.01 Financial Data Schedule
99.01 Form of Letter of Transmittal
99.02 Form of Notice of Guaranteed Delivery
99.03 Exchange Agency Letter Agreement
</TABLE>
- ---------
* To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULES. The following financial statement
schedule is filed as part of this Registration Statement:
Independent Auditors' Report on Schedule.
Schedule II--Valuation and Qualifying Accounts.
Item 22. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales 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;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the 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; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
II-3
<PAGE> 101
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such 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 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
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this 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 foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Pittsburgh, Commonwealth
of Pennsylvania, on December 16, 1996.
ARISTECH CHEMICAL CORPORATION
By: /s/ MICHAEL J. EGAN
-----------------------------
Michael J. Egan
Senior Vice President,
Chief Financial Officer and
Director
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael J. Egan and Mark K. McNally, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documentation in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents with full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in or about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ JIRO KAMIMURA Chairman of the Board, December 13, 1996
---------------------------------- Chief Executive Officer and
Jiro Kamimura Director (Principal Executive
Officer)
/S/ CHARLES W. HAMILTON President, Chief Operating Officer December 13, 1996
---------------------------------- and Director
Charles W. Hamilton
/S/ MICHAEL J. EGAN Senior Vice President, December 13, 1996
---------------------------------- Chief Financial Officer and
Michael J. Egan Director (Principal Financial
Officer)
/S/ MICHAEL J. PRENDERGAST Corporate Comptroller December 13, 1996
---------------------------------- (Principal Accounting Officer)
Michael J. Prendergast
/S/ MASATAKE BANDO Director December 5, 1996
----------------------------------
Masatake Bando
/S/ HAJIME KOGA Director December 13, 1996
----------------------------------
Hajime Koga
/S/ YOSHIZO SHIMIZU Director December 11, 1996
----------------------------------
Yoshizo Shimizu
/S/ YASUO SONE Director December 13, 1996
----------------------------------
Yasuo Sone
/S/ MUNEO SUZUKI Director December 13, 1996
----------------------------------
Muneo Suzuki
/S/ TAKAYORI TSUBOI Director December 10, 1996
----------------------------------
Takayori Tsuboi
</TABLE>
II-5
<PAGE> 103
INDEPENDENT AUDITORS' REPORT
Aristech Chemical Corporation:
We have audited the consolidated balance sheets of Aristech Chemical Corporation
and its subsidiaries as of December 31, 1994 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1995, and have issued our
report thereon dated January 29, 1996 (except for Note 19 as to which the date
is November 19, 1996) (which expresses an unqualified opinion and includes an
explanatory paragraph relating to changes in accounting methods for income
taxes, depreciation and postretirement benefits other than pensions); such
financial statements and report are included in the Prospectus, which is part of
this Registration Statement. Our audits also included the financial statement
schedule of Aristech Chemical Corporation and subsidiaries, listed in Item 21
(b). This financial statement schedule is the responsibility of the Company's
management. In our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 29, 1996
<PAGE> 104
SCHEDULE II
ARISTECH CHEMICAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN MILLIONS)
<TABLE>
<CAPTION>
COLUMN B- ADDITIONS ADDITIONS COLUMN
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER ACCOUNTS COLUMN D- END OF
COLUMN A-DESCRIPTION PERIOD EXPENSES -DESCRIBE DEDUCTIONS PERIOD
- -------------------------- ------------- ----------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED 12/31/95
Reserve for bad debts..... $ .8 $ .5 $ -- $ (.7) $ .6
Inventory reserve for
lower of cost or
market.................. -- -- -- -- --
YEAR ENDED 12/31/94
Reserve for bad debts..... $ .8 $ .2 -- $ (.2) $ .8
Inventory reserve for
lower of cost or
market.................. 7.2 -- -- (7.2) --
YEAR ENDED 12/31/93
Reserve for bad debts..... $ .7 $ 1.2 -- $ (1.1) $ .8
Inventory reserve for
lower of cost or
market.................. -- 7.2 -- -- (7.2)
</TABLE>
<PAGE> 105
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PRIOR FILING OR
NO. DESCRIPTION SEQUENTIAL PAGE NUMBER
- --------- -------------------------------------------------------- -------------------------
<C> <S> <C>
3.01 Restated Certificate of Incorporation of Aristech
Chemical Corporation, as amended
3.02 By-Laws of Aristech Chemical Corporation, as amended
4.01 Indenture dated as of November 1, 1996 between Aristech
Chemical Corporation, as Issuer, and The Chase Manhattan
Bank, as Trustee
4.02 Registration Rights Agreement dated as of November 25,
1996 among Aristech Chemical Corporation, as Issuer, and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, J.P. Morgan Securities Inc. and
Morgan Stanley & Co. Incorporated, as Initial Purchasers
4.03 Form of Security for 6 7/8% Notes due 2006, originally
issued by Aristech Chemical Corporation on November 25,
1996
4.04 Form of Security for 6 7/8% Notes due 2006, to be issued
by Aristech Chemical Corporation and registered under
the Securities Act of 1933
5.01 Opinion of Mark K. McNally, General Counsel of Aristech
Chemical Corporation
10.01 Term Loan Agreement dated as of August 1, 1994 between
Aristech Chemical Corporation and Mitsubishi
Corporation, as amended through September 30, 1996
10.02 Term Loan and Revolving Credit Agreement dated as of
August 1, 1994 between Aristech Chemical Corporation and
Mitsubishi International Corporation, as amended through
September 30, 1996
10.03 Discretionary Credit Agreement dated as of January 4,
1995 among Aristech Chemical Corporation, Mitsubishi
Corporation, The Chase Manhattan Bank and PNC Bank,
National Association, as amended through December 20,
1995
10.04 Agreement regarding Guarantees dated January 4, 1995
between Aristech Chemical Corporation and Mitsubishi
Corporation, as amended through June 3, 1996
10.05 Asset Purchase Agreement dated as of April 28, 1995
between Ashland Inc. and Aristech Chemical Corporation
10.06 Form of Change in Control Agreement between Aristech
Chemical Corporation and each of Charles W. Hamilton,
Michael J. Egan, James J. Driscoll, Mark K. McNally and
Charles P. Costanza
10.07 Aristech Chemical Corporation Deferred Compensation Plan
10.08 Aristech Chemical Corporation Long Term Incentive Plan*
10.09 Aristech Chemical Corporation Executive Life Insurance
Plan
10.10 Summary of Aristech Chemical Corporation Long Term
Disability Plan
10.11 Aristech Chemical Corporation 1996 Supplemental Pension
Plan
</TABLE>
<PAGE> 106
<TABLE>
<CAPTION>
EXHIBIT PRIOR FILING OR
NO. DESCRIPTION SEQUENTIAL PAGE NUMBER
- --------- -------------------------------------------------------- -------------------------
<C> <S> <C>
10.12 Aristech Chemical Corporation Variable Bonus Program
10.13 Letter of Intent between Aristech Chemical Corporation
and Mitsubishi Rayon Co., Ltd.*
12.01 Statement re: Computation of Ratio of Earnings to Fixed
Charges
23.01 Consent of Mark K. McNally, General Counsel of Aristech
Chemical Corporation (included in Exhibit 5.01)
23.02 Consent of Deloitte & Touche LLP
24.01 Powers of Attorney (included on signature page)
25.01 Statement re: Eligibility of Trustee
27.01 Financial Data Schedule
99.01 Form of Letter of Transmittal
99.02 Form of Notice of Guaranteed Delivery
99.03 Exchange Agency Letter Agreement
</TABLE>
- ---------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.01
RESTATED CERTIFICATE OF INCORPORATION
-of-
ARISTECH CHEMICAL CORPORATION
-oo0oo-
FIRST: The name of the Corporation is Aristech Chemical Corporation
(hereinafter sometimes called the "Corporation").
This Restated Certificate of Incorporation was adopted by the Board of
Directors of the Corporation on January 29, 1990, and by the sole stockholder
of the Corporation on January 29, 1990, in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware.
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, State of Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
are to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
<PAGE> 2
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 10,000 shares of Common Stock, par value $.01 per
share.
FIFTH: The following additional provisions are inserted for the management
of the business and for the conduct of the affairs of the Corporation, and for
the creation, definition, limitation and regulation of the powers of the
Corporation, the directors and the stockholders:
1. Election of directors need not be by written ballot. The Board of
Directors shall have power to make, alter, amend and repeal the By-Laws of the
Corporation and to fix the compensation of directors for services in any
capacity.
2. Any corporate action, with respect to which the vote of the stockholders
at a meeting thereof is required or permitted by any provision of the General
Corporation Law of the State of Delaware or of the Certificate of Incorporation
or the By-Laws of the Corporation, is authorized to be taken and may be taken
without that vote and meeting, and that vote and meeting may be dispensed with,
with the written consent of the holders of not less than 90 percent of the
stock that would have been entitled to vote upon that action if a meeting were
held. Prompt notice shall be given to all stockholders of the taking of any
corporate action pursuant to the provisions of this paragraph 2 unless that
action has been consented to in writing by the holders of all of the stock that
would have been entitled to vote upon that action if a meeting were held. The
provisions of the
- 2 -
<PAGE> 3
first sentence of this paragraph 2 may be amended by the vote of the holders of
not less than 90 percent of the stock entitled to vote at meetings of the
Corporation's stockholder.
3. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
SIXTH: The Corporation shall indemnify any person who was or is a party, or
is threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, by
reason of the fact that he, or the person whose legal representative he is, (1)
is or was a stockholder, director, officer, employee or agent of the
Corporation (including the incorporator thereof), or (2) is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or
(3) is or was a director, officer or employee of the Corporation serving at the
request of the Corporation as a
- 3 -
<PAGE> 4
fiduciary of an employee benefit plan or trust maintained for the benefit of
employees of the Corporation or employees of any such other enterprise,
partnership, joint venture, trust, or other enterprise, against judgments,
fines, penalties, amounts paid in settlement, and expenses, including
attorneys' fees, actually and reasonably incurred by him and the person whose
legal representative he is, in connection with such action, suit or proceeding,
or any appeal therein, to the fullest extent permitted by law.
Expenses which may be indemnifiable under this Section incurred in defending
an action, suit or proceedings may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors upon agreement by or on behalf of the stockholder, director,
officer, employee or agent, or his legal representative, to repay such amount
if he is later found not entitled to be indemnified by the Corporation as
authorized in this section.
The Corporation shall not indemnify any stockholder, director, officer,
employee or agent against judgments, fines, amounts paid in settlement and
expenses, including attorneys' fees, to an extent greater than that authorized
by this section, but the Corporation may procure insurance providing greater
- 4 -
<PAGE> 5
indemnification and may share the premium cost with any stockholder, director,
officer, employee or agent on such basis as may be agreed upon.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
executed this 19th day of April, 1990.
ARISTECH CHEMICAL CORPORATION
By: /s/ PAUL M. KAPLOW
------------------------------
Paul M. Kaplow
Vice President
Attestation:
/s/ DAVID F. TUTHILL
- ---------------------------
David F. Tuthill
Secretary
- 5 -
<PAGE> 6
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
ACC HOLDINGS CORPORATION
WITH AND INTO
ARISTECH CHEMICAL CORPORATION
(Pursuant to Sections 103 and 253 of the
General Corporation Law the State of Delaware)
ACC HOLDINGS CORPORATION, a Delaware corporation ("Holdings"), does hereby
certify:
FIRST: That ARISTECH CHEMICAL CORPORATION ("Aristech") was incorporated on
October 14, 1986, pursuant to the Delaware General Corporation Law (the
"DGCL");
SECOND: That Holdings owns all of the outstanding shares of Common Stock,
par value $.01 per share (the "Shares"), of Aristech, which Shares constitute
the only issued and outstanding class of capital stock of Aristech;
THIRD: That Holdings, by resolutions of its Board of Directors duly adopted
by unanimous written consent in lieu of a meeting dated as of December 8, 1994,
determined to merge and authorized the merger of Holdings with and into
Aristech on the conditions set forth in such resolutions. Such resolutions are
set forth below and have not been modified or rescinded and remain in full
force and effect on the date hereof:
"WHEREAS, ACC Holdings Corporation ("Holdings") owns one hundred percent
(100%) of the issued and outstanding shares of capital stock of Aristech
Chemical Corporation, a Delaware corporation ("Aristech"); and
"WHEREAS, the Board of Directors of Holdings determines it to be advisable
to merge Holdings with and into Aristech, with Aristech continuing as the
surviving corporation under the laws of the State of Delaware;
"NOW, THEREFORE, BE IT RESOLVED, that the merger (the "Merger") of Holdings
with and into Aristech, with Aristech continuing as the surviving
corporation (the "Surviving Corporation") under the laws of the State of
Delaware, be, and it hereby is, authorized and approved;
"FURTHER RESOLVED, that the Merger be submitted to the stockholders of
Holdings for approval as required by Section 253(a) of the Delaware General
Corporation Law (the "DGCL");
"FURTHER RESOLVED, that, upon the approval of the Merger by the stockholders
of Holdings, the officers of
<PAGE> 7
Holdings be, and they hereby are, authorized and directed to prepare, execute
and cause to be filed with the Secretary of State of the State of Delaware, a
Certificate of Ownership and Merger in accordance with Sections 103 and 253
of the DGCL;
"FURTHER RESOLVED, that the Merger become effective at such time (the
"Effective Time") as the Certificate of Ownership and Merger is filed with
the Secretary of State of the State of Delaware;
"FURTHER RESOLVED, that, at the Effective Time, the Surviving Corporation
continue its existence under the laws of the State of Delaware;
"FURTHER RESOLVED, that the Merger shall have the effects specified in
Section 259 of the DGCL;
"FURTHER RESOLVED, that, at the Effective Time and without any further
action on the part of Aristech or Holdings, Article FOURTH of the Restated
Certificate of Incorporation of Aristech as the Surviving Corporation shall
be amended in its entirety to read in the form attached hereto as Exhibit A;
"FURTHER RESOLVED, that, at the Effective Time, by virtue of the Merger and
without any further action on the part of the holder thereof:
"1. Each share of common stock, par value $.01 per share, of Aristech
that is issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be canceled and retired without
payment of any consideration therefor and shall cease to exist;
"2. Each share of common stock, par value $.01 per share, of Holdings
that is issued and outstanding immediately prior to the Effective Time
shall be converted into and become one fully paid and non-assessable share
of common stock, par value $.01 per share, of the Surviving Corporation;
"3. Each share of Series A Convertible PIK Preferred Stock, without par
value, of Holdings that is issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and
non-assessable share of Series A Convertible PIK Preferred Stock, without
par value, of the Surviving Corporation; and
- 2 -
<PAGE> 8
"4. At and after the Effective Time, holders of certificates
("Certificates") which immediately prior to the Effective Time represented
issued and outstanding shares of capital stock of Holdings (the "Shares")
shall cease to have any rights as stockholders of Holdings, and no
transfer of Shares outstanding immediately prior to the Effective Time
shall be made on the stock transfer books of the Surviving Corporation or
otherwise after the Effective Time. If, after the Effective Time,
Certificates formerly representing Shares are presented to the Surviving
Corporation, they shall be canceled in accordance with applicable law; and
"FURTHER RESOLVED, that the officers of Holdings be, and they hereby are,
authorized, empowered, and directed, in the name and on behalf of Holdings
and under its corporate seal where required, to take such actions, execute
such documents, and do such other acts and things as they may determine to
be necessary or convenient to carry out the purposes and intent of the
foregoing resolutions."
FOURTH: That the Merger has been approved by the written consent in lieu
of a meeting of at least 90% of the outstanding stock of Holdings entitled to
vote thereon in accordance with Sections 253(a) and 228 of the DGCL and the
Amended Certificate of Incorporation of Holdings;
FIFTH: That Article FOURTH of the Restated Certificate of Incorporation of
Aristech as the Surviving Corporation following the Merger shall be amended in
accordance with Section 253(c) of the DGCL to read in its entirety as set forth
in Exhibit A hereto upon the effectiveness of this Certificate of Ownership and
Merger; and
SIXTH: That this Certificate of Ownership and Merger shall become effective
upon filing.
- 3 -
<PAGE> 9
IN WITNESS WHEREOF, Holdings has caused this Certificate of Ownership and
Merger to be executed by Hajime Koga, its President, and attested by James E.
Brumm, its Secretary, this 20th day of December, 1994.
Attest: ACC HOLDINGS CORPORATION, a
Delaware corporation
By: /s/ JAMES E. BRUMM By: /s/ HAJIME KOGA
- ------------------------- -------------------------
Name: James E. Brumm Name: Hajime Koga
Title: Secretary Title: President
Exhibit A: Amended Article FOURTH of Restated Certificate of
Incorporation of Aristech Chemical Corporation
- 4 -
<PAGE> 10
Exhibit A
Article FOURTH of the Corporation's Restated Certificate of
Incorporation is hereby amended to read in its entirety as follows:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is One Million Twenty Thousand
(1,020,000) shares, which shall be divided into two classes as follows:
"A. Twenty Thousand (20,000) shares of Common Stock,
the par value of each of which shares is One Cent ($.01), amounting in the
aggregate to Two Hundred Dollars ($200.00); and
"B. One Million (1,000,000) shares of Preferred
Stock, without par value, all of which shall be shares of Series A Convertible
PIK Preferred Stock (hereinafter referred to as "Series A Stock"). The shares
of Series A Stock shall have voting powers, full or limited, or no voting
powers, and designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
as follows:
"1. Ranking. The Series A Stock shall rank
senior in right of payment of dividends and upon liquidation, winding up and
dissolution (whether voluntary or involuntary) to all classes of the
Corporation's Common Stock (as defined below) and to any other series of
preferred stock issued by the Corporation that is specifically provided to rank
junior to the Series A Stock as to dividends and upon liquidation, winding up
and dissolution (collectively referred to with all classes of Common Stock of
the Corporation as "Junior Securities"). Each share of the Series A Stock
shall rank equally in all respects. "Common Stock" shall mean (except where
the context otherwise indicates) the Common Stock of the Corporation, par value
$.01 per share, entitling the holders thereof to vote for the election of
directors and other matters generally, as constituted on the date hereof, and
any shares of capital stock of the Corporation into which such Common Stock may
thereafter be changed, and shall also include (i) shares of the Corporations
capital stock of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof which is
not preferred as to dividends or assets over any other class of shares of the
Corporation's capital stock and which is not subject to mandatory redemption
and (ii) shares of capital stock of any successor, resulting, surviving or
acquiring corporation received by or distributed to the holders of common
shares of the Corporation in connection with the merger or consolidation of the
Corporation.
"2. Dividends. (a) When and as declared by
the Board of Directors of the Corporation, out of funds legally
<PAGE> 11
available therefor, the Corporation shall pay dividends to the holders of the
Series A Stock as provided in this Section 2.
"(b) Dividends shall be payable on
shares of the Series A Stock quarterly on the first day of March, June,
September and December (each, a "Dividend Payment Date"), commencing with the
first such Dividend Payment Date following the issuance of such shares, to
holders of shares of the Series A Stock of record on the fifteenth day of the
month preceding each Dividend Payment Date (each a "Record Date"). Dividends
shall accrue from and including the date of issuance, shall be cumulative
(whether or not earned or declared) and paid at a rate of ten percent (10%) per
annum. All dividends payable before June 1, 1995, shall be paid in additional
shares of the Series A Stock (each, a "Stock Dividend") as provided in Section
2 (e) hereof. All dividends payable on or after June 1, 1995, shall be paid in
cash out of funds legally available therefor, provided, however, no dividends
shall be payable in cash after such date if the same shall be prohibited by the
terms of the Merger Credit Agreement (as defined in the Credit Agreement dated
as of March 7, 1990 among ACC Holdings Corporation, ACC Middle Corporation, ACC
Acquisition Corporation, The Mitsubishi Bank, Limited, The Mitsubishi Trust and
Banking Corporation and The Mitsubishi Bank, Limited, as Agent. If any
Dividend Payment Date shall not be a Business Day, payment shall be made on the
next preceding Business Day. "Business Day" shall mean any day that is not a
Saturday, Sunday or a day on which banking institutions in New York, New York
are not required to open.
"(c) The Corporation may not declare
any dividends on or make any other distribution in respect of any Junior
Securities, other than in additional shares of such Junior Securities, unless
all dividends on the Series A Stock have been paid and, to the extent payable
in cash, the dividend for the then current quarter has been set aside for
payment in case. Whenever dividends on the Series A Stock are in arrears, the
Corporation may not declare dividends on or make any other distribution in
respect of any other capital stock of the Corporation ranking on a parity,
either as to dividends or upon liquidation, winding up or dissolution ("Parity
Stock"), with the Series A Stock except dividends paid pro rata so that the
amount of dividends declared per share on the Series A Stock and such Parity
Stock shall in all cases bear to each other the same ratio that accrued and
unpaid dividends per share on the shares of the Series A Stock and such Parity
Stock bear to each other.
"(d) The Corporation may not retire,
redeem, purchase or otherwise acquire any of its Junior Securities unless the
shares of Series A Stock have been redeemed or retired in full, provided,
however, that the Corporation may repurchase shares of Common Stock as provided
with respect to ACC Holdings Corporation Common Stock in the Restated
Subscription
- 2 -
<PAGE> 12
and Stockholders Agreement among Mitsubishi Corporation ("Mitsubishi"), ACC
Holdings Corporation, ACC Middle Corporation, the Corporation, Blackstone
Capital Partners L.P. ("Capital Partners"), Blackstone Family Investment
Partnership L.P. ("Family Investment" and collectively with Capital Partners,
"Blackstone"), Mitsubishi International Corporation and the Management
Investors named therein dated as of March 7, 1990 and amended as of January 1,
1992 and January 4, 1993 (the "Stockholders Agreement"). The Corporation may
not retire, redeem, purchase or otherwise acquire any of its Parity Stock,
except in accordance with the mandatory redemption provisions of such Parity
Stock.
"(e) Stock Dividends shall be payable
as follows: In the event that any dividend shall be payable on shares of the
Series A Stock in additional shares of Series A Stock ("PIK Shares") pursuant
to Section 2(b) hereof, each holder of shares of Series A Stock as of the
Record Date for determining the holders of shares of Series A Stock entitled to
receive such Stock Dividend on the applicable Dividend Payment Date shall be
entitled to receive .025 shares of Series A Stock for each share of Series A
Stock then held by such holder or such proportionally reduced number of shares
for each fractional share of Series A Stock held by such holder.
"(f) All dividends paid hereunder shall
be distributed by first class mail to each holder at the address of such holder
on the records of the Corporation.
"3. Liquidation. (a) Upon the dissolution,
liquidation or winding up of the Corporation (whether voluntary or involuntary)
the holders of the shares of Series A Stock shall be entitled to receive out of
the assets of the Corporation available for distribution to stockholders,
before any payment or distribution shall be made on any Junior Securities, the
amount of $100 per share, plus all accumulated and unpaid dividends to the date
of final distribution.
"(b) Neither the sale, lease or
exchange (for cash, shares of stock, securities or other consideration) of all
or substantially all the property and assets of the Corporation nor the merger
or consolidation of the Corporation into or with any other corporation or the
merger or consolidation of any other corporation into or with the Corporation
shall be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 3.
"(c) After the payment to the holders
of the shares of Series A Stock of the full preferential amounts provided for
in this Section 3, the holders of the Series A Stock as such shall have no
right or claim to any of the remaining assets of the Corporation.
- 3 -
<PAGE> 13
"(d) In the event the assets of the
Corporation available for distribution to the holders of shares of Series A
Stock upon any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to Section 3(a), no such
distribution shall be made on account of any Parity Stock unless proportionate
amounts are distributed to the holders of the shares of Series A Stock,
ratably, in proportion to the full amounts for which holders of shares of
Series A Stock and all such Parity Stock are respectively entitled upon such
dissolution, liquidation or winding up.
"4. Redemption Rights. (a) The Corporation
may, at its option, after March 1, 1995, redeem any or all outstanding shares
of Series A Stock, out of funds legally available therefor. Such redemption
shall be at a price equal to $100 per share plus an amount equal to all
dividends (whether or not earned or declared, including the issuance of Stock
Dividends) accrued and unpaid thereon (the "Redemption Price"). All
redemptions pursuant to this Section 4(a) shall be accomplished in the manner
and with the effect as set forth in this Section 4.
"(b) Notice of every redemption of
Series A Stock pursuant to Section 4(a) shall be given by first class mail or
in such other manner as may be prescribed by resolution of the Board of
Directors not less than thirty (30) days, nor more than forty-five (45) days
prior to the date of redemption (the "Redemption Date") set forth in such
notice. Such notice of redemption shall state the Redemption Price, the place
at which the shares called for redemption will, upon presentation and surrender
of the certificates of stock evidencing such shares, be redeemed, the
Redemption Date, the number of shares to be redeemed and, if less than all
shares are to be redeemed, the number of shares of each holder to be redeemed r
the conversion rights of the shares to be redeemed, the period within which the
conversion rights may be exercised and the Conversion Rate (as defined below).
Any notice by the Corporation which is distributed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder of
Series A Stock receives such notice; and failure to give such notice by mail,
or any defect in such notice, to the holders of any shares shall not affect the
validity of the proceedings for the redemption of any other shares of Series A
Stock. Any partial redemption under this Section 4 shall be made pro-rata
based on each holder's percentage ownership of shares of Series A Stock
outstanding on the Redemption Date.
"(c) On and after the Redemption Date,
all dividends on the shares of Series A Stock so called for redemption shall
cease to accrue and notwithstanding that any
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<PAGE> 14
certificate for shares of Series A Stock so called for redemption shall not
have been surrendered for cancellation, the shares represented thereby shall no
longer be deemed outstanding and all rights of the holders thereof as
shareholders of the Corporation shall cease and terminate except the right to
receive the Redemption Price (unless the Corporation shall fail to make payment
of the Redemption Price).
"(d) At any time on or after the
applicable redemption Date, the holders of record of the Series A Stock to be
redeemed shall be entitled to receive the Redemption Price upon actual delivery
to the principal office of the Corporation, during regular business hours, of
certificates for the shares to be redeemed, such certificates, if required, to
be duly endorsed to the Corporation or in blank or accompanied by proper
instruments of assignment and transfer duly endorsed to the Corporation or in
blank and in form satisfactory to the Corporation. In cases where fewer than
all shares of Series A Stock represented by such certificates are to be
redeemed, a new certificate shall be issued representing the unredeemed shares.
"5. Redemption by Holders. (a) Each holder
of shares of Series A Stock may, at any time, after March 1, 2005 until March
1, 2007, require the Corporation to redeem (a "Holder Redemption") any or all
shares of Series A Stock held by such holder out of funds legally available
therefor. Such Holder Redemption shall be at a price equal to $100 per share
plus an amount equal to all dividends (whether or not earned or declared
including the issuance of Stock Dividends) accrued and unpaid thereon (the
"Holder Redemption Price").
"(b) Any holder of Preferred Stock
requesting a Holder Redemption shall provide written notice addressed to the
Corporation not less than thirty (30) days prior to the date of redemption set
forth in such notice (the "Holder Redemption Date"). Such notice of a Holder
Redemption shall be sent by first class mail to the principal office of the
Corporation and shall state the name of such holder, the number of shares of
Series A Stock to which such notice applies, the total number of shares of
Series A Stock owned by such holder and the Holder Redemption Date.
"(c) On and after a Holder Redemption
Date, all dividends on shares of Series A Stock for which a Holder Redemption
has been exercised shall cease to accrue and notwithstanding that any
certificate for such shares shall not have been surrendered for cancellation,
the shares represented thereby shall no longer be deemed outstanding and all
rights of the holders thereof as shareholders of the Corporation shall cease
and terminate except the right to receive the Holder Redemption Price (unless
the Corporation shall fail to make payment of the Holder Redemption Price).
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<PAGE> 15
"(d) On and after the applicable Holder
Redemption Date, the holder requesting such Holder Redemption shall be entitled
to receive the Holder Redemption Price upon actual delivery to the principal
office of the Corporation, during regular business hours, of certificates for
the shares to be redeemed; such certificates, if required, to be duly endorsed
to the Corporation or in blank or accompanied by proper instruments of
assignment and transfer duly endorsed to the Corporation or in blank and in
form satisfactory to the Corporation. In cases where fewer than all shares of
Series A Stock represented by such certificates are to be redeemed, a new
certificate shall be issued representing the unredeemed shares.
"6. Conversion Rights. (a) Subject to and
upon compliance with the provisions of this Section 6, the holders of shares of
Series A Stock shall have the right, at their option, to convert any or all
such shares into fully paid and nonassessable shares (calculated to the nearest
1/100 of a share) of Common Stock of the Corporation at the rate determined as
hereinafter provided. In the case of shares of Series A Stock which have been
called for redemption, such conversion right shall expire at 11:00 a.m. New
York City time on the Redemption Date or Holder Redemption Date, as the case
may be, unless the Corporation shall fail to make payment of the Redemption
Price or Holder Redemption Price, as applicable. Such conversion right shall
commence on the first to occur of (i) March l, 1995, (ii) a Change in Control
(as defined below) of the Corporation, or (iii) the closing of an initial
public offering of the Corporation's Common Stock. The aggregate number of
shares of Series A Stock outstanding at any time shall, subject to the
adjustments provided below, be convertible into 4.053% (the "Conversion Rate")
of the Fully-Diluted Common Stock of the Corporation (715.913 shares of Common
Stock). "Fully-Diluted Common Stock" shall mean, at any time, 17,663.785
shares of Common Stock which includes all shares of Common Stock outstanding on
the initial issuance date of shares of the Series A Stock (9,850 shares), the
shares of Common Stock as if all of the 10% Series A Convertible Subordinated
Payment-In-Kind Debentures (the "Series A Debentures") and all shares of the
Series A Stock had been issued and converted into Common Stock (whether or not
issued or converted (6,182.325 shares) and the shares of Common Stock as if all
options issuable under the Corporation's Performance Stock Option Plan had been
issued and converted into Common Stock (whether or not issued or converted)
(1,631.46 shares). The Conversion Rate shall: (w) in the event that more than
200,000 shares of Series A Stock are issued (without giving effect to Stock
Dividends), be increased proportionately to the extent and as such additional
shares are issued but shall not exceed 7% of the Fully Diluted Common Stock
(1,236.465 shares), except in connection with adjustments pursuant to Section
6(e); (x) in the event of a pro rata redemption of the shares of Series A Stock
pursuant to either Section 4 or Section 5, be reduced
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<PAGE> 16
proportionately to the same extent and as the shares of Series A Stock are
redeemed; (y) in the event that less than all the shares of Series A Stock are
converted pursuant to this Section 6, be reduced proportionately, to the extent
and as the shares of Series A Stock are converted and (z) be adjusted as
provided in Section 6(e) below. As used in this certificate of Designation,
"Change in Control" shall mean the ownership by Mitsubishi, directly or
indirectly, of less than 50% of the total voting power entitled to vote in the
election of directors of the Corporation.
"(b) If any shares of Series A Stock
are surrendered for conversion subsequent to the Record Date preceding a
Dividend Payment Date but on or prior to such Dividend Payment Date (except
shares called for redemption on a Redemption Date between such Record Date and
Dividend Payment Date), the registered holder of such shares at the close of
business on such Record Date shall be entitled to receive the dividend payable
on such shares on such Dividend Payment Date notwithstanding the conversion
thereof. Except as provided in this Section 6(b), upon conversion of the
shares of Series A Stock, a holder shall not receive any cash payment
representing accrued and unpaid dividends. The delivery of shares of Common
Stock by the Corporation upon conversion of the shares of Series A Stock shall
not be deemed to satisfy any accrued and unpaid dividend (whether or not earned
or declared, including the issuance of Stock Dividends). No payment or
adjustment shall be made by the Corporation upon any conversion of any shares
of Series A Stock because any dividends on the Common Stock issued upon such
conversion were declared for payment to holders of Common Stock of record as of
a date prior to the Conversion Date.
"(c) Any holder of shares of Series A
Stock electing to convert such shares into Common Stock shall surrender the
certificate or certificates for such shares at the office of the Corporation
during regular business hours, duly endorsed to the Corporation or in blank, or
accompanied by instruments of assignment and transfer duly endorsed to the
corporation or in blank and in form satisfactory to the Corporation. The
Corporation shall, as soon as practicable after such deposit of certificates
for shares of Series A Stock, issue and deliver to the holder for whose account
such shares were surrendered, or to his nominee, certificates representing the
number of shares of Common Stock to which such holder is entitled upon such
conversion. In cases where fewer than all shares represented by certificates
for shares of Series A Stock are to be converted, a new certificate shall be
issued representing the unconverted shares.
"(d) Conversion shall be deemed to have
been made immediately prior to the close of business on the date of surrender
of certificates for the shares of Series A Stock to
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<PAGE> 17
be converted as described in Section 6(c); and the person entitled to receive
the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder of such Common Stock on such date. The
corporation shall not be required to deliver certificates for shares of its
Common Stock while the stock transfer books for such stock or for the Series A
Stock are duly closed for any purpose, but certificates for shares of Common
Stock shall be issued and delivered as soon as practicable after the opening of
such books.
"(e) The Conversion Rate shall be
adjusted from time to time as follows:
"(1) In case the Corporation shall (i)
pay or make a dividend or other distribution on its Common Stock exclusively in
Common Stock or shall pay or make a dividend or other distribution on any other
class of capital stock of the Corporation, which dividend or distribution
includes Common Stock, (ii) subdivide its outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares or (iv)
issue any shares of its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the surviving corporation), the Conversion
Rate in effect at the time of the record date for such dividend or distribution
or the effective date of such subdivision, combination or reclassification
and/or the number and kind of shares of capital stock issuable on such date
shall be proportionately adjusted so that a holder of shares of Series A Stock
thereafter converted shall be entitled to receive the number of shares of
Common Stock which, if such shares of Series A Stock had been converted
immediately prior to such date and at a time when the Common Stock transfer
books of the Company were open, such holder would have owned upon conversion
and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification. The foregoing adjustment shall
be made successively whenever any event listed above shall occur. Any
adjustment made pursuant to this Section 6(e)(1) shall become effective
immediately after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of a
subdivision or combination or reclassification. If, as a result of an
adjustment made pursuant to this Section 6(e)(1), the holder of any shares of
Series A Stock thereafter converted shall become entitled to receive two or
more classes of capital stock of the Corporation, the Corporation shall
determine (as determined by the Board of Directors) the allocation of the
Conversion Rate between the classes of capital stock.
"(2) In case the Corporation shall
issue or sell any additional shares of Common Stock for consideration in an
amount per share less than the Fair Market
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<PAGE> 18
Value per share of the Common Stock on the date of such issuance or sale, then
the Conversion Rate shall be adjusted to equal the product obtained by
multiplying the Conversion Rate in effect immediately prior to the date of such
issuance or sale by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately after such issuance or sale and
the denominator of which shall be the number of shares outstanding immediately
prior to such issuance or sale plus the number of shares of Common Stock which
the aggregate offering price of the total number of such additional shares of
Common Stock would purchase at the then Fair Market Value. The provisions of
this Section 6(e)(2) shall not apply to any issuance of additional shares of
Common Stock for which an adjustment is provided under Section 6(e)(1) or to
any issuance of additional shares of Common Stock issued upon conversion of any
shares of Series A Stock or Series A Debentures or to any issuance of
additional shares of Common Stock issued upon conversion of any options issued
pursuant to the Performance Stock Option Plan. No adjustment of the Conversion
Rate shall be made pursuant to this Section 6(e)(2) upon the issuance of
additional shares of Common Stock which are issued pursuant to the exercise of
any warrants or purchase rights or pursuant to the exercise of any conversion
or exchange rights in any Convertible Securities (as defined below), if any
such adjustment shall have been previously made upon the issuance of such
warrants, rights or Convertible Securities pursuant to Sections 6(e)(3) through
(5). "Convertible Securities" shall mean evidences of indebtedness, shares of
the Corporation's capital stock or other securities that are convertible into
or exchangeable, with or without payment of additional consideration in cash or
property, for shares of Common Stock, either immediately or upon the occurrence
of a specified date or event other than shares of Series A Stock, the Series A
Debentures or options issued pursuant to the Corporation's Performance Stock
Option Plan. "Fair Market Value" shall mean the midpoint of the range of fair
market values of the Corporation, as determined by an independent third-party,
chosen by Mitsubishi, the Management Investors holding a majority of the Common
Stock held by all the Management Investors and Blackstone or if the Stockholder
Agreement is not in effect then "Fair Market Value" shall mean the fair market
value of the Corporation as determined by the Board of Directors of the
Corporation in good faith as set forth in a resolution of the Board of
Directors.
"(3) In case the Corporation shall pay
or make a dividend or other distribution on its Common Stock consisting
exclusively of, or shall otherwise issue to all holders of its Common Stock,
rights or warrants entitling the holders thereof to subscribe for or purchase
additional shares of Common Stock or any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable, at a
price per share for which Common Stock is
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<PAGE> 19
issuable upon the exercise of such warrants or rights or upon conversion or
exchange of such Convertible Securities that shall be less than the Fair Market
Value per share of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, the Conversion Rate
in effect at the opening of business on the day following the date fixed for
such determination shall be adjusted as provided in Section 6(e)(2) on the
basis that the maximum number of additional shares of common Stock issuable
pursuant to all such warrants or other rights or necessary to effect the
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued and outstanding and the Corporation shall have received all of
the consideration payable therefor, if any, as of the date of the actual
issuance of such warrants or other rights. No further adjustments of the
Conversion Rate shall made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such warrants or other rights or
upon the actual issue of such Common Stock upon such conversion or exchange of
such Convertible Securities. The Corporation shall not issue any rights or
warrants in respect of shares of Common Stock held in the treasury of the
Corporation.
"(4) In case the Corporation shall
issue or sell rights or warrants (other than options issued pursuant to the
Performance Stock Option Plan) entitling the holders thereof to subscribe for
or purchase additional shares of Common Stock or any Convertible Securities,
whether ar not the rights to exchange or convert thereunder are immediately
exercisable, at a price per share for which Common Stock is issuable upon the
exercise of such warrants or rights or upon conversion or exchange of such
Convertible Securities that shall be less than the Fair Market Value per share
of the Common Stock on the date of such issuance or sale, the Conversion Rate
in effect at the opening of business on the day following the date of such
issuance shall be adjusted as provided in Section 6(e)(2) on the basis that the
maximum number of additional shares of Common Stock issuable pursuant to all
such warrants or other rights or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and
outstanding and the Corporation shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance of such
warrants or other rights. No further adjustments of the Conversion Rate shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon the actual
issue of such Common Stock upon such conversion or exchange of such Convertible
Securities.
"(5) If at any time the Corporation
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner issue or
sell, any Convertible Securities, whether
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<PAGE> 20
or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange shall be less than the Fair Market Value on the
date of such issuance or sale, then the Conversion Rate shall be adjusted as
provided in Section 6(e)(2) on the basis that the maximum number of additional
shares of Common Stock necessary to effect the conversion or exchange of all
such Convertible Securities shall be deemed to have been issued and outstanding
and the Corporation shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the Conversion Rate shall be made under this
Section 6(e)(5) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if an appropriate adjustment shall previously have
been made upon the issuance of such warrants or other rights pursuant to
Sections 6(e)(3) or 6(e)(4). No further adjustment of the Conversion Rate
shall be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities and, if any issue or sale of such
Convertible Securities is made upon exercise of any warrant or other right to
subscribe for or to purchase or any warrant or other right to purchase any such
Convertible Securities for which appropriate adjustments of the Conversion Rate
have been or are to be made pursuant to other provisions of this Section 6(e),
no further adjustments of the Conversion Rate shall be made by reason of such
issue or sale.
"(6) If, at any time after any
adjustment of the Conversion Rate shall have been made pursuant to any of
Sections 6(e)(3) through (5) as the result of any issuance of warrants, rights
or Convertible Securities,
"(i) such warrants or rights, or
the right of conversion or exchange in such other Convertible Securities, shall
expire, and all or a portion of such warrants or rights, or the right of
conversion or exchange with respect to all or a portion of such other
Convertible Securities, as the case may be, shall not have been exercised, or
"(ii) the consideration per share
for which shares of Common Stock are issuable pursuant to such warrants or
rights, or the terms of such other Convertible Securities, shall be increased
solely by virtue of provisions therein contained for an automatic increase in
such consideration per share upon the occurrence of a specified date or event,
"then such previous adjustment shall be rescinded and annulled and the
additional shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation.
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<PAGE> 21
Thereupon, a recomputation shall be made of the effect of such warrants or
rights or other Convertible Securities on the basis of
"(x) treating the number of
additional shares of Common Stock or other property, if any, theretofore
actually issued or to be issued pursuant to the previous exercise of any such
warrants or rights or any such right of conversion or exchange, as having been
issued on the date or dates of any such exercise and for the consideration
actually received and receivable therefor, and
"(y) treating any such warrants or
rights or any such other Convertible Securities which then remain outstanding as
having been granted or issued immediately after the time of such increase, if
any, of the consideration per share for which shares of Common Stock or other
property are issuable under such warrants or rights or other Convertible
Securities; whereupon a new adjustment of the Conversion Rate shall be made,
which new adjustment shall supersede the previous adjustment so rescinded and
annulled.
"(7) The following provisions shall be
applicable to the making of adjustments of the Conversion Rate provided for in
this Section 6(e):
"(i) To the extent that additional
shares of Common Stock or any Convertible Securities or any warrants or other
rights to subscribe for or purchase any additional shares of Common Stock or any
Convertible Securities shall be issued for cash consideration, the consideration
received by the Corporation therefor shall be the amount of the cash received by
the Corporation therefor, or, if such additional shares of Common Stock or
Convertible Securities are offered by the Corporation for subscription, the
subscription price, or, if such additional shares of Common Stock or Convertible
Securities are sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price (in any such case
subtracting any amounts paid or receivable for accrued interest or accrued
dividends on such additional shares of Common Stock or Convertible Securities
and without reduction for any compensation, discounts or expenses paid or
incurred by the Corporation for and in the underwriting of, or otherwise in
connection with, the issuance thereof). To the extent that such issuance shall
be for a consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed to be the
fair value of such consideration at the time of such issuance as determined in
good faith by the Board of Directors of the Corporation. In case any additional
shares of Common Stock or any Convertible Securities or any warrants or other
rights to subscribe for or purchase such additional shares of Common Stock or
Convertible Securities shall
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<PAGE> 22
be issued in connection with any merger in which the Corporation issues any
securities, the amount of consideration therefor shall he deemed to be the fair
value, as determined in good faith by the Board of Directors of the
Corporation, of such portion of the assets and business of the nonsurviving
corporation as such Board in good faith shall determine to be attributable to
such additional shares of Common Stock, Convertible Securities, warrants, or
other rights, as the case may be. The consideration for any additional shares
of Common Stock issuable pursuant to any warrants or other rights to subscribe
for or purchase the same shall be the consideration received by the Corporation
for issuing such warrants or other rights plus the additional consideration
payable to the Corporation upon exercise of such warrants or other rights. The
consideration for any additional shares of Common Stock issuable pursuant to
the terms of any Convertible Securities shall be the consideration received by
the Corporation for issuing rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Corporation in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Corporation upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any additional
shares of Common Stock or Convertible Securities in payment or satisfaction of
any dividends upon any class of stock other than Common Stock, the Corporation
shall be deemed to have issued such additional shares of Common Stock or
Convertible Securities without consideration.
"(ii) The adjustments required by
this Section 6(e) shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
Conversion Rate that would otherwise be required may be postponed up to, but not
beyond, the conversion date (except in the case of a subdivision or combination
of shares of the Common Stock, as provided for in Section 6(e)(1)) if such
adjustment either by itself or with other adjustments not previously made
increases or reduces the Conversion Rate by less than 1% (the "minimum
adjustment"). Any adjustment representing a change of less than such minimum
adjustment (except as aforesaid) which is postponed shall be carried forward and
made as soon as such adjustment, together with other adjustments required by
this Section 6(e) and not previously made, would result in a minimum adjustment
or on the conversion date, whichever is earlier. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
"(8) The Corporation may make such
adjustments to the Conversion Rate, in addition to those required by this
Section 6(e), as it considers to be advisable to ensure that any event treated
for federal income tax purposes as a
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<PAGE> 23
dividend of stock or stock rights shall not be taxable to the recipients.
"(9) If any event occurs as to which,
in the opinion of the Board of Directors of the Corporation, the provisions of
this Section 6(e) are not strictly applicable or if strictly applicable would
not fairly protect the rights of the holders in accordance with the essential
intent and principles of such provisions, then the Board of Directors shall
make an adjustment in the application of such provision, in accordance with
such essential intent and principles, so as to protect such rights as
aforesaid, but in no event shall any adjustment have the effect of decreasing
the Conversion Rate as otherwise determined pursuant to any of the provisions
of this Section 6(e).
"(f) In case of any consolidation of
the Corporation with, or merger of the Corporation with or into, any other
person, any merger of another person into the Corporation (other than a merger
which does not result in any reclassification, change, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Corporation) or any
sale or transfer of all or substantially all of the assets of the Corporation,
then the person formed by such consolidation or resulting from such merger or
which acquires such assets, as the case may be, shall make appropriate
provisions so that the holder of each share of Series A Stock then outstanding
shall have the right thereafter, during the period such shares shall be
convertible, to convert such shares only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock of the
Corporation into which such shares might have been converted immediately prior
to such consolidation, merger, sale or transfer, assuming such holder of Common
Stock of the Corporation failed to exercise his rights of election, if any, as
to the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the Corporation held immediately prior to such consolidation,
merger, sale or transfer and in respect of which such rights of election shall
not have been exercised (a "non-electing share"), then for the purpose of this
Section 6(f) the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares); such provision shall provide
for adjustments which, for events subsequent to the effective date of such
provision, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6. The provisions of this Section
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<PAGE> 24
6(f) shall apply similarly to successive consolidations, mergers, sales or
conveyances.
"(g) Any shares of Series A Stock which
shall at any time have been converted shall, after such conversion, have the
status of authorized but unissued shares of Series A Stock. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the shares of
Series A Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Stock; provided, however, that nothing contained
herein shall preclude the Corporation from satisfying its obligations in
respect of the conversion of the shares by delivery of purchased shares of
Common Stock which are held in the treasury of the Corporation.
"(h) of any shares of Common Stock
required to be reserved for purposes of conversion of shares of Series A Stock
hereunder require registration with or approval of any governmental authority
before such shares may be issued upon conversion, the Corporation shall
endeavor to cause such shares to be duly registered or approved, as the case
may be.
"(i) The Corporation shall pay any and
all stamp, documentary, sales or similar taxes that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of shares of
Series A Stock pursuant hereto. The Corporation shall not, however, be
required to pay any such tax which is payable in respect of any transfer
involved in the issue or delivery of Common Stock in a name other than that in
which the shares of Series A Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of such tax, or has established,
to the satisfaction of the Corporation, that such tax has been paid.
"(j) Before taking any action that
would result in the conversion price being less than the then par value of the
Common Stock, the Corporation shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
conversion price.
"(k) Whenever the Conversion Rate is
adjusted as herein provided, the Corporation shall compute promptly the
adjusted Conversion Rate and shall prepare promptly a certificate of the Chief
Financial Officer of the Corporation setting forth the adjusted Conversion Rate
and showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be mailed by the Corporation
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<PAGE> 25
to the holders of the shares of Series A Stock at the last address of each
holder which appears in the records of the Corporation.
"(l) In the event:
"(1) the Corporation shall declare a
dividend (or any other distribution) on its Common Stock payable otherwise than
exclusively in cash; or
"(2) the Corporation shall authorize
the granting to the holders of its Common Stock of rights or warrants to
subscribe for or purchase any shares of capital stock of any class of any other
rights or any Convertible Securities; or
"(3) the Corporation shall issue any
Common Stock, Convertible Securities, options, rights or exchangeable
securities to persons other than holders of its Common Stock; or
"(4) of any reclassification of the
Common Stock of the Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock), or of any consolidation or merger to which
the Corporation is a party and for which approval of any stockholders of the
Corporation is required, or of the sale or transfer of all or substantially all
of the assets of the Corporation or, of the dissolution, liquidation or
winding-up of the Corporation; or
"(5) of any Change in Control of the
Corporation; or
"(6) of any initial public offering of
the Common Stock of the Corporation;
"then the corporation shall cause to be mailed to all holders of the shares of
Series A Stock at the last address of each holder which appears in the records
of the Corporation, at least 20 days (or 10 days in any case specified in
clause (1) or (2)) prior to the applicable record or effective date hereinafter
specified, a notice stating (i) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, warrants or
Convertible Securities, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, and the date on which
the holders shall be entitled thereto, or the date of such issuance and briefly
indicating the effect of such action on the Common Stock, (ii) the date on
which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is
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<PAGE> 26
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up or (iii) the date on which such Change in Control or
initial public offering is to become effective.
"7. Certain Tax Matters. (a) If and to the
extent that the Corporation in good faith determines that withholding of United
States federal income tax is required in respect of a delivery of PIK Shares to
a holder of Series A Stock on a Dividend Payment Date, the Corporation shall on
the Record Date next preceding such delivery of PIK Shares, provide written
notice to each such holder of Series A Stock stating that a withholding of
United States federal income tax is required and the amount of such tax. not
later than 12:00 noon (New York City time) on such Dividend Payment Date each
such holder shall make a cash payment equal to the amount of such tax to the
corporation. The Corporation shall deposit with the Internal Revenue Service
at the time and in the manner prescribed in applicable United States Treasury
Regulations, the amount of the tax required to be withheld (a "Withholding Tax
Payment"). Within three Business Days after making a Withholding Tax Payment,
the Corporation shall provide to each such holder written notice of the basis
for and the amount of the Withholding Tax Payment, evidence of the
Corporation's payment of the Withholding Tax Payment, and any other information
or documentation reasonably requested by each such holder. The Corporation
shall forward to each such holder any official tax receipts or other
documentation with respect to the Withholding Tax Payment as may be issued from
time to time by the Internal Revenue Service. The Corporation and the holders
of the Series A Stock agree to treat any Withholding Tax Payment made by the
Corporation on behalf of any holder as a deduction and withholding of United
States federal income tax pursuant to Section 1442 and Sections 1461 through
1464 of the Internal Revenue Code of 1986, as amended. The Corporation shall
comply with the provisions of Treasury Regulation Section 1.1461-2, which
requires the filing of an annual information return in respect of federal
income tax withheld under Section 1442 of the Internal Revenue Code of 1986, as
amended, and shall include any Withholding Tax Payments in such returns.
"(b) If and to the extent that the
Corporation in good faith determines that withholding of United States federal
income tax is required from any cash payment of dividends on the shares of
Series A Stock, the Corporation shall (i) on the Record Date next preceding
such cash payment of dividends, provide written notice to the holders of Series
A Stock stating that a withholding of United States federal income tax is
required, (ii) deduct and withhold the applicable tax from such dividend
payment, (iii) pay to the United States Internal Revenue Service in a timely
manner the full amount of taxes so
- 17 -
<PAGE> 27
deducted and withheld, (iv) provide to the holder of Series A Stock evidence of
payment of such taxes, including a statement as to the amount of taxes deducted
and withheld, and any other information or documentation reasonably requested
by such holder, and (v) forward to such holder any official tax receipts or
other documentation with respect to the deducted and withheld taxes as may be
issued from time to time by the Internal Revenue Service. The Corporation
shall comply with the provisions of Treasury Regulation Section 1.1461-2, which
requires the filing of an annual information return in respect of federal
income tax withheld under Section 1442 of the Internal Revenue Code of 1986, as
amended.
"8. Tax Forms. Prior to the first Dividend
Payment Date, each holder of Series A Stock that is not incorporated under the
laws of the United states of America or a state thereof shall deliver to the
Corporation a duly completed and executed Internal Revenue Service Form W-8, or
successor applicable form, statement or certification. In addition, each such
holder shall, prior to the first Dividend Payment Date, deliver to the
Corporation a duly completed and executed Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such holder is eligible for an exemption from or a reduced rate of
withholding of United States federal income tax on payments received under the
Series A Stock; provided, however, that a holder of Series A Stock shall not be
required to provide either such form, unless, in its reasonable opinion, it is
eligible and entitled to provide such form. Each holder that delivers to the
Corporation a Form W-8 (and, if appropriate, a Form 1001 or 4224) pursuant to
the two preceding sentences further undertakes to deliver to the Corporation an
additional duly executed and completed Form W-8 (and, if appropriate, an
additional Form 1001 or 4224), or other means of certification as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by such holder to the Corporation, unless in any such
cases an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any delivery would
otherwise be required which renders such form inapplicable or which would
prevent such holder from duly completing and delivering any such form with
respect to it and such holder advises the Corporation that it is not required
or eligible to provide such form.
"9. Voting Rights. Except as otherwise
provided by law, the holders of the issued shares of Series A Stock shall not
have any voting powers either general or specific.
"10. Sinking Fund. The shares of Series A
Stock shall not be entitled to the benefit of any sinking fund.
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<PAGE> 28
"11. Exclusion of Other Rights. Except as
may otherwise be required by law, the shares of Series A Stock shall not have
any preferences or relative, participating, optional or other special rights
other than those specifically set forth in this Restated Certificate of
Incorporation.
"12. Headings of Subdivisions. The headings
of the various subdivisions of this Article FOURTH are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof."
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<PAGE> 29
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
ARISTECH CHEMICAL CORPORATION
Aristech Chemical Corporation, (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of
the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Corporation
resolutions were duly adopted setting forth a proposed
amendment to the Restated Certificate of Incorporation of the
Corporation, declaring said amendment to be advisable and
directing that it be submitted to the stockholders of the
Corporation for approval and adoption. The proposed amendment
is as follows:
That Article FOURTH of the Corporation's Restated Certificate
of Incorporation be amended in its entirety to read as set
forth in Exhibit A attached hereto.
SECOND: That at the Annual Meeting of the Stockholders of the
Corporation the said amendment was authorized by the holders
of all of the issued and outstanding stock entitled to vote
and of all of the Corporation's issued and outstanding Series
A Convertible PIK Preferred Stock entitled to vote thereon as
a class.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Mark K. McNally, its duly authorized officer on this 5th day of
March, 1996.
BY: /s/ MARK K. MCNALLY
---------------------------
Corporate Secretary
<PAGE> 30
Exhibit A
Article FOURTH of the Corporation's Restated Certificate of
Incorporation is hereby amended to read in its entirety as follows:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is One Million Twenty Thousand
(1,020,000) shares, which shall be divided into two classes as follows:
"A. Twenty Thousand (20,000) shares of Common Stock,
the par value of each of which shares is One Cent ($.01), amounting in the
aggregate to Two Hundred Dollars ($200.00); and
"B. One Million (1,000,000) shares of Preferred
Stock, without par value, all of which shall be shares of Series A Convertible
PIK Preferred Stock (hereinafter referred to as "Series A Stock"). The shares
of Series A Stock shall have voting powers, full or limited, or no voting
powers, and designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
as follows:
"1. Ranking. The Series A Stock shall rank
senior in right of payment of dividends and upon liquidation, winding up and
dissolution (whether voluntary or involuntary) to all classes of the
Corporation's Common Stock (as defined below) and to any other series of
preferred stock issued by the Corporation that is specifically provided to rank
junior to the Series A Stock as to dividends and upon liquidation, winding up
and dissolution (collectively referred to with all classes of Common Stock of
the Corporation as "Junior Securities"). Each share of the Series A Stock
shall rank equally in all respects. "Common Stock" shall mean (except where
the context otherwise indicates) the Common Stock of the Corporation, par value
$.01 per share, entitling the holders thereof to vote for the election of
directors and other matters generally, as constituted on the date hereof, and
any shares of capital stock of the Corporation into which such Common Stock may
thereafter be changed, and shall also include (i) shares of the Corporation's
capital stock of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof which is
not preferred as to dividends or assets over any other class of shares of the
Corporation's capital stock and which is not subject to mandatory redemption
and (ii) shares of capital stock of any successor, resulting, surviving or
acquiring corporation received by or distributed to the holders of common
shares of the Corporation in connection with the merger or consolidation of the
Corporation.
<PAGE> 31
"2. Dividends. (a) When and as declared by
the Board of Directors of the Corporation, out of funds legally available
therefor, the Corporation shall pay dividends to the holders of the Series A
Stock as provided in this Section 2.
"(b) Dividends shall be payable on
shares of the Series A Stock quarterly on the first day of March, June,
September and December (each, a "Dividend Payment Date"), commencing with the
first such Dividend Payment Date following the issuance of such shares, to
holders of shares of the Series A Stock of record on the fifteenth day of the
month preceding each Dividend Payment Date (each a "Record Date"). Dividends
shall accrue from and including the date of issuance, shall be cumulative
(whether or not earned or declared) and paid at a rate of ten percent (10%) per
annum. All dividends payable before June 1, 1995, shall be paid in additional
shares of the Series A Stock (each, a "Stock Dividend") as provided in Section
2 (e) hereof. All dividends payable on or after June 1, 1995, shall be paid in
cash out of funds legally available therefor, provided, however, no dividends
shall be payable in cash after such date if the same shall be prohibited by the
terms of the Merger Credit Agreement (as defined in the Credit Agreement dated
as of March 7, 1990 among ACC Holdings Corporation, ACC Middle Corporation, ACC
Acquisition Corporation, The Mitsubishi Bank, Limited, The Mitsubishi Trust and
Banking Corporation and The Mitsubishi Bank, Limited, as Agent. If any
Dividend Payment Date shall not be a Business Day, payment shall be made on the
next preceding Business Day. "Business Day" shall mean any day that is not a
Saturday, Sunday or a day on which banking institutions in New York, New York
are not required to open.
"(c) The Corporation may not declare
any dividends on or make any other distribution in respect of any Junior
Securities, other than in additional shares of such Junior Securities, unless
all dividends on the Series A Stock have been paid and, to the extent payable
in cash, the dividend for the then current quarter has been set aside for
payment in case. Whenever dividends on the Series A Stock are in arrears, the
Corporation may not declare dividends on or make any other distribution in
respect of any other capital stock of the Corporation ranking on a parity,
either as to dividends or upon liquidation, winding up or dissolution ("Parity
Stock"), with the Series A Stock except dividends paid pro rata so that the
amount of dividends declared per share on the Series A Stock and such Parity
Stock shall in all cases bear to each other the same ratio that accrued and
unpaid dividends per share on the shares of the Series A Stock and such Parity
Stock bear to each other.
"(d) The Corporation may not retire,
redeem, purchase or otherwise acquire any of its Junior Securities unless the
shares of Series A Stock have been redeemed
- 2 -
<PAGE> 32
or retired in full, provided, however, that the Corporation may repurchase
shares of Common Stock as provided with respect to ACC Holdings Corporation
Common Stock in the Restated Subscription and Stockholders Agreement among
Mitsubishi Corporation ("Mitsubishi"), ACC Holdings Corporation, ACC Middle
Corporation, the Corporation, Blackstone Capital Partners L.P. ("Capital
Partners"), Blackstone Family Investment Partnership L.P. ("Family Investment"
and collectively with Capital Partners, "Blackstone"), Mitsubishi International
Corporation and the Management Investors named therein dated as of March 7,
1990 and amended as of January 1, 1992 and January 4, 1993 (the "Stockholders
Agreement"). The Corporation may not retire, redeem, purchase or otherwise
acquire any of its Parity Stock, except in accordance with the mandatory
redemption provisions of such Parity Stock.
"(e) Stock Dividends shall be payable
as follows: In the event that any dividend shall be payable on shares of the
Series A Stock in additional shares of Series A Stock ("PIK Shares") pursuant
to Section 2(b) hereof, each holder of shares of Series A Stock as of the
Record Date for determining the holders of shares of Series A Stock entitled to
receive such Stock Dividend on the applicable Dividend Payment Date shall be
entitled to receive .025 shares of Series A Stock for each share of Series A
Stock then held by such holder or such proportionally reduced number of shares
for each fractional share of Series A Stock held by such holder.
"(f) All dividends paid hereunder shall
be distributed by first class mail to each holder at the address of such holder
on the records of the Corporation.
"3. Liquidation. (a) Upon the dissolution,
liquidation or winding up of the Corporation (whether voluntary or involuntary)
the holders of the shares of Series A Stock shall be entitled to receive out of
the assets of the Corporation available for distribution to stockholders, before
any payment or distribution shall be made on any Junior Securities, the amount
of $100 per share, plus all accumulated and unpaid dividends to the date of
final distribution.
"(b) Neither the sale, lease or
exchange (for cash, shares of stock, securities or other consideration) of all
or substantially all the property and assets of the Corporation nor the merger
or consolidation of the Corporation into or with any other corporation or the
merger or consolidation of any other corporation into or with the Corporation
shall be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 3.
"(c) After the payment to the holders
of the shares of Series A Stock of the full preferential amounts
- 3 -
<PAGE> 33
provided for in this Section 3, the holders of the Series A Stock as such shall
have no right or claim to any of the remaining assets of the Corporation.
"(d) In the event the assets of the
Corporation available for distribution to the holders of shares of Series A
Stock upon any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to Section 3(a), no such
distribution shall be made on account of any Parity Stock unless proportionate
amounts are distributed to the holders of the shares of Series A Stock,
ratably, in proportion to the full amounts for which holders of shares of
Series A Stock and all such Parity Stock are respectively entitled upon such
dissolution, liquidation or winding up.
"4. Redemption Rights. (a) The Corporation
may, at its option, after March 1, 1995, redeem any or all outstanding shares
of Series A Stock, out of funds legally available therefor. Such redemption
shall be at a price equal to $100 per share plus an amount equal to all
dividends (whether or not earned or declared, including the issuance of Stock
Dividends) accrued and unpaid thereon (the "Redemption Price"). All
redemptions pursuant to this Section 4(a) shall be accomplished in the manner
and with the effect as set forth in this Section 4.
"(b) Notice of every redemption of
Series A Stock pursuant to Section 4(a) shall be given by first class mail or
in such other manner as may be prescribed by resolution of the Board of
Directors not less than thirty (30) days, nor more than forty-five (45) days
prior to the date of redemption (the "Redemption Date") set forth in such
notice. Such notice of redemption shall state the Redemption Price, the place
at which the shares called for redemption will, upon presentation and surrender
of the certificates of stock evidencing such shares, be redeemed, the
Redemption Date, the number of shares to be redeemed and, if less than all
shares are to be redeemed, the number of shares of each holder to be redeemed,
the conversion rights of the shares to be redeemed, the period within which the
conversion rights may be exercised and the Conversion Rate (as defined below).
Any notice by the Corporation which is distributed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder of
Series A Stock receives such notice; and failure to give such notice by mail,
or any defect in such notice, to the holders of any shares shall not affect the
validity of the proceedings for the redemption of any other shares of Series A
Stock. Any partial redemption under this Section 4 shall be made pro-rata
based on each holder's percentage ownership of shares of Series A Stock
outstanding on the Redemption Date.
- 4 -
<PAGE> 34
"(c) On and after the Redemption Date,
all dividends on the shares of Series A Stock so called for redemption shall
cease to accrue and notwithstanding that any certificate for shares of Series A
Stock so called for redemption shall not have been surrendered for
cancellation, the shares represented thereby shall no longer be deemed
outstanding and all rights of the holders thereof as shareholders of the
Corporation shall cease and terminate except the right to receive the
Redemption Price (unless the Corporation shall fail to make payment of the
Redemption Price).
"(d) At any time on or after the
applicable Redemption Date, the holders of record of the Series A Stock to be
redeemed shall be entitled to receive the Redemption Price upon actual delivery
to the principal office of the Corporation, during regular business hours, of
certificates for the shares to be redeemed, such certificates, if required, to
be duly endorsed to the Corporation or in blank or accompanied by proper
instruments of assignment and transfer duly endorsed to the Corporation or in
blank and in form satisfactory to the Corporation. In cases where fewer than
all shares of Series A Stock represented by such certificates are to be
redeemed, a new certificate shall be issued representing the unredeemed shares.
"5. Redemption by Holders. (a) Each holder
of shares of Series A Stock may, at any time, after March 1, 2005 until March
1, 2007, require the Corporation to redeem (a "Holder Redemption") any or all
shares of Series A Stock held by such holder out of funds legally available
therefor. Such Holder Redemption shall be at a price equal to $100 per share
plus an amount equal to all dividends (whether or not earned or declared
including the issuance of Stock Dividends) accrued and unpaid thereon (the
"Holder Redemption Price").
"(b) Any holder of Preferred Stock
requesting a Holder Redemption shall provide written notice addressed to the
Corporation not less than thirty (30) days prior to the date of redemption set
forth in such notice (the "Holder Redemption Date"). Such notice of a Holder
Redemption shall be sent by first class mail to the principal office of the
Corporation and shall state the name of such holder, the number of shares of
Series A Stock to which such notice applies, the total number of shares of
Series A Stock owned by such holder and the Holder Redemption Date.
"(c) On and after a Holder Redemption
Date, all dividends on shares of Series A Stock for which a Holder Redemption
has been exercised shall cease to accrue and notwithstanding that any
certificate for such shares shall not have been surrendered for cancellation,
the shares represented thereby shall no longer be deemed outstanding and all
rights of the holders thereof as shareholders of the Corporation shall
- 5 -
<PAGE> 35
cease and terminate except the right to receive the Holder Redemption Price
(unless the Corporation shall fail to make payment of the Holder Redemption
Price).
"(d) On and after the applicable Holder
Redemption Date, the holder requesting such Holder Redemption shall be entitled
to receive the Holder Redemption Price upon actual delivery to the principal
office of the Corporation, during regular business hours, of certificates for
the shares to be redeemed; such certificates, if required, to be duly endorsed
to the Corporation or in blank or accompanied by proper instruments of
assignment and transfer duly endorsed to the Corporation or in blank and in
form satisfactory to the Corporation. In cases where fewer than all shares of
Series A Stock represented by such certificates are to be redeemed, a new
certificate shall be issued representing the unredeemed shares.
"6. Conversion Rights. (a) Subject to and
upon compliance with the provisions of this Section 6, the holders of shares of
Series A Stock shall have the right, at their option, to convert any or all
such shares into fully paid and non-assessable shares (calculated to the
nearest 1/100 of a share) of Common Stock of the Corporation at the rate
determined as hereinafter provided. In the case of shares of Series A Stock
which have been called for redemption, such conversion right shall expire at
11:00 a.m. New York City time on the Redemption Date or Holder Redemption
Date, as the case may be, unless the Corporation shall fail to make payment of
the Redemption Price or Holder Redemption Price, as applicable. Such
conversion right shall commence on the first to occur of (i) March 1, 1995,
(ii) a Change in Control (as defined below) of the Corporation, or (iii) the
closing of an initial public offering of the Corporation's Common Stock. The
aggregate number of shares of Series A Stock shall, subject to the adjustments
provided below, be convertible into 4.053% (the "Conversion Rate") of the
Fully-Diluted Common Stock of the Corporation (715.913 shares of Common Stock).
"Fully-Diluted Common Stock" shall mean, at any time, 17,663.785 shares of
Common Stock which includes all shares of Common Stock outstanding on the
initial issuance date of shares of the Series A Stock (9,850 shares), the
shares of Common Stock as if all of the 10% Series A Convertible Subordinated
Payment-In-Kind Debentures (the "Series A Debentures") and all shares of the
Series A Stock had been issued and converted into Common Stock (whether or not
issued or converted) (6,182.325 shares) and the shares of Common Stock as if
all options issuable under the Corporation's Performance Stock Option Plan had
been issued and converted into Common Stock (whether or not issued or
converted) (1,631.46 shares). The Conversion Rate shall: (w) in the event
that more than 200,000 shares of Series A Stock are issued (without giving
effect to Stock Dividends), be increased proportionately to the extent and as
such additional shares are issued but shall not exceed 7% of the Fully Diluted
Common Stock
- 6 -
<PAGE> 36
(1,236.465 shares), except in connection with adjustments pursuant to Section
6(e); (x) in the event of a pro rata redemption of the shares of Series A Stock
pursuant to either Section 4 or Section 5, or in the event that at any time
subsequent to the initial issuance of shares of Series A Stock, the Corporation
shall otherwise acquire shares of Series A Stock, be reduced proportionately to
the extent and as the shares of Series A Stock are redeemed or otherwise
acquired by the Corporation; (y) in the event that less than all the shares of
Series A Stock are converted pursuant to this Section 6, be reduced
proportionately, to the extent and as the shares of Series A Stock are
converted and (z) be adjusted as provided in Section 6(e) below. As used in
this Certificate of Designation, "Change in Control" shall mean the ownership
by Mitsubishi, directly or indirectly, of less than 50% of the total voting
power entitled to vote in the election of directors of the Corporation.
"(b) If any shares of Series A Stock
are surrendered for conversion subsequent to the Record Date preceding a
Dividend Payment Date but on or prior to such Dividend Payment Date (except
shares called for redemption on a Redemption Date between such Record Date and
Dividend Payment Date), the registered holder of such shares at the close of
business on such Record Date shall be entitled to receive the dividend payable
on such shares on such Dividend Payment Date notwithstanding the conversion
thereof. Except as provided in this Section 6(b), upon conversion of the
shares of Series A Stock, a holder shall not receive any cash payment
representing accrued and unpaid dividends. The delivery of shares of Common
Stock by the Corporation upon conversion of the shares of Series A Stock shall
not be deemed to satisfy any accrued and unpaid dividend (whether or not earned
or declared, including the issuance of Stock Dividends). No payment or
adjustment shall be made by the Corporation upon any conversion of any shares
of Series A Stock because any dividends on the Common Stock issued upon such
conversion were declared for payment to holders of Common Stock of record as of
a date prior to the Conversion Date.
"(c) Any holder of shares of Series A
Stock electing to convert such shares into Common Stock shall surrender the
certificate or certificates for such shares at the office of the Corporation
during regular business hours, duly endorsed to the Corporation or in blank, or
accompanied by instruments of assignment and transfer duly endorsed to the
Corporation or in blank and in form satisfactory to the Corporation. The
Corporation shall, as soon as practicable after such deposit of certificates
for shares of Series A Stock, issue and deliver to the holder for whose account
such shares were surrendered, or to his nominee, certificates representing the
number of shares of Common Stock to which such holder is entitled upon such
conversion. In cases where fewer than all shares
- 7 -
<PAGE> 37
represented by certificates for shares of Series A Stock are to be converted, a
new certificate shall be issued representing the unconverted shares.
"(d) Conversion shall be deemed to have
been made immediately prior to the close of business on the date of surrender
of certificates for the shares of Series A Stock to be converted as described
in Section 6(c); and the person entitled to receive the Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder of
such Common Stock on such date. The Corporation shall not be required to
deliver certificates for shares of its Common Stock while the stock transfer
books for such stock or for the Series A Stock are duly closed for any purpose,
but certificates for shares of Common Stock shall be issued and delivered as
soon as practicable after the opening of such books.
"(e) The Conversion Rate shall be
adjusted from time to time as follows:
"(1) In case the Corporation shall
(i) pay or make a dividend or other distribution on its Common Stock exclusively
in Common Stock or shall pay or make a dividend or other distribution on any
other class of capital stock of the Corporation, which dividend or distribution
includes Common Stock, (ii) subdivide its outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares or (iv)
issue any shares of its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the surviving corporation), the Conversion
Rate in effect at the time of the record date for such dividend or distribution
or the effective date of such subdivision, combination or reclassification
and/or the number and kind of shares of capital stock issuable on such date
shall be proportionately adjusted so that a holder of shares of Series A Stock
thereafter converted shall be entitled to receive the number of shares of Common
Stock which, if such shares of Series A Stock had been converted immediately
prior to such date and at a time when the Common Stock transfer books of the
Company were open, such holder would have owned upon conversion and been
entitled to receive by virtue of such dividend, distribution, subdivision,
combination or reclassification. The foregoing adjustment shall be made
successively whenever any event listed above shall occur. Any adjustment made
pursuant to this Section 6(e)(1) shall become effective immediately after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision or combination
or reclassification. If, as a result of an adjustment made pursuant to this
Section 6(e)(1), the holder of any shares of Series A Stock thereafter converted
shall become entitled to receive two or more classes of capital stock
- 8 -
<PAGE> 38
of the Corporation, the Corporation shall determine (as determined by the Board
of Directors) the allocation of the Conversion Rate between the classes of
capital stock.
"(2) In case the Corporation shall
issue or sell any additional shares of Common Stock for consideration in an
amount per share less than the Fair Market Value per share of the Common Stock
on the date of such issuance or sale, then the Conversion Rate shall be adjusted
to equal the product obtained by multiplying the Conversion Rate in effect
immediately prior to the date of such issuance or sale by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such issuance or sale and the denominator of which shall be
the number of shares outstanding immediately prior to such issuance or sale plus
the number of shares of Common Stock which the aggregate offering price of the
total number of such additional shares of Common Stock would purchase at the
then Fair Market Value. The provisions of this Section 6(e)(2) shall not apply
to any issuance of additional shares of Common Stock for which an adjustment is
provided under Section 6(e)(1) or to any issuance of additional shares of Common
Stock issued upon conversion of any shares of Series A Stock or Series A
Debentures or to any issuance of additional shares of Common Stock issued upon
conversion of any options issued pursuant to the Performance Stock Option Plan.
No adjustment of the Conversion Rate shall be made pursuant to this Section
6(e)(2) upon the issuance of additional shares of Common Stock which are issued
pursuant to the exercise of any warrants or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Convertible Securities (as
defined below), if any such adjustment shall have been previously made upon the
issuance of such warrants, rights or Convertible Securities pursuant to Sections
6(e)(3) through (5). "Convertible Securities" shall mean evidences of
indebtedness, shares of the Corporation's capital stock or other securities that
are convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for shares of Common Stock, either
immediately or upon the occurrence of a specified date or event other than
shares of Series A Stock, the Series A Debentures or options issued pursuant to
the Corporation's Performance Stock Option Plan. "Fair Market Value" shall mean
the midpoint of the range of fair market values of the Corporation, as
determined by an independent third party, chosen by Mitsubishi, the Management
Investors holding a majority of the Common Stock held by all the Management
Investors and Blackstone or if the Stockholder Agreement is not in effect then
"Fair Market Value" shall mean the fair market value of the Corporation as
determined by the Board of Directors of the Corporation in good faith as set
forth in a resolution of the Board of Directors.
- 9 -
<PAGE> 39
"(3) In case the Corporation shall pay
or make a dividend or other distribution on its Common Stock consisting
exclusively of, or shall otherwise issue to all holders of its Common Stock,
rights or warrants entitling the holders thereof to subscribe for or purchase
additional shares of Common Stock or any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable, at a
price per share for which Common Stock is issuable upon the exercise of such
warrants or rights or upon conversion or exchange of such Convertible
Securities that shall be less than the Fair Market Value per share of the
Common Stock on the date fixed for the determination of stockholders entitled
to receive such rights or warrants, the Conversion Rate in effect at the
opening of business on the day following the date fixed for such determination
shall be adjusted as provided in Section 6(e)(2) on the basis that the maximum
number of additional shares of Common Stock issuable pursuant to all such
warrants or other rights or necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been issued and
outstanding and the Corporation shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance of such
warrants or other rights. No further adjustments of the Conversion Rate shall
made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon the actual
issue of such Common Stock upon such conversion or exchange of such Convertible
Securities. The Corporation shall not issue any rights or warrants in respect
of shares of Common Stock held in the treasury of the Corporation.
"(4) In case the Corporation shall
issue or sell rights or warrants (other than options issued pursuant to the
Performance Stock Option Plan) entitling the holders thereof to subscribe for
or purchase additional shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, at a price per share for which Common Stock is issuable upon the
exercise of such warrants or rights or upon conversion or exchange of such
Convertible Securities that shall be less than the Fair Market Value per share
of the Common Stock on the date of such issuance or sale, the Conversion Rate
in effect at the opening of business on the day following the date of such
issuance shall be adjusted as provided in Section 6(e)(2) on the basis that the
maximum number of additional shares of Common Stock issuable pursuant to all
such warrants or other rights or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and
outstanding and the Corporation shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance of such
warrants or other rights. No further adjustments of the Conversion Rate shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon
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<PAGE> 40
exercise of such warrants or other rights or upon the actual issue of such
Common Stock upon such conversion or exchange of such Convertible Securities.
"(5) If at any time the Corporation
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner issue or
sell, any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange shall be less
than the Fair Market Value on the date of such issuance or sale, then the
Conversion Rate shall be adjusted as provided in Section 6(e)(2) on the basis
that the maximum number of additional shares of Common Stock necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Corporation shall have
received all of the consideration payable therefor, if any, as of the date of
actual issuance of such Convertible Securities. No adjustment of the
Conversion Rate shall be made under this Section 6(e)(5) upon the issuance of
any Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if an appropriate
adjustment shall previously have been made upon the issuance of such warrants
or other rights pursuant to Sections 6(e)(3) or 6(e)(4). No further adjustment
of the Conversion Rate shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities and, if any issue or
sale of such Convertible Securities is made upon exercise of any warrant or
other right to subscribe for or to purchase or any warrant or other right to
purchase any such Convertible Securities for which appropriate adjustments of
the Conversion Rate have been or are to be made pursuant to other provisions of
this Section 6(e), no further adjustments of the Conversion Rate shall be made
by reason of such issue or sale.
"(6) If, at any time after any
adjustment of the Conversion Rate shall have been made pursuant to any of
Sections 6(e)(3) through (5) as the result of any issuance of warrants, rights
or Convertible Securities,
"(i) such warrants or rights, or
the right of conversion or exchange in such other Convertible Securities, shall
expire, and all or a portion of such warrants or rights, or the right of
conversion or exchange with respect to all or a portion of such other
Convertible Securities, as the case may be, shall not have been exercised, or
"(ii) the consideration per share
for which shares of Common Stock are issuable pursuant to such warrants or
rights, or the terms of such other Convertible Securities, shall be increased
solely by virtue of provisions
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<PAGE> 41
therein contained for an automatic increase in such consideration per share
upon the occurrence of a specified date or event,
"then such previous adjustment shall be rescinded and annulled and the
additional shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation. Thereupon, a recomputation shall be made of the effect of such
warrants or rights or other Convertible Securities on the basis of
"(x) treating the number of additional
shares of Common Stock or other property, if any, theretofore actually issued
or to be issued pursuant to the previous exercise of any such warrants or
rights or any such right of conversion or exchange, as having been issued on
the date or dates of any such exercise and for the consideration actually
received and receivable therefor, and
"(y) treating any such warrants or
rights or any such other Convertible Securities which then remain outstanding
as having been granted or issued immediately after the time of such increase,
if any, of the consideration per share for which shares of Common Stock or
other property are issuable under such warrants or rights or other Convertible
Securities; whereupon a new adjustment of the Conversion Rate shall be made,
which new adjustment shall supersede the previous adjustment so rescinded and
annulled.
"(7) The following provisions shall be
applicable to the making of adjustments of the Conversion Rate provided for in
this Section 6(e):
"(i) To the extent that additional
shares of Common Stock or any Convertible Securities or any warrants or other
rights to subscribe for or purchase any additional shares of Common Stock or any
Convertible Securities shall be issued for cash consideration, the consideration
received by the Corporation therefor shall be the amount of the cash received by
the Corporation therefor, or, if such additional shares of Common Stock or
Convertible Securities are offered by the Corporation for subscription, the
subscription price, or, if such additional shares of Common Stock or Convertible
Securities are sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price (in any such case
subtracting any amounts paid or receivable for accrued interest or accrued
dividends on such additional shares of Common Stock or Convertible Securities
and without reduction for any compensation, discounts or expenses paid or
incurred by the Corporation for and in the underwriting of, or otherwise in
connection with, the issuance thereof). To the extent that such
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<PAGE> 42
issuance shall be for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration shall be deemed
to be the fair value of such consideration at the time of such issuance as
determined in good faith by the Board of Directors of the Corporation. In case
any additional shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase such additional shares of
Common Stock or Convertible Securities shall be issued in connection with any
merger in which the Corporation issues any securities, the amount of
consideration therefor shall he deemed to be the fair value, as determined in
good faith by the Board of Directors of the Corporation, of such portion of the
assets and business of the nonsurviving corporation as such Board in good faith
shall determine to be attributable to such additional shares of Common Stock,
Convertible Securities, warrants, or other rights, as the case may be. The
consideration for any additional shares of Common Stock issuable pursuant to
any warrants or other rights to subscribe for or purchase the same shall be the
consideration received by the Corporation for issuing such warrants or other
rights plus the additional consideration payable to the Corporation upon
exercise of such warrants or other rights. The consideration for any
additional shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Corporation
for issuing rights to subscribe for or purchase such Convertible Securities,
plus the consideration paid or payable to the Corporation in respect of the
subscription for or purchase of such Convertible Securities, plus the
additional consideration, if any, payable to the Corporation upon the exercise
of the right of conversion or exchange in such Convertible Securities. In case
of the issuance at any time of any additional shares of Common Stock or
Convertible Securities in payment or satisfaction of any dividends upon any
class of stock other than Common Stock, the Corporation shall be deemed to have
issued such additional shares of Common Stock or Convertible Securities without
consideration.
"(ii) The adjustments required by
this Section 6(e) shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
Conversion Rate that would otherwise be required may be postponed up to, but not
beyond, the conversion date (except in the case of a subdivision or combination
of shares of the Common Stock, as provided for in Section 6(e)(1)) if such
adjustment either by itself or with other adjustments not previously made
increases or reduces the Conversion Rate by less than 1% (the "minimum
adjustment"). Any adjustment representing a change of less than such minimum
adjustment (except as aforesaid) which is postponed shall be carried forward and
made as soon as such adjustment, together with other adjustments required by
this Section 6(e) and not previously made, would result in a minimum adjustment
or on the conversion date,
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<PAGE> 43
whichever is earlier. For the purpose of any adjustment, any specified event
shall be deemed to have occurred at the close of business on the date of its
occurrence.
"(8) The Corporation may make such
adjustments to the Conversion Rate, in addition to those required by this
Section 6(e), as it considers to be advisable to ensure that any event treated
for federal income tax purposes as a dividend of stock or stock rights shall
not be taxable to the recipients.
"(9) If any event occurs as to which,
in the opinion of the Board of Directors of the Corporation, the provisions of
this Section 6(e) are not strictly applicable or if strictly applicable would
not fairly protect the rights of the holders in accordance with the essential
intent and principles of such provisions, then the Board of Directors shall
make an adjustment in the application of such provision, in accordance with
such essential intent and principles, so as to protect such rights as
aforesaid, but in no event shall any adjustment have the effect of decreasing
the Conversion Rate as otherwise determined pursuant to any of the provisions
of this Section 6(e).
"(f) In case of any consolidation of
the Corporation with, or merger of the Corporation with or into, any other
person, any merger of another person into the Corporation (other than a merger
which does not result in any reclassification, change, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Corporation) or any
sale or transfer of all or substantially all of the assets of the Corporation,
then the person formed by such consolidation or resulting from such merger or
which acquires such assets, as the case may be, shall make appropriate
provisions so that the holder of each share of Series A Stock then outstanding
shall have the right thereafter, during the period such shares shall be
convertible, to convert such shares only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock of the
Corporation into which such shares might have been converted immediately prior
to such consolidation, merger, sale or transfer, assuming such holder of Common
Stock of the Corporation failed to exercise his rights of election, if any, as
to the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the Corporation held immediately prior to such consolidation,
merger, sale or transfer and in respect of which such rights of election shall
not have been exercised (a "non-electing share"), then for the purpose of this
Section 6(f)
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<PAGE> 44
the kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
nonelecting shares); such provision shall provide for adjustments which, for
events subsequent to the effective date of such provision, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 6. The provisions of this Section 6(f) shall apply similarly to
successive consolidations, mergers, sales or conveyances.
"(g) Any shares of Series A Stock which
shall at any time have been converted shall, after such conversion, have the
status of authorized but unissued shares of Series A Stock. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the shares of
Series A Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Stock; provided, however, that nothing contained
herein shall preclude the Corporation from satisfying its obligations in
respect of the conversion of the shares by delivery of purchased shares of
Common Stock which are held in the treasury of the Corporation.
"(h) if any shares of Common Stock
required to be reserved for purposes of conversion of shares of Series A Stock
hereunder require registration with or approval of any governmental authority
before such shares may be issued upon conversion, the Corporation shall
endeavor to cause such shares to be duly registered or approved, as the case
may be.
"(i) The Corporation shall pay any and
all stamp, documentary, sales or similar taxes that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of shares of
Series A Stock pursuant hereto. The Corporation shall not, however, be
required to pay any such tax which is payable in respect of any transfer
involved in the issue or delivery of Common Stock in a name other than that in
which the shares of Series A Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of such tax, or has established,
to the satisfaction of the Corporation, that such tax has been paid.
"(j) Before taking any action that
would result in the conversion price being less than the then par value of the
Common Stock, the Corporation shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
conversion price.
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<PAGE> 45
"(k) Whenever the Conversion Rate is
adjusted as herein provided, the Corporation shall compute promptly the
adjusted Conversion Rate and shall prepare promptly a certificate of the Chief
Financial Officer of the Corporation setting forth the adjusted Conversion Rate
and showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be mailed by the Corporation to the
holders of the shares of Series A Stock at the last address of each holder
which appears in the records of the Corporation.
"(l) In the event:
"(1) the Corporation shall declare a
dividend (or any other distribution) on its Common Stock payable otherwise than
exclusively in cash; or
"(2) the Corporation shall authorize
the granting to the holders of its Common Stock of rights or warrants to
subscribe for or purchase any shares of capital stock of any class of any other
rights or any Convertible Securities; or
"(3) the Corporation shall issue any
Common Stock, Convertible Securities, options, rights or exchangeable
securities to persons other than holders of its Common Stock; or
"(4) of any reclassification of the
Common Stock of the Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock), or of any consolidation or merger to which
the Corporation is a party and for which approval of any stockholders of the
Corporation is required, or of the sale or transfer of all or substantially all
of the assets of the Corporation or, of the dissolution, liquidation or
winding-up of the Corporation; or
"(5) of any Change in Control of the
Corporation; or
"(6) of any initial public offering of
the Common Stock of the Corporation;
"then the Corporation shall cause to be mailed to all holders of the shares of
Series A Stock at the last address of each holder which appears in the records
of the Corporation, at least 20 days (or 10 days in any case specified in
clause (1) or (2)) prior to the applicable record or effective date hereinafter
specified, a notice stating (i) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, warrants or
Convertible Securities, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record
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<PAGE> 46
to be entitled to such dividend, distribution, rights or warrants are to be
determined, and the date on which the holders shall be entitled thereto, or the
date of such issuance and briefly indicating the effect of such action on the
Common Stock, (ii) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up or (iii) the date on which such Change in Control or
initial public offering is to become effective.
"7. Certain Tax Matters. (a) If and to the
extent that the Corporation in good faith determines that withholding of United
States federal income tax is required in respect of a delivery of PIK Shares to
a holder of Series A Stock on a Dividend Payment Date, the Corporation shall on
the Record Date next preceding such delivery of PIK Shares, provide written
notice to each such holder of Series A Stock stating that a withholding of
United States federal income tax is required and the amount of such tax, not
later than 12:00 noon (New York City time) on such Dividend Payment Date each
such holder shall make a cash payment equal to the amount of such tax to the
Corporation. The Corporation shall deposit with the Internal Revenue Service
at the time and in the manner prescribed in applicable United States Treasury
Regulations, the amount of the tax required to be withheld (a "Withholding Tax
Payment"). Within three Business Days after making a Withholding Tax Payment,
the Corporation shall provide to each such holder written notice of the basis
for and the amount of the Withholding Tax Payment, evidence of the
Corporation's payment of the Withholding Tax Payment, and any other information
or documentation reasonably requested by each such holder. The Corporation
shall forward to each such holder any official tax receipts or other
documentation with respect to the Withholding Tax Payment as may be issued from
time to time by the Internal Revenue Service. The Corporation and the holders
of the Series A Stock agree to treat any Withholding Tax Payment made by the
Corporation on behalf of any holder as a deduction and withholding of United
States federal income tax pursuant to Section 1442 and Sections 1461 through
1464 of the Internal Revenue Code of 1986, as amended. The Corporation shall
comply with the provisions of Treasury Regulation Section 1.1461-2, which
requires the filing of an annual information return in respect of federal
income tax withheld under Section 1442 of the Internal Revenue Code of 1986, as
amended, and shall include any Withholding Tax Payments in such returns.
"(b) If and to the extent that the
Corporation in good faith determines that withholding of United States federal
income tax is required from any cash payment of
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<PAGE> 47
dividends on the shares of Series A Stock, the Corporation shall (i) on the
Record Date next preceding such cash payment of dividends, provide written
notice to the holders of Series A Stock stating that a withholding of United
States federal income tax is required, (ii) deduct and withhold the applicable
tax from such dividend payment, (iii) pay to the United States Internal Revenue
Service in a timely manner the full amount of taxes so deducted and withheld,
(iv) provide to the holder of Series A Stock evidence of payment of such taxes,
including a statement as to the amount of taxes deducted and withheld, and any
other information or documentation reasonably requested by such holder, and (v)
forward to such holder any official tax receipts or other documentation with
respect to the deducted and withheld taxes as may be issued from time to time
by the Internal Revenue Service. The Corporation shall comply with the
provisions of Treasury Regulation Section 1.1461-2, which requires the filing
of an annual information return in respect of federal income tax withheld under
Section 1442 of the Internal Revenue Code of 1986, as amended.
"8. Tax Forms. Prior to the first Dividend
Payment Date, each holder of Series A Stock that is not incorporated under the
laws of the United States of America or a state thereof shall deliver to the
Corporation a duly completed and executed Internal Revenue Service Form W-8, or
successor applicable form, statement or certification. In addition, each such
holder shall, prior to the first Dividend Payment Date, deliver to the
Corporation a duly completed and executed Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such holder is eligible for an exemption from or a reduced rate of
withholding of United States federal income tax on payments received under the
Series A Stock; provided, however, that a holder of Series A Stock shall not be
required to provide either such form, unless, in its reasonable opinion, it is
eligible and entitled to provide such form. Each holder that delivers to the
Corporation a Form W-8 (and, if appropriate, a Form 1001 or 4224) pursuant to
the two preceding sentences further undertakes to deliver to the Corporation an
additional duly executed and completed Form W-8 (and, if appropriate, an
additional Form 1001 or 4224), or other means of certification as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by such holder to the Corporation, unless in any such
cases an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any delivery would
otherwise be required which renders such form inapplicable or which would
prevent such holder from duly completing and delivering any such form with
respect to it and such holder advises the Corporation that it is not required
or eligible to provide such form.
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<PAGE> 48
"9. Voting Rights. Except as otherwise
provided by law, the holders of the issued shares of Series A Stock shall not
have any voting powers either general or specific.
"10. Sinking Fund. The shares of Series A
Stock shall not be entitled to the benefit of any sinking fund.
"11. Exclusion of Other Rights. Except as
may otherwise be required by law, the shares of Series A Stock shall not have
any preferences or relative, participating, optional or other special rights
other than those specifically set forth in this Restated Certificate of
Incorporation.
"12. Headings of Subdivisions. The headings
of the various subdivisions of this Article FOURTH are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof."
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<PAGE> 1
EXHIBIT 3.02
BY-LAWS
-of-
ARISTECH CHEMICAL CORPORATION
ARTICLE I
STOCKHOLDERS
SECTION 1.01. ANNUAL MEETING. The Board of Directors by resolution shall
designate the time, place and date (which shall be, in the case of the first
annual meeting, not more than 13 months after the organization of the
Corporation and, in the case of all other annual meetings, not more than 13
months after the date of the last annual meeting) of the annual meeting of the
stockholders for the election of directors and the transaction of such other
business as may come before it.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, may be called at any time by the President, any Vice
President, the Treasurer or the Secretary or by resolution of the Board of
Directors. Special meetings of stockholders shall be held at such place,
within or without the State of Delaware, as shall be fixed by the person or
persons calling the meeting and stated in the notice or waiver of notice of the
meeting.
SECTION 1.03. NOTICE OF MEETINGS OF STOCKHOLDERS. Whenever stockholders
are required or permitted to take any action at a meeting, written notice of
the meeting shall be given (unless that notice shall be waived or unless the
meeting is to be dispensed with in accordance with the provisions of Article
SIXTH of the Certificate of Incorporation of the Corporation and Section 1.12
hereof) which shall state the place, date and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. The written notice of any meeting shall be given, personally or by
mail, not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting. If mailed, such notice
is given when deposited in the United States mail, postage prepaid, directed to
the stockholder at his address as it appears on the records of the Corporation.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if
<PAGE> 2
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
SECTION 1.04. QUORUM. At all meetings of the stockholders, the holders of
a majority of the stock issued and outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum for the transaction of
any business.
When a quorum is once present to organize a meeting, it is not broken by the
subsequent withdrawal of any stockholders.
The stockholders present may adjourn the meeting despite the absence of a
quorum and at any such adjourned meeting at which the requisite amount of
voting stock shall be represented, the Corporation may transact any business
which might have been transacted at the original meeting had a quorum been
there present.
SECTION 1.05. METHOD OF VOTING. The vote upon any question before the
meeting need not be by ballot. All elections and all other questions shall be
decided by a plurality of the votes cast, at a meeting at which a quorum is
present, except as expressly provided otherwise by the General Corporation Law
of the State of Delaware, the Certificate of Incorporation or the Subscription
and Stockholders Agreement (the "Stockholders Agreement") dated January 31,
1990 among ACC Holdings Corporation, ACC Middle Corporation, the Corporation,
Mitsubishi Corporation, Blackstone Capital Partners, L.P. and the Management
Investors identified therein.
SECTION 1.06. VOTING RIGHTS OF STOCKHOLDERS AND PROXIES. Each stockholder
of record entitled to vote in accordance with the laws of the State of
Delaware, the Certificate of Incorporation or these By-Laws, shall at every
meeting of the stockholders be entitled to one vote in person or by proxy for
each share of stock entitled to vote standing in his name on the books of the
Corporation, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.
SECTION 1.07. OWNERSHIP OF ITS OWN STOCK. Shares of its own capital stock
belonging to the Corporation or to another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held, directly or indirectly, by the Corporation, shall neither be entitled
to vote nor be counted for quorum purposes. Nothing in this section shall be
construed as limiting the right of any corporation to vote stock, including but
not limited to its own stock, held by it in a fiduciary capacity.
SECTION 1.08. VOTING BY FIDUCIARIES AND PLEDGORS. Persons holding stock in
a fiduciary capacity shall be entitled to
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<PAGE> 3
vote the shares so held. Persons whose stock is pledged shall be entitled to
vote, unless in the transfer by the pledgor on the books of the Corporation he
has expressly empowered the pledgee to vote thereon, in which case only the
pledgee, or his proxy, may represent such stock and vote thereon.
If shares or other securities having voting power stand of record in the
names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants, tenants in common, tenants by the entirety or otherwise, or if
two or more persons have the same fiduciary relationship respecting the same
shares, unless the Secretary of the Corporation is given written notice to the
contrary and is furnished with a copy of the instrument or order appointing
them or creating the relationship wherein it is so provided, their acts with
respect to voting shall have the following effect:
(1) If only one votes, his act binds all;
(2) If more than one vote, the act of the majority so voting binds all;
(3) If more than one vote, but the vote is evenly split on any particular
matter, each faction may vote the securities in question proportionally, or any
person voting the shares, or a beneficiary, if any, may apply to the Court of
Chancery or such other court as may have jurisdiction to appoint an additional
person to act with the persons so voting the shares, which shall then be voted
as determined by a majority of such persons and the person appointed by the
court. If the instrument so filed shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of this subsection
shall be a majority or even-split in interest.
SECTION 1.09. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD. In
order to determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor less
then ten days before the date of such meeting, nor more than sixty days prior
to any other action. If no record date is fixed by the Board of Directors, the
record date shall be determined in accordance with the provisions of the
General Corporation Law of the State of Delaware.
SECTION 1.10. LIST OF STOCKHOLDERS. The officer who has charge of the
stock ledger of the Corporation shall prepare and
3
<PAGE> 4
make, at least ten days before every meeting of the stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held
(which place shall be specified in the notice of the meeting or, if not so
specified, at the place where said meeting is to be held), and the list shall
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who may be present. Upon the
willful neglect or refusal of the directors to produce such a list at any
meeting for the election of directors, they shall be ineligible for election to
any office at such meeting.
SECTION 1.11. STOCKHOLDER'S RIGHT OF INSPECTION. Stockholders of record,
in person or by attorney or other agent, shall have the right, upon written
demand under oath stating the purpose thereof, during the usual hours for
business to inspect or any proper purpose the Corporation's stock ledger, a
list of its stockholders, and its other books and records, and to make copies
or extracts therefrom. A proper purpose shall mean a purpose reasonably
related to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in this State or at its principal place of business.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by Section 1.10 or the
books of the Corporation, or to vote in person or by proxy at any meeting of
the stockholders.
SECTION 1.12. CONSENT IN LIEU OF MEETING. As provided in Article SIXTH of
the Certificate of Incorporation, any corporate action, with respect to which
the vote of the stockholders at a meeting thereof is required or permitted by
any provision of the General Corporation Law of the State of Delaware, the
Certificate of Incorporation of the Corporation, or these By-Laws, may be taken
without that vote and meeting, and that vote and meeting may be dispensed with,
if that corporate action has been consented to in writing by the holders of a
majority (or, if with respect to a particular corporate action the General
Corporation Law of the State of Delaware, the Certificate of Incorporation of
the Corporation or these By-Laws specifies a greater percentage, by the holders
of that percentage) of the stock that would have been entitled to vote upon
that action if a meeting were held. Prompt
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<PAGE> 5
notice shall be given to all stockholders of the taking of any corporate action
pursuant to the provisions of that paragraph unless that action has been
consented to in writing by the holders of all of the stock that would have been
entitled to vote upon that action if a meeting were held.
ARTICLE II
DIRECTORS
SECTION 2.01. MANAGEMENT OF BUSINESS. The business of the Corporation
shall be managed by its Board of Directors.
The Board of Directors, in addition to the powers and authority expressly
conferred upon it herein, by statute, by the Certificate of Incorporation of
the Corporation or otherwise, is hereby empowered to exercise all such powers
as may be exercised by the Corporation, except as expressly provided otherwise
by the statutes of the State of Delaware, by the Certificate of Incorporation
of the Corporation or by these By-Laws.
Without prejudice to the generality of the foregoing, the Board of
Directors, by resolution or resolutions, may create and issue, whether or not
in connection with the issue and sale of any shares of stock or other
securities of the Corporation, rights or options entitling the holders thereof
to purchase from the Corporation any shares of its capital stock of any class
or classes or any other securities of the Corporation, such rights or options
to be evidenced by or in such instrument or instruments as shall be approved by
the Board of Directors. The terms upon which, including the time or times,
which may be limited or unlimited in duration, at or within which, and the
price or prices at which, any such rights or options may be issued and any such
shares or other securities may be purchased from the Corporation upon the
exercise of any such right or option shall be such as shall be fixed and stated
in the resolution or resolutions adopted by the Board of Directors providing
for the creation and issue of such right or options, and, in every case, set
forth or incorporated by reference in the instrument or instruments evidencing
such rights or options. In the absence of actual fraud in the transaction, the
judgment of the directors as to the consideration for the issuance of such
rights or options and the sufficiency thereof shall be conclusive. In case the
shares of stock of the Corporation to be issued upon the exercise of such
rights or options shall be shares having a par value, the price or prices so to
be received therefor shall not be less than the par value thereof. In case the
shares of stock so to be issued shall be shares of stock without par value, the
consideration therefor shall be determined in the manner provided in Section
153 of the General Corporation Law of the State of Delaware.
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<PAGE> 6
SECTION 2.02. QUALIFICATIONS AND NUMBER OF DIRECTORS. Directors need not
be stockholders. The number of directors which shall constitute the whole
Board shall be thirteen, but this number may be increased and subsequently
again from time to time increased or decreased by an amendment to the By-Laws,
but in no case shall the number be less than three.
SECTION 2.03. ELECTION AND TERM. The directors shall be elected at the
annual meeting of the stockholders, and each director shall be elected to hold
office until his successor shall be elected and qualified, or until his earlier
resignation or removal.
SECTION 2.04. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the Corporation. Such resignation shall
take effect at the time specified therein, if any, or if no time is specified
therein, then upon receipt of such notice by the Corporation; and, unless
otherwise provided therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 2.05. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Vacancies and
newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining director, and the
directors so chosen shall hold office until their successors shall be elected
and qualified, or until their earlier resignation or removal. When one or more
directors shall resign from the Board, effective at a future date, a majority
of the directors then in office, including those who have so resigned, shall
have power to fill such vacancy or vacancies, the vote thereon to take effect
when such resignation or resignations shall become effective, and each director
so chosen shall hold office as herein provided in the filling of other
vacancies.
SECTION 2.06. QUORUM OF DIRECTORS. At all meetings of the Board of
Directors, a majority of the entire Board, but not less than two directors,
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as provided in Sections 2.05
and 2.12 hereof.
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting of the directors to another time and place. Notice of any
adjournment need not be given if such time and place are announced at the
meeting.
SECTION 2.07. ANNUAL MEETING. The newly elected Board of Directors shall
meet immediately following the adjournment of the annual meeting of
stockholders in each year at the same place,
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within or without the State of Delaware, and no notice of such meeting shall be
necessary.
SECTION 2.08. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such time and place, within or without the State of Delaware, as
shall from time to time be fixed by the Board and no notice thereof shall be
necessary.
SECTION 2.09. SPECIAL MEETINGS. Special meetings may be called at any
time by the President, any Vice President, the Treasurer or the Secretary or by
resolution of the Board of Directors. Special meetings shall be held at such
place, within or without the State of Delaware, as shall be fixed by the person
or persons calling the meeting and stated in the notice or waiver of notice of
the meeting.
Special meetings of the Board of Directors shall be held upon notice to the
directors or waiver thereof.
Unless waived, notice of each special meeting of the directors, stating the
time and place of the meeting, shall be given to each director by delivered
letter, by telegram or by personal communication either over the telephone or
otherwise, in each such case not later than the tenth day prior to the meeting,
or by mailed letter deposited in the United States mail with postage thereon
prepaid not later than the fifteenth day prior to the meeting. Notices of
special meetings of the Board of Directors and waivers thereof need not state
the purpose or purposes of the meeting.
SECTION 2.10. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if all members of the Board of
committee, as the case may be, consent thereto in a writing or writings and the
writing or writings are filed with the minutes of proceedings of the Board or
committee.
SECTION 2.11. COMPENSATION. Directors shall receive such fixed sums and
expenses of attendance for attendance at each meeting of the Board or of any
committee and/or such salary as may be determined from time to time by the
Board of Directors; provided that nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 2.12. COMMITTEES. The Board of Directors may, by resolution or
resolutions, passed by a majority of the whole Board, designate such Committees
of the Board as it may deem proper, and may discontinue the same at any time.
7
<PAGE> 8
ARTICLE III
OFFICERS
SECTION 3.01. NUMBER. The officers of the Corporation shall be chosen by
the Board of Directors. The officers shall be a President, a Secretary and a
Treasurer, and such number of Vice Presidents, Assistant Secretaries and
Assistant Treasurers, and such other officers, if any, as the Board may from
time to time determine. The Board may choose such other agents as it shall
deem necessary. Any number of offices may be held by the same person.
SECTION 3.02. TERMS OF OFFICE. Subject to the provisions of any employment
agreement and the Stockholders Agreement, each officer shall hold his office
until his successor is chosen and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation.
SECTION 3.03. REMOVAL. Subject to the terms of any employment agreement
and the Stockholders Agreement, any officer may be removed from office at any
time by the Board of Directors with or without cause.
SECTION 3.04. AUTHORITY. The Secretary shall record all of the proceedings
of the meetings of the stockholders and directors in a book to be kept for that
purpose, and shall have the authority, perform the duties and exercise the
powers in the management of the Corporation usually incident to the office held
by him, and/or such other authority, duties and powers as may be assigned to
him from time to time by the Board of Directors or the President. The other
officers, and agents, if any, shall have the authority, perform the duties and
exercise the powers in the management of the Corporation usually incident to
the offices held by them, respectively, and/or such other authority, duties and
powers as may be assigned to them from time to time by the Board of Directors
or (except in the case of the President) by the President.
SECTION 3.05. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President and any
such officer may, in the name of and on behalf of the Corporation, take all
such action as any such officer may deem advisable to vote in person or by
proxy at any meeting of security holders of any corporation in which the
Corporation may own securities and at any such meeting shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors
8
<PAGE> 9
may, by resolution, from time to time confer like powers upon any other person
or persons.
ARTICLE IV
CAPITAL STOCK
SECTION 4.01. STOCK CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by, or in the name of the
Corporation by, the Chairman or Vice-Chairman of the Board of Directors, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary, of the Corporation, certifying the
number of shares owned by him in the Corporation. Where such certificate is
signed (1) by a transfer agent other than the Corporation or its employee, or
(2) by a registrar other than the Corporation or its employee, the signatures
of the officers of the Corporation may be facsimiles. In case any officer who
has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of issue.
SECTION 4.02. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by the laws of the State of Delaware.
SECTION 4.03. REGISTERED HOLDERS. Prior to due presentment for
registration of transfer of any security of the Corporation in registered form,
the Corporation shall treat the registered owner as the person exclusively
entitled to vote, to receive notifications and to otherwise exercise all the
rights and powers of an owner, and shall not be bound to recognize any
equitable or other claim to, or interest in, any security, whether or not the
Corporation shall have notice thereof, except as otherwise provided by the laws
of the State of Delaware.
SECTION 4.04. NEW CERTIFICATES. The Corporation shall issue a new
certificate of stock in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, if the owner: (1) so requests
before the Corporation has notice that the shares of stock represented by that
certificate have been acquired by a bona fide purchaser; (2) files with the
Corporation a bond sufficient (in the judgment of the directors) to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss or theft of that certificate or the issuance of a new certificate;
and (3) satisfies any other requirements imposed by the directors that are
reasonable under the circumstances. A new certificate may be issued without
requiring any bond when, in the judgment of the directors, it is proper so to
do.
9
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ARTICLE V
INDEMNIFICATION
SECTION 5.01. The Corporation shall indemnify its officers, directors,
employees and agents to the fullest extent permitted by the General Corporation
Law of Delaware.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. OFFICES. The registered office of the Corporation in the
State of Delaware shall be at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The Corporation may also have offices at other
places within and/or without the State of Delaware.
SECTION 6.02. SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal Delaware".
SECTION 6.03. CHECKS. All checks or demands for money shall be signed by
such person or persons as the Board of Directors may from time to time
determine.
SECTION 6.04. FISCAL YEAR. The fiscal year shall begin the first day of
January in each year and shall end on the thirty-first day of December of such
year.
SECTION 6.05. WAIVERS OF NOTICE; DISPENSING WITH NOTICE. Whenever any
notice whatever is required to be given under the provisions of the General
Corporation Law of the State of Delaware, of the Certificate of Incorporation
of the Corporation, or of these By-Laws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a 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.
Whenever any notice whatever is required to be given
10
<PAGE> 11
under the provisions of the General Corporation Law of the State of Delaware,
of the Certificate of Incorporation of the Corporation, or of these By-Laws, to
any person with whom communication is made unlawful by any law of the United
States of America, or by any rule, regulation, proclamation or executive order
issued under any such law, then the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person;
and any action or meeting which shall be taken or held without notice to any
such person or without giving or without applying for a license or permit to
give any such notice to any such person with whom communication is made
unlawful as aforesaid, shall have the same force and effect as if such notice
had been given as provided under the provisions of the General Corporation Law
of the State of Delaware, or under the provisions of the Certificate of
Incorporation of the Corporation or of these By-Laws. In the event that the
action taken by the Corporation is such as to require the filing of a
certificate under any of the other sections of this title, the certificate
shall state, if such is the fact and if notice is required, that notice was
given to all persons entitled to receive notice except such persons with whom
communication is unlawful.
SECTION 6.06. LOANS TO AND GUARANTEES OF OBLIGATIONS OF EMPLOYEES AND
OFFICERS. The Corporation may lend money to or guaranty any obligation of, or
otherwise assist any officer or other employee of the Corporation or of a
subsidiary, including any officer or employee who is a director of the
Corporation or a subsidiary, whenever, in the judgment of the Board of
Directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the Board
of Directors shall approve, including, without limitation, a pledge of shares
of stock of the Corporation. Nothing in this Section contained shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the
Corporation at common law or under any other statute.
SECTION 6.07. AMENDMENT OF BY-LAWS. These By-Laws may be altered, amended
or repealed at any meeting of the Board of Directors.
SECTION 6.08. SECTION HEADINGS AND STATUTORY REFERENCES. The headings of
the Articles and Sections of these By-Laws, have been inserted for convenience
of reference only and shall not be deemed to be a part of these By-Laws.
11
<PAGE> 1
EXHIBIT 4.01
ARISTECH CHEMICAL CORPORATION,
Issuer
to
THE CHASE MANHATTAN BANK,
Trustee
---------------
INDENTURE
---------------
Dated as of November 1, 1996
Debt Securities
<PAGE> 2
Reconciliation and tie between
Trust Indenture Act of 1939 (the "Trust Indenture Act")
and Indenture
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
Section 310(a)(1)...................................................607
(a)(2).............................................................607
(b)................................................................608
Section 312(a)......................................................701
(b)................................................................702
(c)................................................................702
Section 313(a)......................................................703
(b)(2).............................................................703
(c)................................................................703
(d)................................................................703
Section 314(a)......................................................704
(c)(1).............................................................102
(c)(2).............................................................102
(e)................................................................102
(f)................................................................102
Section 316(a) (last sentence)......................................101
(a)(1)(A).....................................................502, 512
(a)(1)(B)..........................................................513
(b)................................................................508
Section 317(a)(1)...................................................503
(a)(2).............................................................504
(b)...............................................................1003
Section 318(a)......................................................108
- --------------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
Recitals .................................................................. 1
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.............................................. 2
Act............................................................... 2
Additional Amounts................................................ 2
Affiliate......................................................... 2
Attributable Debt................................................. 3
Authenticating Agent.............................................. 3
Authorized Newspaper.............................................. 3
Authorized Officer................................................ 3
Avonite........................................................... 3
Bearer Security................................................... 3
Board of Directors................................................ 3
Board Resolution.................................................. 4
Business Day...................................................... 4
Commission........................................................ 4
Common Stock...................................................... 4
Company ......................................................... 4
Company Request and Company Order................................. 4
Consolidated Assets............................................... 4
Consolidated Net Tangible Assets.................................. 4
Conversion Event.................................................. 5
Corporate Trust Office............................................ 5
Corporation....................................................... 5
Coupon............................................................ 5
Currency ......................................................... 5
CUSIP number...................................................... 5
Debt.............................................................. 5
Defaulted Interest................................................ 6
Dollars or $...................................................... 6
ECU............................................................... 6
European Monetary System.......................................... 6
European Union.................................................... 6
Event of Default.................................................. 6
Foreign Currency.................................................. 6
Funded Debt....................................................... 6
Government Obligations............................................ 6
Holder............................................................ 7
Indebtedness...................................................... 7
Indenture......................................................... 7
Independent Public Accountants.................................... 7
Indexed Security.................................................. 7
Interest ......................................................... 7
Interest Payment Date............................................. 7
Judgment Currency................................................. 7
Legal Holidays.................................................... 7
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Lien............................................................. 7
Maturity ........................................................ 7
New York Banking Day............................................. 8
Office or Agency................................................. 8
Officers' Certificate............................................ 8
Opinion of Counsel............................................... 8
Original Issue Discount Security................................. 8
Outstanding...................................................... 8
Paying Agent..................................................... 9
Person........................................................... 10
Place of Payment................................................. 10
Predecessor Security............................................. 10
Redemption Date.................................................. 10
Redemption Price................................................. 10
Registered Security.............................................. 10
Regular Record Date.............................................. 10
Required Currency................................................ 10
Responsible Officer.............................................. 10
Restricted Subsidiary............................................ 10
Sale/Leaseback Transaction....................................... 11
Security or Securities........................................... 11
Security Register and Security Registrar......................... 11
Special Record Date.............................................. 11
Stated Maturity.................................................. 11
Subsidiary....................................................... 11
Trust Indenture Act.............................................. 11
Trustee ........................................................ 11
United States.................................................... 12
United States Alien.............................................. 12
U.S. Depository or Depository.................................... 12
Vice President................................................... 12
Voting Stock..................................................... 12
Section 1.2. Compliance Certificates and Opinions.................... 12
Section 1.3. Form of Documents Delivered to
Trustee................................................. 13
Section 1.4. Acts of Holders......................................... 14
Section 1.5. Notices, etc. to Trustee and Company.................... 16
Section 1.6. Notice to Holders of Securities;
Waiver.................................................. 16
Section 1.7. Language of Notices..................................... 17
Section 1.8. Conflict with Trust Indenture Act....................... 17
Section 1.9. Effect of Headings and Table of
Contents................................................ 17
Section 1.10. Successors and Assigns.................................. 18
Section 1.11. Separability Clause..................................... 18
Section 1.12. Benefits of Indenture................................... 18
Section 1.13. Governing Law........................................... 18
Section 1.14. Legal Holidays.......................................... 18
Section 1.15. Counterparts............................................ 19
Section 1.16. Judgment Currency....................................... 19
Section 1.17. No Security Interest Created............................ 19
Section 1.18. Limitation on Individual Liability...................... 19
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<PAGE> 5
ARTICLE 2
SECURITIES FORMS
Section 2.1. Forms Generally......................................... 20
Section 2.2. Form of Trustee's Certificate of
Authentication.......................................... 21
Section 2.3. Securities in Global Form............................... 21
ARTICLE 3
THE SECURITIES
Section 3.1. Amount Unlimited; Issuable in Series.................... 22
Section 3.2. Currency; Denominations................................. 26
Section 3.3. Execution, Authentication, Delivery and
Dating.................................................. 26
Section 3.4. Temporary Securities.................................... 28
Section 3.5. Registration, Transfer and Exchange..................... 29
Section 3.6. Mutilated, Destroyed, Lost and Stolen
Securities.............................................. 33
Section 3.7. Payment of Interest and Certain Additional Amounts;
Rights to Interest and Certain Additional Amounts
Preserved............................................... 34
Section 3.8. Persons Deemed Owners................................... 35
Section 3.9. Cancellation............................................ 36
Section 3.10. Computation of Interest................................. 36
ARTICLE 4
SATISFACTION AND DISCHARGE OF INDENTURE
Section 4.1. Satisfaction and Discharge.............................. 37
Section 4.2. Defeasance and Covenant Defeasance...................... 38
Section 4.3. Application of Trust Money.............................. 42
ARTICLE 5
REMEDIES
Section 5.1. Events of Default....................................... 43
Section 5.2. Acceleration of Maturity; Rescission and
Annulment............................................... 45
Section 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee.................................. 46
Section 5.4. Trustee May File Proofs of Claim........................ 47
Section 5.5. Trustee May Enforce Claims without
Possession of Securities or Coupons..................... 48
Section 5.6. Application of Money Collected.......................... 48
Section 5.7. Limitations on Suits.................................... 48
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<PAGE> 6
Section 5.8. Unconditional Right of Holders to
Receive Principal and any Premium,
Interest and Additional Amounts......................... 49
Section 5.9. Restoration of Rights and Remedies...................... 50
Section 5.10. Rights and Remedies Cumulative.......................... 50
Section 5.11. Delay or Omission Not Waiver............................ 50
Section 5.12. Control by Holders of Securities........................ 50
Section 5.13. Waiver of Past Defaults................................. 51
Section 5.14. Waiver of Usury, Stay or Extension
Laws.................................................... 51
Section 5.15. Undertaking for Costs................................... 51
ARTICLE 6
THE TRUSTEE
Section 6.1. Certain Rights of Trustee............................... 52
Section 6.2. Notice of Defaults...................................... 54
Section 6.3. Not Responsible for Recitals or Issuance
of Securities........................................... 54
Section 6.4. May Hold Securities..................................... 54
Section 6.5. Money Held in Trust..................................... 55
Section 6.6. Compensation and Reimbursement.......................... 55
Section 6.7. Corporate Trustee Required;
Eligibility............................................. 56
Section 6.8. Resignation and Removal; Appointment of
Successor............................................... 56
Section 6.9. Acceptance of Appointment by
Successor............................................... 58
Section 6.10. Merger, Conversion, Consolidation or
Succession to Business.................................. 59
Section 6.11. Appointment of Authenticating Agent..................... 59
ARTICLE 7
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Company to Furnish Trustee Names and
Addresses of Holders.................................... 61
Section 7.2. Preservation of Information;
Communications to Holders............................... 62
Section 7.3. Reports by Trustee...................................... 62
Section 7.4. Reports by Company...................................... 62
ARTICLE 8
CONSOLIDATION, MERGER AND SALES
Section 8.1. Company May Consolidate, Etc., Only on
Certain Terms........................................... 63
Section 8.2. Successor Person Substituted for
Company................................................. 64
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ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures without Consent
of Holders............................................... 64
Section 9.2. Supplemental Indentures with Consent of
Holders.................................................. 66
Section 9.3. Execution of Supplemental Indentures..................... 67
Section 9.4. Effect of Supplemental Indentures........................ 67
Section 9.5. Reference in Securities to Supplemental
Indentures............................................... 68
Section 9.6. Conformity with Trust Indenture Act...................... 68
Section 9.7. Notice of Supplemental Indenture......................... 68
ARTICLE 10
COVENANTS
Section 10.1. Payment of Principal, any Premium,
Interest and Additional Amounts.......................... 68
Section 10.2. Maintenance of Office or Agency.......................... 68
Section 10.3. Money for Securities Payments to Be Held
in Trust................................................. 70
Section 10.4. Additional Amounts....................................... 71
Section 10.5. Limitation on Liens...................................... 72
Section 10.6. Limitation on Sale/Leaseback
Transactions............................................. 74
Section 10.7. Corporate Existence...................................... 76
Section 10.8. Waiver of Certain Covenants.............................. 76
Section 10.9. Company Statement as to Compliance;
Notice of Certain Defaults............................... 76
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.1. Applicability of Article................................. 77
Section 11.2. Election to Redeem; Notice to Trustee.................... 77
Section 11.3. Selection by Trustee of Securities to be
Redeemed................................................. 77
Section 11.4. Notice of Redemption..................................... 78
Section 11.5. Deposit of Redemption Price.............................. 79
Section 11.6. Securities Payable on Redemption Date.................... 80
Section 11.7. Securities Redeemed in Part.............................. 81
ARTICLE 12
SINKING FUNDS
Section 12.1. Applicability of Article................................. 81
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Section 12.2. Satisfaction of Sinking Fund Payments with
Securities................................................82
Section 12.3. Redemption of Securities for Sinking
Fund..................................................... 82
ARTICLE 13
REPAYMENT AT THE OPTION OF HOLDERS
Section 13.1. Applicability of Article................................. 83
ARTICLE 14
SECURITIES IN FOREIGN CURRENCIES
Section 14.1. Applicability of Article................................. 83
ARTICLE 15
MEETINGS OF HOLDERS OF SECURITIES
Section 15.1. Purposes for Which Meetings May Be
Called................................................... 84
Section 15.2. Call, Notice and Place of Meetings....................... 84
Section 15.3. Persons Entitled to Vote at Meetings..................... 84
Section 15.4. Quorum; Action........................................... 85
Section 15.5. Determination of Voting Rights; Conduct
and Adjournment of Meetings.............................. 85
Section 15.6. Counting Votes and Recording Action of
Meetings................................................. 86
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INDENTURE, dated as of November 1, 1996 (the "Indenture"), between
ARISTECH CHEMICAL CORPORATION, a corporation duly organized and existing under
the laws of the State of Delaware (hereinafter called the "Company"), having
its principal executive office located at 600 Grant Street, Pittsburgh,
Pennsylvania 15219-2704, and THE CHASE MANHATTAN BANK, a banking corporation
duly organized and existing under the laws of the State of New York
(hereinafter called the "Trustee"), having its Corporate Trust Office located
at 450 West 33rd Street, 15th Floor, New York, New York 10001.
Recitals
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its senior unsecured
debentures, notes or other evidences of indebtedness (hereinafter called the
"Securities"), unlimited as to principal amount, to bear such rates of
interest, to mature at such time or times, to be issued in one or more series
and to have such other provisions as shall be fixed as hereinafter provided.
The Company has duly authorized the execution and delivery of this
Indenture. All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture
Act of 1939, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder that are required to be part of this
Indenture and, to the extent applicable, shall be governed by such provisions.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as herein defined) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders
of the Securities or of any series thereof and any Coupons (as herein defined)
as follows:
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ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.
Except as otherwise expressly provided in or pursuant to this
Indenture or unless the context otherwise requires, for all purposes of this
Indenture:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as
the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles in the United States of America and, except as
otherwise herein expressly provided, the terms "generally accepted
accounting principles" or "GAAP" with respect to any computation
required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States of America
at the date or time of such computation;
(4) the words "herein", "hereof", "hereto" and "hereunder"
and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision; and
(5) the word "or" is always used inclusively (for example,
the phrase "A or B" means "A or B or both", not "either A or B but
not both").
Certain terms used principally in certain Articles hereof are
defined in those Articles.
"Act", when used with respect to any Holders, has the meaning
specified in Section 1.4.
"Additional Amounts" means any additional amounts which are required
hereby or by any Security, under circumstances specified herein or therein, to
be paid by the Company in respect of certain taxes, assessments or other
governmental charges imposed on Holders specified therein and which are owing
to such Holders.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the
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purposes of this definition, "control", when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have the
meanings correlative to the foregoing.
"Attributable Debt" means, in respect of any Sale/Leaseback
Transaction, at any date as of which the amount thereof is to be determined,
the total net amount of rent required to be paid by the lessee of the property
subject to such Sale/Leaseback Transaction under the lease included in such
transaction during the remaining term thereof (including any period for which
such lease has been extended), discounted from the respective due dates thereof
to such date at the rate per annum of 10%, compounded semi-annually. The net
amount of rent required to be paid under any such lease for any such period
shall be the aggregate amount of the rent payable by the lessee with respect to
such period after excluding amounts required to be paid on account of
maintenance and repairs, services, insurance, taxes, assessments, water rates
and similar charges and contingent rents (such as those based on sales). In the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount of rent shall include the lesser of (i) the total
discounted net amount of rent required to be paid from the later of the first
date upon which such lease may be so terminated or the date of the
determination of such amount of rent, as the case may be, and (ii) the amount
of such penalty (in which event no rent shall be considered as required to be
paid under such lease subsequent to the first date upon which it may be so
terminated).
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.11 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper, in an official language of
the place of publication or in the English language, customarily published on
each day that is a Business Day in the place of publication, whether or not
published on days that are Legal Holidays in the place of publication, and of
general circulation in each place in connection with which the term is used or
in the financial community of each such place. Where successive publications
are required to be made in Authorized Newspapers, the successive publications
may be made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any day that is a Business Day in
the place of publication.
"Authorized Officer" means, when used with respect to the Company,
the Chairman of the Board of Directors, a Vice Chairman, the President, any
Vice President, the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company.
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"Avonite" means Avonite, Inc., a New Mexico corporation.
"Bearer Security" means any Security in the form established
pursuant to Section 2.1 which is payable to bearer.
"Board of Directors" means the board of directors of the Company or
any committee of that board duly authorized to act generally or in any
particular respect for the Company hereunder.
"Board Resolution" means a copy of one or more resolutions,
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification, delivered to the Trustee.
"Business Day", with respect to any Place of Payment or other
location, means, unless otherwise specified with respect to any Securities
pursuant to Section 3.1, any day other than a Saturday, Sunday or other day on
which banking institutions in such Place of Payment or other location are
authorized or obligated by law, regulation or executive order to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Stock" includes any capital stock of any class of the
Company which has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not subject to redemption by the
Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person, and any other obligor upon the
Securities.
"Company Request" and "Company Order" mean, respectively, a written
request or order, as the case may be, signed in the name of the Company by the
Chairman of the Board of Directors, a Vice Chairman, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee.
"Consolidated Assets" means all amounts that would be shown as
assets on a consolidated balance sheet of the Company and its Restricted
Subsidiaries prepared in accordance with GAAP.
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"Consolidated Net Tangible Assets" means, as of any particular time,
the aggregate amount of Consolidated Assets (less depreciation, amortization
and other applicable reserves and other items deductible therefrom under GAAP)
after deducting therefrom (a) all current liabilities (excluding any thereof
which are by their terms extendible or renewable at the option of the obligor
thereon to a time more than 12 months after the time as of which the amount
thereof is being computed), (b) all goodwill, tradenames, trademarks, patents
and other intangibles, in each case net of applicable amortization, and (c)
appropriate adjustments on account of minority interests of other Persons
holding stock of the Company's Restricted Subsidiaries, all as would be shown
on a consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in accordance with GAAP, as of the date of the most recent quarterly
consolidated balance sheet of the Company and its subsidiaries, prepared in
accordance with GAAP, provided that, in the case of a balance sheet as of the
end of the first, second or fourth quarterly fiscal periods of the Company, the
date of such balance sheet is not more than 135 days prior to the date of
determination and, in the case of a balance sheet as of the end of the third
quarterly fiscal period of the Company, the date of such balance sheet is not
more than 180 days prior to the date of determination.
"Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country or the confederation which
issued such Foreign Currency and for the settlement of transactions by a
central bank or other public institutions of or within the international
banking community, (ii) the ECU both within the European Monetary System and
for the settlement of transactions by public institutions of or within the
European Union or (iii) any currency unit or composite currency other than the
ECU for the purposes for which it was established.
"Corporate Trust Office" means the principal corporate trust office
of the Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of original execution of this
Indenture is located at 450 West 33rd Street, 15th Floor, New York, New York
10001.
"Corporation" includes corporations and limited liability companies
and, except for purposes of Article Eight, associations, companies and business
trusts.
"Coupon" means any interest coupon appertaining to a Bearer
Security.
"Currency", with respect to any payment, deposit or other transfer
in respect of the principal of or any premium or interest on or any Additional
Amounts with respect to any Security, means Dollars or the Foreign Currency, as
the case may be, in which such payment, deposit or other transfer is required
to be made by or
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pursuant to the terms hereof or such Security and, with respect to any other
payment, deposit or transfer pursuant to or contemplated by the terms hereof or
such Security, means Dollars.
"CUSIP number" means the alphanumeric designation assigned to a
Security by Standard & Poor's Corporation, CUSIP Service Bureau.
"Debt" means (a) any liability of the Company or any Restricted
Subsidiary (1) for borrowed money, or under any reimbursement obligation
relating to a letter of credit, or (2) evidenced by a bond, note, debenture or
similar instrument, or (3) for payment obligations arising under any
conditional sale or other title retention arrangement (including a purchase
money obligation) given in connection with the acquisition of any businesses,
properties or assets of any kind, or (4) for the payment of money relating to a
capitalized lease obligation; (b) any liability of others of a type described
in the preceding clause (a) that the Company or any Restricted Subsidiary has
guaranteed or that is otherwise its legal liability; and (c) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (a) and (b) above.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Dollars" or "$" means a dollar or other equivalent unit of legal
tender for payment of public or private debts in the United States of America.
"ECU" means the European Currency Units as defined and revised from
time to time by the Council of the European Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the
European Community.
"European Union" means the European Community, the European Coal and
Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 5.1.
"Foreign Currency" means any currency, currency unit or composite
currency, including, without limitation, the ECU, issued by the government of
one or more countries other than the United States of America or by any
recognized confederation or association of such governments.
"Funded Debt" means indebtedness created, assumed or guaranteed by a
Person for money borrowed which matures by its terms, or is renewable by the
borrower to a date, more than 12 months after the date of original creation,
assumption or guarantee.
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"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the other government or
governments in the confederation which issued the Foreign Currency in which the
principal of or any premium or interest on such Security or any Additional
Amounts in respect thereof shall be payable, in each case where the payment or
payments thereunder are supported by the full faith and credit of such
government or governments or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America or such other government or governments, in each case where the
timely payment or payments thereunder are unconditionally guaranteed as a full
faith and credit obligation by the United States of America or such other
government or governments, and which, in the case of (i) or (ii), are not
callable or redeemable at the option of the issuer or issuers thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of or other amount with respect to any such
Government Obligation held by such custodian for the account of the holder of a
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Obligation or the specific payment of interest on or principal
of or other amount with respect to the Government Obligation evidenced by such
depository receipt.
"Holder", in the case of any Registered Security, means the Person
in whose name such Security is registered in the Security Register and, in the
case of any Bearer Security, means the bearer thereof and, in the case of any
Coupon, means the bearer thereof.
"Indebtedness", with respect to any Person, means indebtedness for
borrowed money or for the unpaid purchase price of real or personal property
of, or guaranteed by, such Person and computed in accordance with GAAP.
"Indenture" means this instrument as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and, with respect to any
Security, by the terms and provisions of such Security and any Coupon
appertaining thereto established pursuant to Section 3.1 (as such terms and
provisions may be amended pursuant to the applicable provisions hereof).
"Independent Public Accountants" means accountants or a firm of
accountants that, with respect to the Company and any other obligor under the
Securities or the Coupons, are independent public accountants within the
meaning of the Securities Act of 1933, as amended, and the rules and
regulations promulgated by the Commission thereunder, who may be the
independent public accountants regularly retained by the Company or who may be
other independent public
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accountants. Such accountants or firm shall be entitled to rely upon any
Opinion of Counsel as to the interpretation of any legal matters relating to
this Indenture or certificates required to be provided hereunder.
"Indexed Security" means a Security the terms of which provide that
the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"Interest", with respect to any Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity and, when used with respect to a Security which provides for the
payment of Additional Amounts pursuant to Section 10.4, includes such Additional
Amounts.
"Interest Payment Date", with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Judgment Currency" has the meaning specified in Section 1.16.
"Legal Holidays" has the meaning specified in Section 1.14.
"Lien" has the meaning specified in Section 10.5.
"Maturity", with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as provided in or pursuant to this Indenture, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption or repurchase,
notice of option to elect repayment or otherwise, and includes the Redemption
Date.
"New York Banking Day" has the meaning specified in Section 1.16.
"Office" or "Agency", with respect to any Securities, means an
office or agency of the Company maintained or designated in a Place of Payment
for such Securities pursuant to Section 10.2 or any other office or agency
of the Company maintained or designated for such Securities pursuant to
Section 10.2 or, to the extent designated or required by Section 10.2 in lieu
of such office or agency, the Corporate Trust Office of the Trustee.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, a Vice Chairman, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, that complies with the requirements of Section 314(e) of the Trust
Indenture Act and is delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
an employee of or counsel for the Company or other counsel
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who shall be reasonably acceptable to the Trustee, that, if required by the
Trust Indenture Act, complies with the requirements of Section 314(e) of the
Trust Indenture Act.
"Original Issue Discount Security" means a Security issued pursuant
to this Indenture which provides for declaration of an amount less than the
principal face amount thereof to be due and payable upon acceleration pursuant
to Section 5.2.
"Outstanding", when used with respect to any Securities, means, as
of the date of determination, all such Securities theretofore authenticated and
delivered under this Indenture, except:
(a) any such Security theretofore cancelled by the
Trustee or the Security Registrar or delivered to
the Trustee or the Security Registrar for
cancellation;
(b) any such Security for whose payment at the
Maturity thereof money in the necessary amount has
been theretofore deposited pursuant hereto (other
than pursuant to Section 4.2) with the Trustee
or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by
the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities
and any Coupons appertaining thereto, provided
that, if such Securities are to be redeemed,
notice of such redemption has been duly given
pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(c) any such Security with respect to which the
Company has effected defeasance pursuant to the
terms hereof, except to the extent provided in
Section 4.2;
(d) any such Security which has been paid pursuant to
Section 3.6 or in exchange for or in lieu of which
other Securities have been authenticated and
delivered pursuant to this Indenture, unless there
shall have been presented to the Trustee proof
satisfactory to it that such Security is held by a
bona fide purchaser in whose hands such Security
is a valid obligation of the Company; and
(e) any such Security converted or exchanged as
contemplated by this Indenture into Common Stock
or other securities, if the terms of such Security
provide for such conversion or exchange pursuant
to Section 3.1;
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provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Securities for quorum purposes, (i) the principal amount
of an Original Issue Discount Security that may be counted in making such
determination and that shall be deemed to be Outstanding for such purposes shall
be equal to the amount of the principal thereof that pursuant to the terms of
such Original Issue Discount Security would be declared (or shall have been
declared to be) due and payable upon a declaration of acceleration thereof
pursuant to Section 5.2 at the time of such determination, and (ii) the
principal amount of any Indexed Security that may be counted in making such
determination and that shall be deemed Outstanding for such purposes shall be
equal to the principal face amount of such Indexed Security at original
issuance, unless otherwise provided in or pursuant to this Indenture, and (iii)
the principal amount of a Security denominated in a Foreign Currency shall be
the Dollar equivalent, determined on the date of original issuance of such
Security, of the principal amount (or, in the case of an Original Issue Discount
Security, the Dollar equivalent on the date of original issuance of such
Security of the amount determined as provided in (i) above) of such Security,
and (iv) Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor, shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in making any such determination or
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Securities which a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded. Securities so owned which shall
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee (A) the pledgee's right so to act
with respect to such Securities and (B) that the pledgee is not the Company or
any other obligor upon the Securities or any Coupons appertaining thereto or an
Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of, or any premium or interest on, or any Additional Amounts with
respect to, any Security or any Coupon on behalf of the Company.
"Person" means any individual, Corporation, partnership, joint
venture, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Place of Payment", with respect to any Security, means the place or
places where the principal of, or any premium or interest on, or any Additional
Amounts with respect to such Security are payable as provided in or pursuant to
this Indenture or such Security.
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"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same Indebtedness as
that evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.6 in
exchange for or in lieu of a lost, destroyed, mutilated or stolen Security or
any Security to which a mutilated, destroyed, lost or stolen Coupon appertains
shall be deemed to evidence the same Indebtedness as the lost, destroyed,
mutilated or stolen Security or the Security to which a mutilated, destroyed,
lost or stolen Coupon appertains.
"Redemption Date", with respect to any Security or portion thereof
to be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture or such Security.
"Redemption Price", with respect to any Security or portion thereof
to be redeemed, means the price at which it is to be redeemed as determined by
or pursuant to this Indenture or such Security.
"Registered Security" means any Security established pursuant to
Section 2.1 which is registered in a Security Register.
"Regular Record Date" for the interest payable on any Registered
Security on any Interest Payment Date therefor means the date, if any,
specified in or pursuant to this Indenture or such Security as the "Regular
Record Date".
"Required Currency" has the meaning specified in Section 1.16.
"Responsible Officer" means any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, or any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary other than Avonite;
provided that, notwithstanding the foregoing, Avonite shall be deemed a
"Restricted Subsidiary" for purposes of this Indenture from and after such time
as either (i) the Company and/or one or more Subsidiaries owns or controls
directly or indirectly 100% of the outstanding shares of Avonite's Voting Stock
(except for qualifying shares) or (ii) the Company's and its other
Subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of Avonite exceeds 10% of the total assets of the Company and its
Subsidiaries consolidated as of the end of the most recently completed fiscal
year or (iii) the Company's and its other Subsidiaries' equity in the income
from continuing operations, before income taxes, interest expense,
extraordinary items and
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cumulative effect of a change in accounting principle, of Avonite exceeds 10%
of such income of the Company and its Subsidiaries consolidated for the most
recently completed fiscal year.
"Sale/Leaseback Transaction" has the meaning specified in Section
10.6.
"Security" or "Securities" means any note or notes, bond or bonds,
debenture or debentures, or any other evidences of Indebtedness, as the case
may be, authenticated and delivered under this Indenture; provided, however,
that, if at any time there is more than one Person acting as Trustee under this
Indenture, "Securities", with respect to any such Person, shall mean Securities
authenticated and delivered under this Indenture, exclusive, however, of
Securities of any series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Special Record Date" for the payment of any Defaulted Interest
on any Registered Security means a date fixed by the Company pursuant to
Section 3.7.
"Stated Maturity", with respect to any Security or any installment
of principal thereof or interest thereon or any Additional Amounts with respect
thereto, means the date established by or pursuant to this Indenture or such
Security as the fixed date on which the principal of such Security or such
installment of principal or interest is, or such Additional Amounts are, due
and payable.
"Subsidiary" means any Corporation of which at the time of
determination the Company and/or one or more Subsidiaries owns or controls
directly or indirectly more than 50% of the voting power of the shares of its
Voting Stock.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean each Person
who is then a Trustee hereunder; provided, however, that if at any time there
is more than one such Person, "Trustee" shall mean each such Person and as used
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with respect to the Securities of any series shall mean the Trustee with
respect to the Securities of such series.
"United States", except as otherwise provided in or pursuant to this
Indenture or any Security, means the United States of America (including the
states thereof and the District of Columbia), its territories and possessions
and other areas subject to its jurisdiction.
"United States Alien", except as otherwise provided in or pursuant
to this Indenture or any Security, means any Person who, for United States
Federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
Federal income tax purposes, a foreign corporation, a non-resident alien
individual or a non-resident alien fiduciary of a foreign estate or trust.
"U.S. Depository" or "Depository" means, with respect to any
Security issuable or issued in the form of one or more global Securities, the
Person designated as U.S. Depository or Depository by the Company in or
pursuant to this Indenture, which Person must be, to the extent required by
applicable law or regulation, a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and, if so provided with respect to any
Security, any successor to such Person. If at any time there is more than one
such Person, "U.S. Depository" or "Depository" shall mean, with respect to any
Securities, the qualifying entity which has been appointed with respect to such
Securities.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "Vice President".
"Voting Stock" means stock of a Corporation of the class or one of
the classes having general voting power under ordinary circumstances to elect
at least a majority of the board of directors, managers or trustees of such
Corporation (irrespective of whether or not at the time stock of any other
class or classes has or might have voting power by reason of the happening of
any contingency).
Section 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided in this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an
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Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
or any of them is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such
certificate or opinion has read such condition or covenant and the
definitions herein relating thereto;
(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 each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether
or not such condition or covenant has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel,
provided that such officer, after reasonable inquiry, has no reason to believe
and does not believe that the Opinion of Counsel with respect to the matters
upon which his certificate or opinion is based is erroneous. Any such Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, provided that such counsel, after reasonable
inquiry, has no reason to believe and does
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not believe that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Security, they may, but need not, be
consolidated and form one instrument.
Section 1.4. Acts of Holders.
(1) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by or pursuant to this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing. If, but only if, Securities of a series are issuable
as Bearer Securities, any request, demand, authorization, direction, notice,
consent, waiver or other action provided in or pursuant to this Indenture to be
given or taken by Holders of Securities of such series may, alternatively, be
embodied in and evidenced by the record of Holders of Securities of such series
voting in favor thereof, either in person or by proxies duly appointed in
writing, at any meeting of Holders of Securities of such series duly called and
held in accordance with the provisions of Article Fifteen, or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments or record or both are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments and
any such record (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders signing such
instrument or instruments or so voting at any such meeting. Proof of execution
of any such instrument or of a writing appointing any such agent, or of the
holding by any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 315 of the Trust Indenture Act)
conclusive in favor of the Trustee and the Company and any agent of the Trustee
or the Company, if made in the manner provided in this Section. The record of
any meeting of Holders of Securities shall be proved in the manner provided in
Section 15.6.
Without limiting the generality of this Section 1.4, unless
otherwise provided in or pursuant to this Indenture, a Holder, including a U.S.
Depository that is a Holder of a global Security, may make, give or take, by a
proxy or proxies duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other Act provided in or pursuant to this
Indenture to be made, given or taken by Holders, and a U.S. Depository that is
a Holder of a global Security may provide its proxy or proxies to the
beneficial owners of interests in any such
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global Security through such U.S. Depository's standing instructions and
customary practices.
The Company shall fix a record date for the purpose of determining
the Persons who are beneficial owners of interest in any permanent global
Security held by a U.S. Depository entitled under the procedures of such U.S.
Depository to make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization, direction, notice, consent, waiver
or other Act provided in or pursuant to this Indenture to be made, given or
taken by Holders. If such a record date is fixed, the Holders on such record
date or their duly appointed proxy or proxies, and only such Persons, shall be
entitled to make, give or take such request, demand, authorization, direction,
notice, consent, waiver or other Act, whether or not such Holders remain
Holders after such record date. No such request, demand, authorization,
direction, notice, consent, waiver or other Act shall be valid or effective if
made, given or taken more than 90 days after such record date.
(2) The fact and date of the execution by any Person of any such
instrument or writing referred to in this Section 1.4 may be proved in any
reasonable manner; and the Trustee may in any instance require further proof
with respect to any of the matters referred to in this Section.
(3) The ownership, principal amount and serial numbers of Registered
Securities held by any Person, and the date of the commencement and the date of
the termination of holding the same, shall be proved by the Security Register.
(4) The ownership, principal amount and serial numbers of Bearer
Securities held by any Person, and the date of the commencement and the date of
the termination of holding the same, may be proved by the production of such
Bearer Securities or by a certificate executed, as depositary, by any trust
company, bank, banker or other depositary reasonably acceptable to the Company,
wherever situated, if such certificate shall be deemed by the Company and the
Trustee to be satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such certificate or
affidavit is deemed by the Trustee to be satisfactory. The Trustee and the
Company may assume that such ownership of any Bearer Security continues until
(i) another certificate or affidavit bearing a later date issued in respect of
the same Bearer Security is produced, or (ii) such Bearer Security is produced
to the Trustee by some other Person, or (iii) such Bearer Security is
surrendered in exchange for a Registered Security, or (iv) such Bearer Security
is no longer Outstanding. The ownership, principal amount and serial numbers of
Bearer Securities held by the Person so executing such instrument or writing
and the date of the commencement and the date of the
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termination of holding the same may also be proved in any other manner which
the Company and the Trustee deem sufficient.
(5) If the Company shall solicit from the Holders of any Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may at its option (but is not obligated to),
by Board Resolution, fix in advance a record date for the determination of
Holders of Registered Securities entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act. If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such record date, but
only the Holders of Registered Securities of record at the close of business on
such record date shall be deemed to be Holders for the purpose of determining
whether Holders of the requisite proportion of Outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
Outstanding Securities shall be computed as of such record date; provided that
no such authorization, agreement or consent by the Holders of Registered
Securities shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.
(6) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or suffered to be done by the Trustee, any Security
Registrar, any Paying Agent or the Company in reliance thereon, whether or not
notation of such Act is made upon such Security.
Section 1.5. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust
Office, or
(2) the Company by the Trustee or any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to the attention of its Treasurer,
with a copy to the attention of its General Counsel, at the address
of its principal office
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specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Trustee by the
Company.
Section 1.6. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided in or pursuant to this
Indenture, where this Indenture provides for notice to Holders of Securities of
any event,
(1) such notice shall be sufficiently given to Holders of
Registered Securities if in writing and mailed, first-class postage
prepaid, to each Holder of a Registered Security affected by such
event, at his address as it appears in the Security Register, not
later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice; and
(2) such notice shall be sufficiently given to Holders of
Bearer Securities, if any, if published in an Authorized Newspaper
in The City of New York and, if such Securities are then listed on
any stock exchange outside the United States, in an Authorized
Newspaper in such city as the Company shall advise the Trustee that
such stock exchange so requires, on a Business Day at least twice,
the first such publication to be not earlier than the earliest date
and the second such publication not later than the latest date
prescribed for the giving of such notice.
In any case where notice to Holders of Registered Securities is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder of a Registered Security shall
affect the sufficiency of such notice with respect to other Holders of
Registered Securities or the sufficiency of any notice to Holders of Bearer
Securities given as provided herein. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided. In the case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearers Securities as
provided above, then such notification to Holders of Bearer Securities as shall
be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither failure to give notice by
publication to Holders of Bearer Securities as provided
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above, nor any defect in any notice so published, shall affect the sufficiency
of any notice mailed to Holders of Registered Securities as provided above.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
Section 1.7. Language of Notices.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that, if the Company so elects, any published notice
may be in an official language of the country of publication.
Section 1.8. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
duties under any required provision of the Trust Indenture Act imposed hereon
by Section 318(c) thereof, such required provision shall control.
Section 1.9. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Indenture, any Security or any Coupon
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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Section 1.12. Benefits of Indenture.
Nothing in this Indenture, any Security or any Coupon, express or
implied, shall give to any Person, other than the parties hereto, any Security
Registrar, any Paying Agent, any Authenticating Agent and their successors
hereunder and the Holders of Securities or Coupons, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 1.13. Governing Law.
This Indenture, the Securities and any Coupons shall be governed by
and construed in accordance with the laws of the State of New York applicable
to agreements made or instruments entered into and, in each case, performed in
said state.
Section 1.14. Legal Holidays.
Unless otherwise specified in or pursuant to this Indenture or any
Securities, in any case where any Interest Payment Date, Stated Maturity or
Maturity of any Security, or the last date on which a Holder has the right to
convert or exchange Securities of a series that are convertible or
exchangeable, shall be a Legal Holiday at any Place of Payment, then
(notwithstanding any other provision of this Indenture, any Security or any
Coupon other than a provision in any Security or Coupon that specifically
states that such provision shall apply in lieu hereof) payment need not be made
at such Place of Payment on such date, and such Securities need not be
converted or exchanged on such date but such payment may be made, and such
Securities may be converted or exchanged, on the next succeeding day that is a
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or at the Stated Maturity or Maturity or on such
last day for conversion or exchange, and no interest shall accrue on the amount
payable on such date or at such time for the period from and after such
Interest Payment Date, Stated Maturity, Maturity or last day for conversion or
exchange, as the case may be, to such next succeeding Business Day.
Section 1.15. Counterparts.
This Indenture may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
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Section 1.16. Judgment Currency.
The Company agrees, to the fullest extent that it may effectively do
so under applicable law, that (a) if for the purpose of obtaining judgment in
any court it is necessary to convert the sum due in respect of the principal
of, or premium or interest, if any, or Additional Amounts on the Securities of
any series (the "Required Currency") into a currency in which a judgment will
be rendered (the "Judgment Currency"), the rate of exchange used shall be the
rate at which in accordance with normal banking procedures the Trustee could
purchase in The City of New York the requisite amount of the Required Currency
with the Judgment Currency on the New York Banking Day preceding the day on
which a final unappealable judgment is given and (b) its obligations under this
Indenture to make payments in the Required Currency (i) shall not be discharged
or satisfied by any tender, or any recovery pursuant to any judgment (whether
or not entered in accordance with clause (a)), in any currency other than the
Required Currency, except to the extent that such tender or recovery shall
result in the actual receipt, by the payee, of the full amount of the Required
Currency expressed to be payable in respect of such payments, (ii) shall be
enforceable as an alternative or additional cause of action for the purpose of
recovering in the Required Currency the amount, if any, by which such actual
receipt shall fall short of the full amount of the Required Currency so
expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a
legal holiday in The City of New York or a day on which banking institutions in
The City of New York are authorized or obligated by law, regulation or
executive order to be closed.
Section 1.17. No Security Interest Created.
Subject to the provisions of Section 10.5, nothing in this Indenture
or in any Securities, express or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect in any jurisdiction where property of
the Company or its Subsidiaries is or may be located.
Section 1.18. Limitation on Individual Liability.
No recourse under or upon any obligation, covenant or agreement
contained in this Indenture or in any Security, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company, either directly or through the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that this Indenture and
the obligations issued hereunder are solely corporate obligations, and
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that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, shareholders, officers or directors, as such,
of the Company, or any of them, because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations, covenants or
agreements contained in this Indenture or in any Security or implied therefrom;
and that any and all such personal liability of every name and nature, either
at common law or in equity or by constitution or statute, of, and any and all
such rights and claims against, every such incorporator, shareholder, officer
or director, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any Security or implied therefrom, are hereby
expressly waived and released as a condition of, and as a consideration for,
the execution of this Indenture and the issuance of such Security.
ARTICLE 2
SECURITIES FORMS
Section 2.1. Forms Generally.
Each Registered Security, Bearer Security, Coupon and temporary or
permanent global Security issued pursuant to this Indenture shall be in the
form established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
or pursuant to this Indenture or any indenture supplemental hereto and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Security or Coupon as evidenced by their execution of
such Security or Coupon.
Unless otherwise provided in or pursuant to this Indenture or any
Securities, the Securities shall be issuable in registered form without Coupons
and shall not be issuable upon the exercise of warrants.
Definitive Securities and definitive Coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers of the Company executing such
Securities or Coupons, as evidenced by their execution of such Securities or
Coupons.
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Section 2.2. Form of Trustee's Certificate of Authentication.
Subject to Section 6.11, the Trustee's certificate of authentication
shall be in substantially the following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
[NAME OF TRUSTEE],
as Trustee
By ____________________________
Authorized Officer
Section 2.3. Securities in Global Form.
Unless otherwise provided in or pursuant to this Indenture or any
Securities, the Securities shall not be issuable in temporary or permanent
global form. If Securities of a series shall be issuable in global form, any
such Security may provide that it or any number of such Securities shall
represent the aggregate amount of all Outstanding Securities of such series (or
such lesser amount as is permitted by the terms thereof) from time to time
endorsed thereon and may also provide that the aggregate amount of Outstanding
Securities represented thereby may from time to time be increased or reduced to
reflect exchanges. Any endorsement of any Security in global form to reflect the
amount, or any increase or decrease in the amount, or changes in the rights of
Holders, of Outstanding Securities represented thereby shall be made in such
manner and by such Person or Persons as shall be specified therein or in the
Company Order to be delivered pursuant to Section 3.3 or 3.4 with respect
thereto. Subject to the provisions of Section 3.3 and, if applicable, Section
3.4, the Trustee shall deliver and redeliver, in each case at the Company's
expense, any Security in permanent global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 3.3 or 3.4
has been, or simultaneously is, delivered, any instructions by the Company
with respect to a Security in global form shall be in writing but need not be
accompanied by or contained in an Officers' Certificate and need not be
accompanied by an Opinion of Counsel.
Notwithstanding the provisions of Section 3.7, unless otherwise
specified in or pursuant to this Indenture or any Securities, payment of
principal of, any premium and interest on, and any Additional Amounts in
respect of, any Security in temporary or permanent global form shall be made
to the Person or Persons specified therein.
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Notwithstanding the provisions of Section 3.8 and except as provided
in the preceding paragraph, the Company, the Trustee and any agent of the
Company or the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a global Security (i) in the case of a
global Security in registered form, the Holder of such global Security in
registered form, or (ii) in the case of a global Security in bearer form, the
Person or Persons specified pursuant to Section 3.1.
ARTICLE 3
THE SECURITIES
Section 3.1. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued in one or more series.
With respect to any Securities to be authenticated and delivered
hereunder, there shall be established in or pursuant to a Board Resolution and
set forth in an Officers' Certificate, or established in one or more indentures
supplemental hereto,
(1) the title of such Securities and the series in which
such Securities shall be included;
(2) any limit upon the aggregate principal amount of the
Securities of such title or the Securities of such series which may
be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of such
series pursuant to Section 3.5, 3.6, 9.5, or 11.7, upon repayment
in part of any Registered Security of such series pursuant to
Article Thirteen, upon surrender in part of any Registered Security
for conversion into Common Stock or exchange for other securities
pursuant to its terms, or pursuant to or as contemplated by the
terms of such Securities);
(3) if such Securities are to be issuable as Registered
Securities, as Bearer Securities or alternatively as Bearer
Securities and Registered Securities, and whether the Bearer
Securities are to be issuable with Coupons, without Coupons or both,
and any restrictions applicable to the offer, sale or delivery of
the Bearer Securities and the terms, if any, upon which Bearer
Securities may be exchanged for Registered Securities and vice
versa;
(4) if any of such Securities are to be issuable in global
form, when any of such Securities are to be issuable in
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global form and (i) whether such Securities are to be issued in
temporary or permanent global form or both, (ii) whether beneficial
owners of interests in any such global Security may exchange such
interests for Securities of the same series and of like tenor and of
any authorized form and denomination, and the circumstances under
which any such exchanges may occur, if other than in the manner
specified in Section 3.5, and (iii) the name of the Depository or
the U.S. Depository, as the case may be, with respect to any such
global Security;
(5) if any of such Securities are to be issuable as Bearer
Securities or in global form, the date as of which any such Bearer
Security or global Security shall be dated (if other than the date
of original issuance of the first of such Securities to be issued);
(6) if any of such Securities are to be issuable as Bearer
Securities, whether interest in respect of any portion of a
temporary Bearer Security in global form payable in respect of an
Interest Payment Date therefor prior to the exchange, if any, of
such temporary Bearer Security for definitive Securities shall be
paid to any clearing organization with respect to the portion of
such temporary Bearer Security held for its account and, in such
event, the terms and conditions (including any certification
requirements) upon which any such interest payment received by a
clearing organization will be credited to the Persons entitled to
interest payable on such Interest Payment Date;
(7) the date or dates, or the method or methods, if any, by
which such date or dates shall be determined, on which the principal
of such Securities is payable;
(8) the rate or rates at which such Securities shall bear
interest, if any, or the method or methods, if any, by which such
rate or rates are to be determined, the date or dates, if any, from
which such interest shall accrue or the method or methods, if any,
by which such date or dates are to be determined, the Interest
Payment Dates, if any, on which such interest shall be payable and
the Regular Record Date, if any, for the interest payable on
Registered Securities on any Interest Payment Date, whether and
under what circumstances Additional Amounts on such Securities or
any of them shall be payable, the notice, if any, to Holders
regarding the determination of interest on a floating rate Security
and the manner of giving such notice, and the basis upon which
interest shall be calculated if other than that of a 360-day year of
twelve 30-day months;
(9) if in addition to or other than the Borough of
Manhattan, The City of New York, the place or places where the
principal of, any premium and interest on or any Additional
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Amounts with respect to such Securities shall be payable, any of
such Securities that are Registered Securities may be surrendered
for registration of transfer or exchange, any of such Securities may
be surrendered for conversion or exchange and notices or demands to
or upon the Company in respect of such Securities and this Indenture
may be served, the extent to which, or the manner in which, any
interest payment or Additional Amounts on a global Security on an
Interest Payment Date, will be paid and the manner in which any
principal of or premium, if any, on any global Security will be
paid;
(10) whether any of such Securities are to be redeemable at
the option of the Company and, if so, the date or dates on which,
the period or periods within which, the price or prices at which and
the other terms and conditions upon which such Securities may be
redeemed, in whole or in part, at the option of the Company;
(11) whether the Company is obligated to redeem or purchase
any of such Securities pursuant to any sinking fund or analogous
provision or at the option of any Holder thereof and, if so, the
date or dates on which, the period or periods within which, the
price or prices at which and the other terms and conditions upon
which such Securities shall be redeemed or purchased, in whole or in
part, pursuant to such obligation, and any provisions for the
remarketing of such Securities so redeemed or purchased;
(12) the denominations in which any of such Securities that
are Registered Securities shall be issuable if other than
denominations of $1,000 and any integral multiple thereof, and the
denominations in which any of such Securities that are Bearer
Securities shall be issuable if other than the denomination of
$5,000;
(13) whether the Securities of the series will be
convertible into shares of Common Stock and/or exchangeable for
other securities, and if so, the terms and conditions upon which
such Securities will be so convertible or exchangeable, and any
deletions from or modifications or additions to this Indenture to
permit or to facilitate the issuance of such convertible or
exchangeable Securities or the administration thereof;
(14) if other than the principal amount thereof, the
portion of the principal amount of any of such Securities that shall
be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 5.2 or the method by which such portion is to be
determined;
(15) if other than Dollars, the Foreign Currency in which
payment of the principal of, any premium or interest on or any
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Additional Amounts with respect to any of such Securities shall be
payable;
(16) if the principal of, any premium or interest on or any
Additional Amounts with respect to any of such Securities are to be
payable, at the election of the Company or a Holder thereof or
otherwise, in Dollars or in a Foreign Currency other than that in
which such Securities are stated to be payable, the date or dates on
which, the period or periods within which, and the other terms and
conditions upon which, such election may be made, and the time and
manner of determining the exchange rate between the Currency in
which such Securities are stated to be payable and the Currency in
which such Securities or any of them are to be paid pursuant to such
election, and any deletions from or modifications of or additions to
the terms of this Indenture to provide for or to facilitate the
issuance of Securities denominated or payable, at the election of
the Company or a Holder thereof or otherwise, in a Foreign Currency;
(17) whether the amount of payments of principal of, any
premium or interest on or any Additional Amounts with respect to
such Securities may be determined with reference to an index,
formula or other method or methods (which index, formula or method
or methods may be based, without limitation, on one or more
Currencies, commodities, equity securities, equity indices or other
indices), and, if so, the terms and conditions upon which and the
manner in which such amounts shall be determined and paid or
payable;
(18) any deletions from, modifications of or additions to
the Events of Default or covenants of the Company with respect to
any of such Securities, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants set
forth herein;
(19) whether either or both of Section 4.2(2) relating to
defeasance or Section 4.2(3) relating to covenant defeasance shall
not be applicable to the Securities of such series, or any covenants
in addition to those specified in Section 4.2(3) relating to the
Securities of such series which shall be subject to covenant of
defeasance, and any deletions from, or modifications or additions
to, the provisions of Article Four in respect of the Securities of
such series;
(20) whether any of such Securities are to be issuable upon
the exercise of warrants, and the time, manner and place for such
Securities to be authenticated and delivered;
(21) if any of such Securities are to be issuable in global
form and are to be issuable in definitive form (whether upon
original issue or upon exchange of a temporary Security)
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<PAGE> 36
only upon receipt of certain certificates or other documents or
satisfaction of other conditions, then the form and terms of such
certificates, documents or conditions;
(22) if there is more than one Trustee, the identity of the
Trustee and, if not the Trustee, the identity of each Security
Registrar, Paying Agent or Authenticating Agent with respect to such
Securities; and
(23) any other terms of such Securities and any other
deletions from or modifications or additions to this Indenture in
respect of such Securities.
All Securities of any one series and all Coupons, if any,
appertaining to Bearer Securities of such series shall be substantially
identical except as to Currency of payments due thereunder, denomination and
the rate of interest thereon, or method of determining the rate of interest, if
any, Maturity, and the date from which interest, if any, shall accrue and
except as may otherwise be provided by the Company in or pursuant to the Board
Resolution and set forth in the Officers' Certificate or in any indenture or
indentures supplemental hereto pertaining to such series of Securities. The
terms of the Securities of any series may provide, without limitation, that the
Securities shall be authenticated and delivered by the Trustee on original
issue from time to time upon written order of persons designated in the
Officers' Certificate or supplemental indenture and that such persons are
authorized to determine, consistent with such Officers' Certificate or any
applicable supplemental indenture, such terms and conditions of the Securities
of such series as are specified in such Officers' Certificate or supplemental
indenture. All Securities of any one series need not be issued at the same time
and, unless otherwise so provided, a series may be reopened for issuances of
additional Securities of such series or to establish additional terms of such
series of Securities.
If any of the terms of the Securities of any series shall be
established by action taken by or pursuant to a Board Resolution, the Board
Resolution shall be delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
Section 3.2. Currency; Denominations.
Unless otherwise provided in or pursuant to this Indenture, the
principal of, any premium and interest on and any Additional Amounts with
respect to the Securities shall be payable in Dollars. Unless otherwise
provided in or pursuant to this Indenture, Registered Securities denominated in
Dollars shall be issuable in registered form without Coupons in denominations
of $1,000 and any integral multiple thereof, and the Bearer Securities
denominated in
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<PAGE> 37
Dollars shall be issuable in the denomination of $5,000. Securities not
denominated in Dollars shall be issuable in such denominations as are
established with respect to such Securities in or pursuant to this Indenture.
Section 3.3. Execution, Authentication, Delivery and Dating.
Securities shall be executed on behalf of the Company by its
Chairman of the Board, a Vice Chairman, its President, its Treasurer or a Vice
President under its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. Coupons shall be executed on
behalf of the Company by the Treasurer or any Assistant Treasurer of the
Company. The signature of any of these officers on the Securities or any
Coupons appertaining thereto may be manual or facsimile.
Securities and any Coupons appertaining thereto bearing the manual
or facsimile signatures of individuals who were at any time the proper officers
of the Company shall bind the Company, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities and Coupons or did not hold such offices at the
date of original issuance of such Securities or Coupons.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities, together with any Coupons
appertaining thereto, executed by the Company, to the Trustee for authentication
and, provided that the Board Resolution and Officers' Certificate or
supplemental indenture or indentures with respect to such Securities referred to
in Section 3.1 and a Company Order for the authentication and delivery of such
Securities have been delivered to the Trustee, the Trustee in accordance with
the Company Order and subject to the provisions hereof and of such Securities
shall authenticate and deliver such Securities. In authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities and any Coupons appertaining thereto, the Trustee
shall be entitled to receive, and (subject to Sections 315(a) through 315(d) of
the Trust Indenture Act) shall be fully protected in relying upon,
(1) an Opinion of Counsel to the effect that:
(a) the form or forms and terms of such Securities and
Coupons, if any, have been established in conformity with the
provisions of this Indenture;
(b) all conditions precedent to the authentication and
delivery of such Securities and Coupons, if any, appertaining
thereto, have been complied with and that such Securities and
Coupons, when completed by appropriate insertions, executed
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<PAGE> 38
under the Company's corporate seal and attested by duly authorized
officers of the Company, delivered by duly authorized officers of
the Company to the Trustee for authentication pursuant to this
Indenture, and authenticated and delivered by the Trustee and issued
by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute legally valid and
binding obligations of the Company, enforceable against the Company
in accordance with their terms, except as enforcement thereof may be
subject to or limited by bankruptcy, insolvency, reorganization,
moratorium, arrangement, fraudulent conveyance, fraudulent transfer
or other similar laws relating to or affecting creditors' rights
generally, and subject to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at
law) and will entitle the Holders thereof to the benefits of this
Indenture; such Opinion of Counsel need express no opinion as to the
availability of equitable remedies; and
(c) all laws and requirements in respect of the execution and
delivery by the Company of such Securities and Coupons, if any,
have been complied with;
and, to the extent that this Indenture is required to be qualified under the
Trust Indenture Act in connection with the issuance of such Securities, to the
further effect that:
(d) this Indenture has been qualified under the Trust
Indenture Act; and
(2) an Officers' Certificate stating that all conditions precedent
to the execution, authentication and delivery of such Securities and Coupons,
if any, appertaining thereto, have been complied with and that, to the best
knowledge of the Persons executing such certificate, no event which is, or
after notice or lapse of time would become, an Event of Default with respect to
any of the Securities shall have occurred and be continuing.
If all the Securities of any series are not to be issued at one
time, it shall not be necessary to deliver an Opinion of Counsel and an
Officers' Certificate at the time of issuance of each Security, but such
opinion and certificate, with appropriate modifications, shall be delivered at
or before the time of issuance of the first Security of such series. After any
such first delivery, any separate written request by an Authorized Officer of
the Company that the Trustee authenticate and deliver Securities of such series
for original issue will be deemed to be a certification by the Company that all
conditions precedent provided for in this Indenture relating to authentication
and delivery of such Securities continue to have been complied with.
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<PAGE> 39
The Trustee shall not be required to authenticate or to cause an
Authenticating Agent to authenticate any Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee or if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken.
Each Registered Security shall be dated the date of its
authentication. Each Bearer Security and any Bearer Security in global form
shall be dated as of the date specified in or pursuant to this Indenture.
No Security or Coupon appertaining thereto shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Security a certificate of authentication substantially in
the form provided for in Section 2.2 or 6.11 executed by or on behalf of the
Trustee or by the Authenticating Agent by the manual signature of one of its
authorized officers. Such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder. Except as permitted by Section 3.6 or 3.7, the Trustee
shall not authenticate and deliver any Bearer Security unless all Coupons
appertaining thereto then matured have been detached and cancelled.
Section 3.4. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute and deliver to the Trustee and, upon Company Order, the Trustee shall
authenticate and deliver, in the manner provided in Section 3.3, temporary
Securities in lieu thereof which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized in or pursuant to this
Indenture, in bearer form with one or more Coupons or without Coupons and with
such appropriate insertions, omissions, substitutions and other variations as
the officers of the Company executing such Securities may determine, as
conclusively evidenced by their execution of such Securities. Such temporary
Securities may be in global form.
Except in the case of temporary Securities in global form, which
shall be exchanged in accordance with the provisions thereof, if temporary
Securities are issued, the Company shall cause definitive Securities to be
prepared without unreasonable delay. After the preparation of definitive
Securities of the same series and containing terms and provisions that are
identical to those of any temporary Securities, such temporary Securities shall
be exchangeable for such definitive Securities upon surrender of such temporary
Securities at an Office or Agency for such Securities,
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<PAGE> 40
without charge to any Holder thereof. Upon surrender for cancellation of any
one or more temporary Securities (accompanied by any unmatured Coupons
appertaining thereto), the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations of the same series and
containing identical terms and provisions; provided, however, that no
definitive Bearer Security, except as provided in or pursuant to this
Indenture, shall be delivered in exchange for a temporary Registered Security;
and provided, further, that a definitive Bearer Security shall be delivered in
exchange for a temporary Bearer Security only in compliance with the conditions
set forth in or pursuant to this Indenture. Unless otherwise provided in or
pursuant to this Indenture with respect to a temporary global Security, until
so exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series.
Section 3.5. Registration, Transfer and Exchange.
With respect to the Registered Securities of each series, if any,
the Company shall cause to be kept a register (each such register being herein
sometimes referred to as the "Security Register") at an Office or Agency for
such series in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Registered
Securities of such series and of transfers of the Registered Securities of such
series. Such Office or Agency shall be the "Security Registrar" for that series
of Securities. Unless otherwise specified in or pursuant to this Indenture or
the Securities, the Trustee shall be the initial Security Registrar for each
series of Securities. The Company shall have the right to remove and replace
from time to time the Security Registrar for any series of Securities; provided
that no such removal or replacement shall be effective until a successor
Security Registrar with respect to such series of Securities shall have been
appointed by the Company and shall have accepted such appointment by the
Company. In the event that the Trustee shall not be or shall cease to be
Security Registrar with respect to a series of Securities, it shall have the
right to examine the Security Register for such series at all reasonable times.
There shall be only one Security Register for each series of Securities.
Upon surrender for registration of transfer of any Registered
Security of any series at any Office or Agency for such series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same series denominated as authorized in or pursuant to this Indenture,
of a like aggregate principal amount bearing a number not contemporaneously
outstanding and containing identical terms and provisions.
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<PAGE> 41
At the option of the Holder, Registered Securities of any series may
be exchanged for other Registered Securities of the same series containing
identical terms and provisions, in any authorized denominations, and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
any Office or Agency for such series. Whenever any Registered Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Registered Securities which the Holder making the
exchange is entitled to receive.
If provided in or pursuant to this Indenture, with respect to
Securities of any series, at the option of the Holder, Bearer Securities of
such series may be exchanged for Registered Securities of such series
containing identical terms, denominated as authorized in or pursuant to this
Indenture and in the same aggregate principal amount, upon surrender of the
Bearer Securities to be exchanged at any Office or Agency for such series, with
all unmatured Coupons and all matured Coupons in default thereto appertaining.
If the Holder of a Bearer Security is unable to produce any such unmatured
Coupon or Coupons or matured Coupon or Coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company and the Trustee in an amount equal to the face amount
of such missing Coupon or Coupons, or the surrender of such missing Coupon or
Coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and
any Paying Agent harmless. If thereafter the Holder of such Bearer Security
shall surrender to any Paying Agent any such missing Coupon in respect of which
such a payment shall have been made, such Holder shall be entitled to receive
the amount of such payment; provided, however, that, except as otherwise
provided in Section 10.2, interest represented by Coupons shall be payable only
upon presentation and surrender of those Coupons at an Office or Agency for
such series located outside the United States. Notwithstanding the foregoing,
in case a Bearer Security of any series is surrendered at any such Office or
Agency for such series in exchange for a Registered Security of such series and
like tenor after the close of business at such Office or Agency on (i) any
Regular Record Date and before the opening of business at such Office or Agency
on the next succeeding Interest Payment Date, or (ii) any Special Record Date
and before the opening of business at such Office or Agency on the related date
for payment of Defaulted Interest, such Bearer Security shall be surrendered
without the Coupon relating to such Interest Payment Date or proposed date of
payment, as the case may be (or, if such Coupon is so surrendered with such
Bearer Security, such Coupon shall be returned to the Person so surrendering
the Bearer Security), and interest or Defaulted Interest, as the case may be,
shall not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of the Registered Security issued in
exchange for such Bearer Security, but shall be payable only to the Holder of
such Coupon when due in accordance with the provisions of this Indenture.
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<PAGE> 42
If provided in or pursuant to this Indenture with respect to
Securities of any series, at the option of the Holder, Registered Securities of
such series may be exchanged for Bearer Securities upon such terms and
conditions as may be provided in or pursuant to this Indenture with respect to
such series.
Whenever any Securities are surrendered for exchange as contemplated
by the immediately preceding two paragraphs, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise provided in or
pursuant to this Indenture, any global Security shall be exchangeable for
definitive Securities only if (i) the Depository is at any time unwilling,
unable or ineligible to continue as depository and a successor depository is
not appointed by the Company within 90 days of the date the Company is so
informed in writing, (ii) the Company executes and delivers to the Trustee a
Company Order to the effect that such global Security shall be so exchangeable,
or (iii) an Event of Default has occurred and is continuing with respect to the
Securities. If the beneficial owners of interests in a global Security are
entitled to exchange such interests for definitive Securities as the result of
an event described in clause (i), (ii) or (iii) of the preceding sentence, then
without unnecessary delay but in any event not later than the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities in such form and denominations as are required by
or pursuant to this Indenture, and of the same series, containing identical
terms and in aggregate principal amount equal to the principal amount of such
global Security, executed by the Company. On or after the earliest date on
which such interests may be so exchanged, such global Security shall be
surrendered from time to time by the U.S. Depository or such other Depository
as shall be specified in the Company Order with respect thereto, and in
accordance with instructions given to the Trustee and the U.S. Depository or
such other Depository, as the case may be (which instructions shall be in
writing but need not be contained in or accompanied by an Officers' Certificate
or be accompanied by an Opinion of Counsel), as shall be specified in the
Company Order with respect thereto to the Trustee, as the Company's agent for
such purpose, to be exchanged, in whole or in part, for definitive Securities
as described above without charge. The Trustee shall authenticate and make
available for delivery, in exchange for each portion of such surrendered global
Security, a like aggregate principal amount of definitive Securities of the
same series of authorized denominations and of like tenor as the portion of
such global Security to be exchanged, which (unless such Securities are not
issuable both as Bearer Securities and as Registered Securities, in which case
the definitive Securities exchanged for the global Security shall be issuable
only in the form in which the Securities are issuable, as provided in or
pursuant to
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this Indenture) shall be in the form of Bearer Securities or Registered
Securities, or any combination thereof, as shall be specified by the beneficial
owner thereof, but subject to the satisfaction of any certification or other
requirements to the issuance of Bearer Securities; provided, however, that no
such exchanges may occur during a period beginning at the opening of business
15 days before any selection of Securities of the same series to be redeemed
and ending on the relevant Redemption Date; and provided, further, that (unless
otherwise provided in or pursuant to this Indenture) no Bearer Security
delivered in exchange for a portion of a global Security shall be mailed or
otherwise delivered to any location in the United States. Promptly following
any such exchange in part, such global Security shall be returned by the
Trustee to such Depository or the U.S. Depository, as the case may be, or such
other Depository or U.S. Depository referred to above in accordance with the
instructions of the Company referred to above. If a Registered Security is
issued in exchange for any portion of a global Security after the close of
business at the Office or Agency for such Security where such exchange occurs
on or after (i) any Regular Record Date for such Security and before the
opening of business at such Office or Agency on the next succeeding Interest
Payment Date, or (ii) any Special Record Date for such Security and before the
opening of business at such Office or Agency on the related proposed date for
payment of interest or Defaulted Interest, as the case may be, interest shall
not be payable on such Interest Payment Date or proposed date for payment, as
the case may be, in respect of such Registered Security, but shall be payable
on such Interest Payment Date or proposed date for payment, as the case may be,
only to the Person to whom interest in respect of such portion of such global
Security shall be payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company evidencing the same
debt and entitling the Holders thereof to the same benefits under this
Indenture as the Securities surrendered upon such registration of transfer or
exchange.
Every Registered Security presented or surrendered for registration
of transfer or for exchange or redemption shall (if so required by the Company
or the Security Registrar for such Security) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar for such Security duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange, or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge and any other
expenses (including fees and expenses of the Trustee) that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than
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exchanges pursuant to Section 3.4, 9.5 or 11.7 not involving any transfer.
Except as otherwise provided in or pursuant to this Indenture, the
Company shall not be required (i) to issue, register the transfer of or
exchange any Securities during a period beginning at the opening of business 15
days before the day of the selection for redemption of Securities of like tenor
and the same series under Section 11.3 and ending at the close of business on
the day of such selection, or (ii) to register the transfer of or exchange any
Registered Security so selected for redemption in whole or in part, except in
the case of any Security to be redeemed in part, the portion thereof not to be
redeemed, or (iii) to exchange any Bearer Security so selected for redemption
except, to the extent provided with respect to such Bearer Security, that such
Bearer Security may be exchanged for a Registered Security of like tenor and
the same series, provided that such Registered Security shall be immediately
surrendered for redemption with written instruction for payment consistent with
the provisions of this Indenture or (iv) to issue, register the transfer of or
exchange any Security which, in accordance with its terms, has been surrendered
for repayment at the option of the Holder, except the portion, if any, of such
Security not to be so repaid.
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated Coupon
appertaining to it is surrendered to the Trustee, subject to the provisions of
this Section , the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same series containing
identical terms and of like principal amount and bearing a number not
contemporaneously outstanding, with Coupons appertaining thereto corresponding
to the Coupons, if any, appertaining to the surrendered Security.
If there be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security or
Coupon, and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security or Coupon has been
acquired by a bona fide purchaser, the Company shall execute and, upon the
Company's request the Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Security or in
exchange for the Security to which a destroyed, lost or stolen Coupon
appertains with all appurtenant Coupons not destroyed, lost or stolen, a new
Security of the same series containing identical terms and of like principal
amount and bearing a number not contemporaneously outstanding, with Coupons
appertaining thereto corresponding to the Coupons, if any, appertaining to such
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destroyed, lost or stolen Security or to the Security to which such destroyed,
lost or stolen Coupon appertains.
Notwithstanding the foregoing provisions of this Section 3.6, in case
any mutilated, destroyed, lost or stolen Security or Coupon has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, pay such Security or Coupon; provided, however, that
payment of principal of, any premium or interest on or any Additional Amounts
with respect to any Bearer Securities shall, except as otherwise provided in
Section 10.2, be payable only at an Office or Agency for such Securities located
outside the United States and, unless otherwise provided in or pursuant to this
Indenture, any interest on Bearer Securities and any Additional Amounts with
respect to such interest shall be payable only upon presentation and surrender
of the Coupons appertaining thereto.
Upon the issuance of any new Security under this Section 3.6, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security, with any Coupons appertaining thereto issued
pursuant to this Section 3.6 in lieu of any destroyed, lost or stolen Security,
or in exchange for a Security to which a destroyed, lost or stolen Coupon
appertains shall constitute a separate obligation of the Company, whether or
not the destroyed, lost or stolen Security and Coupons appertaining thereto or
the destroyed, lost or stolen Coupon shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of such series and any
Coupons, if any, duly issued hereunder.
The provisions of this Section 3.6, as amended or supplemented
pursuant to this Indenture with respect to particular Securities or generally,
shall be exclusive and shall preclude (to the extent lawful) all other rights
and remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities or Coupons.
Section 3.7. Payment of Interest and Certain Additional
Amounts; Rights to Interest and Certain
Additional Amounts Preserved.
Unless otherwise provided in or pursuant to this Indenture, any
interest on and any Additional Amounts with respect to any Registered Security
which shall be payable, and are punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name such Security
(or one or more Predecessor
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<PAGE> 46
Securities) is registered as of the close of business on the Regular Record
Date for such interest.
Unless otherwise provided in or pursuant to this Indenture, any
interest on and any Additional Amounts with respect to any Registered Security
which shall be payable, but shall not be punctually paid or duly provided for,
on any Interest Payment Date for such Registered Security (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder; and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Person in whose name such Registered Security (or a
Predecessor Security thereof) shall be registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed by the Company in the following
manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on such Registered
Security, the Special Record Date therefor and the date of the
proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit on or
prior to the date of the proposed payment, such money when so
deposited to be held in trust for the benefit of the Person entitled
to such Defaulted Interest as in this Clause provided. The Special
Record Date for the payment of such Defaulted Interest shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after notification to the
Trustee of the proposed payment. The Trustee shall, in the name and
at the expense of the Company, cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to the Holder of such
Registered Security (or a Predecessor Security thereof) at his
address as it appears in the Security Register not less than 10 days
prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company cause a
similar notice to be published at least once in an Authorized
Newspaper of general circulation in the Borough of Manhattan, The
City of New York, but such publication shall not be a condition
precedent to the establishment of such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the Person in whose name such Registered
Security (or a Predecessor Security thereof) shall be registered at
the close of business on such Special
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Record Date and shall no longer be payable pursuant to the following
clause (2).
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of
any securities exchange on which such Security may be listed, and
upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such payment shall be deemed practicable by
the Trustee.
Unless otherwise provided in or pursuant to this Indenture or the
Securities of any particular series pursuant to the provisions of this
Indenture, at the option of the Company, interest on Registered Securities that
bear interest may be paid by mailing a check to the address of the Person
entitled thereto as such address shall appear in the Security Register or by
transfer to an account maintained by the payee with a bank located in the
United States.
Subject to the foregoing provisions of this Section and Section 3.5,
each Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
In the case of any Registered Security of any series that is
convertible into shares of Common Stock or exchangeable for other securities,
which Registered Security is converted or exchanged after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Registered Security with respect to which the Stated Maturity is prior to
such Interest Payment Date), interest with respect to which the Stated Maturity
is on such Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion or exchange, and such interest (whether or not
punctually paid or duly provided for) shall be paid to the Person in whose name
that Registered Security (or one or more predecessor Registered Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Registered Security which is converted or exchanged, interest with
respect to which the Stated Maturity is after the date of conversion or
exchange of such Registered Security shall not be payable.
Section 3.8. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Registered Security is
registered in the Security Register as the owner of such Registered Security
for the purpose of receiving
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payment of principal of, any premium and (subject to Sections 3.5 and 3.7)
interest on and any Additional Amounts with respect to such Registered Security
and for all other purposes whatsoever, whether or not any payment with respect
to such Registered Security shall be overdue, and none of the Company, the
Trustee or any agent of the Company or the Trustee shall be affected by notice
to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the bearer of any Bearer Security or the bearer of any Coupon as the
absolute owner of such Security or Coupon for the purpose of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether or
not any payment with respect to such Security or Coupon shall be overdue, and
none of the Company, the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.
No Holder of any beneficial interest in any global Security held on
its behalf by a Depository shall have any rights under this Indenture with
respect to such global Security, and such Depository may be treated by the
Company, the Trustee, and any agent of the Company or the Trustee as the owner
of such global Security for all purposes whatsoever. None of the Company, the
Trustee, any Paying Agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 3.9. Cancellation.
All Securities and Coupons surrendered for payment, redemption,
registration of transfer, exchange or conversion or for credit against any
sinking fund payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee, and any such Securities and Coupons, as
well as Securities and Coupons surrendered directly to the Trustee for any such
purpose, shall be cancelled promptly by the Trustee. The Company may at any
time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Securities so delivered shall be cancelled
promptly by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as
expressly permitted by or pursuant to this Indenture. All cancelled Securities
and Coupons held by the Trustee shall be destroyed by the Trustee, unless by a
Company Order the Company directs their return to it.
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Section 3.10. Computation of Interest.
Except as otherwise provided in or pursuant to this Indenture or in
any Security, interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE 4
SATISFACTION AND DISCHARGE OF INDENTURE
Section 4.1. Satisfaction and Discharge.
Upon the direction of the Company by a Company Order, this Indenture
shall cease to be of further effect with respect to any series of Securities
specified in such Company Order and any Coupons appertaining thereto, and the
Trustee, on receipt of a Company Order, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture as to such series, when
(1) either
(a) all Securities of such series theretofore authenticated and
delivered and all Coupons appertaining thereto (other than (i)
Coupons appertaining to Bearer Securities of such series surrendered
in exchange for Registered Securities of such series and maturing
after such exchange whose surrender is not required or has been
waived as provided in Section 3.5, (ii) Securities and Coupons of
such series which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.6, (iii) Coupons
appertaining to Securities of such series called for redemption and
maturing after the relevant Redemption Date whose surrender has been
waived as provided in Section 11.7, and (iv) Securities and Coupons
of such series for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(b) all Securities of such series and, in the case of (i) or
(ii) below, any Coupons appertaining thereto not theretofore
delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
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(iii) if redeemable at the option of the Company, 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,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for such purpose, money in the Currency in which such
Securities are payable in an amount sufficient to pay and discharge
the entire indebtedness on such Securities and any Coupons
appertaining thereto not theretofore delivered to the Trustee for
cancellation, including the principal of, any premium and interest
on, and any Additional Amounts with respect to such Securities and
any Coupons appertaining thereto, to the date of such deposit (in
the case of Securities which have become due and payable) or to the
Maturity thereof, as the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company with respect to the
Outstanding Securities of such series and any Coupons appertaining
thereto; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture as to such series
have been complied with.
In the event there are Securities of two or more series hereunder,
the Trustee shall be required to execute an instrument acknowledging
satisfaction and discharge of this Indenture only if requested to do so with
respect to Securities of such series as to which it is Trustee and if the other
conditions thereto are met.
Notwithstanding the satisfaction and discharge of this Indenture
with respect to any series of Securities, the obligations of the Company to the
Trustee under Section 6.6 and, if money shall have been deposited with the
Trustee pursuant to subclause (b) of clause (1) of this Section, the obligations
of the Company and the Trustee with respect to the Securities of such series
under Sections 3.5, 3.6, 4.3, 10.2 and 10.3, with respect to the payment of
Additional Amounts, if any, with respect to such Securities as contemplated by
Section 10.4 (but only to the extent that the Additional Amounts payable with
respect to such Securities exceed the amount deposited in respect of such
Additional Amounts pursuant to Section 4.1(1)(b)), and with respect to any
rights to convert or exchange such Securities into Common Stock or other
securities shall survive.
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Section 4.2. Defeasance and Covenant Defeasance.
(1) Unless pursuant to Section 3.1, either or both of (i) defeasance
of the Securities of or within a series under clause (2) of this Section 4.2
shall not be applicable with respect to the Securities of such series or (ii)
covenant defeasance of the Securities of or within a series under clause (3) of
this Section 4.2 shall not be applicable with respect to the Securities of such
series, then such provisions, together with the other provisions of this Section
4.2 (with such modifications thereto as may be specified pursuant to Section 3.1
with respect to any Securities), shall be applicable to such Securities and any
Coupons appertaining thereto, and the Company may at its option by Board
Resolution, at any time, with respect to such Securities and any Coupons
appertaining thereto, elect to have Section 4.2(2) or Section 4.2(3) be applied
to such Outstanding Securities and any Coupons appertaining thereto upon
compliance with the conditions set forth below in this Section 4.2.
(2) Upon the Company's exercise of the above option applicable to
this Section 4.2(2) with respect to any Securities of or within a series, the
Company shall be deemed to have been discharged from its obligations with
respect to such Outstanding Securities and any Coupons appertaining thereto on
the date the conditions set forth in clause (4) of this Section are 4.2
satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by such Outstanding Securities and any Coupons
appertaining thereto, which shall thereafter be deemed to be "Outstanding" only
for the purposes of clause (5) of this Section 4.2 and the other Sections of
this Indenture referred to in clauses (i) and (ii) below, and to have satisfied
all of its other obligations under such Securities and any Coupons appertaining
thereto and this Indenture insofar as such Securities and any Coupons
appertaining thereto are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of such Outstanding Securities and any
Coupons appertaining thereto to receive, solely from the trust fund described in
clause (4) of this Section 4.2 and as more fully set forth in such clause,
payments in respect of the principal of (and premium, if any) and interest, if
any, on, and Additional Amounts, if any, with respect to, such Securities and
any Coupons appertaining thereto when such payments are due, and any rights of
such Holder to convert such Securities into Common Stock or exchange such
Securities for other securities, (ii) the obligations of the Company and the
Trustee with respect to such Securities under Sections 3.5, 3.6, 10.2 and 10.3
and with respect to the payment of Additional Amounts, if any, on such
Securities as contemplated by Section (but only to the extent that the
Additional Amounts payable with respect to such Securities exceed the amount
deposited
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in respect of such Additional Amounts pursuant to Section 4.2(4)(a) below), and
with respect to any rights to convert such Securities into Common Stock or
exchange such Securities for other securities, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (iv) this Section 4.2. The
Company may exercise its option under this Section 4.2(2) notwithstanding the
prior exercise of its option under clause (3) of this Section 4.2 with respect
to such Securities and any Coupons appertaining thereto.
(3) Upon the Company's exercise of the option to have this Section
4.2(3)apply with respect to any Securities of or within a series, the Company
shall be released from its obligations under Sections 10.5 and 10.6, and, to the
extent specified pursuant to Section 3.1(19), any other covenant applicable to
such Securities, with respect to such Outstanding Securities and any Coupons
appertaining thereto on and after the date the conditions set forth in clause
(4) of this Section 4.2 are satisfied (hereinafter, "covenant defeasance"), and
such Securities and any Coupons appertaining thereto shall thereafter be deemed
to be not "Outstanding" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with any such covenant, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to such Outstanding Securities and any Coupons
appertaining thereto, the Company may omit to comply with, and shall have no
liability in respect of, any term, condition or limitation set forth in any such
Section or such other covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such Section or such other covenant or by
reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a default or an Event of Default under Section 5.1(4) or 5.1(8) or
otherwise, as the case may be, but, except as specified above, the remainder of
this Indenture and such Securities and Coupons appertaining thereto shall be
unaffected thereby.
(4) The following shall be the conditions to application of clause
(2) or (3) of this Section 4.2 to any Outstanding Securities of or within a
series and any Coupons appertaining thereto:
(a) The Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.7 who shall agree to comply with the
provisions of this Section 4.2 applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of
the Holders of such Securities and any Coupons appertaining thereto,
(1) an amount in Dollars or in such Foreign Currency in which such
Securities and any Coupons appertaining thereto are then
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specified as payable at Stated Maturity, or (2) Government
Obligations applicable to such Securities and Coupons appertaining
thereto (determined on the basis of the Currency in which such
Securities and Coupons appertaining thereto are then specified as
payable at Stated Maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of
any payment of principal of (and premium, if any) and interest, if
any, on such Securities and any Coupons appertaining thereto, money
in an amount, or (3) a combination thereof, in any case, in an
amount, sufficient, without consideration of any reinvestment of
such principal and interest, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, (y) the principal of (and
premium, if any) and interest, if any, on such Outstanding
Securities and any Coupons appertaining thereto at the Stated
Maturity of such principal or installment of principal or premium or
interest and (z) any mandatory sinking fund payments or analogous
payments applicable to such Outstanding Securities and any Coupons
appertaining thereto on the days on which such payments are due and
payable in accordance with the terms of this Indenture and of such
Securities and any Coupons appertaining thereto.
(b) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the
Company is a party or by which it is bound.
(c) No Event of Default or event which with notice or lapse
of time or both would become an Event of Default with respect to
such Securities and any Coupons appertaining thereto shall have
occurred and be continuing on the date of such deposit and, with
respect to defeasance only, at any time during the period ending on
the 123rd day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until the
expiration of such period).
(d) In the case of an election under clause (2) of this
Section 4.2, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (i) the Company has received from
the Internal Revenue Service a letter ruling, or there has been
published by the Internal Revenue Service a Revenue Ruling, or (ii)
since the date of execution of this 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 shall confirm that,
the Holders of such Outstanding Securities and any Coupons
appertaining thereto
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will not recognize income, gain or loss for Federal income tax
purposes as a result of such 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 defeasance had
not occurred.
(e) In the case of an election under clause (3) of this
Section 4.2, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Outstanding
Securities and any Coupons appertaining thereto 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.
(f) The Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that, after the 123rd day after the
date of deposit, all money and Government Obligations (or other
property as may be provided pursuant to Section 3.1) (including the
proceeds thereof) deposited or caused to be deposited with the
Trustee (or other qualifying trustee) pursuant to this clause (4) to
be held in trust will not be subject to any case or proceeding
(whether voluntary or involuntary) in respect of the Company under
any Federal or State bankruptcy, insolvency, reorganization or other
similar law, or any decree or order for relief in respect of the
Company issued in connection therewith.
(g) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent to the defeasance or covenant defeasance
under clause (2) or (3) of this Section 4.2 (as the case may be) have
been complied with.
(h) Notwithstanding any other provisions of this Section
4.2(4), such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or
limitations which may be imposed on the Company in connection
therewith pursuant to Section 3.1.
(5) Unless otherwise specified in or pursuant to this Indenture or
any Security, if, after a deposit referred to in Section 4.2(4)(a) has been
made, (a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 3.1 or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 4.2(4)(a) has been made in respect of such Security, or
(b) a Conversion Event occurs in respect of the Foreign Currency in which the
deposit pursuant to Section 4.2(4)(a) has been made, the indebtedness
represented by such Security and any Coupons appertaining thereto shall be
deemed to have been, and will be,
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fully discharged and satisfied through the payment of the principal of (and
premium, if any), and interest, if any, on, and Additional Amounts, if any,
with respect to, such Security as the same becomes due out of the proceeds
yielded by converting (from time to time as specified below in the case of any
such election) the amount or other property deposited in respect of such
Security into the Currency in which such Security becomes payable as a result
of such election or Conversion Event based on (x) in the case of payments made
pursuant to clause (a) above, the applicable market exchange rate for such
Currency in effect on the second Business Day prior to each payment date, or
(y) with respect to a Conversion Event, the applicable market exchange rate for
such Foreign Currency in effect (as nearly as feasible) at the time of the
Conversion Event.
The Company shall pay and indemnify the Trustee (or other qualifying
trustee, collectively for purposes of this Section 4.2(5) and Section 4.3, the
"Trustee") against any tax, fee or other charge, imposed on or assessed against
the Government Obligations deposited pursuant to this Section 4.2 or the
principal or interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of such
Outstanding Securities and any Coupons appertaining thereto.
Anything in this Section 4.2 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Obligations (or other property and any proceeds
therefrom) held by it as provided in clause (4) of this Section 4.2 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect a defeasance or covenant defeasance, as applicable, in accordance with
this Section 4.2.
Section 4.3. Application of Trust Money.
Subject to the provisions of the last paragraph of Section , all
money and Government Obligations (or other property as may be provided pursuant
to Section 3.1) (including the proceeds thereof) deposited with the Trustee
pursuant to Section 4.1 or 4.2 in respect of any Outstanding Securities of any
series and any Coupons appertaining thereto shall be held in trust and applied
by the Trustee, in accordance with the provisions of such Securities and any
Coupons appertaining thereto and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of such Securities
and any Coupons appertaining thereto of all sums due and to become due thereon
in respect of principal (and premium, if any) and interest and Additional
Amounts, if any; but such money and Government
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Obligations need not be segregated from other funds except to the extent
required by law.
ARTICLE 5
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein with respect to Securities
of any series, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body), unless such event is specifically deleted or modified in or
pursuant to the supplemental indenture, Board Resolution or Officers'
Certificate establishing the terms of such Series pursuant to this Indenture:
(1) default in the payment of any interest on any Security of such
series, or any Additional Amounts payable with respect thereto, when such
interest becomes or such Additional Amounts become due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of such series, or any Additional Amounts payable with respect
thereto, when such principal or premium becomes or such Additional Amounts
become due and payable at their Maturity; or
(3) default in the deposit of any sinking fund payment when and
as due by the terms of a Security of such series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture or the Securities (other than a
covenant or warranty a default in the performance or the breach of which is
elsewhere in this Section specifically dealt with or which has been expressly
included in this Indenture solely for the benefit of a series of Securities
other than such series), and continuance of such default or breach for a period
of 60 days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of such series, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder; or
(5) if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be secured or
evidenced, any Debt of the Company, whether
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such Debt now exists or shall hereafter be created, shall happen and shall
result in such Debt in principal amount in excess of $25,000,000 becoming or
being declared due and payable prior to the date on which it would otherwise
become due and payable, and such acceleration shall not be rescinded or
annulled within a period of 30 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of such series, a written notice specifying such event
of default and requiring the Company to cause such acceleration to be rescinded
or annulled or to cause such Debt to be discharged and stating that such notice
is a "Notice of Default" hereunder; or
(6) the Company shall fail within 60 days to pay, bond or otherwise
discharge any uninsured judgment or court order for the payment of money in
excess of $25,000,000, which is not stayed on appeal or is not otherwise being
appropriately contested in good faith; or
(7) the entry by a court having competent jurisdiction of:
(a) a decree or order for relief in respect of the Company
in an involuntary proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law and such decree or
order shall remain unstayed and in effect for a period of 60
consecutive days; or
(b) a decree or order adjudging the Company to be
insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of the Company and such
decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or
(c) a final and non-appealable order appointing a
custodian, receiver, liquidator, assignee, trustee or other similar
official of the Company or of any substantial part of the property
of the Company, or ordering the winding up or liquidation of the
affairs of the Company; or
(8) the commencement by the Company of a voluntary proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar law or
of a voluntary proceeding seeking to be adjudicated insolvent or the consent by
the Company to the entry of a decree or order for relief in an involuntary
proceeding under any applicable bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any insolvency proceedings against it, or
the filing by the Company of a petition or answer or consent seeking
reorganization, arrangement, adjustment or composition of the Company or relief
under any applicable law, or the consent by the Company to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee,
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trustee or similar official of the Company or any substantial part of the
property of the Company or the making by the Company of an assignment for the
benefit of creditors, or the taking of corporate action by the Company in
furtherance of any such action; or
(9) any other Event of Default provided in or pursuant to this
Indenture with respect to Securities of such series.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at
the time Outstanding (other than an Event of Default specified in clause (7) or
(8) of Section 5.1) occurs and is continuing, then the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities of such
series may declare the principal of all the Securities of such series, or such
lesser amount as may be provided for in the Securities of such series, to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal
or such lesser amount shall become immediately due and payable.
If an Event of Default specified in clause (7) or (8) of Section
5.1 occurs, all unpaid principal of and accrued interest on the Outstanding
Securities of that series (or such lesser amount as may be provided for in the
Securities of such series) 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 of any Security of that series.
At any time after a declaration of acceleration with respect to the
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of not less than a majority in principal
amount of the Outstanding Securities of such series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum of
money sufficient to pay
(a) all overdue installments of any interest on and
Additional Amounts with respect to all Securities of such series and
any Coupon appertaining thereto,
(b) the principal of and any premium on any Securities
of such series which have become due otherwise than by such
declaration of acceleration and interest thereon and any
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Additional Amounts with respect thereto at the rate or rates borne
by or provided for in such Securities,
(c) to the extent that payment of such interest or
Additional Amounts is lawful, interest upon overdue installments of
any interest and Additional Amounts at the rate or rates borne by or
provided for in such Securities, and
(d) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and all other amounts due the
Trustee under Section 6.6; and
(2) all Events of Default with respect to Securities of such series,
other than the non-payment of the principal of, any premium and interest on,
and any Additional Amounts with respect to Securities of such series which
shall have become due solely by such declaration of acceleration, shall have
been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any installment of interest
on or any Additional Amounts with respect to any Security or any Coupon
appertaining thereto when such interest or Additional Amounts shall have become
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of or any
premium on any Security or any Additional Amounts with respect thereto at their
Maturity,
the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities and any Coupons appertaining thereto,
the whole amount of money then due and payable with respect to such Securities
and any Coupons appertaining thereto, with interest upon the overdue principal,
any premium and, to the extent that payment of such interest shall be legally
enforceable, upon any overdue installments of interest and Additional Amounts
at the rate or rates borne by or provided for in such Securities, and, in
addition thereto, such further amount of money 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 and
all other amounts due to the Trustee under Section 6.6.
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If the Company fails to pay the money it is required to pay the
Trustee pursuant to the preceding paragraph forthwith upon the demand of the
Trustee, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the money so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
and any Coupons appertaining thereto and collect the monies adjudged or decreed
to be payable in the manner provided by law out of the property of the Company
or any other obligor upon such Securities and any Coupons appertaining thereto,
wherever situated.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series and any Coupons appertaining thereto by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or such Securities or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor upon
the Securities of any series or the property of the Company or such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of any overdue principal,
premium, interest or Additional Amounts) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Securities of any
applicable series, of the principal and any premium, interest and
Additional Amounts owing and unpaid in respect of the Securities and
any Coupons appertaining thereto and to file such other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee,
its agents or counsel) and of the Holders of Securities or any
Coupons appertaining thereto allowed in such judicial proceeding,
and
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(2) to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities or any Coupons 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 of Securities or any Coupons, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and any other amounts due the
Trustee under Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security or any Coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or Coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or any Coupon in any such proceeding.
Section 5.5. Trustee May Enforce Claims without Possession of
Securities or Coupons.
All rights of action and claims under this Indenture or any of the
Securities or Coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or Coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery or judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, shall be for the ratable benefit of each and every Holder of the
Securities or Coupons in respect of which such judgment has been recovered.
Section 5.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, or any
premium, interest or Additional Amounts, upon presentation of the Securities or
Coupons, or both, as the case may be, and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and
any predecessor Trustee under Section 6.6;
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SECOND: To the payment of the amounts then due and unpaid
upon the Securities and any Coupons for principal and any premium,
interest and Additional Amounts in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the aggregate
amounts due and payable on such Securities and Coupons for principal
and any premium, interest and Additional Amounts, respectively;
THIRD: The balance, if any, to the Person or Persons
entitled thereto.
Section 5.7. Limitations on Suits.
No Holder of any Security of any series or any Coupons appertaining
thereto shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of such series;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of such series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee such
indemnity as is reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities of
such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other such Holders or Holders of Securities of any other series, or to
obtain or to seek to obtain priority or preference over any other Holders or to
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enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all such Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal
and any Premium, Interest and Additional Amounts.
Notwithstanding any other provision in this Indenture, the Holder
of any Security or Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of, any premium and (subject
to Sections 3.5 and 3.7) interest on, and any Additional Amounts with respect to
such Security or payment of such Coupon, as the case may be, on the respective
Stated Maturity or Maturities therefor specified in such Security or Coupon (or,
in the case of redemption, on the Redemption Date or, in the case of repayment
at the option of such Holder if provided in or pursuant to this Indenture, on
the date such repayment is due) and to institute suit for the enforcement of any
such payment, and such right shall not be impaired without the consent of such
Holder.
Section 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or a Coupon has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every
such case the Company, the Trustee and each such Holder shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and each such Holder shall continue as though no such proceeding had
been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or Coupons in the
last paragraph of Section 3.6, no right or remedy herein conferred upon or
reserved to the Trustee or to each and every Holder of a Security or a Coupon
is intended to be exclusive of any other right or remedy, and every right and
remedy, to the extent permitted by law, shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not, to the extent permitted by law,
prevent the concurrent assertion or employment of any other appropriate right
or remedy.
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Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
or Coupon to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to any Holder of a Security or a Coupon may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by such Holder, as the case may be.
Section 5.12. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall 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 with respect to the
Securities of such series and any Coupons appertaining thereto, provided that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture or with the Securities of such
series,
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction,
and
(3) such direction is not unduly prejudicial to the
rights of the other Holders of Securities of such series not joining
in such action.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series on behalf of the Holders of all the
Securities of such series and any Coupons appertaining thereto may waive any
past default hereunder with respect to such series and its consequences, except
a default
(1) in the payment of the principal of, any premium or
interest on, or any Additional Amounts with respect to, any Security
of such series or any Coupons appertaining thereto, or
(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent
of the Holder of each Outstanding Security of such series affected.
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Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 5.14. Waiver of Usury, Stay or Extension Laws.
The Company covenants that (to the extent that it may lawfully do
so) it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company expressly
waives (to the extent that it may lawfully do so) 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 5.15. Undertaking for Costs
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, 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, the filing by any party litigant in such suit of
any undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest, if any, on or
Additional Amounts, if any, with respect to any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date, and, in the case of repayment, on
or after the date for repayment) or for the enforcement of the right, if any,
to convert or exchange any Security into Common Stock or other securities in
accordance with its terms.
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ARTICLE 6
THE TRUSTEE
Section 6.1. Certain Rights of Trustee.
Subject to Sections 315(a) through 315(d) of the Trust Indenture
Act:
(1) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, coupon or
other paper or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or a
Company Order (in each case, other than delivery of any Security,
together with any Coupons appertaining thereto, to the Trustee for
authentication and delivery pursuant to Section which shall be
sufficiently evidenced as provided therein) and any resolution of
the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence shall be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(5) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by or pursuant to this
Indenture at the request or direction of any of the Holders of
Securities of any series or any Coupons appertaining thereto
pursuant to this Indenture, unless such Holders shall have offered
to the Trustee such security or indemnity as is reasonably
satisfactory to it against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
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resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, coupon
or other paper or document, but the Trustee, in its discretion, may
but shall not be obligated to 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 to examine, during business
hours and upon reasonable notice, the books, records and premises of
the Company, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
(8) the Trustee shall not be liable for any action taken or
error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that
the Trustee was negligent, acted in bad faith or engaged in willful
misconduct;
(9) the Authenticating Agent, Paying Agent, and Security
Registrar shall have the same protections as the Trustee set forth
hereunder; and
(10) the Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with an Act of the Holders hereunder, and, to the extent
not so provided herein, with respect to any act requiring the
Trustee to exercise its own discretion, relating to the time, method
and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture or any Securities, unless it shall be
proved that, in connection with any such action taken, suffered or
omitted or any such act, the Trustee was negligent, acted in bad
faith or engaged in willful misconduct.
Section 6.2. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series entitled to receive reports pursuant
to Section 7.3(3), notice of such default hereunder actually known to a
Responsible Officer of the Trustee, unless such default shall have been cured
or waived; provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any), or interest, if any, on, or
Additional Amounts or any sinking fund or purchase fund
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installment with respect to, any Security of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the best interest of the Holders of Securities and Coupons of such
series; and provided, further, that in the case of any default of the character
specified in Section 5.1(5) with respect to Securities of such series, no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.
Section 6.3. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, and in any Coupons shall be taken as
the statements of the Company and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or the Coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. Neither the Trustee
nor any Authenticating Agent shall be accountable for the use or application by
the Company of the Securities or the proceeds thereof.
Section 6.4. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other Person that may be an agent of the Trustee or
the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities or Coupons and, subject to Sections 310(b) and 311 of the
Trust Indenture Act, may otherwise deal with the Company with the same rights
it would have if it were not the Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other Person.
Section 6.5. Money Held in Trust.
Except as provided in Section 4.3 and Section 10.3, money held by
the Trustee in trust hereunder need not be segregated from other funds except
to the extent required by law and shall be held uninvested. The Trustee shall
be under no liability for interest on
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any money received by it hereunder except as otherwise agreed to in
writing with the Company.
Section 6.6. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by the Trustee hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture or arising out of or
in connection with the acceptance or administration of the trust or
trusts hereunder (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to the
Trustee's negligence or bad faith; and
(3) to indemnify the Trustee and its agents, officers,
directors and employees for, and to hold them harmless against, any
loss, liability or expense incurred without negligence or bad faith
on their part, arising out of or in connection with the acceptance
or administration of the trust or trusts hereunder, including the
costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of
their powers or duties hereunder, except to the extent that any such
loss, liability or expense was due to the Trustee's negligence or
bad faith.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien prior to the Securities of
any series upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the payment of principal of, and premium
or interest on or any Additional Amounts with respect to Securities or any
Coupons appertaining thereto.
To the extent permitted by law, any compensation or expense incurred
by the Trustee after a default specified in or pursuant to Section 5.1 is
intended to constitute an expense of administration under any then applicable
bankruptcy or insolvency law. "Trustee" for purposes of this Section 5.1 shall
include any predecessor Trustee but the negligence or bad faith of any Trustee
shall not affect the rights of any other Trustee under this Section 6.6.
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The provisions of this Section 6.6 shall survive the satisfaction
and discharge of this Indenture or the earlier resignation or removal of the
Trustee and shall apply with equal force and effect to the Trustee in its
capacity as Authenticating Agent, Paying Agent or Security Registrar.
Section 6.7. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that is a
Corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia, that is eligible under
Section 310(a)(1) of the Trust Indenture Act to act as trustee under an
indenture qualified under the Trust Indenture Act and that has a combined
capital and surplus (computed in accordance with Section 310(a)(2) of the Trust
Indenture Act) of at least $50,000,000, and that is subject to supervision or
examination by Federal or state authority. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 6.8. Resignation and Removal; Appointment of Successor.
(1) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee pursuant to Section 6.9.
(2) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 6.9 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to such series.
(3) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee
and the Company.
(4) If at any time:
(a) the Trustee shall fail to comply with the obligations
imposed upon it under Section 310(b) of the Trust Indenture Act with
respect to Securities of any series after written request therefor
by the Company or any Holder of a
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Security of such series who has been a bona fide Holder of a
Security of such series for at least six months, or
(b) the Trustee shall cease to be eligible under
Section 6.7 and shall fail to resign after written request
therefor by the Company or any such Holder, or
(c) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or
of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by or pursuant to a Board Resolution,
may remove the Trustee with respect to all Securities or the Securities of such
series, or (ii) subject to Section 315(e) of the Trust Indenture Act, any
Holder of a Security who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities of such series and the
appointment of a successor Trustee or Trustees.
(5) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by or
pursuant to a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of such series (it being understood
that any such successor Trustee may be appointed with respect to the Securities
of one or more or all of such series and that at any time there shall be only
one Trustee with respect to the Securities of any particular series) and shall
comply with the applicable requirements of Section 6.9. If, within one year
after such resignation, removal or incapacity, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
6.9, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders of Securities and accepted
appointment in the manner required by Section , any Holder of a Security who has
been a bona fide Holder of a Security of such series for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
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(6) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mail, postage prepaid,
to the Holders of Registered Securities, if any, of such series as their names
and addresses appear in the Security Register and, if Securities of such series
are issued as Bearer Securities, by publishing notice of such event once in an
Authorized Newspaper in each Place of Payment located outside the United
States. Each notice shall include the name of the successor Trustee with
respect to the Securities of such series and the address of its Corporate Trust
Office.
(7) In no event shall any retiring Trustee be liable for the acts
or omissions of any successor Trustee hereunder.
Section 6.9. Acceptance of Appointment by Successor.
(1) Upon the appointment hereunder of any successor Trustee with
respect to all Securities, such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties hereunder of the retiring Trustee; but, on the
request of the Company or such successor Trustee, such retiring Trustee, upon
payment of its charges, shall execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee and, subject to Section 10.3, shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder, subject nevertheless to its claim, if any, provided for in
Section 6.6.
(2) Upon the appointment hereunder of any successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and such successor Trustee shall execute and deliver an
indenture supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary
or desirable to transfer and confirm to, and to vest in, such successor Trustee
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or those
series as to which the retiring Trustee is not retiring shall continue to be
vested in the retiring Trustee, and (3) shall add to
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or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust, that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee and that no Trustee shall be responsible for any notice given to,
or received by, or any act or failure to act on the part of any other Trustee
hereunder, and, upon the execution and delivery of such supplemental indenture,
the resignation or removal of the retiring Trustee shall become effective to
the extent provided therein, such retiring Trustee shall have no further
responsibility for the exercise of rights and powers or for the performance of
the duties and obligations vested in the Trustee under this Indenture with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates other than as hereinafter expressly set forth,
and such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates; but, on request of the Company
or such successor Trustee, such retiring Trustee, upon payment of its charges
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates and subject to Section 10.3 shall duly assign,
transfer and deliver to such successor Trustee, to the extent contemplated by
such supplemental indenture, the property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates, subject to its claim,
if any, provided for in Section 6.6.
(3) Upon request of any Person appointed hereunder as a successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in paragraph (1) or (2) of this Section, as the
case may be.
(4) No Person shall accept its appointment hereunder as a successor
Trustee unless at the time of such acceptance such successor Person shall be
qualified and eligible under this Article.
Section 6.10. Merger, Conversion, Consolidation or Succession to
Business.
Any Corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any Corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any Corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the
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execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated but not
delivered by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
Section 6.11. Appointment of Authenticating Agent.
The Trustee may appoint one or more Authenticating Agents acceptable
to the Company with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of that
or those series issued upon original issue, exchange, registration of transfer,
partial redemption or partial repayment or pursuant to Section , and Securities
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Company and,
except as provided in or pursuant to this Indenture, shall at all times be a
corporation that would be permitted by the Trust Indenture Act to act as
trustee under an indenture qualified under the Trust Indenture Act, is
authorized under applicable law and by its charter to act as an Authenticating
Agent and has a combined capital and surplus (computed in accordance with
Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect specified in this Section.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of an Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, provided such
Corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and the Company. The Trustee
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may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time such Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall (i)
mail written notice of such appointment by first-class mail, postage prepaid,
to all Holders of Registered Securities, if any, of the series with respect to
which such Authenticating Agent shall serve, as their names and addresses
appear in the Security Register, and (ii) if Securities of the series are
issued as Bearer Securities, publish notice of such appointment at least once
in an Authorized Newspaper in the place where such successor Authenticating
Agent has its principal office if such office is located outside the United
States. Any successor Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay each Authenticating Agent from time to
time reasonable compensation for its services under this Section. If the
Trustee makes such payments, it shall be entitled to be reimbursed for such
payments, subject to the provisions of Section 6.6.
The provisions of Sections 3.8, 6.3 and 6.4 shall be applicable to
each Authenticating Agent.
If an Authenticating Agent is appointed with respect to one or more
series of Securities pursuant to this Section, the Securities of such series
may have endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication in
substantially the following form:
This is one of the Securities of the series designated
herein referred to in the within-mentioned Indenture.
[NAME OF TRUSTEE],
as Trustee
By ________________________
as Authenticating Agent
By ________________________
Authorized Officer
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If all of the Securities of any series may not be originally issued
at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested in writing (which writing need
not be accompanied by or contained in an Officers' Certificate by the Company),
shall appoint in accordance with this Section an Authenticating Agent having an
office in a Place of Payment designated by the Company with respect to such
series of Securities.
ARTICLE 7
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of
Holders.
In accordance with Section 312(a) of the Trust Indenture Act, the
Company shall furnish or cause to be furnished to the Trustee
(1) semi-annually with respect to Securities of each series
not later than May 15 and November 15 of the year or upon such other
dates as are set forth in or pursuant to the Board Resolution or
indenture supplemental hereto authorizing such series, a list, in
each case in such form as the Trustee may reasonably require, of the
names and addresses of Holders as of the applicable date, and
(2) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished,
provided, however, that so long as the Trustee is the Security Registrar no
such list shall be required to be furnished.
Section 7.2. Preservation of Information; Communications to
Holders.
The Trustee shall comply with the obligations imposed upon it
pursuant to Section 312 of the Trust Indenture Act.
Every Holder of Securities or Coupons, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company, the
Trustee, any Paying Agent or any Security Registrar shall be held accountable
by reason of the disclosure of
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any such information as to the names and addresses of the Holders of Securities
in accordance with Section 312(c) of the Trust Indenture Act, regardless of the
source from which such information was derived, and that the Trustee shall not
be held accountable by reason of mailing any material pursuant to a request
made under Section 312(b) of the Trust Indenture Act.
Section 7.3. Reports by Trustee.
(1) Within 60 days after September 15 of each year commencing with
the first September 15 following the first issuance of Securities pursuant to
Section 3.1, if required by Section 313(a) of the Trust Indenture Act, the
Trustee shall transmit, pursuant to Section 313(c) of the Trust Indenture Act,
a brief report dated as of such September 15 with respect to any of the events
specified in said Section 313(a) which may have occurred since the later of the
immediately preceding September 15 and the date of this Indenture.
(2) The Trustee shall transmit the reports required by Section
313(a) of the Trust Indenture Act at the times specified therein.
(3) Reports pursuant to this Section shall be transmitted in the
manner and to the Persons required by Sections 313(c) and 313(d) of the Trust
Indenture Act.
Section 7.4. Reports by Company.
The Company, pursuant to Section 314(a) of the Trust Indenture Act,
shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then it
shall file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
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(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company, with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(3) transmit within 30 days after the filing thereof with the
Trustee, in the manner and to the extent provided in Section 313(c) of the
Trust Indenture Act, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of this
Section as may be required by rules and regulations prescribed from time to
time by the Commission.
ARTICLE 8
CONSOLIDATION, MERGER AND SALES
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person (whether or not affiliated with the Company), or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to any other Person (whether or not affiliated with the Company), and the
Company shall not permit any other Person (whether or not affiliated with the
Company) to consolidate with or merge into the Company or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to the Company; unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties and assets of the
Company as an entirety or substantially as an entirety shall be a Corporation
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia and shall expressly assume, by an
indenture (or indentures, if at such time there is more than one Trustee)
supplemental hereto, executed by the successor Person and delivered to the
Trustee the due and punctual payment of the principal of, any premium and
interest on and any Additional Amounts with respect to all the Securities and
the performance of every obligation in this Indenture and the Outstanding
Securities on the part of the Company to be performed or observed and shall
provide for conversion or exchange rights in accordance with the provisions of
the Securities of any series that
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are convertible or exchangeable into Common Stock or other securities;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a Subsidiary as
a result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default or event which,
after notice or lapse of time, or both, would become an Event of Default, shall
have occurred and be continuing; and
(3) either the Company or the successor Person shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
Section 8.2. Successor Person Substituted for Company.
Upon any consolidation by the Company with or merger of the Company
into any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety to any Person in
accordance with Section , the successor Person formed by such consolidation or
into which the Company is merged or to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and thereafter, except
in the case of a lease, the predecessor Person shall be released from all
obligations and covenants under this Indenture, the Securities and the Coupons.
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities or Coupons, the
Company (when authorized by or pursuant to a Board Resolution) and the Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto, for any of the following purposes:
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(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company contained
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (as shall be specified in such
supplemental indenture or indentures) or to surrender any right or power herein
conferred upon the Company; or
(3) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to change or
eliminate any restrictions on the payment of principal of, any premium or
interest on or any Additional Amounts with respect to Securities, to permit
Bearer Securities to be issued in exchange for Registered Securities, to permit
Bearer Securities to be exchanged for Bearer Securities of other authorized
denominations or to permit or facilitate the issuance of Securities in
uncertificated form, provided any such action shall not adversely affect the
interests of the Holders of Outstanding Securities of any series or any Coupons
appertaining thereto in any material respect; or
(4) to establish the form or terms of Securities of any series and
any Coupons appertaining thereto as permitted by Sections 3.1 and 3.1; or
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section 6.9;
or
(6) to cure any ambiguity or to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture which shall not adversely affect the interests of the
Holders of Securities of any series then Outstanding or any Coupons
appertaining thereto in any material respect; or
(7) to add to, delete from or revise the conditions, limitations
and restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of Securities, as herein set forth; or
(8) to add any additional Events of Default with respect to all
or any series of Securities (as shall be specified in such supplemental
indenture); or
(9) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the
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defeasance and discharge of any series of Securities pursuant to Article Four,
provided that any such action shall not adversely affect the interests of any
Holder of an Outstanding Security of such series and any Coupons appertaining
thereto or any other Outstanding Security or Coupon in any material respect; or
(10) to secure the Securities pursuant to Section 10.5, 10.6 or
otherwise; or
(11) to make provisions with respect to conversion or exchange
rights of Holders of Securities of any series; or
(12) to amend or supplement any provision contained herein or in any
supplemental indenture, provided that no such amendment or supplement shall
materially adversely affect the interests of the Holders of any Securities then
Outstanding.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company (when authorized by or pursuant to a Company's Board
Resolution) and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture or of the Securities of such series; provided, however,
that no such supplemental indenture, without the consent of the Holder of each
Outstanding Security affected thereby, shall
(1) change the Stated Maturity of the principal of, or any premium
or installment of interest on or any Additional Amounts with respect to, any
Security, or reduce the principal amount thereof or the rate (or modify the
calculation of such rate) of interest thereon or any Additional Amounts with
respect thereto, or any premium payable upon the redemption thereof or
otherwise, or change the obligation of the Company to pay Additional Amounts
pursuant to Section 10.4 (except as contemplated by Section 8.1(1) and permitted
by Section 9.1(1)), or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2 or the amount
thereof provable in bankruptcy pursuant to Section 5.4, change the redemption
provisions or adversely affect the right of repayment at the option of any
Holder as contemplated by Article Thirteen, or change the Place of Payment,
Currency in which the principal of, any premium or interest on, or any
Additional Amounts with respect to any Security is payable, or impair the right
to institute suit for the enforcement of any such
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payment on or after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date or, in the case of repayment at the option of
the Holder, on or after the date for repayment), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
reduce the requirements of Section 15.4 for quorum or voting, or
(3) modify any of the provisions of this Section, Section 5.13 or
Section 10.8, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, or
(4) make any change that adversely affects the right to convert or
exchange any Security into or for Common Stock or other securities in
accordance with its terms.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which shall have been included expressly and
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights
under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 9.3 Execution of Supplemental Indentures.
As a condition to executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trust created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Section 315 of the Trust Indenture Act)
shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture and an Officers' Certificate stating that all conditions precedent to
the execution of such supplemental indenture have been fulfilled. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
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Section 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of a Security theretofore or thereafter authenticated and delivered
hereunder and of any Coupon appertaining thereto shall be bound thereby.
Section 9.5. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
Section 9.6. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.7. Notice of Supplemental Indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to Section 9.2, the Company shall transmit to
the Holders of Outstanding Securities of any series affected thereby a notice
setting forth the substance of such supplemental indenture.
ARTICLE 10
COVENANTS
Section 10.1. Payment of Principal, any Premium, Interest and
Additional Amounts.
The Company covenants and agrees for the benefit of the Holders of
the Securities of each series that it will duly and punctually pay the
principal of, any premium and interest on and any Additional Amounts with
respect to the Securities of such series in
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accordance with the terms thereof, any Coupons appertaining thereto and this
Indenture. Any interest due on any Bearer Security on or before the Maturity
thereof, and any Additional Amounts payable with respect to such interest,
shall be payable only upon presentation and surrender of the Coupons
appertaining thereto for such interest as they severally mature.
Section 10.2. Maintenance of Office or Agency.
The Company shall maintain in each Place of Payment for any series
of Securities an Office or Agency where Securities of such series (but not
Bearer Securities, except as otherwise provided below, unless such Place of
Payment is located outside the United States) may be presented or surrendered
for payment, where Securities of such series may be surrendered for
registration of transfer or exchange, where Securities of such series that are
convertible or exchangeable may be surrendered for conversion or exchange, and
where notices and demands to or upon the Company in respect of the Securities
of such series relating thereto and this Indenture may be served. If Securities
of a series are issuable as Bearer Securities, the Company shall maintain,
subject to any laws or regulations applicable thereto, an Office or Agency in a
Place of Payment for such series which is located outside the United States
where Securities of such series and any Coupons appertaining thereto may be
presented and surrendered for payment; provided, however, that if the
Securities of such series are listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company shall maintain a Paying Agent in London,
Luxembourg or any other required city located outside the United States, as the
case may be, so long as the Securities of such series are listed on such
exchange. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such Office or Agency. If at any
time the Company 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 Corporate Trust
Office of the Trustee, except that Bearer Securities of such series and any
Coupons appertaining thereto may be presented and surrendered for payment at
the place specified for the purpose with respect to such Securities as provided
in or pursuant to this Indenture, and the Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and
demands.
Except as otherwise provided in or pursuant to this Indenture, no
payment of principal, premium, interest or Additional Amounts with respect to
Bearer Securities shall be made at any Office or Agency in the United States or
by check mailed to any address in the United States or by transfer to an
account maintained with a bank located in the United States; provided, however,
if amounts owing
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with respect to any Bearer Securities shall be payable in Dollars, payment of
principal of, any premium or interest on and any Additional Amounts with
respect to any such Security may be made at the Corporate Trust Office of the
Trustee or any Office or Agency designated by the Company in the Borough of
Manhattan, The City of New York, if (but only if) payment of the full amount of
such principal, premium, interest or Additional Amounts at all offices outside
the United States maintained for such purpose by the Company in accordance with
this Indenture is illegal or effectively precluded by exchange controls or
other similar restrictions.
The Company may also from time to time designate one or more other
Offices or Agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an Office
or Agency in each Place of Payment for Securities of any series for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other Office or Agency. Unless otherwise provided in or pursuant to this
Indenture, the Company hereby designates as the Place of Payment for each
series of Securities the Borough of Manhattan, The City of New York, and
initially appoints the Corporate Trust Office of the Trustee as the Office or
Agency of the Company in the Borough of Manhattan, The City of New York for
such purpose. The Company may subsequently appoint a different Office or
Agency in the Borough of Manhattan, The City of New York for the Securities of
any series.
Unless otherwise specified with respect to any Securities pursuant
to Section 3.1, if and so long as the Securities of any series (i) are
denominated in a Foreign Currency or (ii) may be payable in a Foreign Currency,
or so long as it is required under any other provision of this Indenture, then
the Company will maintain with respect to each such series of Securities, or
as so required, at least one exchange rate agent.
Section 10.3. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it shall, on or before each due date of
the principal of, any premium or interest on or Additional Amounts with respect
to any of the Securities of such series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant
to Section 3.1 for the Securities of such series) sufficient to pay the
principal or any premium, interest or Additional Amounts so becoming due until
such sums shall be paid to such Persons or
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otherwise disposed of as herein provided, and shall promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it shall, on or prior to each due date of the principal
of, any premium or interest on or any Additional Amounts with respect to any
Securities of such series, deposit with any Paying Agent a sum (in the currency
or currencies, currency unit or units or composite currency or currencies
described in the preceding paragraph) sufficient to pay the principal or any
premium, interest or Additional Amounts so becoming due, such sum to be held in
trust for the benefit of the Persons entitled thereto, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
The Company shall cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal of,
any premium or interest on or any Additional Amounts with respect to Securities
of such series in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as provided in
or pursuant to this Indenture;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of such series) in the making of any payment
of principal, any premium or interest on or any Additional Amounts with respect
to the Securities of such series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same terms as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such sums.
Except as otherwise provided herein or pursuant hereto, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of, any premium or interest on or any
Additional Amounts with respect to any
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Security of any series or any Coupon appertaining thereto and remaining
unclaimed for two years after such principal or any such premium or interest or
any such Additional Amounts shall have become due and payable shall be paid to
the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security or any Coupon
appertaining thereto shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper in each Place of Payment for such series or to be mailed to Holders
of Registered Securities of such series, or both, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication or mailing nor shall it be
later than two years after such principal and any premium or interest or
Additional Amounts shall have become due and payable, any unclaimed balance of
such money then remaining will be repaid to the Company.
Section 10.4 Additional Amounts.
If any Securities of a series provide for the payment of Additional
Amounts, the Company agrees to pay to the Holder of any such Security or any
Coupon appertaining thereto Additional Amounts as provided in or pursuant to
this Indenture or such Securities. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of or any premium or
interest on, or in respect of, any Security of any series or any Coupon or the
net proceeds received on the sale or exchange of any Security of any series,
such mention shall be deemed to include mention of the payment of Additional
Amounts provided by the terms of such series established hereby or pursuant
hereto to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to such terms, and express mention
of the payment of Additional Amounts (if applicable) in any provision hereof
shall not be construed as excluding the payment of Additional Amounts in those
provisions hereof where such express mention is not made.
Except as otherwise provided in or pursuant to this Indenture or the
Securities of the applicable series, if the Securities of a series provide for
the payment of Additional Amounts, at least 10 days prior to the first Interest
Payment Date with respect to such series of Securities (or if the Securities of
such series shall not bear interest prior to Maturity, the first day on which a
payment of principal is made), and at least 10 days prior to each date of
payment of principal or interest if there has been any change with respect to
the matters set forth in the below-mentioned Officers' Certificate, the Company
shall furnish to the Trustee and the
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principal Paying Agent or Paying Agents, if other than the Trustee, an
Officers' Certificate instructing the Trustee and such Paying Agent or Paying
Agents whether such payment of principal of and premium, if any, or interest on
the Securities of such series shall be made to Holders of Securities of such
series or the Coupons appertaining thereto who are United States Aliens without
withholding for or on account of any tax, assessment or other governmental
charge described in the Securities of such series. If any such withholding
shall be required, then such Officers' Certificate shall specify by country the
amount, if any, required to be withheld on such payments to such Holders of
Securities or Coupons, and the Company agrees to pay to the Trustee or such
Paying Agent the Additional Amounts required by the terms of such Securities.
The Company covenants to indemnify the Trustee and any Paying Agent for, and to
hold them harmless against, any loss, liability or expense reasonably incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section.
Section 10.5. Limitation on Liens.
The Company covenants and agrees for the benefit of each series of
Securities, other than any series established in or pursuant to a Board
Resolution or in one or more indentures supplemental hereto which specifically
provides otherwise, that the Company will not, nor will it permit any
Restricted Subsidiary to, at any time create, incur, assume or guarantee any
Debt secured by any mortgage, pledge, lien, security interest or other
encumbrance ("Lien") on any property (including shares of capital stock or
Debt) of the Company or of any Restricted Subsidiary, whether now owned or
hereafter acquired, without in any such case effectively providing,
concurrently with the creation, incurrence, assumption or guarantee of such
Debt, that the Securities of the applicable series then Outstanding shall, so
long as any such other Debt shall be so secured (and, if the Company shall so
determine, any other existing Debt (or Debt thereafter in existence) created,
incurred, assumed or guaranteed by the Company or any Restricted Subsidiary) be
secured by any such Lien equally and ratably with or prior to any and all other
Debt thereby secured, provided, however, that the foregoing covenant shall not
be applicable to the following:
(a) All Liens on property of the Company or any Restricted
Subsidiary existing on the date of original issuance by the Company
of the applicable series of Securities issued pursuant to this
Indenture or such other date as may be specified in or pursuant to a
Board Resolution and set forth in an Officers' Certificate, or in
one or more indentures supplemental hereto pursuant to which such
series is established; or
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(b) Liens on property acquired by the Company or any
Restricted Subsidiary (including acquisition through merger or
consolidation); provided that such Liens were in existence prior to
and were not created in contemplation of such acquisition and shall
not extend to any other property of the Company or any Restricted
Subsidiary; or
(c) Liens on any property (including in the case of a plant
or facility, the land on which it is erected and fixtures comprising
a part thereof) of the Company or any Restricted Subsidiary securing
the payment of all or any part of the purchase price or construction
cost thereof or securing any Debt created, incurred, assumed or
guaranteed prior to or at the time of the acquisition of such
property or the completion of such construction, whichever is later,
for the purpose of financing all or any part of the purchase price
or construction cost thereof (provided, in the case of Liens
securing the payment of all or any part of the purchase price of any
property of the Company or any Restricted Subsidiary, as the case
may be, or securing any Debt created, incurred, assumed or
guaranteed for the purposes of financing all or any part of such
purchase price, such Liens are limited to the property then being
acquired and fixed improvements thereon and the capital stock of any
Person formed to acquire such property and provided, further, in the
case of Liens securing the payment of all or any part of the
construction cost of any property of the Company or any Restricted
Subsidiary, as the case may be, or securing any Debt created,
incurred, assumed or guaranteed for the purpose of financing all or
any part of such construction cost, such Liens are limited to the
assets or property then being constructed and the land on which such
property is erected and fixtures comprising a part thereof); or
(d) Liens on any property to secure all or any part of the
cost of development, construction, alteration, repair or improvement
of all or any part of such property, or to secure Debt created,
incurred, assumed or guaranteed prior to or at the time of the
completion of such development, construction, alteration, repair or
improvement, whichever is later, for the purpose of financing all or
any part of such cost (provided such Liens do not extend to or cover
any property of the Company or any Restricted Subsidiary other than
the property then being developed, constructed, altered, repaired or
improved and the land on which such property is erected and fixtures
comprising a part thereof); or
(e) Liens in favor of the Company or a Restricted
Subsidiary securing Debt of the Company or a Restricted Subsidiary;
or
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(f) Liens created in connection with tax assessments or
legal proceedings and mechanics' liens and materialmens' liens and
other similar liens created in the ordinary course of business; or
(g) Liens on property of the Company or any Restricted
Subsidiary (except property consisting of the capital stock or Debt
of the Company or any Restricted Subsidiary) in favor of the United
States of America or any State thereof, or any department, agency or
instrumentality or political subdivision of the United States of
America or any State thereof, or in favor of any other country, or
any department, agency or instrumentality or political subdivision
thereof, to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any Debt created,
incurred, assumed or guaranteed for the purpose of financing all or
any part of the purchase price or the cost of construction or
improvement of the property subject to such Liens (including, but
not limited to, Liens created in connection with pollution control,
industrial revenue bond or similar financings); or
(h) Any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing subparagraphs (a) through (g);
provided that any of the foregoing are limited to the same property
subject to, and securing no more Debt than the Lien so extended,
renewed or replaced.
Notwithstanding the foregoing provisions of this Section 10.5, the
Company and any Restricted Subsidiary may create, incur, assume or guarantee
Debt of the Company or any Restricted Subsidiary which would otherwise be
subject to the foregoing restrictions, without equally and ratably securing the
applicable series of Securities, if the aggregate principal amount of all Debt
secured by Liens on property (including shares of capital stock or Debt) of the
Company and of any Restricted Subsidiary then outstanding (not including Debt
permitted to be secured under subparagraphs (a) through (h) above), plus
Attributable Debt of the Company and its Restricted Subsidiaries in respect of
Sale/Leaseback Transactions that would otherwise be subject to the restrictions
set forth in Section 10.6, does not at the time such Debt is created, incurred,
assumed or guaranteed exceed 15% of Consolidated Net Tangible Assets.
For the purposes of this Section 10.5, the creation of a Lien on
property (including shares of capital stock or Debt) of the Company or of any
Restricted Subsidiary to secure Debt which existed prior to the creation of
such Lien shall be deemed to involve the creation of Debt secured by a Lien in
an amount equal to the principal amount secured by such Lien.
Section 10.6. Limitation on Sale/Leaseback Transactions.
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The Company covenants and agrees for the benefit of each series of
Securities, other than any series established in or pursuant to a Board
Resolution or in one or more indentures supplemental hereto which specifically
provides otherwise, that neither the Company nor any Restricted Subsidiary will
enter into any Sale/Leaseback Transaction after the date of the original
issuance by the Company of the applicable series of Securities issued pursuant
to this Indenture, or such other date as may be specified in or pursuant to a
Board Resolution and set forth in an Officers' Certificate, or in one or more
indentures supplemental hereto pursuant to which such series is established,
with any Person (other than the Company or a Restricted Subsidiary) providing
for a term of more than three years unless:
(a) the Company or such Restricted Subsidiary would be
permitted, pursuant to the terms of Section 10.5, to incur Debt in a
principal amount equal to or exceeding the Attributable Debt in
respect of such Sale/Leaseback Transaction secured by a Lien on the
property subject to such Sale/Leaseback Transaction without equally
and ratably securing the applicable series of Securities; or
(b) since the date of this Indenture and within a period
commencing six months prior to the Sale/Leaseback Transaction and
ending six months after the consummation thereof, the Company or
such Restricted Subsidiary has expended or will expend for any
property (including amounts expended for the acquisition thereof, or
for additions, alterations, improvements or repairs thereto) an
amount up to the net proceeds of such Sale/Leaseback Transaction,
and the Company elects to designate such amount as a credit against
such Sale/Leaseback Transaction (with any amount of such net
proceeds not being so designated to be applied as set forth in
paragraph (c) below); or
(c) the Company, during or immediately after the expiration
of the 12 month period following the consummation of the
Sale/Leaseback Transaction, applies or causes such Restricted
Subsidiary to apply to the voluntary retirement, redemption or
defeasance of Securities of any series or other Funded Debt of the
Company (other than Funded Debt subordinated to the Securities) or
Funded Debt of such Restricted Subsidiary an amount equal to the
greater of (i) the net proceeds of the Sale/Leaseback Transaction
and (ii) the fair value, in the opinion of the Board of Directors of
the Company, of the subject property of the Sale/Leaseback
Transaction at the time of such transaction (adjusted, in either
case, to reflect the remaining term of the lease and any amount
applied pursuant to paragraph (b) above), less an amount equal to
the principal amount of any such Funded Debt of the Company or such
Restricted Subsidiary, other than
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Securities, voluntarily retired by the Company or such Restricted
Subsidiary during such 12-month period.
"Sale/Leaseback Transaction" means any arrangement providing for the
leasing to the Company or any Restricted Subsidiary by any Person (other than
the Company or a Restricted Subsidiary) of any property which has been, or is
to be, sold or transferred by the Company or such Restricted Subsidiary to such
Person or to any Person (other than the Company or a Restricted Subsidiary) to
which funds have been or are to be advanced by such Person on the security of
the leased property.
Section 10.7. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence and that of each Subsidiary and their respective rights
(charter and statutory) and franchises; provided, however, that the foregoing
shall not obligate the Company or any Subsidiary to preserve any such right or
franchise if the Company or any Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of its business or
the business of such Subsidiary and that the loss thereof is not
disadvantageous in any material respect to any Holder.
Section 10.8. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 10.5, 10.6 or 10.7 with
respect to the Securities of any series if before the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Securities of such series, by Act of such Holders, either shall
waive such compliance in such instance or generally shall have waived
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
Section 10.9. Company Statement as to Compliance; Notice of Certain
Defaults.
(1) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, a written statement (which need not be contained
in or accompanied by an Officers' Certificate) signed by the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company, stating that
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(a) a review of the activities of the Company during such
year and of its performance under this Indenture has been made under
his or her supervision, and
(b) to the best of his or her knowledge, based on such
review, (a) the Company has complied with all the conditions and
covenants imposed on it under this Indenture throughout such year,
or, if there has been a default in the fulfillment of any such
condition or covenant, specifying each such default known to him or
her and the nature and status thereof, and (b) no event has occurred
and is continuing which is, or after notice or lapse of time or both
would become, an Event of Default, or, if such an event has occurred
and is continuing, specifying each such event known to him and the
nature and status thereof.
(2) The Company shall deliver to the Trustee, within five days after
the occurrence thereof, written notice of any Event of Default or any event
which after notice or lapse of time or both would become an Event of Default
pursuant to clause (4) of Section 5.1.
(3) The Trustee shall have no duty to monitor the Company's
compliance with the covenants contained in this Article 10 other than as
specifically set forth in this Section 10.9.
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.1. Applicability of Article.
Redemption of Securities of any series at the option of the Company
as permitted or required by the terms of such Securities shall be made in
accordance with the terms of such Securities and (except as otherwise provided
herein or pursuant hereto) this Article.
Section 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company of (a) less than all of the Securities of any
series or (b) all of the Securities of any series, with the same issue date,
interest rate or formula, Stated Maturity and other terms, the Company shall,
at least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such
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Redemption Date and of the principal amount of Securities of such series to be
redeemed.
Section 11.3. Selection by Trustee of Securities to be Redeemed.
If less than all of the Securities of any series with the same issue
date, interest rate or formula, Stated Maturity and other terms are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal amount of Registered
Securities of such series; provided, however, that no such partial redemption
shall reduce the portion of the principal amount of a Registered Security of
such series not redeemed to less than the minimum denomination for a Security
of such series established herein or pursuant hereto.
The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal of such Securities which has been or is to be
redeemed.
Unless otherwise specified in or pursuant to this Indenture or the
Securities of any series, if any Security selected for partial redemption is
converted into Common Stock or exchanged for other securities in part before
termination of the conversion or exchange right with respect to the portion of
the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption. Securities
which have been converted or exchanged during a selection of Securities to be
redeemed shall be treated by the Trustee as Outstanding for the purpose of such
selection.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given in the manner provided in
Section 1.6, not less than 30 nor more than 60 days prior to the Redemption
Date, unless a shorter period is specified in the Securities to be redeemed, to
the Holders of Securities to be redeemed. Failure to give notice by mailing in
the manner herein provided to the Holder of any Registered Securities designated
for redemption as a whole or in part, or any defect in the notice to any
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such Holder, shall not affect the validity of the proceedings for the
redemption of any other Securities or portion thereof.
Any notice that is mailed to the Holder of any Registered Securities
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the Holder of such Security will
receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that, on the Redemption Date, the Redemption Price shall become
due and payable upon each such Security or portion thereof to be redeemed, and,
if applicable, that interest thereon shall cease to accrue on and after said
date,
(6) the place or places where such Securities, together (in the case
of Bearer Securities) with all Coupons appertaining thereto, if any, maturing
after the Redemption Date, are to be surrendered for payment of the Redemption
Price and any accrued interest and Additional Amounts pertaining thereto,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all Coupons maturing subsequent to the date fixed for redemption
or the amount of any such missing Coupon or Coupons will be deducted from the
Redemption Price, unless security or indemnity satisfactory to the Company, the
Trustee and any Paying Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and no
Registered Securities of such series are to be redeemed, and if such Bearer
Securities may be exchanged for Registered Securities not subject to redemption
on the Redemption Date pursuant to Section
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3.5 or otherwise, the last date, as determined by the Company, on which such
exchanges may be made,
(10) in the case of Securities of any series that are convertible
into Common Stock or exchangeable for other securities, the conversion or
exchange price or rate, the date or dates on which the right to convert or
exchange the principal of the Securities of such series to be redeemed will
commence or terminate and the place or places where such Securities may be
surrendered for conversion or exchange, and
(11) the CUSIP number or the Euroclear or the Cedel reference
numbers of such Securities, if any (or any other numbers used by a Depository
to identify such Securities).
A notice of redemption published as contemplated by Section need not
identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 11.5. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit, with
respect to the Securities of any series called for redemption pursuant to
Section 11.4, with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 10.3) an amount of money in the applicable Currency sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date, unless otherwise specified pursuant to Section 3.1 or in the
Securities of such series) any accrued interest on and Additional Amounts with
respect thereto, all such Securities or portions thereof which are to be
redeemed on that date.
Section 11.6. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest and the Coupons for such
interest appertaining to any Bearer Securities so to be redeemed, except to the
extent provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all Coupons, if any,
appertaining thereto maturing
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after the Redemption Date, such Security shall be paid by the Company at the
Redemption Price, together with any accrued interest and Additional Amounts to
the Redemption Date; provided, however, that, except as otherwise provided in
or pursuant to this Indenture or the Bearer Securities of such series,
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only upon presentation and
surrender of Coupons for such interest (at an Office or Agency located outside
the United States except as otherwise provided in Section 10.2), and provided,
further, that, except as otherwise specified in or pursuant to this Indenture
or the Registered Securities of such series, installments of interest on
Registered Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
Regular Record Dates therefor according to their terms and the provisions of
Section 3.7.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing Coupons, or the surrender of such
missing Coupon or Coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to the Trustee or any Paying Agent any such missing
Coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that any interest or Additional Amounts represented by
Coupons shall be payable only upon presentation and surrender of those Coupons
at an Office or Agency for such Security located outside of the United States
except as otherwise provided in Section 10.2.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium, until paid,
shall bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 11.7. Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part shall
be surrendered at any Office or Agency for such Security (with, if the Company
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing) and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Registered Security or Securities
of the same series, containing identical terms and
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provisions, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered. If a Security in global form
is so surrendered, the Company shall execute, and the Trustee shall
authenticate and deliver to the U.S. Depository or other Depository for such
Security in global form as shall be specified in the Company Order with respect
thereto to the Trustee, without service charge, a new Security in global form
in a denomination equal to and in exchange for the unredeemed portion of the
principal of the Security in global form so surrendered.
ARTICLE 12
SINKING FUNDS
Section 12.1. Applicability of Article.
The provisions of this Article shall be applicable to any sinking
fund for the retirement of Securities of a series, except as otherwise
permitted or required in or pursuant to this Indenture or any Security of such
series issued pursuant to this Indenture.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of such series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 12.2. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series and this Indenture.
Section 12.2. Satisfaction of Sinking Fund Payments with
Securities.
The Company may, in satisfaction of all or any part of any sinking
fund payment with respect to the Securities of any series to be made pursuant
to the terms of such Securities (1) deliver Outstanding Securities of such
series (other than any of such Securities previously called for redemption or
any of such Securities in respect of which cash shall have been released to the
Company), together in the case of any Bearer Securities of such series with all
unmatured Coupons appertaining thereto, and (2) apply as a credit Securities of
such series which have been redeemed either at the election of the Company
pursuant to the terms of such series of Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
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Securities, provided that such series of Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly. If, as a result of the delivery or credit
of Securities of any series in lieu of cash payments pursuant to this Section
12.2, the principal amount of Securities of such series to be redeemed in order
to satisfy the remaining sinking fund payment shall be less than $100,000, the
Trustee need not call Securities of such series for redemption, except upon
Company Request, and such cash payment shall be held by the Trustee or a Paying
Agent and applied to the next succeeding sinking fund payment, provided,
however, that the Trustee or such Paying Agent shall at the request of the
Company from time to time pay over and deliver to the Company any cash payment
so being held by the Trustee or such Paying Agent upon delivery by the Company
to the Trustee of Securities of that series purchased by the Company having an
unpaid principal amount equal to the cash payment requested to be released to
the Company.
Section 12.3. Redemption of Securities for Sinking Fund.
Not less than 75 days prior to each sinking fund payment date for
any series of Securities, the Company shall deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting of
Securities of that series pursuant to Section 12.2, and the optional amount, if
any, to be added in cash to the next ensuing mandatory sinking fund payment,
and will also deliver to the Trustee any Securities to be so credited and not
theretofore delivered. If such Officers' Certificate shall specify an optional
amount to be added in cash to the next ensuing mandatory sinking fund payment,
the Company shall thereupon be obligated to pay the amount therein specified.
Not less than 60 days before each such sinking fund payment date the Trustee
shall select the Securities to be redeemed upon such sinking fund payment date
in the manner specified in Section 11.3 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 11.4. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 11.6 and 11.7.
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ARTICLE 13
REPAYMENT AT THE OPTION OF HOLDERS
Section 13.1. Applicability of Article.
Securities of any series which are repayable at the option of the
Holders thereof before their Stated Maturity shall be repaid in accordance with
the terms of the Securities of such series. The repayment of any principal
amount of Securities pursuant to such option of the Holder to require repayment
of Securities before their Stated Maturity, for purposes of Section 3.9, shall
not operate as a payment, redemption or satisfaction of the Indebtedness
represented by such Securities unless and until the Company, at its option,
shall deliver or surrender the same to the Trustee with a directive that such
Securities be cancelled. Notwithstanding anything to the contrary contained in
this Section 13.1, in connection with any repayment of Securities, the Company
may arrange for the purchase of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Holders of such Securities on or before the close of business on the
repayment date an amount not less than the repayment price payable by the
Company on repayment of such Securities, and the obligation of the Company to
pay the repayment price of such Securities shall be satisfied and discharged to
the extent such payment is so paid by such purchasers.
ARTICLE 14
SECURITIES IN FOREIGN CURRENCIES
Section 14.1. Applicability of Article.
Whenever this Indenture provides for (i) any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same Currency, or (ii)
any distribution to Holders of Securities, in the absence of any provision to
the contrary in the form of Security of any particular series or pursuant to
this Indenture or the Securities, any amount in respect of any Security
denominated in a Currency other than Dollars shall be treated for any such
action or distribution as that amount of Dollars that could be obtained for
such amount on such reasonable basis of exchange and as of the record date with
respect to Registered Securities of such series (if any) for such action,
determination of rights or distribution (or, if there shall be no applicable
record date, such other date reasonably proximate to the date of such action,
determination of rights or distribution) as the Company may specify in a
written notice to the Trustee.
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ARTICLE 15
MEETINGS OF HOLDERS OF SECURITIES
Section 15.1. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities of any series may be called at
any time and from time to time pursuant to this Article to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
Act provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
Section 15.2. Call, Notice and Place of Meetings.
(1) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 15.1, to be held
at such time and at such place in the Borough of Manhattan, The City of New
York, or, if Securities of such series have been issued in whole or in part as
Bearer Securities, in London or in such place outside the United States as the
Trustee shall determine. Notice of every meeting of Holders of Securities of any
series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 1.6, not less than 21 nor more than 180 days prior to
the date fixed for the meeting.
(2) In case at any time the Company (by or pursuant to a Board
Resolution) or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified in
Section 15.1, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed
notice of or made the first publication of the notice of such meeting within
21 days after receipt of such request (whichever shall be required pursuant to
Section 1.6) or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities of such series in
the amount above specified, as the case may be, may determine the time and the
place in the Borough of Manhattan, The City of New York, or, if Securities of
such series are to be issued as Bearer Securities, in London for such meeting
and may call such meeting for such purposes by giving notice thereof as provided
in clause (1) of this Section.
Section 15.3. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of
any series, a Person shall be (1) a Holder of one or more
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Outstanding Securities of such series, or (2) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or more
Outstanding Securities of such series by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders of Securities of any series shall be the Persons entitled to vote at
such meeting and their counsel, any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
Section 15.4. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for any meeting
of Holders of Securities of such series. In the absence of a quorum within
30 minutes after the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved.
In any other case the meeting may be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such meeting. In the absence of a quorum at any reconvened meeting, such
reconvened meeting may be further adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such reconvened meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 15.2(1), except that such notice need be
given only once not less than five days prior to the date on which the meeting
is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage, as provided above, of the principal amount
of the Outstanding Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 9.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted only by the affirmative vote of the
Holders of a majority in principal amount of the Outstanding Securities of
that series; provided, however, that, except as limited by the proviso to
Section 9.2, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other Act which this Indenture expressly
provides may be made, given or taken by the Holders of a specified percentage,
which is less than a majority, in principal amount of the Outstanding Securities
of a series may be adopted at a meeting or an adjourned meeting duly reconvened
and at which a quorum is present as aforesaid by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding
Securities of such series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of
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<PAGE> 103
such series and the Coupons appertaining thereto, whether or not such Holders
were present or represented at the meeting.
Section 15.5. Determination of Voting Rights; Conduct and
Adjournment of Meetings.
(1) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of such series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in Section 1.4
and the appointment of any proxy shall be proved in the manner specified in
Section 1.4 or by having the signature of the person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by
Section 1.4 to certify to the holding of Bearer Securities. Such regulations
may provide that written instruments appointing proxies, regular on their
face, may be presumed valid and genuine without the proof specified in
Section 1.4 or other proof.
(2) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called
by the Company or by Holders of Securities as provided in Section 15.2(2), in
which case the Company or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(3) At any meeting, each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of
Securities of such series held or represented by him; provided, however, that
no vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.
(4) Any meeting of Holders of Securities of any series duly called
pursuant to Section 15.2 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
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<PAGE> 104
Section 15.6. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section and, if applicable,
Section . Each copy shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one such copy shall be
delivered to the Company, and another to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters
therein stated.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed,
all as of the day and year first above written.
[SEAL] ARISTECH CHEMICAL CORPORATION
Attest: /s/ MATTHEW C. CAIRONE
-----------------------
By /s/ MICHAEL J. EGAN
------------------------------
Name: Michael J. Egan
Title: Senior Vice President
and Chief Financial Officer
[SEAL] THE CHASE MANHATTAN BANK,
as Trustee
Attest: /s/ KATHLEEN PERRY
------------------------
(Second Vice President)
By /s/ A.K. CRAIN
------------------------------
Name: Andrea Koster-Crain
Title: (Vice President)
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<PAGE> 106
COMMONWEALTH OF PENNSYLVANIA )
: SS.:
COUNTY OF ALLEGHENY )
On the 22nd day of November, 1996, before me personally came Michael
J. Egan, to me known, who, being by me duly sworn, did depose and say that he
is a Sr. Vice President & Chief Financial Officer of ARISTECH CHEMICAL
CORPORATION, a Delaware corporation, one of the persons described in and who
executed the foregoing instrument; that he knows the seal of said Corporation;
that the seal affixed to said instrument is such Corporation's seal; that it
was so affixed by authority of the Board of Directors of said Corporation; and
that he signed his name thereto by like authority.
/s/ NANCY L. TRAVISANO
--------------------------------
Notary Public
[NOTARIAL SEAL]
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<PAGE> 107
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On the 22nd day of November, 1996, before me personally came A.K.
Crain, to me known, who, being by me duly sworn, did depose and say that she is
a Vice President of THE CHASE MANHATTAN BANK, a banking corporation organized
and existing under the laws of the State of New York, one of the persons
described in and who executed the foregoing instrument; that he knows the seal
of said Corporation; that the seal affixed to said instrument is such
Corporation's seal; that it was so affixed by authority of the Board of
Directors of said Corporation; and that he signed his name thereto by like
authority.
/s/ ANNABELLE DELUCA
-------------------------------
Notary Public
[NOTARIAL SEAL]
99
<PAGE> 1
EXHIBIT 4.02
----------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of November 25, 1996
among
Aristech Chemical Corporation,
Issuer,
and
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
J.P. Morgan Securities Inc. and
Morgan Stanley & Co. Incorporated,
Initial Purchasers
----------------------------------------------------------------
<PAGE> 2
Table of Contents
<TABLE>
<S> <C> <C>
1. Definitions..................................... 1
2. Registration Under the 1933 Act................. 4
(a) Exchange Offer Registration............ 4
(b) Shelf Registration..................... 6
(c) Expenses............................... 7
(d) Effective Registration Statement....... 8
(e) Increase in Interest Rate.............. 8
(f) Specific Enforcement................... 9
3. Registration Procedures......................... 9
4. Underwritten Registrations...................... 18
5. Indemnification and Contribution................ 18
6. Miscellaneous................................... 20
(a) Rule 144 and Rule 144A................. 20
(b) No Inconsistent Agreements............. 20
(c) Amendments and Waivers................. 21
(d) Notices................................ 21
(e) Successors and Assigns................. 21
(f) Third Party Beneficiary................ 22
(g) Counterparts........................... 22
(h) Headings............................... 22
(i) GOVERNING LAW.......................... 22
(j) Severability........................... 22
</TABLE>
i
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered as of November 25, 1996, among ARISTECH CHEMICAL CORPORATION, a
Delaware corporation (the "Company"), and MERRILL LYNCH & CO., MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED, J.P. MORGAN SECURITIES INC. and MORGAN
STANLEY & CO. INCORPORATED (the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated
November 20, 1996 among the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $150,000,000 principal amount of the Company's 6
7/8 percent Notes due 2006 (the "Debt Securities"). In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Company has agreed
to provide to the Initial Purchasers and their direct and indirect transferees
the registration rights set forth in this Agreement. The execution and delivery
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree, and all
other Holders (as defined below) of Registrable Securities (as defined below)
from time to time, by their acceptance thereof, shall be conclusively deemed to
have agreed, as follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Closing Date" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble and also
includes the Company's successors.
"Debt Securities" shall have the meaning set forth in the preamble.
"Depositary" shall mean the Trustee, or any other exchange agent
appointed by the Company.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
Act effected pursuant to Section 2(a) hereof.
<PAGE> 4
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, and all exhibits thereto.
"Exchange Securities" shall mean 6 7/8 percent Notes due 2006 issued
by the Company under the Indenture containing terms identical in all material
respects to the Debt Securities (except that (i) interest thereon shall accrue
from the last date on which interest was paid or duly provided for on the Debt
Securities or, if no such interest has been paid, from the date of their
original issue, (ii) the transfer restrictions thereon shall be eliminated,
(iii) certain provisions relating to an increase in the stated rate of interest
thereon shall be eliminated and (iv) the denominations thereof shall be $1000
and integral multiples of $1000), to be offered to Holders of Debt Securities
in exchange for Debt Securities pursuant to the Exchange Offer.
"Holders" shall mean each of the Initial Purchasers, for so long as it
owns any Registrable Securities, and each of its successors, assigns and direct
and indirect transferees who shall at the time be owners of Registrable
Securities under the Indenture; provided that the term Holder shall exclude any
underwriter who purchased Registrable Securities for distribution in an
underwritten public offering pursuant to an effective Registration Statement.
"Indenture" shall mean the Indenture relating to the Debt Securities
dated as of November 1, 1996 between the Company and The Chase Manhattan Bank,
as trustee, as the same may be amended from time to time in accordance with the
terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities; provided that
whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Company shall be disregarded in determining whether such consent or
approval was given by the Holders of such required percentage or amount; and
provided, further, that whenever the consent or approval of Holders of
Registrable Securities is required hereunder with regard to matters related to
an underwritten registration or similar offering or with regard to matters
pertaining to a Registration Statement, Registrable Securities held by Holders
not participating in such underwritten registration or similar offering, or
Registrable Securities not registered pursuant to such Registration Statement
(or, at any time prior to the filing of a Shelf Registration Statement and
after the determination to file such Shelf Registration is made, Registrable
Securities whose Holders have not requested that such Registrable Securities be
included in such
2
<PAGE> 5
Shelf Registration Statement), as the case may be, shall be disregarded in
determining whether such consent or approval was given by the Holders of such
required percentage or amount.
"Merrill Lynch" shall mean Merrill Lynch, Pierce, Fenner & Smith
Incorporated, on behalf of the Initial Purchasers.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments.
"Purchase Agreement" shall have the meaning set forth in the preamble.
"Registrable Securities" shall mean the Debt Securities; provided,
however, that any Debt Securities shall cease to be Registrable Securities when
(i) a Registration Statement with respect to such Debt Securities shall have
been declared effective under the 1933 Act and such Debt Securities shall have
been disposed of pursuant to such Registration Statement, (ii) such Debt
Securities shall have been sold to the public pursuant to Rule 144 (or any
similar provision then in force, but not Rule 144A) under the 1933 Act, (iii)
such Debt Securities shall have become eligible for resale pursuant to Rule
144(k) under the 1933 Act, (iv) such Debt Securities shall have ceased to be
outstanding or (v) such Debt Securities have been exchanged for Exchange
Securities upon consummation of the Exchange Offer.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. ("NASD") registration and filing fees, (ii) all fees and expenses incurred
in connection with compliance with state securities or blue sky laws (including
reasonable fees and disbursements of one firm of legal counsel for any
underwriters and Holders in connection with blue sky qualification of any of
the Exchange Securities or Registrable Securities), (iii) all expenses of
printing and distributing any Registration Statement, any Prospectus and any
amendments or supplements thereto, (iv) all rating agency fees, (v) the fees
and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of "cold comfort" letters
required by this Agreement, (vi) the fees and expenses of the Trustee, and any
escrow agent or custodian, and (vii) the reasonable fees and expenses of any
special experts
3
<PAGE> 6
retained by the Company in connection with any Registration Statement, but
excluding fees of counsel to the underwriters or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
Company which covers any of the Exchange Securities or Registrable Securities
pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, and all
exhibits thereto.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Securities (except Registrable
Securities which the Holders have elected not to include in such Shelf
Registration Statement or the Holders of which have not complied with their
obligations under the penultimate paragraph of Section 3 hereof or under the
penultimate sentence of Section 2(b) hereof) on an appropriate form under Rule
415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and
all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein and, all exhibits thereto.
"Trustee" shall mean the trustee with respect to the Debt Securities
under the Indenture.
2. Registration Under the 1933 Act. (a) Exchange Offer
Registration. To the extent not prohibited by law (including, without
limitation, any applicable interpretation of the Staff of the SEC), the Company
shall use its best efforts (A) to file within 90 days after the Closing Date
the Exchange Offer Registration Statement covering the offer by the Company to
the Holders to exchange all of the Registrable Securities (except Registrable
Securities held by an Initial Purchaser and acquired directly from the Company
if such Initial Purchaser is not permitted, in the reasonable opinion of
counsel to the Initial Purchasers, pursuant to applicable law or SEC
interpretation, to participate in the Exchange Offer) for Exchange Securities,
(B) to cause such Exchange Offer Registration Statement to be declared
effective by the SEC within 180 days after the Closing Date, (C) to cause such
Exchange Offer Registration Statement to remain effective until the closing of
the Exchange Offer and (D) to consummate the Exchange Offer on or prior to the
earlier of (x) the 30th day following the date on which the Exchange Offer
Registration Statement is declared
4
<PAGE> 7
effective and (y) the 210th day following the Closing Date. The Exchange
Securities will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder (other than Participating Broker-Dealers (as defined in Section 3(f))
and broker-dealers who purchased Debt Securities directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the 1933
Act) eligible and electing to exchange Registrable Securities for Exchange
Securities (assuming that such Holder is not an affiliate of the Company,
acquires the Exchange Securities in the ordinary course of such Holder's
business and has no arrangements or understandings with any person to
participate in the distribution (within the meaning of the 1933 Act) of
Exchange Securities) to trade such Exchange Securities from and after their
receipt without any limitations or restrictions under the 1933 Act and without
material restrictions under the securities laws of a substantial proportion of
the several states of the United States.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 30 days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) use the services of the Depositary for the Exchange
Offer;
(iv) permit Holders to withdraw tendered Registrable
Securities at any time prior to the close of business, New York City
time, on the last business day on which the Exchange Offer shall
remain open, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the principal amount of Registrable Securities
delivered for exchange, and a statement that such Holder is
withdrawing his election to have such Registrable Securities
exchanged; and
(v) otherwise comply in all respects with all applicable
laws relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer,
the Company shall:
(i) accept for exchange Registrable Securities duly tendered
and not validly withdrawn pursuant to the Exchange Offer in accordance
with the terms of the Exchange Offer Registration Statement and letter
of transmittal which is an exhibit thereto;
5
<PAGE> 8
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities so accepted for exchange by
the Company; and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Securities to each Holder of Registrable Securities equal in
amount to the Registrable Securities of such Holder so accepted for
exchange.
Interest on each Exchange Security will accrue from the last
date on which interest was paid or duly provided for on the Registrable
Securities surrendered or exchanged therefor or, if no interest has been paid
on the Registrable Securities, from the date of their original issue. The
Exchange Offer shall not be subject to any conditions, other than (i) that the
Exchange Offer, or the making of any exchange by a Holder, does not violate
applicable law or any applicable interpretation of the Staff of the SEC, (ii)
that no action or proceeding shall have been instituted or threatened in any
court or by or before any governmental agency or body with respect to the
Exchange Offer, (iii) that there shall not have been adopted or enacted any
law, statute, rule or regulation, (iv) that there shall not have been declared
by United States federal or New York state authorities a banking moratorium,
(v) that trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall not have been suspended by order of the
SEC or any other governmental authority and (vi) such other conditions as may
be reasonably acceptable to Merrill Lynch, in each of clauses (ii) through (v),
which, in the Company's judgment, would reasonably be expected to impair the
ability of the Company to proceed with the Exchange Offer. In addition, each
Holder of Registrable Securities (other than Participating Broker-Dealers) who
wishes to exchange such Registrable Securities for Exchange Securities in the
Exchange Offer will be required to represent that (i) it is not an affiliate of
the Company, (ii) any Exchange Securities to be received by it were acquired in
the ordinary course of business and (iii) it has no arrangement with any person
to participate in the distribution (within the meaning of the 1933 Act) of the
Exchange Securities. Each Participating Broker-Dealer shall be required to make
such representations as, in the reasonable judgment of the Company, may be
necessary under applicable SEC rules, regulations or interpretations or
customary in connection with similar exchange offers. Each Holder (including
Participating Broker-Dealers) shall be required to make such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or another
appropriate form under the 1933 Act available and will be required to agree to
comply with their agreements and covenants set forth in this Agreement. The
Exchange Offer shall be subject to the further condition that no stop order
shall have been issued by the SEC or any state securities authority suspending
the effectiveness of the Exchange Offer Registration Statement and no
proceedings shall have been initiated or, to the knowledge of the Company,
threatened for that purpose. To the extent permitted by law, the Company shall,
upon request of Merrill Lynch, inform the
6
<PAGE> 9
Initial Purchasers of the names and addresses of the Holders to whom the
Exchange Offer is made, and the Initial Purchasers shall have the right to,
and, if requested by the Company, shall, contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
For greater clarity, the Company's obligation to use its best
efforts to make the Exchange Offer hereunder terminates at the close of
business on the 210th day following the Closing Date.
(b) Shelf Registration. (i) If, because of any change in law
or applicable interpretations thereof by the Staff of the SEC, the Company is
not permitted to effect the Exchange Offer as contemplated by Section 2(a)
hereof, or (ii) if for any other reason the Exchange Offer Registration
Statement is not declared effective within 180 days after the Closing Date, the
Company shall, at its cost:
(A) as promptly as practicable, file with the SEC a Shelf
Registration Statement relating to the offer and sale of the
Registrable Securities (other than Registrable Securities owned by
Holders who have elected not to include such Registrable Securities in
such Shelf Registration Statement or who have not complied with their
obligations under the penultimate paragraph of Section 3 hereof or
under the penultimate sentence of this Section 2(b)) by the Holders
from time to time in accordance with the methods of distribution
selected by the Majority Holders of such Registrable Securities and
set forth in such Shelf Registration Statement, and use its best
efforts to cause such Shelf Registration Statement to be declared
effective by the SEC by the 210th day after the Closing Date;
(B) use its reasonable efforts to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of three
years from the date a Shelf Registration Statement is declared
effective by the SEC or such shorter period which will terminate when
all of the Registrable Securities covered by the Shelf Registration
Statement have been sold pursuant to such Shelf Registration Statement
or otherwise are no longer Registrable Securities; and
(C) notwithstanding any other provisions hereof, use its
reasonable efforts to ensure that (i) any Shelf Registration Statement
and any amendment thereto and any Prospectus forming part thereof and
any supplement thereto complies in all material respects with the 1933
Act and the rules and regulations thereunder, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, 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
7
<PAGE> 10
(iii) any Prospectus forming part of any Shelf Registration Statement,
and any supplement to such Prospectus (as amended or supplemented from
time to time), does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
To the extent permitted by law, the Company further agrees,
if necessary, to supplement or amend the Shelf Registration Statement (if
reasonably requested by one firm of legal counsel selected by the Majority
Holders) with respect to information relating to the Holders and otherwise as
required by Section 3(b) below, to use all reasonable efforts to cause any such
amendment to become effective and such Shelf Registration Statement to become
usable as soon as thereafter practicable and to furnish to the Holders of
Registrable Securities registered thereby, promptly after its being used or
filed with the SEC, such number of copies of any such supplement or amendment
as such Holders may reasonably request. Anything herein to the contrary
notwithstanding, the Company shall not be required to (x) permit or effect more
than one underwritten offering of Registrable Securities pursuant to the Shelf
Registration Statement or (y) permit or effect any offerings through sales
agents, distributors or other similar offerings in respect of any Registration
Statement. The Company may require, as a condition to including the Registrable
Securities of any Holder in any Shelf Registration Statement, that such Holder
shall have furnished to the Company a written agreement to the effect that such
Holder agrees to comply with and be bound by the provisions of this
Registration Rights Agreement. For further clarity, the Company shall have no
obligation to keep the Shelf Registration Statement effective after
consummation of the Exchange Offer, and the Company's obligations to use its
best efforts to file a Shelf Registration Statement and to keep such Shelf
Registration Statement effective shall immediately terminate upon effectiveness
of the Exchange Offer Registration Statement (regardless of when such
effectiveness shall occur).
(c) Expenses. The Company (i) shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) or 2(b),
and (ii) in the case of the Shelf Registration Statement, will reimburse the
Holders for the reasonable fees and disbursements of one firm of legal counsel
(reasonably satisfactory to the Company) designated in writing by the Majority
Holders to act as counsel for the Holders of the Registrable Securities in
connection therewith (including any Initial Purchasers whose Registrable
Securities are registered for resale pursuant to such Shelf Registration
Statement). Each Holder (including each Initial Purchaser) shall pay all
expenses of its counsel other than as set forth in the preceding sentence,
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to any
Shelf Registration Statement or the exchange of its Registrable Securities
pursuant to any Exchange
8
<PAGE> 11
Offer Registration Statement. Notwithstanding anything in this Agreement to the
contrary, the Company shall not be required to pay the fees and disbursements
of legal counsel for any Holders (including Initial Purchasers) except (A) as
provided in clause (ii) of the first sentence of this paragraph and (B) to the
extent required by Section 5 hereof.
(d) Effective Registration Statement. (i) The Company will be
deemed not to have used its best efforts or reasonable efforts, as the case may
be, to cause the Exchange Offer Registration Statement or any Shelf
Registration Statement, as the case may be, to become, or to remain, effective
during the requisite period if the Company voluntarily takes any action that
would result in any such Registration Statement not being declared effective or
in the Holders of Registrable Securities covered thereby not being able to
exchange or offer and sell such Registrable Securities during that period
unless (A) such action is, in the reasonable judgment of the Company, required
by applicable law (including, without limitation, any interpretation of the
SEC) or (B) such action is taken by the Company in good faith and for valid
business reasons (not including avoidance of the Company's obligations
hereunder), including the acquisition or divestiture of assets, so long as the
Company promptly complies with the requirements of Section 3(k) hereof, if
applicable.
(ii) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided however, that if, after it has been declared
effective, the offering of Registrable Securities pursuant to such Shelf
Registration Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or
court, such Shelf Registration Statement will be deemed not to have been
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Shelf Registration Statement may
legally resume.
(e) Increase in Interest Rate. In the event that (i) the
Exchange Offer Registration Statement is not filed with the SEC on or prior to
the 90th calendar day after the Closing Date, (ii) the Exchange Offer
Registration Statement is not declared effective by the SEC on or prior to the
180th calendar day after the Closing Date or (iii) the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective by the
SEC on or prior to the earlier of (x) the 30th day following the date on which
the Exchange Offer Registration Statement is declared effective and (y) the
210th day after the Closing Date, the interest rate borne by the Debt
Securities shall be increased by 0.50 percent per annum following such 90th day
in the case of clause (i) above, such 180th day in the case of clause (ii)
above, or the earlier of such 30th day and such 210th day in the case of clause
(iii) above; provided that the aggregate amount of any such increase in such
per annum interest rate will in no event exceed
9
<PAGE> 12
0.50 percent; and provided, further that if the Exchange Offer Registration
Statement is not declared effective by the SEC on or prior to the 180th day
following the Closing Date, then Debt Securities owned by Persons who do not
comply in all material respects with their obligations under the penultimate
paragraph of Section 3 will not be entitled to any such increase in the
interest rate for any day after the 210th day following the Closing Date. Upon
(x) the filing of the Exchange Offer Registration Statement after the 90th day
described in clause (i) above, (y) the effectiveness of the Exchange Offer
Registration Statement after the 180th day described in clause (ii) above or
(z) the consummation of the Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after the earlier of the 30th day
and the 210th day described in clause (iii) above, the interest rate borne by
the Debt Securities from the date of such filing, effectiveness or
consummation, as the case may be, will be reduced to the original interest
rate.
(f) Specific Enforcement. Without limiting the remedies
available to the Holders, the Company acknowledges that any failure by the
Company to comply with its obligations under Section 2(a) and Section 2(b)
hereof may result in material irreparable injury to the Holders for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of any such failure, any
Holder may, to the extent permitted by law, obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. Registration Procedures. In connection with the
obligations of the Company with respect to the Registration Statements pursuant
to Sections 2(a) and 2(b) hereof, but only so long as the Company shall have an
obligation under this Agreement to keep a Registration Statement effective, the
Company shall:
(a) use its best efforts to prepare and file with the SEC a
Registration Statement, within the relevant time period specified in
Section 2, on the appropriate form under the 1933 Act, which form (i)
shall be selected by the Company, (ii) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities
by the selling Holders thereof and (iii) shall comply as to form in
all material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and use its best efforts to cause such Registration
Statement to become effective and use its reasonable efforts to cause
such Registration Statement to remain effective in accordance with
Section 2 hereof;
(b) to the extent permitted by law, use its reasonable
efforts to (i) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary under applicable law to keep such Registration Statement
effective for the applicable period,
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<PAGE> 13
(ii) cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed (if
required) pursuant to Rule 424 under the 1933 Act, and (iii) comply
with the provisions of the 1933 Act with respect to the disposition of
all securities covered by each Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof;
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities, at least five days prior to filing,
that the Shelf Registration Statement with respect to the Registrable
Securities is being filed and advising such Holders that the
distribution of Registrable Securities will be made in accordance with
the method elected by the Majority Holders; and (ii) furnish to each
Holder of Registrable Securities registered under the Shelf
Registration Statement, to a single firm of legal counsel for the
Holders (including the Initial Purchasers) and to the managing
underwriters of an underwritten offering of Registrable Securities, if
any, and their counsel, without charge, as many copies of each
Prospectus, including each preliminary prospectus, and any amendment
or supplement thereto as such Holder, counsel or underwriters may
reasonably request and, if the Holder so requests, all exhibits in
order to facilitate the public sale or other disposition of the
Registrable Securities; and (iii) subject to Section 3(k) and the last
paragraph of Section 3, hereby consent to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto but only during the period of time that the Company
is required to keep the Shelf Registration Statement effective
pursuant to this Agreement;
(d) use its reasonable efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
sky" laws of such jurisdictions in the United States as the Majority
Holders of Registrable Securities covered by a Registration Statement
and the managing underwriter of an underwritten offering of
Registrable Securities shall reasonably request at least ten days
prior to the time the applicable Registration Statement is declared
effective by the SEC, to cooperate with the Holders in connection with
any filings required to be made with the NASD, and do any and all
other acts and things which may be reasonably necessary or advisable
to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder
pursuant to such Registration Statement; provided, however, that the
Company shall not be required to (i) qualify as a foreign corporation
or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d) or (ii)
take any action that would subject
11
<PAGE> 14
it to general service of process or taxation in any such jurisdiction
if it is not then so subject;
(e) in the case of a Shelf Registration Statement, notify a
single firm of legal counsel for the Holders of Registrable Securities
registered thereby (including any Initial Purchasers) and Merrill
Lynch promptly and, if requested by such counsel or Merrill Lynch,
confirm such advice in writing promptly (by notice to such counsel or
to Merrill Lynch) (i) when such Registration Statement has become
effective and when any post-effective amendments thereto become
effective, (ii) of any request by the SEC or any state securities
authority for post-effective amendments and supplements to such
Registration Statement and the related Prospectus or for additional
information after such Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of such Registration
Statement or the initiation of any proceedings for that purpose, (iv)
if, between the effective date of such Registration Statement and the
closing of any sale of Registrable Securities covered thereby pursuant
to an underwriting agreement to which the Company is a party, the
representations and warranties of the Company contained in such
underwriting agreement cease to be true and correct in all material
respects, (v) of the receipt by an appropriate officer or management
employee of the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities covered
by such Registration Statement for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (vi)
upon an appropriate officer or management employee of the Company
becoming aware thereof, of the happening of any event or the discovery
of any facts during the period such Registration Statement is
effective which (A) makes any statement made in such Registration
Statement or the related Prospectus untrue in any material respect or
(B) causes such Registration Statement or the related Prospectus to
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by Participating Broker-Dealers (as defined
below) who have exchanged their Registrable Securities for Exchange
Securities for the resale of such Exchange Securities, (ii) furnish to
each Participating Broker-Dealer who notifies the Company in writing
that it desires to participate in the Exchange Offer, without charge,
as many copies of each Prospectus included in the Exchange Offer
Registration Statement, including any preliminary prospectus, and any
amendment or supplement
12
<PAGE> 15
thereto, as such Participating Broker-Dealer may reasonably request,
(iii) include in the Exchange Offer Registration Statement a statement
that any broker-dealer who holds Registrable Securities acquired for
its own account as a result of market-making activities or other
trading activities (a "Participating Broker-Dealer"), and who receives
Exchange Securities for Registrable Securities pursuant to the
Exchange Offer, may be a statutory underwriter and must deliver a
prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Securities, (iv) subject to Section 3(k)
and the last paragraph of Section 3, hereby consent to the use of the
Prospectus forming part of the Exchange Offer Registration Statement
or any amendment or supplement thereto by any Participating
Broker-Dealer in connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or supplement
thereto for a period ending 90 days following consummation of the
Exchange Offer or, if earlier, when all Exchange Securities received
by such Participating Broker-Dealer in exchange for Registrable
Securities acquired for their own account as a result of market-making
or other trading activities have been disposed of by such
Participating Broker-Dealer, and (v) include in the transmittal letter
or similar documentation to be executed by an exchange offeree in
order to participate in the Exchange Offer a provision to
substantially the following effect (or such similar provision as is
reasonably acceptable to counsel for the Initial Purchasers and as, in
the reasonable opinion of the Company, may at the time be required by
applicable law or SEC interpretation):
"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 Exchange Securities. If the
undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Registrable
Securities, it represents that the Registrable Securities to
be exchanged for Exchange Securities 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 1933 Act in connection with
any resale of such Exchange Securities pursuant to the
Exchange Offer; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of
the 1933 Act"; and
(B) to the extent any Participating Broker-Dealer
participates in the Exchange Offer, the Company shall use its
reasonable efforts to cause to be delivered at the request of an
entity representing the Participating Broker-Dealers (which entity
shall be Merrill Lynch, Pierce, Fenner & Smith Incorporated or another
Initial Purchaser) only one, if any,
13
<PAGE> 16
"cold comfort" letter with respect to the Prospectus in the Exchange
Offer Registration Statement in the form existing on the last date for
which exchanges are accepted pursuant to the Exchange Offer; and
(C) to the extent any Participating Broker-Dealer
participates in the Exchange Offer and notifies the Company or causes
the Company to be notified in writing that it is a Participating
Broker-Dealer, the Company shall use its reasonable efforts to
maintain the effectiveness of the Exchange Offer Registration
Statement for a period of 90 days following the last date on which
exchanges are accepted pursuant to the Exchange Offer, or, if earlier,
when all Exchange Securities received by Participating Broker-Dealers
in exchange for Registrable Securities acquired for their own account
as a result of market-making or other trading activities have been
disposed of by such Participating Broker-Dealers; and
(D) the Company shall not be required to amend or supplement
the Prospectus contained in the Exchange Offer Registration Statement
as would otherwise be contemplated by Section 3(b), or take any other
action as a result of this Section 3(f), for a period exceeding 90
days after the last date for which exchanges are accepted pursuant to
the Exchange Offer (or such earlier date referred to in paragraph (C)
above) and Participating Broker-Dealers shall not be authorized by the
Company to, and shall not, deliver such Prospectus after such period
in connection with resales contemplated by this Section 3 or
otherwise;
it being understood that, notwithstanding anything in this Agreement
to the contrary, the Company shall not be required to comply with any
provision of this Section 3(f) or any other provision of this
Agreement relating to the distribution of Exchange Securities by
Participating Broker-Dealers, to the extent that the Company
reasonably concludes (with the consent of Merrill Lynch, not to be
unreasonably withheld) that compliance with such provision is no
longer required by applicable law or interpretation of the Staff of
the SEC;
(g) (A) in the case of an Exchange Offer, furnish one firm of
legal counsel for the Initial Purchasers and (B) in the case of a
Shelf Registration, furnish one firm of legal counsel for the Holders
of Registrable Securities covered thereby, copies of any request
received by or on behalf of the Company from the SEC or any state
securities authority for amendments or supplements to the relevant
Registration Statement and Prospectus or for additional information;
(h) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement as
soon as practicable and provide
14
<PAGE> 17
prompt notice to one firm of legal counsel for the Holders of the
withdrawal of any such order;
(i) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities registered thereby, without charge,
at least one conformed copy of each Registration Statement and any
post-effective amendment thereto;
(j) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legend (except
any customary legend borne by securities held through The Depository
Trust Company or any similar depository); and cause such Registrable
Securities to be in such denominations (consistent with the provisions
of the Indenture and the officers' certificate establishing the form
and terms of the Debt Securities pursuant to the Indenture) and
registered in such names as the selling Holders or the underwriters,
if any, may reasonably request at least two business days prior to the
closing of any sale of Registrable Securities;
(k) in the case of a Shelf Registration, upon an appropriate
officer or management employee of the Company becoming aware of the
occurrence of any event or the discovery of any facts, each as
contemplated by Section 3(e)(vi) hereof, use its reasonable efforts to
prepare a supplement or post-effective amendment to the relevant
Registration Statement or the related Prospectus or file any other
required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not contain at the
time of such delivery any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The Company agrees to notify each Holder of Registrable
Securities registered under the Shelf Registration Statement to
suspend use of the Prospectus as promptly as practicable after an
appropriate officer or management employee of the Company becomes
aware of the occurrence of such an event, and each Holder of
Registrable Securities registered under the Shelf Registration
Statement hereby agrees to suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such
misstatement or omission or has advised such Holders that use of such
Prospectus may be resumed. At such time as such public disclosure is
otherwise made or the Company determines that such disclosure is not
necessary, in each case to correct any misstatement of a material fact
or to include any omitted material fact, or the Company otherwise
determines that use of such Prospectus may be resumed, the Company
agrees promptly to notify each Holder of Registrable Securities
registered under the Shelf Registration Statement of such
determination and (if applicable) to furnish each such
15
<PAGE> 18
Holder such numbers of copies of the Prospectus, as amended or
supplemented, as such Holder may reasonably request;
(l) obtain a CUSIP number for all Exchange Securities, or
Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement, and provide the Trustee
with printed certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form eligible for
deposit with The Depository Trust Company (provided that the Company
shall not be required to provide for any Exchange Securities or
Registrable Securities to be so-called "book-entry only" securities);
(m) unless the Indenture, as it relates to the Exchange
Securities or the Registrable Securities, as the case may be, has
already been so qualified, use its reasonable efforts to (i) cause the
Indenture to be qualified under the Trust Indenture Act of 1939, as
amended (the "TIA"), in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be,
(ii) cooperate with the Trustee and the Holders to effect such changes
to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA and (iii) execute,
and use its reasonable efforts to cause the Trustee to execute, all
documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;
(n) in the case of a Shelf Registration, take all customary
and appropriate actions (including those reasonably requested by the
Majority Holders) in order to expedite or facilitate the disposition
of the Registrable Securities registered thereby, provided that the
Company shall not be required to (A) enter into more than one
underwriting agreement (the "Underwriting Agreement") with respect to
Registrable Securities registered under the Shelf Registration
Statement or (B) enter into any sales agency agreements, distribution
agreements or other similar agreements whatsoever with respect to the
Registrable Securities. The Company agrees that it will in good faith
negotiate the terms of any such Underwriting Agreement, which shall be
in form and scope as is customary for similar offerings of debt
securities with similar credit ratings (including, without limitation,
representations and warranties to the underwriters) and shall
otherwise be reasonably satisfactory to the Company and the managing
underwriters; and
(i) with regard to not more than one underwritten
offering pursuant to the Underwriting Agreement (opinions of
counsel that are required to be filed as Exhibit 5 to any
registration statement being specifically excluded from this
limitation), if requested by the managing underwriters,
obtain opinions of counsel to the Company
16
<PAGE> 19
(which counsel shall be reasonably satisfactory to the
managing underwriters) addressed to such underwriters,
covering the matters customarily covered in opinions
requested in sales of securities or underwritten offerings
and in substantially the forms specified in the Underwriting
Agreement; provided, however, that all of such opinions shall
be dated as of a single date and no updates thereof shall be
required; and provided, further, that except as set forth in
this paragraph (i), the Company shall have no obligation to
deliver any legal opinions (excluding Exhibit 5 opinions)
under or in connection with this Agreement;
(ii) with regard to not more than one underwritten
offering pursuant to the Underwriting Agreement, if requested
by the managing underwriters, obtain a single "cold comfort"
letter and a single update thereto not later than two weeks
after the date of the original letter (or if not available
under applicable accounting pronouncements or standards, a
single "procedures" letter and a single update thereto) from
the Company's independent certified public accountants
addressed to the underwriters named in the Underwriting
Agreement and use reasonable efforts to have such letter
addressed to the selling Holders of Registrable Securities
(provided that such letter need not be addressed to any
Holder to whom, in the reasonable opinion of the Company's
independent certified public accountants, addressing such
letter is not permissible under applicable accounting
standards), such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" (or
"procedures") letters to underwriters in connection with
similar underwritten offerings; provided, however, that
except as set forth in this paragraph (ii), the Company shall
have no obligation to deliver any "cold comfort" or
"procedures" letters or any updates thereto under or in
connection with this Agreement; and
(iii) deliver such documents and certificates as
may be reasonably requested and as are customarily delivered
in similar underwritten offerings.
Notwithstanding anything herein to the contrary, the Company shall
have no obligation to enter into any underwriting agreement or permit
an underwritten offering of Registrable Securities unless a request
therefor shall have been received from the Majority Holders. In the
case of such a request for an underwritten offering, the Company shall
provide written notice to the Holders of all Registrable Securities of
such underwritten offering at least 30 days prior to the filing of a
prospectus supplement for such underwritten offering. Such notice
shall (x) offer each such Holder the right to participate in such
underwritten offering (but may indicate that whether or not all
Registrable Securities are included
17
<PAGE> 20
will be at the discretion of the underwriters), (y) specify a date,
which shall be no earlier than 10 days following the date of such
notice, by which such Holder must inform the Company of its intent to
participate in such underwritten offering and (z) include the
instructions such Holder must follow in order to participate in such
underwritten offering;
(o) in the case of a Shelf Registration, and to the extent
customary in connection with a "due diligence" investigation for an
offering of debt securities with a similar credit rating to that of
the Registrable Securities, make available for inspection by
representatives appointed by the Majority Holders and any underwriters
participating in any disposition pursuant to a Shelf Registration
Statement and one firm of legal counsel retained for all Holders
participating in such Shelf Registration, and one firm of legal
counsel to the underwriters, if any, all financial and other records,
pertinent corporate documents and properties of the Company reasonably
requested by any such persons, and cause the respective officers,
employees, and any other agents of the Company to supply all
information reasonably requested by any such representative,
underwriters or counsel in connection with the Shelf Registration
Statement; provided that, if any such records, documents or other
information relates to pending or proposed acquisitions or
dispositions, or otherwise relates to matters reasonably considered by
the Company to constitute sensitive or proprietary information, the
Company need not provide such records, documents or information unless
the foregoing parties enter into a confidentiality agreement in
customary form and reasonably acceptable to such parties and the
Company;
(p) (i) a reasonable time prior to the filing of any Exchange
Offer Registration Statement, any Prospectus forming a part thereof,
any amendment to an Exchange Offer Registration Statement or amendment
or supplement to such Prospectus, provide copies of such document to
the Initial Purchasers, and make such changes in any such document
prior to the filing thereof as Merrill Lynch or one firm of legal
counsel to the Initial Purchasers may reasonably request; (ii) in the
case of a Shelf Registration, a reasonable time prior to filing any
Shelf Registration Statement, any Prospectus forming a part thereof,
any amendment to such Shelf Registration Statement or amendment or
supplement to such Prospectus, provide copies of such document to
Merrill Lynch, one firm of legal counsel appointed by the Majority
Holders to represent the Holders participating in such Shelf
Registration, the managing underwriters of an underwritten offering of
Registrable Securities, if any, and their counsel, and make such
changes in any such document prior to the filing thereof as Merrill
Lynch, such one firm of legal counsel for the Holders, such managing
underwriters or their counsel may reasonably request; and (iii) cause
the representatives of the Company to be available for discussion of
such document as
18
<PAGE> 21
shall be reasonably requested by Merrill Lynch, one firm of legal
counsel to the Holders, the managing underwriters and their counsel
and shall not at any time make any filing of any such document of
which Merrill Lynch, one firm of legal counsel to the Holders, the
managing underwriters and their counsel shall not have previously been
advised and furnished a copy;
(q) use its reasonable efforts to cause the Exchange
Securities, if applicable, and, in the event of a Shelf Registration,
the Debt Securities to be rated with not more than two rating agencies
selected by the Company, if so requested by the Majority Holders or by
the managing underwriters of an underwritten offering of Registrable
Securities, if any, unless the Exchange Securities or the Registrable
Securities, as the case may be, are already so rated or unless the
Company has obtained such ratings for its long-term debt securities
generally;
(r) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering at least 12 months which shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;
provided that the Company's obligations under this paragraph (r) shall
be satisfied by the filing of its quarterly and annual reports on
Forms 10-Q and 10-K; and
(s) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence
investigation by any managing underwriters and their counsel.
In the case of a Shelf Registration Statement, the Company
may (as a condition to such Holder's participation in the Shelf Registration)
(i) require each Holder of Registrable Securities to furnish to the Company
such information regarding such Holder and the proposed distribution by such
Holder of such Registrable Securities as the Company may from time to time
reasonably request in writing and such other information as, in the reasonable
opinion of the Company, is required for inclusion in the Shelf Registration
Statement (which requests may be given to a single firm of legal counsel for
the Holders), and (ii) further require each Holder of Registrable Securities,
through one firm of legal counsel on behalf of all such Holders, to furnish to
the Company comments on the Shelf Registration Statement and the Prospectus
included therein or any amendment or supplement to any of the foregoing not
later than such times as the Company may request.
In the case of a Shelf Registration Statement, each Holder
agrees and, in the case of the Exchange Offer Registration Statement, each
Participating Broker-Dealer agrees that, upon receipt of any notice from the
Company of the happening of any
19
<PAGE> 22
event or the discovery of any facts, each of the kind described in Section
3(e)(ii)-(vi) or Section 3(k) hereof (it being understood and agreed that, for
purposes of this paragraph, all references in Sections 3(e)(ii)-(vi) and
Section 3(k) to a "Shelf Registration Statement" or a "Registration Statement"
shall be deemed to mean and include the Shelf Registration Statement or the
Exchange Offer Registration Statement or both thereof (as the context
requires), mutatis mutandis, such Holder or Participating Broker-Dealer, as the
case may be, will forthwith discontinue disposition of Registrable Securities
pursuant to such Registration Statement and discontinue use of the Prospectus
included therein until such Holder's or Participating Broker-Dealer's receipt,
as the case may be, of (A) copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof or (B) notice from the Company that the
sale of the Registrable Securities may be resumed, and, if so directed by the
Company, such Holder or Participating Broker-Dealer, as the case may be, will
deliver to the Company (at its expense) all copies in its possession, other
than permanent file copies then in its possession, of the Prospectus covering
such Registrable Securities current at the time of receipt of such notice. If
the Company shall give any such notice to suspend the disposition of
Registrable Securities pursuant to a Registration Statement as a result of the
happening of any event or the discovery of any facts, each of the kind
described in Section 3(e)(vi) or 3(k) hereof, the Company shall be deemed to
have used its reasonable efforts to keep such Registration Statement effective
during such period of suspension, provided that the Company shall use its
reasonable efforts to file and have declared effective (if an amendment) as
soon as reasonably practicable an amendment or supplement to such Registration
Statement or the related Prospectus and shall extend the period during which
such Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from and including the date
of the giving of such notice to and including the date when the Holders shall
have received copies of the supplemented or amended Prospectus necessary to
resume such dispositions or the date on which the Company has given notice that
the sale of Registrable Securities may be resumed, as the case may be. Each
Holder of Registrable Securities hereby agrees that it will at all times use
the then most current preliminary prospectus or Prospectus (as the case may
be), as then amended or supplemented, which has been provided to it by the
Company in connection with the resale or transfer of any Registrable Securities
pursuant to a Registration Statement or Prospectus.
4. Underwritten Registrations. If any of the Registrable
Securities covered by the Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will manage the offering will be selected by the Majority
Holders of such Registrable Securities included in such offering and shall be
reasonably acceptable to the Company.
20
<PAGE> 23
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) 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 (b) completes, executes and delivers, or causes to be
completed, executed and delivered, all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
5. Indemnification and Contribution. (a) The Company
shall indemnify and hold harmless each Initial Purchaser, each Holder and each
Person, if any, who controls any of such parties within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all losses, liabilities, claims, damages
and expenses whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to
which Exchange Securities or Registrable Securities were registered
under the 1933 Act or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all losses, liabilities, claims, damages
and expenses whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including (subject to Section 5(c) below) the reasonable fees and
disbursements of counsel chosen by Merrill Lynch, Pierce, Fenner &
Smith Incorporated or, in the event that Merrill Lynch, Pierce, Fenner
& Smith Incorporated is not an indemnified party, by a majority of the
indemnified parties), reasonably incurred in investigating, preparing
or defending against any litigation, or investigation or proceeding by
any court or governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or omission, to the extent that
any such
21
<PAGE> 24
expense is not paid under subparagraph (i) or (ii) of this Section
5(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Initial Purchaser, any Holder or any underwriter expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto).
(b) In the case of a Shelf Registration, each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, each
Initial Purchaser, each underwriter who participates in an offering of
Registrable Securities and the other Holders and each of their respective
directors and officers (including each officer of the Company who signed the
Registration Statement in question) and each Person, if any, who controls the
Company, any Initial Purchaser, any underwriter or any other Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all losses, liabilities, claims, damages and expenses described in the
indemnity contained in Section 5(a) hereof, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Holder expressly for use in the Registration Statement (or any amendment
thereto) or the Prospectus (or any amendment or supplement thereto); provided,
however, that no such Holder shall be liable for any claims hereunder in excess
of the amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to such Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have other than on account of this indemnity agreement or the contribution
agreement set forth in Section 5(d) below. An indemnifying party may
participate at its own expense in the defense of such action. In no event shall
the indemnifying party or parties be liable for the fees and expenses of more
than one legal counsel (which shall be selected by Merrill Lynch, Pierce,
Fenner & Smith Incorporated or, in the event that Merrill Lynch, Pierce, Fenner
& Smith Incorporated is not an indemnified party, by a majority of the
indemnified parties) 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.
(d) In order to provide for just and equitable contribution
in circumstances in which any of the indemnity
22
<PAGE> 25
provisions set forth in this Section 5 are for any reason held to be
unenforceable by the indemnified parties although applicable in accordance with
its terms, the Company, the Initial Purchasers and the Holders shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the
nature contemplated by such indemnity agreement incurred by the Company, the
Initial Purchasers and the Holders, as incurred; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any Person that
was not guilty of such fraudulent misrepresentation. As between the Company,
the Initial Purchasers and the Holders, such parties shall contribute to such
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect (i) the relative benefits received by the Company on the
one hand, the Initial Purchasers on another hand, and the Holders on another
hand, from the offering of the Exchange Securities or Registrable Securities,
as the case may be, included in such offering, and (ii) the relative fault of
the Company on the one hand, the Initial Purchasers on another hand, and the
Holders on another hand, with respect to the statements or omissions which
resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
Company, the Initial Purchasers and the Holders agree that it would not be just
and equitable if contribution pursuant to this Section 5 were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the relevant equitable considerations. For purposes of this
Section 5, each Person, if any, who controls an Initial Purchaser or a Holder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as such Initial Purchaser or such
Holder, and each director of the Company, each officer of the Company who
signed the Registration Statement in question, and each Person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so long as
the Company is subject to the reporting requirements of Section 13 or 15 of the
1934 Act, the Company covenants that it will file the reports required to be
filed by it under Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to be so required
to file such reports, it will upon the request of any Holder of Registrable
Securities (i) make publicly available such information as is necessary to
permit sales pursuant to Rule 144 under the 1933 Act, (ii) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant
to Rule 144A under the 1933 Act, and (iii) take such further action that is
reasonable in the circumstances, in each case, to the extent required from time
to time to enable such Holder to sell its Registrable Securities without
registration under the 1933 Act within the limitation of the exemptions provided
by (x) Rule 144 under the 1933 Act, as such
23
<PAGE> 26
Rule may be amended from time to time, (y) Rule 144A under the 1933 Act, as
such Rule may be amended from time to time, or (z) any similar rules or
regulations hereafter adopted by the SEC (provided that the obligations of the
Company under any such similar rules or regulations shall not be more
burdensome in any substantial respect than those referred to in clauses (x) or
(y)). Upon the request of any Holder of Registrable Securities, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
(b) No Inconsistent Agreements. The Company has not entered
into nor will the Company on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities under any such
agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure; provided, however, that to the extent any provision of
this Agreement relates to the Initial Purchasers, such provision may be
amended, modified or supplemented, and waivers or consents to departures from
such provisions thereof may be given, by Merrill Lynch; and provided, further,
that no amendment, modification, supplement or waiver or consent to any
departure from the provisions of Section 5 hereof shall be effective as against
any Holder of Registrable Securities unless consented to in writing by such
Holder. Notwithstanding anything in this Agreement to the contrary, this
Agreement may be amended, modified or supplemented, and waivers and consents to
departures from the provisions hereof may be given, by written agreement signed
by the Company and Merrill Lynch to the extent that any such amendment,
modification, supplement, waiver or consent is, in their reasonable judgment,
necessary or appropriate to comply with applicable law (including any
interpretation of the Staff of the SEC) or any change therein.
(d) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or any courier providing
overnight delivery (i) if to a Holder, at its address appearing in the
Securities Register (as defined in the Indenture) or at such other address as
shall have been given by such Holder to the Company by means of a notice given
in accordance with the provisions of this Section 6(d), which address initially
is, with respect to the Initial Purchasers, the address care of
24
<PAGE> 27
Merrill Lynch, Pierce, Fenner & Smith Incorporated set forth in the Purchase
Agreement, and (ii) if to the Company initially at the Company's address set
forth in the Purchase Agreement, or in each case to such other address notice
of which is given in accordance with the provisions of this Section 6(d).
All such notices and communications shall be deemed to have
been duly given at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next business day if timely delivered to an air courier providing
overnight delivery.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms hereof or of the Purchase Agreement, the
Indenture or the Offering Memorandum dated November 20, 1996; and provided,
further, that Holders of Registrable Securities may not assign their rights
under this Agreement except in connection with the permitted transfer of
Registrable Securities and then only insofar as relates to such Registrable
Securities. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all
of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase Agreement,
and such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. The Holders from time to time
shall each be a third party beneficiary to the agreements made hereunder
between the Company, on the one hand, and the Initial Purchasers, on the other
hand, and Merrill Lynch, Pierce, Fenner & Smith Incorporated shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
25
<PAGE> 28
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
-------------------------------
26
<PAGE> 29
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ARISTECH CHEMICAL CORPORATION
By: /s/ MICHAEL J. EGAN
-------------------------------
Name: Michael J. Egan
Title: Senior Vice President
and Chief Financial Officer
Confirmed and accepted as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ MICHAEL L. SANTINI
---------------------------
Name: Michael L. Santini
Title: Associate
J.P. MORGAN SECURITIES INC.
By: /s/ MARGARET BRODY
---------------------------
Name: Margaret Brody
Title: Managing Director
MORGAN STANLEY & CO. INCORPORATED
By: /s/ H. WAKAMOTO
---------------------------
Name: H. Wakamoto
Title: Principal
27
<PAGE> 1
EXHIBIT 4.03
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY (AS
DEFINED IN THE INDENTURE) OR A NOMINEE THEREOF. THIS GLOBAL SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT 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, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS
DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE EARLIER OF (1) THE DATE WHEN
THIS SECURITY CAN BE SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT WITHOUT
ANY LIMITATIONS UNDER CLAUSES (c), (e), (f) AND (h) OF RULE 144 AND (2) THE
DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF
AND THE LAST DATE ON WHICH THE COMPANY OR ANY "AFFILIATE" OF THE COMPANY WAS
THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY (SUCH EARLIER
DATE, THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
<PAGE> 2
PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF THE REGISTRATION
RIGHTS AGREEMENT REFERRED TO BELOW AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE
BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS
AGREEMENT.
No. R-1 $150,000,000
CUSIP No. 040422AA5
ARISTECH CHEMICAL CORPORATION
6 7/8% Notes due 2006
Aristech Chemical Corporation, a Delaware corporation (hereinafter
called the "Company", which term includes any successor corporation under the
Indenture referred to below), for value received, hereby promises to pay to
Cede & Co. or registered assigns, the principal sum of One Hundred Fifty
Million Dollars ($150,000,000) on November 15, 2006, and to pay interest
thereon from November 25, 1996 or from the most recent date to which interest
has been paid or duly provided for, semiannually on May 15 and November 15 in
each year (each, an "Interest Payment Date"), commencing May 15, 1997, at the
rate of 6 7/8 percent per annum, until the principal hereof is paid or duly
made available for payment. Interest on this Note shall be calculated on the
basis of a 360-day year consisting of twelve 30-day months. The interest so
payable and punctually paid or duly provided for on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose name this
Note (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the April
30 or October 31 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the registered Holder hereof on the relevant
Regular Record Date by virtue of having been such Holder, and may be paid to
the Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Company, notice whereof shall be
given to the Holders of Notes of this series not less than 10 days prior to
such Special Record Date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in such Indenture.
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement dated as of November 25, 1996 among
<PAGE> 3
the Company and the Initial Purchasers named therein (as the same may be
amended from time to time, the "Registration Rights Agreement"). In the event
that either (a) the Exchange Offer Registration Statement (as such term is
defined in the Registration Rights Agreement) is not filed with the Securities
and Exchange Commission (the "Commission") on or prior to the 90th day
following November 25, 1996 (the "Original Issue Date"), (b) the Exchange Offer
Registration Statement has not been declared effective by the Commission or
prior to the 180th day following the Original Issue Date or (c) the Exchange
Offer (as such term is defined in the Registration Rights Agreement) is not
consummated or a Shelf Registration Statement (as such term is defined in the
Registration Rights Agreement) is not declared effective by the Commission on
or prior to the earlier of (x) the 30th day following the date on which the
Exchange Offer Registration Statement is declared effective and (y) the 210th
day following the Original Issue Date, the interest rate borne by this Note
shall be increased by 0.50 percent per annum following such 90th day in the
case of clause (a) above, such 180th day in the case of clause (b) above and
the earlier of such 30th day and such 210th day in the case of clause (c)
above; provided that the aggregate amount of any such increase in the per annum
interest rate on this Note pursuant to the foregoing provisions shall in no
event exceed 0.50 percent; and provided, further, that if the Exchange Offer
Registration Statement is not declared effective on or prior to the 180th day
following the Original Issue Date, and this Note is owned by a Person (as
defined in the Registration Rights Agreement) who does not comply in all
material respects with its obligations under the penultimate paragraph of
Section 3 of the Registration Rights Agreement, this Note will not be entitled
to any such increase in the interest rate for any day after the 210th day
following the Original Issue Date. Upon (x) the filing of the Exchange Offer
Registration Statement after the 90th day described in clause (a) above, (y)
the effectiveness of the Exchange Offer Registration Statement after the 180th
day described in clause (b) above or (z) the consummation of the Exchange Offer
or the effectiveness of a Shelf Registration Statement, as the case may be,
after the earlier of the 30th day and the 210th day described in clause (c)
above, the interest rate borne by this Note from the date of such filing,
effectiveness or consummation, as the case may be, will be reduced to 6 7/8
percent per annum. The Company shall promptly provide the Trustee with notice
of any change in the interest rate borne by this Note.
Payment of the principal of and the interest on this Note will be made
at the office or agency of the Company maintained for that purpose in The
Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that, at the option of the
Company, interest may be paid by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register;
provided, further, that payment to DTC or any successor depository
3
<PAGE> 4
may be made by wire transfer to the account designated by DTC or such successor
depository in writing.
This Note is one of a duly authorized issue of securities of the
Company (herein called the "Notes") issued and to be issued in one or more
series under an Indenture dated as of November 1, 1996 (herein called, together
with all indentures supplemental thereto, the "Indenture") between the Company
and The Chase Manhattan Bank, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Notes,
and of the terms upon which the Notes are, and are to be, authenticated and
delivered. This Note is one of the series designated on the face hereof,
limited (subject to exceptions provided in the Indenture) to the aggregate
principal amount specified in the Officers' Certificate dated November 25, 1996
establishing the terms of the Notes pursuant to the Indenture.
The Notes are not redeemable prior to maturity and are not subject to
any sinking fund.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series issued
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of each series affected thereby. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities of any series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Notes issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note,
at the times, place and rate, and in the coin or currency, herein and in the
Indenture prescribed.
4
<PAGE> 5
As provided in the Indenture and subject to certain limitations set
forth therein and in this Note, the transfer of this Note may be registered on
the Security Register upon surrender of this Note for registration of transfer
at the office or agency of the Company maintained for the purpose in any place
where the principal of and interest on this Note are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or by
his attorney duly authorized in writing, and thereupon one or more new Notes of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Notes are issuable only in registered form without coupons in the
denominations specified in the Officers' Certificate dated November 25, 1996
establishing the terms of the Notes, all as more fully provided in the
Indenture and such Officers' Certificate. As provided in the Indenture and in
such Officers' Certificate, and subject to certain limitations set forth in the
Indenture, such Officers' Certificate and in this Note, the Notes are
exchangeable for a like aggregate principal amount of Notes of this series in
different authorized denominations, as requested by the Holders surrendering
the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith, other
than in certain cases provided in the Indenture.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture contains provisions whereby (i) the Company may be
discharged from its obligations with respect to the Notes (subject to certain
exceptions) or (ii) the Company may be released from its obligation under
specified covenants and agreements in the Indenture, in each case if the
Company irrevocably deposits with the Trustee money or U.S. Government
Obligations sufficient to pay and discharge the entire indebtedness on all
Notes of this series, and satisfies certain other conditions, all as more fully
provided in the Indenture.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
5
<PAGE> 6
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee under the Indenture by the manual signature of one
of its authorized signatories, this Note shall not be entitled to any benefits
under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: November 25, 1996
[Seal] ARISTECH CHEMICAL CORPORATION
Attest: By:
---------------------- ----------------------
Name: Name:
Title: Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:
------------------------
Authorized Signatory
6
<PAGE> 7
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-- as tenants in UNIF GIFT MIN ACT-- Custodian
common ---- ----
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with Under Uniform Gifts
right of survivorship to Minors
and not as tenants in common Act
------------------
(State)
Additional abbreviations may also be used though not in the
above list.
---------------------------------------
FOR VALUE RECEIVED, the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
- ---------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- ----------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably
constituting and appointing
- ----------------------------------------------------------------
to transfer said Note on the books of the Company with full
power of substitution in the premises.
Dated:
----------------------------------------------------------
Notice: The signature to 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 whatever.
7
<PAGE> 8
CERTIFICATE OF TRANSFER
In connection with any transfer of this Note occurring prior to
the earlier of (1) the date when this Note can be sold pursuant to Rule 144
under the Securities Act of 1933, as amended, without any limitations under
clauses (c), (e), (f) and (h) of Rule 144 and (2) the date that is three years
after the later of November 25, 1996 and the last date on which this Note (or
any Predecessor Security) was owned by the Company or any affiliate of the
Company, the undersigned confirms that this Note is being transferred:
CHECK ONE BOX BELOW
/ / (a) as long as this / / (b) to the Company.
Note is eligible for
resale pursuant to Rule
144A under the Securities
Act of 1933, as amended,
to a person the undersigned
reasonably believes is
a "qualified institutional
buyer" (a "QIB") as defined
in such Rule 144A that
purchases for its own
account or for the
account of a QIB to
whom notice is given
that the transfer is
being made in reliance
on such Rule 144A; or
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee under the Indenture by the manual signature of one of
its authorized signatories, this Note shall not be entitled to any benefits
under the Indenture or be valid or obligatory for any purpose.
Dated:
------------------------- -----------------------
SIGNATURE
Signature Guaranteed:
- ------------------------------- -----------------------
SIGNATURE
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is acquiring this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it or any such account, as the case may be, 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
8
<PAGE> 9
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
9
<PAGE> 1
EXHIBIT 4.04
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY (AS
DEFINED IN THE INDENTURE) OR A NOMINEE THEREOF. THIS GLOBAL SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT 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, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS
DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. ___ $150,000,000
CUSIP No. _________
ARISTECH CHEMICAL CORPORATION
6 7/8% Notes due 2006
Aristech Chemical Corporation, a Delaware corporation (hereinafter called the
"Company", which term includes any successor corporation under the Indenture
referred to below), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of One Hundred Fifty Million Dollars
($150,000,000) on November 15, 2006, and to pay interest thereon from November
25, 1996 or from the most recent date to which interest has been paid or duly
provided for, semiannually on May 15 and November 15 in each year (each, an
"Interest Payment Date"), commencing May 15, 1997, at the rate of 6 7/8 percent
per annum, until the principal hereof is paid or duly made available for
payment. Interest on this Note shall be calculated on the basis of a 360-day
year consisting of twelve 30-day months. The interest so payable and
punctually paid or duly provided for on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Securities) is registered at the close of business on
the Regular
<PAGE> 2
Record Date for such interest, which shall be the April 30 or October 31
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the registered Holder hereof on the relevant
Regular Record Date by virtue of having been such Holder, and may be paid to
the Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Company, notice whereof shall be
given to the Holders of Notes of this series not less than 10 days prior to
such Special Record Date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in such Indenture.
Payment of the principal of and the interest on this Note will be made at the
office or agency of the Company maintained for that purpose in The Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that, at the option of the Company, interest
may be paid by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register; provided, further, that
payment to DTC or any successor depository may be made by wire transfer to the
account designated by DTC or such successor depository in writing.
This Note is one of a duly authorized issue of securities of the Company
(herein called the "Notes") issued and to be issued in one or more series under
an Indenture dated as of November 1, 1996 (herein called, together with all
indentures supplemental thereto, the "Indenture") between the Company and The
Chase Manhattan Bank, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes, and of the terms upon
which the Notes are, and are to be, authenticated and delivered. This Note is
one of the series designated on the face hereof, limited (subject to exceptions
provided in the Indenture) to the aggregate principal amount specified in the
Officers' Certificate dated November 25, 1996 establishing the terms of the
Notes pursuant to the Indenture.
The Notes are not redeemable prior to maturity and are not subject to any
sinking fund.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due
- 2 -
<PAGE> 3
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series issued
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding of each series affected thereby. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities of any series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Notes issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note,
at the times, place and rate, and in the coin or currency, herein and in the
Indenture prescribed.
As provided in the Indenture and subject to certain limitations set forth
therein and in this Note, the transfer of this Note may be registered on the
Security Register upon surrender of this Note for registration of transfer at
the office or agency of the Company maintained for the purpose in any place
where the principal of and interest on this Note are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or by
his attorney duly authorized in writing, and thereupon one or more new Notes of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Notes are issuable only in registered form without coupons in the
denominations specified in the Officers' Certificate dated November 25, 1996
establishing the terms of the Notes, all as more fully provided in the
Indenture and such Officers' Certificate. As provided in the Indenture and in
such Officers' Certificate, and subject to certain limitations set forth in the
Indenture, such Officers' Certificate and in this Note, the Notes are
exchangeable for a like aggregate principal amount of Notes of this series in
- 3 -
<PAGE> 4
different authorized denominations, as requested by the Holders surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith, other than in
certain cases provided in the Indenture.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture contains provisions whereby (i) the Company may be discharged
from its obligations with respect to the Notes (subject to certain exceptions)
or (ii) the Company may be released from its obligation under specified
covenants and agreements in the Indenture, in each case if the Company
irrevocably deposits with the Trustee money or U.S. Government Obligations
sufficient to pay and discharge the entire indebtedness on all Notes of this
series, and satisfies certain other conditions, all as more fully provided in
the Indenture.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee under the Indenture by the manual signature of one of its
authorized signatories, this Note shall not be entitled to any benefits under
the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: ___________, 1997
[Seal] ARISTECH CHEMICAL CORPORATION
Attest:_______________________ By:___________________________
Name: Name:
Title: Title:
- 4 -
<PAGE> 5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:__________________________
Authorized Signatory
- 5 -
<PAGE> 6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in UNIF GIFT MIN ACT -- Custodian
common ------ -------
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with Under Uniform Gifts
right of survivorship to Minors Act
and not as tenants in common
-----------------------
(State)
Additional abbreviations may also be used though not in the above list.
---------------------------------------
FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- -----------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- -----------------------------------------------------------------------------
to transfer said Note on the books of the Company with full power of
substitution in the premises.
Dated:
-----------------------------------------------------------------------
Notice: The signature to 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 whatever.
- 6 -
<PAGE> 1
EXHIBIT 5.01
December 16, 1996
Aristech Chemical Corporation
600 Grant Street
Pittsburgh, PA 15219
Ladies and Gentlemen:
I am the General Counsel and Corporate Secretary of Aristech Chemical
Corporation, a Delaware corporation (the "Company"). In that capacity, I have
acted as counsel to the Company in connection with the filing by the Company of
a Registration Statement on Form S-4 under the Securities Act of 1933, as
amended (the "Securities Act") with the Securities and Exchange Commission.
The Registration Statement relates to the proposed issuance of up to
$150,000,000 aggregate principal amount of the Company's 6-7/8% notes due 2006
(the "New Notes") registered under the Securities Act in exchange for a like
principal amount of the Company's outstanding 6-7/8% notes due 2006 (the "Old
Notes"). The New Notes are issuable, and the Old Notes were issued, under an
Indentures dated as of November 1, 1996 (the "Indenture") between the Company
and The Chase Manhattan Bank, as Trustee (the "Trustee").
I have examined the Registration Statement, the Indenture and the
Company's Restated Certificate of Incorporation and By-laws, each as amended
to date. I have also examined such other public and corporate documents,
certificates, instruments and corporate records, and such questions of law,
I have deemed necessary for purposes of this opinion.
In making such examination and rendering the opinion set forth below,
I have assumed the genuineness of all signatures, the authenticity of all
documents submitted to me as originals and the conformity to original documents
of documents submitted to me as certified, telecopied, photostatic or
reproduced copies and the authenticity of the originals of such documents, and
the execution and delivery of all such documents and instruments.
To the extent relevant to the opinion set forth below, I have assumed
that the Trustee is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization; that the Trustee is duly
qualified to engage in the activities contemplated by the Indenture and is
qualified and eligible under the terms of the Indenture to act as trustee
<PAGE> 2
thereunder; that the Indenture was duly authorized, executed and delivered by
the Trustee; that the Indenture is a valid and binding obligation of the
Trustee; and that the Trustee has the requisite organizational and legal power
and authority to perform its obligations under the Indenture.
Based upon the foregoing, and subject to the effectiveness of the
Registration Statement under the Securities Act and the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, I am of the
opinion that, when the New Notes are duly executed, attested, issued and
delivered by duly authorized officers of the Company and duly authenticated by
the Trustee, all in accordance with the terms of the Indenture, against
surrender and cancellation of a like principal amount of Old Notes, the New
Notes will constitute legally issued and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally, or by general principals of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
I consent to the use of this opinion as Exhibit 5.01 to the
Registration Statement and to the reference to the undersigned in the
prospectus that forms part of the Registration Statement.
Yours truly,
/s/ MARK K. MCNALLY
Mark K. McNally
General Counsel and
Corporate Secretary
<PAGE> 1
EXHIBIT 10.01
U.S. $203,000,000
TERM LOAN AGREEMENT
DATED AS OF AUGUST 1, 1994
BETWEEN
ARISTECH CHEMICAL CORPORATION
AS THE BORROWER
AND
MITSUBISHI CORPORATION
AS THE LENDER
<PAGE> 2
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT ("Agreement"), dated as of August 1,
1994 by and between ARISTECH CHEMICAL CORPORATION, a Delaware corporation
(hereinafter referred to as the "Borrower"), and MITSUBISHI CORPORATION, a
corporation organized under the laws of Japan (hereinafter referred to as
"Lender").
RECITALS
WHEREAS, Borrower is an indirectly owned subsidiary of
Lender; and
WHEREAS, Borrower desires to borrow, and Lender is willing to
lend, the sum of Two Hundred Three Million Dollars (U.S. $203,000,000) pursuant
to the terms and subject to the conditions herein contained.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; CONSTRUCTION
1.01 DEFINITIONS. In addition to the words and terms defined
elsewhere in this Agreement, as used in this Agreement, the following terms
shall have the following meanings:
"BANKRUPTCY CODE" shall mean the provisions of title
11 of the United States Code, 11 U.S.C. Section 101 et seq., as amended,
modified or supplemented from time to time.
"BUSINESS DAY" shall mean any day other than a
Saturday, Sunday, public holiday under the laws of the state of New York or of
Japan or other day on which commercial banks in New York, New York or Tokyo,
Japan, are required or authorized to close under applicable law.
"CLOSING DATE" shall mean the date of this
Agreement.
"CODE" shall mean the Internal Revenue Code of 1986,
as amended, and any successor statute, and the rules and regulations
promulgated thereunder.
"EVENT OF DEFAULT" or "Default" shall mean any of
the events of default described in Section 3.01 of this Agreement.
<PAGE> 3
"GAAP" means generally accepted accounting
principles in the United States of America applied by the Borrower on a
consistent basis as to both classification of items and amounts, which shall
include but not be limited to the official interpretations thereof by the
Financial Accounting Standards Board, its predecessors or successors.
"INDEBTEDNESS" means all items of indebtedness which
in accordance with GAAP should be included in determining total liabilities as
shown on the liability side of a balance sheet as at the date as of which such
indebtedness is to be determined.
"INTEREST PAYMENT DATE" shall mean the last Business
Day of each Interest Period. If any Interest Period would 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 such Interest Period would 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.
"INTEREST PERIOD" shall mean the period commencing
on (and including) the Closing Date and ending on (but excluding) the first
Interest Payment Date thereafter; and, thereafter, each period commencing on
(and including) the last day of the immediately preceding Interest Period and
ending on (but excluding) the first Interest Payment Date thereafter.
"LIBO RATE" shall mean, for each Interest Period,
the rate per annum as determined by reference to page 3750 of Telerate (at
approximately 11:00 a.m. London, England time, on the date two London Business
Days prior to the first day of such Interest Period), in the London Interbank
Market for deposits of dollars for a period equal to the length of such
Interest Period and in an amount comparable to the aggregate unpaid principal
amount of the Term Loan outstanding during such Interest Period.
"LOAN DOCUMENTS" shall mean this Agreement and all
other agreements, instruments, certificates and documents contemplated by or
delivered or required to be delivered under this Agreement or in connection
herewith, as any or all of the foregoing may be amended, supplemented or
otherwise modified from time to time.
"LONDON BUSINESS DAY" shall mean any day other than
a Saturday, Sunday, public holiday under the laws of England or other day on
which prime banks in London England are required or authorized to close under
applicable law.
"MATURITY DATE" shall mean 11:00 a.m., Tokyo, Japan
time, on July 31, 2002.
- 2 -
<PAGE> 4
"OLD FACILITY" shall mean that certain Credit
Agreement, dated as of April 18, 1990, among Borrower, as the borrower, ACC
Holdings Corporation, ACC Middle Corporation, Aristech Chemical International
Limited, Aristech Chemical International Sales Limited and Lender, as
Guarantors, The Mitsubishi Bank, Limited, acting through its New York Branch
and The Mitsubishi Trust and Banking Corporation, acting through its New York
Branch, as the Co-Arrangers, certain commercial lending institutions as the
lenders and The Mitsubishi Bank, Limited, acting through its New York Branch,
as the Agent, as amended, supplemented, amended and restated or otherwise
modified from time to time.
1.02 CONSTRUCTION. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular, the
singular the plural and the part the whole and "or" has the inclusive meaning
represented by the phrase "and/or". The words "hereof", "herein", "hereunder"
and similar terms in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement. Time is of the essence in this
Agreement and the other Loan Documents. The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section and subsection references are to this Agreement
unless otherwise specified. References to dollar amounts shall be to United
States dollars.
ARTICLE II
THE TERM LOAN
2.01 MAKING OF TERM LOAN. Subject to the terms and conditions
hereof, the Lender shall make a loan to the Borrower on the Closing Date in the
aggregate principal amount of Two Hundred Three Million Dollars (U.S.
$203,000,000) (the "Term Loan"). No portion of the Term Loan may be reborrowed
by Borrower.
2.02 PAYMENTS ON ACCOUNT OF PRINCIPAL. The unpaid principal
amount of the Term Loan shall be due and payable on the Maturity Date. The
Borrower shall have the right, at the Borrower's option exercisable by delivery
of thirty (30) days' prior written notice to Lender, to pay the Term Loan in
whole or part on any Interest Payment Date, without premium or penalty;
provided, however, that the minimum prepayment amount with respect to the Term
Loan shall be $500,000.
2.03 PAYMENTS ON ACCOUNT OF INTEREST.
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<PAGE> 5
(a) Payment of Interest. The Borrower shall pay
interest in respect of the entire outstanding unpaid principal balance of the
Term Loan at a rate per annum during each Interest Period equal to 1.375
percent in excess of the LIBO Rate in effect for each such Interest Period.
Interest shall be payable on the outstanding balance of the Term Loan until the
Term Loan is paid in full. Interest accrued on the outstanding principal
balance of the Term Loan during any Interest Period shall be payable on the
Interest Payment Date for such Interest Period.
(b) Interest Period Election. Borrower shall have
the option of selecting Interest Periods of one, two, three or six months
duration and may elect to have more than one Interest Period outstanding at any
one time; provided, however, that (i) no Interest Period shall extend beyond
the Maturity Date and (ii) the initial Interest Period for the Term Loan shall
be one month. Thereafter, Borrower shall, not less than seven Business Days
prior to the next Interest Payment Date, specify in writing to Lender the
duration of the next Interest Period, which shall commence on (and include) the
Interest Payment Date and shall expire on (but exclude) the next Interest
Payment Date. If Borrower fails at any time to make an Interest Period
election, the next succeeding Interest Period shall be of one month's duration
and all succeeding Interest Periods thereafter shall be for one month's
duration until such time, if any, as Borrower makes an Interest Period
election.
(c) Interest Rate After Maturity. After the
principal amount of the Term Loan shall have become due and payable, whether at
maturity or by acceleration, declaration or otherwise, it shall thereafter bear
interest at a rate per annum equal at all times to 2.0 percent above the rate
of interest otherwise applicable pursuant to Section 2.03(a) of this Agreement
until paid, payable on demand.
(d) Maximum Rate. In no contingency or event shall
interest charged hereunder, however such interest may be characterized or
computed, exceed the highest rate permissible under any law deemed applicable
to this Agreement (the "Maximum Rate"). In the event that it is determined that
the rate of interest charged hereunder exceeded the Maximum Rate during any
period or periods, the rate of interest hereunder for such period or periods
shall be deemed to have been the Maximum Rate, and the rate of interest
hereunder shall be deemed to have continued to be and shall continue to be the
Maximum Rate for such period as is necessary for the total amount of interest
paid or accrued hereunder to equal the amount of interest that would have been
paid or accrued hereunder had the interest rate hereunder at all times remained
as provided in the preceding subsections of this Section 2.03. If,
notwithstanding the foregoing interest rate adjustment, it is determined that
the Lender has received interest in excess of the Maximum Rate, any such excess
shall (i) first, be applied to any unpaid costs and expenses owed to the
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<PAGE> 6
Lender under this Agreement or any other Loan Document and to the unpaid
principal amount of the Term Loan and (ii) second, be refunded to the Borrower.
2.04 USE OF PROCEEDS. The Borrower hereby represents and
warrants to the Lender that all proceeds of the Term Loan will be used solely
for the refinancing of Indebtedness of the Borrower outstanding on the Closing
Date and owed to certain lending institutions pursuant to the Old Facility.
2.05 BORROWER'S COVENANTS. Until and unless the Term Loan and
all interest accrued thereon shall have been fully paid or repaid, the Borrower
hereby covenants and agrees that any distribution, division or application,
partial or complete, voluntary or involuntary, by operation of law or
otherwise, of all or any part of the property, assets or business of the
Borrower or the proceeds thereof, except for the repayments or prepayments
contemplated by Article IV hereof, shall not, without a prior written consent
of the Lender, be made to any creditor or creditors of the Borrower (other than
the Lender) other than in the ordinary course of business.
2.06 PAYMENTS. All payments or prepayments to be made in
respect of principal, interest or fees or amounts due from Borrower hereunder
shall be payable on the date when due in U.S. Dollars in immediately available
funds before 11:00 A.M. Tokyo, Japan time at the Head Office of The Mitsubishi
Bank, Tokyo, Japan for the account of Lender.
ARTICLE III
DEFAULT
3.01 CONCERNING DEFAULTS.
The Borrower shall be in default under this Agreement upon
the occurrence of any one or more of the following events (herein called
"Events of Default"):
(a) nonpayment of interest, principal or any amount
due hereunder on or before the date when due, whether at maturity or
by acceleration or otherwise, and such failure shall continue for a
period of 10 days;
(b) the Borrower fails to comply with any other
terms, covenants or conditions contained herein or in any Loan
Documents, and such failure (exclusive of monetary obligations) is not
remedied within sixty (60) days thereafter;
(c) the Borrower shall default (i) in any payment of
principal of or interest on any other Indebtedness beyond any period
of grace provided with respect thereto, or (ii)
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<PAGE> 7
in the performance of any other agreement, term or condition contained
in any agreement under which any such obligation is created, and as a
result of the Borrower's default such obligation has become due prior
to its stated maturity and the result of an event specified in clause
(ii) is to accelerate or permit the acceleration of any such
obligation in excess of $1,000,000; or
(d) adjudication of the Borrower as a bankrupt or
insolvent, or entry of an order, remaining unstayed by appeal or
otherwise for 30 days, appointing a receiver or trustee for the
Borrower, or for all or any of its property, or approving a petition
seeking reorganization or other similar relief under the Bankruptcy
Code or other similar laws of the United States or of any state or of
any other competent jurisdiction, or the filing by the Borrower of a
petition seeking any of the foregoing or consenting thereto, or the
filing of a petition to take advantage of any debtors' act, or making
a general assignment for the benefit of creditors, or admitting in
writing its inability to pay its debts as they mature.
3.02 REMEDIES. If an Event of Default shall have occurred and
be continuing, then the Lender may forthwith, or at any time thereafter, by
notice to the Borrower, declare the unpaid principal amount of the Term Loan
and all interest then accrued thereon to be immediately due and payable, and
such principal and interest shall thereupon be immediately due and payable
without presentment, protest, demand or other notice all of which are hereby
waived. Lender shall also have all other rights and remedies available to
Lender at law or in equity.
ARTICLE IV
NEW LOAN(S)
The Lender has been informed and is aware that the Borrower
intends to borrow from one or more banks or financial institutions, on or
before March 31, 1995, the aggregate amount of at least Three Hundred
Seventy-Six Million Dollars (U.S. $376,000,000)(the "New Loan(s)"), all of
which will be used for the repayment or prepayment of certain portions of (i)
the then outstanding loan or loans extended to the Borrower by the Lender or
its subsidiary(s) or affiliated company(s) and/or (ii) the then outstanding
loan or loans extended by banks or financial institutions to the Borrower and
guaranteed by the Lender or its subsidiary(s) or affiliated company(s). In
order to assist the Borrower in borrowing the New Loan(s), the Lender is
prepared to enter into discussions with the Borrower and the lenders of the
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<PAGE> 8
New Loan(s) with regard to any amendment of this Agreement and/or new
conditions of this Agreement or the Term Loan.
ARTICLE V
MISCELLANEOUS
5.01 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of New York, excluding its rules relating to the conflict of
laws.
5.02 NOTICES. Any notice or request by any party hereto shall
be in writing and shall be deemed to have been given when delivered by hand or
by facsimile transmission or upon receipt when mailed by overnight courier,
addressed as follows, until notice of some other address shall have been given
to the other party:
If to the Borrower:
Aristech Chemical Company
600 Grant Street, Room 1188
Pittsburgh, Pennsylvania 15219-2704
Attention: Mr. Anthony F. Mastro
Facsimile: (412) 433-7819
If to the Lender:
Mitsubishi Corporation
3-1, Marunouchi 2-Chome, Chiyoda-Ku
Tokyo 100-86, Japan
Attention: Mr. Noriyoshi Fukuyama
Facsimile: 011 813 3210 5513
5.03 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which constitutes an original.
5.04 WAIVERS; AMENDMENTS. The observance or performance of
any covenant or obligation imposed upon the Borrower under any provision of
this Agreement may be waived in writing by the Lender and the same shall then
be effective only for the period on the conditions and for the specific
instances and purposes specified in such writing; provided, however, that no
such waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereto. No modification of any provision of this
Agreement or of the Note shall be effective unless made in writing by the
Borrower and the Lender; provided, however, that no such amendment shall impair
the rights of any holder of Senior Indebtedness hereunder without the consent
of such holder.
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<PAGE> 9
5.05 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the Borrower and the Lender and
their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations hereunder or any interest
herein without the prior written consent of the Lender. The Lender may assign
this Agreement and all of its rights and obligations hereunder to any wholly
owned corporate subsidiary of Lender. Except to the extent otherwise required
by its context, the word "Lender" where used in this Agreement shall mean and
include the holder of the Note originally issued to the Lender, and the holder
of such Note shall be bound by and have the benefits of this Agreement the same
as if such holder had been a signatory hereto.
5.06 SEVERABILITY. The provisions of this Agreement and of
the other Loan Documents are severable, and if any clause or provision of this
Agreement or of any other Loan Document shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such clause or provision shall,
as to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such clause or provision in any other jurisdiction or the remaining
provisions hereof and of the other Loan Documents in any jurisdiction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such which may be hereafter declared invalid, void or
unenforceable.
5.07 ENTIRE AGREEMENT. This Agreement supersedes all prior
understandings and agreements, whether written or oral, among the parties
hereto relating to the transactions provided for herein.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be effective as of the day and year first above written.
ATTEST: ARISTECH CHEMICAL CORPORATION
By: /s/ D. F. TUTHILL By: /s/ W. D. WALSTON
------------------------------- ---------------------------
Title: Secretary Title: Treasurer
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<PAGE> 10
ATTEST: MITSUBISHI CORPORATION
By: /s/ Y. HARA By: /s/ N. FUKUYAMA
------------------------------- ---------------------------
Title: Deputy General Manager Title: General Manager
Aristech Department Aristech Department
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<PAGE> 11
First Amendment
This First Amendment, dated as of June 3, 1996, by and between
Aristech Chemical Corporation, a Delaware corporation (the "Borrower") and
Mitsubishi Corporation, a corporation organized under the laws of Japan (the
"Lender"),
WITNESSETH THAT:
WHEREAS, the Borrower and the Lender entered into a Term Loan
Agreement dated as of August 1, 1994 (the "Original Agreement"); and
WHEREAS, the Borrower and the Lender wish to amend the Original
Agreement to revise the interest rate on borrowings covered by the Original
Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Definitions
Except as expressly changed herein, terms in this First Amendment
which are defined in the Original Agreement are herein used as therein defined.
2. Change in Payment of Interest
Section 2.03(a) of the Original Agreement is hereby amended to read in
full as follows:
(a) Payment of Interest. The Borrower shall pay interest in
respect of the entire outstanding unpaid principal balance of
the Term Loan at a rate per annum during each Interest Period
equal to 0.55 percent in excess of the LIBO Rate in effect
for each such Interest Period.
<PAGE> 12
Interest shall be payable on the outstanding balance of the
Term Loan until the Term Loan is paid in full. Interest
accrued on the outstanding principal balance of the Term Loan
during any Interest Period shall be payable on the Interest
Payment Date for such Interest Period.
3. Effectiveness
This First Amendment shall be effective as of June 3, 1996.
4. Miscellaneous
(a) Except as specifically amended herein, the Original Agreement
shall remain in full force and effect.
(b) This First Amendment may be executed in any number of
counterparts each of which, when so executed and delivered by
all parties, shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
(c) This First Amendment shall be governed by the laws of the
State of New York, excluding its rules relating to the
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of June 3, 1996.
<PAGE> 13
ARISTECH CHEMICAL CORPORATION
By: /s/ W.D. WALSTON
Title: TREASURER
MITSUBISHI CORPORATION
By: /s/ HAJIME KOGA
Title: General Manager
Aristech Dept.
<PAGE> 14
Second Amendment
This Second Amendment, dated as of September 30, 1996, by and between
Aristech Chemical Corporation, a Delaware corporation (the "Borrower") and
Mitsubishi Corporation, a corporation organized under the laws of Japan (the
"Lender"),
WITNESSETH THAT:
WHEREAS, the Borrower and the Lender entered into a Term Loan
Agreement dated as of August 1, 1994. as amended by the First Amendment dated
as of June 3, 1996 (as amended, the "Original Agreement"); and
WHEREAS, the Borrower and the Lender wish to amend the Original
Agreement to revise the interest rate on borrowings covered by the Original
Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Definitions
Except as expressly changed herein, terms used in this Second
Amendment which are defined in the Original Agreement are herein used as
therein defined.
2. Change in Payment of Interest
Section 2.03(a) of the Original Agreement is hereby amended to read in
full as follows:
(a) Payment of Interest
Effective November 1, 1996, the Borrower shall pay interest
in respect of the entire outstanding unpaid
<PAGE> 15
principal balance of the Term Loan at a rate per annum during
each Interest Period equal to 0.4875 percent in excess of the
LIBO Rate in effect for each such Interest Period. Interest
shall be payable on the outstanding balance of the Term Loan
until the Term Loan is paid in full. Interest accrued on the
outstanding principal balance of the Term Loan during any
Interest Period shall be payable on the Interest Payment Date
for such Interest Period.
3. Effectiveness
This Second Amendment shall be effective as of September 30, 1996.
4. Miscellaneous
(a) Except as specifically amended herein, the Original Agreement
shall remain in full force and effect.
(b) This Second Amendment may be executed in any number of
counterparts each of which, when so executed and delivered by
all parties, shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
(c) This Second Amendment shall be governed by the laws of the
State of New York, excluding its rules relating to the
conflict of laws.
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of September 30, 1996.
ARISTECH CHEMICAL CORPORATION
By: /s/ W.D. WALSTON
--------------------------
Title: TREASURER
MITSUBISHI CORPORATION
By: /s/ HAJIME KOGA
--------------------------
Title: General Manager
Aristech Dept.
<PAGE> 1
EXHIBIT 10.02
TERM LOAN AND REVOLVING CREDIT
AGREEMENT
DATED AS OF AUGUST 1, 1994
BETWEEN
ARISTECH CHEMICAL CORPORATION
AS THE BORROWER
AND
MITSUBISHI INTERNATIONAL CORPORATION
AS THE LENDER
<PAGE> 2
TERM LOAN AND REVOLVING CREDIT AGREEMENT
THIS AGREEMENT ("AGREEMENT"), dated as of August 1, 1994, is by and between
ARISTECH CHEMICAL CORPORATION, a Delaware corporation (hereinafter referred to
as the "BORROWER"), and MITSUBISHI INTERNATIONAL CORPORATION, a Delaware
corporation (hereinafter referred to as "LENDER").
RECITALS
WHEREAS, Borrower desires to borrow, and Lender is willing to lend, the sum
of One Hundred Million Dollars (U.S. $100,000,000) on a short-term basis and
up to the sum of One Hundred Million Dollars (U.S. $100,000,000) on a revolving
credit basis, all pursuant to the terms and subject to the conditions herein
contained;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; CONSTRUCTION
1.01 DEFINITIONS. In addition to the words and terms defined elsewhere in
this Agreement, as used in this Agreement, the following terms shall have the
following meanings:
"ALTERNATE BASE RATE" shall mean, for each Interest Period, a fluctuating
rate of interest equal to the higher of
(a) the rate of interest most recently established by The Mitsubishi
Bank, Limited at its New York office as its prime rate for U.S. Dollar
loans; and
(b) the Federal Funds Rate plus 1/2 of 1%.
"BANKRUPTCY CODE" shall mean the provisions of title 11 of the United
States Code, 11 U.S.C. Section 101 et seq., as amended, modified or
supplemented from time to time.
<PAGE> 3
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, public
holiday under the laws of the state of New York or other day on which
commercial banks in New York, New York, are required or authorized to close
under applicable law.
"CLOSING DATE" shall mean the date of this Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and any
successor statute, and the rules and regulations promulgated thereunder.
"EVENT OF DEFAULT" or "DEFAULT" shall mean any of the events of default
described in Section 3.01 of this Agreement.
"FEDERAL FUNDS RATE" shall mean a fluctuating interest rate per annum
equal for each day to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions
received by Lender from three federal funds brokers of recognized
standing selected by it.
"GAAP" means generally accepted accounting principles in the United States
of America applied by the Borrower on a consistent basis as to both
classification of items and amounts, which shall include but not be limited to
the official interpretations thereof by the Financial Accounting Standards
Board, its predecessors or successors.
"INDEBTEDNESS" means all items of indebtedness which in accordance with
GAAP should be included in determining total liabilities as shown on the
liability side of a balance sheet as at the date as of which such indebtedness
is to be determined.
"INTEREST PAYMENT DATE" shall mean the last Business Day of each Interest
Period for any portion of the Loans subject to the LIBO Rate and the date of
any conversion to the LIBO Rate with respect to any portion of the Loans
subject to the
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<PAGE> 4
Alternate Base Rate. If any Interest Period would 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 such Interest Period would 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.
"INTEREST PERIOD" shall mean the period commencing on (and including) the
Closing Date and ending on (but excluding) the first Interest Payment Date
thereafter; and, thereafter, each period commencing on (and including) the last
day of the immediately preceding Interest Period and ending on (but excluding)
the first Interest Payment Date thereafter.
"LIBO RATE" shall mean, for each Interest Period, the rate per annum as
determined by reference to page 3750 of Telerate (at approximately 11:00 a.m.
London, England time, on the date two London Business Days prior to the first
day of such Interest Period), in the London Interbank Market for deposits of
dollars for a period equal to the length of such Interest Period and in an
amount comparable to the aggregate unpaid principal amount of the Loan
outstanding during such Interest Period.
"LOAN" and "LOANS" shall mean either or all of the Term Loan and the
Revolving Credit Loans.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes and all other
agreements, instruments, certificates and documents contemplated by or
delivered or required to be delivered under this Agreement or in connection
herewith, as any or all of the foregoing may be amended, supplemented or
otherwise modified from time to time.
"LONDON BUSINESS DAY" shall mean any day other than a Saturday, Sunday,
public holiday under the laws of England or other day on which prime banks in
London, England are required or authorized to close under applicable law.
"MATURITY DATE" shall mean 3:00 p.m., New York time, on March 31, 1995.
"NOTE" and "NOTES" shall mean either or both of the Term Note and the
Revolving Credit Note.
"OLD FACILITY" shall mean that certain Credit Agreement, dated as of April
18, 1990, among Borrower, as the borrower, ACC Holdings Corporation, ACC Middle
Corporation, Aristech Chemical International Limited, Aristech Chemical
International Sales Limited and Mitsubishi Corporation, as Guarantors, The
Mitsubishi Bank, Limited, acting through its New York Branch and The Mitsubishi
Trust and Banking Corporation,
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<PAGE> 5
acting through its New York Branch, as the Co-Arrangers, certain commercial
lending institutions as the lenders and The Mitsubishi Bank, Limited, acting
through its New York Branch, as the Agent, as amended, supplemented, amended
and restated or otherwise modified from time to time.
"RATE" and "RATES" shall mean either or both of the Alternate Base Rate
and LIBO Rate.
"REVOLVING CREDIT LOAN" or "REVOLVING CREDIT LOANS" shall mean one or more
of the Loans made to Borrower by Lender pursuant to Section 3.01 hereof.
"REVOLVING CREDIT NOTE" shall mean the Revolving Credit Note of the
Borrower executed and delivered to the Lender pursuant to this Agreement,
together with all extensions, renewals, refinancings or refundings thereof,
whether in whole or in part.
"TERM LOAN" means the Loan made to Borrower by Lender pursuant to Section
2.01 hereof.
"TERM NOTE" shall mean the Term Note of the Borrower executed and
delivered to the Lender pursuant to this Agreement, together with all
extensions, renewals, refinancings or refundings thereof, whether in whole or
in part.
1.02 CONSTRUCTION. Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular the
plural and the part the whole and "or" has the inclusive meaning represented by
the phrase "and/or". The words "hereof", "herein", "hereunder" and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Time is of the essence in this
Agreement and the other Loan Documents. The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section and subsection references are to this
Agreement unless otherwise specified. References to dollar amounts shall be to
United States dollars.
ARTICLE II
THE TERM LOAN
2.01 MAKING OF TERM LOAN. Subject to the terms and conditions hereof, the
Lender shall make a loan to the Borrower on the Closing Date in the aggregate
principal amount of One
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<PAGE> 6
Hundred Million Dollars (U.S. $100,000,000) (the "TERM LOAN"). No portion of
the Term Loan may be reborrowed by Borrower.
2.02 TERM NOTE. The obligation of the Borrower to repay the aggregate
unpaid principal amount of the Term Loan, and all interest accruing thereon
pursuant to Section 2.04 of this Agreement, shall be evidenced by the Term
Note, the form of which is attached to this Agreement as Exhibit "A."
2.03 PAYMENTS ON ACCOUNT OF PRINCIPAL.
(a) Payment of Principal; Optional Prepayment. The unpaid principal
amount of the Term Loan shall be due and payable on the Maturity Date. The
Borrower shall have the right, at the Borrower's option exercisable by delivery
of three (3) Business Days' prior written notice to Lender, to pay the Term
Loan in whole or part on any Interest Payment Date and to pay the whole or any
part of the portion of the Term Loan subject to the Alternate Base Rate on any
date, in either case without premium or penalty; provided, however, that the
minimum prepayment amount with respect to the Term Loan shall be $500,000.
(b) Compensation for Losses. In the event that the Borrower prepays a
portion of the Term Loan subject to the LIBO Rate on a day other than the
Interest Payment Date for such portion of the Term Loan, the Borrower shall pay
to Lender upon demand an amount which will compensate Lender for any loss or
penalty incurred by Lender as a result of such prepayment. Such compensation
shall equal the excess, if any, of (i) the amount of interest which would have
accrued on the amount so prepaid for the period from the date of such
prepayment to the last day of such Interest Period over (ii) the amount of
interest which would have accrued to Lender on such amount by placing such
amount on deposit for a comparable period with prime banks in the London
Interbank Market. Lender shall deliver to Borrower, within two (2) Business
Days after the date of any notice of such prepayment a certificate as to the
amount of such loss or expense, which certificate shall set forth in reasonable
detail the basis for such loss or expense.
2.04 PAYMENTS ON ACCOUNT OF INTEREST.
(a) Payment of Interest. The Borrower shall pay interest in respect of
the entire outstanding unpaid principal balance of the Term Loan at a rate per
annum during each Interest Period equal to (i) 0.150% in excess of the LIBO
Rate or (ii) the Alternate Base Rate, as selected by the Borrower. Interest
shall be payable on the outstanding balance of the Term Loan until the Term
Loan is paid in full. Interest accrued on the outstanding principal balance of
the Term Loan during any Interest Period shall be payable on the Interest
Payment Date for such Interest Period.
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<PAGE> 7
(b) Interest Period and Rate Elections. Borrower shall have the option
of selecting Interest Periods for LIBO Rate portions of the Term Loan of one,
two or three months duration. The Interest Period for any portions of the Term
Loan subject to the Alternate Base Rate shall be any number of days at the
discretion of the Borrower. The Borrower may elect to have more than one
Interest Period outstanding at any one time; provided, however, that no
Interest Period shall extend beyond the Maturity Date. Not less than three
Business Days prior to the Closing Date, Borrower shall specify in writing to
Lender the initial Rate or Rates and Interest Period or Periods for the Term
Loan. Thereafter, Borrower shall, prior to the next Interest Payment Date,
specify in writing to Lender the Rate and the duration of the next Interest
Period, which shall commence on (and include) the Interest Payment Date and
shall expire on (but exclude) the next Interest Payment Date. Borrower shall
provide notice at least three Business Days prior to the applicable Interest
Payment Date of its election to choose the LIBO Rate and notice at least one
Business Day prior to the applicable Interest Payment Date of its election to
choose the Alternate Base Rate. If more than one Rate and Interest Period are
to be in effect at any time, then Borrower shall also specify which portion of
the Term Loan is to be subject to each Rate and Interest Period. With respect
to any portion of the Term Loan as to which there is no currently effective
Rate and Interest Period election, interest shall accrue on such portion of the
Term Loan at a rate per annum equal to the Alternate Base Rate and shall be
payable upon conversion of such portion of the Term Loan to the LIBO Rate.
(c) Interest Rate After Maturity. After the principal amount of the Term
Loan shall have become due and payable, whether at maturity or by acceleration,
declaration or otherwise, it shall thereafter bear interest at a rate per annum
equal at all times to 2.0% above the Alternate Base Rate until paid, payable on
demand.
(d) Maximum Rate. In no contingency or event shall interest charged
hereunder with respect to the Term Loan, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
deemed applicable to this Agreement (the "MAXIMUM RATE"). In the event that it
is determined that the rate of interest charged hereunder with respect to the
Term Loan exceeded the Maximum Rate during any period or periods, the rate of
interest for such period or periods shall be deemed to have been the Maximum
Rate, and the rate of interest shall be deemed to have continued to be and
shall continue to be the Maximum Rate for such period as is necessary for the
total amount of interest paid or accrued hereunder with respect to the Term
Loan to equal the amount of interest that would have been paid or accrued
hereunder had the interest rate hereunder at all times remained as provided in
the
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<PAGE> 8
preceding subsections of this Section 2.04. If, notwithstanding the foregoing
interest rate adjustment, it is determined that the Lender has received
interest in excess of the Maximum Rate, any such excess shall (i) first, be
applied to any unpaid costs and expenses owed to the Lender under this
Agreement or any other Loan Document and to the unpaid principal amount of the
Term Loan and (ii) second, be refunded to the Borrower.
ARTICLE III
THE REVOLVING CREDIT LOANS
3.01 MAKING OF REVOLVING CREDIT LOANS. Subject to the terms and
conditions hereof, the Lender shall make Revolving Credit Loans to Borrower
from time to time at Borrower's request, the aggregate outstanding principal
amount of which shall not exceed One Hundred Million Dollars (U.S.
$100,000,000) at any time, which Loans Borrower may repay and reborrow from
time to time until the Maturity Date. The amount of any Revolving Credit Loan
shall be no less than Two Million Dollars (U.S. $2,000,000).
3.02 REVOLVING CREDIT NOTE. The obligation of the Borrower to repay the
aggregate unpaid principal amount of the Revolving Credit Loans, and all
interest accruing thereon pursuant to Section 3.04 of this Agreement, shall be
evidenced by the Revolving Credit Note, the form of which is attached to this
Agreement as Exhibit "B".
3.03 PAYMENTS ON ACCOUNT OF PRINCIPAL.
(a) Payment of Principal; Optional Prepayment. The unpaid principal
amount of all Revolving Credit Loans shall be due and payable on the Maturity
Date. The Borrower shall have the right, at the Borrower's option exercisable
by delivery of three (3) Business Days' prior written notice to Lender, to pay
the Revolving Credit Loans in whole or part on any Interest Payment Date and to
pay the whole or any part of the portion of the Revolving Credit Loans subject
to the Alternate Base Rate on any date, in either case without premium or
penalty; provided, however, that the minimum prepayment amount with respect to
the Revolving Credit Loans shall be $500,000.
(b) Compensation for Losses. In the event that the Borrower prepays a
portion of the Revolving Credit Loan subject to the LIBO Rate on a day other
than the Interest Payment Date for such portion of the Revolving Credit Loan,
the Borrower shall pay to Lender upon demand an amount which will compensate
Lender for any loss or penalty incurred by Lender as a result of such
prepayment. Such compensation shall equal the excess, if any, of (i) the
amount of interest which would have accrued on
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<PAGE> 9
the amount so prepaid for the period from the date of such prepayment to the
last day of such Interest Period over (ii) the amount of interest which would
have accrued to Lender on such amount by placing such amount on deposit for a
comparable period with prime banks in the London Interbank Market. Lender
shall deliver to Borrower, within two (2) Business Days after the date of any
notice of such prepayment a certificate as to the amount of such loss or
expense, which certificate shall set forth in reasonable detail the basis for
such loss or expense.
3.04 PAYMENTS ON ACCOUNT OF INTEREST.
(a) Payment of Interest. The Borrower shall pay interest in respect of
the entire outstanding unpaid principal balance of the Revolving Credit Loans
at a rate per annum during each Interest Period equal to (i) 0.150% in excess
of the LIBO Rate or (ii) the Alternate Base Rate, as selected by the Borrower.
Interest shall be payable on the outstanding balance of the Revolving Credit
Loans until the Revolving Credit Loans are paid in full. Interest accrued on
the outstanding principal balance of the Revolving Credit Loans during any
Interest Period shall be payable on the Interest Payment Date for such Interest
Period.
(b) Interest Period and Rate Elections. Borrower shall have the option
of selecting Interest Periods for LIBO Rate portions of the Revolving Credit
Loans of one, two or three months duration. The Interest Period for any
portions of the Revolving Credit Loans subject to the Alternate Base Rate shall
be any number of days at the discretion of the Borrower. The Borrower may
elect to have more than one Interest Period outstanding at any one time;
provided, however, that no Interest Period shall extend beyond the Maturity
Date. Not less than three Business Days prior to the Closing Date, Borrower
shall specify in writing to Lender the initial Rate or Rates and Interest
Period or Periods for the initial Revolving Credit Loan. Thereafter, Borrower
shall, prior to the next Interest Payment Date, specify in writing to Lender
the Rate and the duration of the next Interest Period, which shall commence on
(and include) the Interest Payment Date and shall expire on (but exclude) the
next Interest Payment Date. Borrower shall provide notice at least three
Business Days prior to the applicable Interest Payment Date of its election to
choose the LIBO Rate and notice at least one Business Day prior to the
applicable Interest Payment Date of its election to choose the Alternate Base
Rate. If more than one Rate and Interest Period are to be in effect at any
time, then Borrower shall also specify which portion of the Revolving Credit
Loans are to be subject to each Rate and Interest Period. With respect to any
portion of any Revolving Credit Loan as to which there is no currently
effective Rate and Interest Period election, interest shall accrue on such
portion of the Revolving Credit Loan at a rate per annum equal to the
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<PAGE> 10
Alternate Base Rate and shall be payable upon conversion of such portion of the
Revolving Credit Loan to the LIBO Rate.
(c) Interest Rate After Maturity. After the principal amount of the
Revolving Credit Loans shall have become due and payable, whether at maturity
or by acceleration, declaration or otherwise, they shall thereafter bear
interest at a rate per annum equal at all times to 2.0% above the Alternate
Base Rate until paid, payable on demand.
(d) Maximum Rate. In no contingency or event shall interest charged
hereunder with respect to Revolving Credit Loans, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
deemed applicable to this Agreement (the "Maximum Rate"). In the event that it
is determined that the rate of interest charged hereunder with respect to the
Revolving Credit Loans exceeded the Maximum Rate during any period or periods,
the rate of interest for such period or periods shall be deemed to have been
the Maximum Rate, and the rate of interest shall be deemed to have continued to
be and shall continue to be the Maximum Rate for such period as is necessary
for the total amount of interest paid or accrued hereunder with respect to the
Revolving Credit Loans to equal the amount of interest that would have been
paid or accrued hereunder had the interest rate hereunder at all time remained
as provided in the preceding subsections of this Section 3.04. If,
notwithstanding the foregoing interest rate adjustment, it is determined that
the Lender has received interest in excess of the Maximum Rate, any such excess
shall (i) first, be applied to any unpaid costs and expenses owed to the Lender
under this Agreement or any other Loan Document and to the unpaid principal
amount of the Revolving Credit Loans and (ii) second, be refunded to the
Borrower.
ARTICLE IV
DEFAULT
4.01 CONCERNING DEFAULTS. The Borrower shall be in default under this
Agreement upon the occurrence of any one or more of the following events
(herein called "Events of Default"):
(a) nonpayment of interest, principal or any amount due hereunder on or
before the date when due, whether at maturity or by acceleration, declaration
or otherwise, and such failure shall continue for a period of 10 days;
(b) the Borrower shall default (i) in any payment of principal of or
interest on any other Indebtedness beyond any period of grace provided with
respect thereto, or (ii)
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<PAGE> 11
in the performance of any other agreement, term or condition contained in any
agreement under which any such obligation is created, and as a result of the
Borrower's default such obligation has become due prior to its stated
maturity and the result of an event specified in clause (ii) is to accelerate
or permit the acceleration of any such obligation in excess of $1,000,000; or
(c) adjudication of the Borrower as a bankrupt or insolvent, or entry of
an order, remaining unstayed by appeal or otherwise for 30 days, appointing a
receiver or trustee for the Borrower, or for all or any of its property, or
approving a petition seeking reorganization or other similar relief under the
Bankruptcy Code or other similar laws of the United States or of any state or
of any other competent jurisdiction, or the filing by the Borrower of a
petition seeking any of the foregoing or consenting thereto, or the filing of
a petition to take advantage of any debtors' act, or making a general
assignment for the benefit of creditors, or admitting in writing its
inability to pay its debts as they mature.
4.02 REMEDIES. If an Event of Default described in Section 4.01(a) or (b)
shall have occurred and be continuing, then Lender may forthwith, or at any
time thereafter, by notice to the Borrower, declare the unpaid principal amount
of the Loans and all interest then accrued thereon to be immediately due and
payable, and such principal and interest shall thereupon be immediately due and
payable without presentment, protest, demand or other notice all of which are
hereby waived, and Lender may terminate any and all obligations of Lender to
make Loans under this Agreement. If an Event of Default described in Section
4.01(c) shall have occurred, then all Loans and all interest thereon shall
automatically be and become immediately due and payable without presentment,
protest, demand or notice all of which are hereby waived, and any and all
obligations of Lender to make Loans under this Agreement shall automatically
and immediately terminate. Lender shall also have all other rights and
remedies available to Lender at law or in equity.
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<PAGE> 12
ARTICLE V
MISCELLANEOUS
5.01 GUARANTY. The Borrower hereby represents and warrants to the Lender
that Mitsubishi Corporation shall guaranty the Loans made to Borrower hereunder
in a manner satisfactory to the Lender.
5.02 USE OF PROCEEDS. The Borrower hereby represents and warrants to the
Lender that the proceeds of the Loans will be used solely for the refinancing
of Indebtedness of the Borrower outstanding on the Closing Date and owed to
certain lending institutions pursuant to the Old Facility or owed to Mitsubishi
Corporation pursuant to the Subordinated Loan Agreement dated as of February
18, 1994 between the Borrower and Mitsubishi Corporation.
5.03 GOVERNING LAW. This Agreement and the Notes shall be governed by the
laws of the State of New York, excluding its rules relating to the conflict of
laws.
5.04 NOTICES. Any notice or request by any party hereto shall be in
writing and shall be deemed to have been given when delivered by hand or by
facsimile transmission or upon receipt when mailed by overnight courier,
addressed as follows, until notice of some other address shall have been given
to the other party:
If to the Borrower:
Aristech Chemical Company
600 Grant Street, Room 1188
Pittsburgh, Pennsylvania 15219-2704
Attention: Mr. Anthony F. Mastro
Facsimile: (412) 433-7819
If to the Lender:
Mitsubishi International Corporation
520 Madison Avenue
New York, New York 10022
Facsimile: (212) 605-2102
5.05 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which constitutes an original.
5.06 WAIVERS; AMENDMENTS. The observance or performance of any covenant or
obligation imposed upon the Borrower under any provision of this Agreement may
be waived in writing by the Lender and the same shall then be effective only
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<PAGE> 13
for the period on the conditions and for the specific instances and purposes
specified in such writing; provided, however, that no such waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereto. No modification of any provision of this Agreement or of any Note
shall be effective unless made in writing by the Borrower and the Lender.
5.07 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations hereunder or any interest herein
without the prior written consent of the Lender. The Lender may assign this
Agreement and all of its rights and obligations hereunder to any wholly owned
corporate subsidiary of Lender. Except to the extent otherwise required by its
context, the word "Lender" where used in this Agreement shall mean and include
the holder of the Notes originally issued to the Lender, and the holder of such
Notes shall be bound by and have the benefits of this Agreement the same as if
such holder had been a signatory hereto.
5.08 SEVERABILITY. The provisions of this Agreement and of the other Loan
Documents are severable, and if any clause or provision of this Agreement or of
any other Loan Document shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such clause or provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such clause or provision in any other jurisdiction or the remaining
provisions hereof and of the other Loan Documents in any jurisdiction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such which may be hereafter declared invalid, void or
unenforceable.
5.09 ENTIRE AGREEMENT. This Agreement supersedes all prior understandings
and agreements, whether written or oral, among the parties hereto relating to
the transactions provided for herein.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the day and year first above written.
ATTEST: ARISTECH CHEMICAL CORPORATION
By: /s/ D. F. TUTHILL By: /s/ W. D. WALSTON
-------------------- ----------------------------
Treasurer
Title: Secretary
------------------
ATTEST: MITSUBISHI INTERNATIONAL CORPORATION
By: /s/ Y. SAKATA By: /s/ H. TAKEUCHI
-------------------- ----------------------------
General Manager,
Finance Division
Title: Manager, Project Finance
-------------------------
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<PAGE> 15
EXHIBIT A
ARISTECH CHEMICAL CORPORATION
TERM NOTE
U.S. $100,000,000 Pittsburgh, Pennsylvania
August 1, 1994
For value received, ARISTECH CHEMICAL CORPORATION (the "BORROWER") hereby
promises to pay to the order of MITSUBISHI INTERNATIONAL CORPORATION
("LENDER"), on or before the Maturity Date, the principal sum of U.S.
$100,000,000, payable in accordance with the provisions of that certain Term
Loan and Revolving Credit Agreement, dated as of August 1, 1994, entered into
by and between Borrower and Lender (the "AGREEMENT"), together with interest on
the unpaid principal balance hereof as provided in the Agreement. All
initially capitalized terms used herein without definition shall have the
meanings attributed to such terms in the Agreement unless the context clearly
requires otherwise.
Interest shall be due and payable on each Interest Payment Date, determined
in accordance with the Agreement, until the principal balance of the Term Loan
is paid in full.
If any amount payable by the Borrower under this Note (including the
principal hereof and interest hereon) is not paid when due (whether at stated
maturity or otherwise), interest shall accrue on such amount to the extent
permitted by applicable law from the due date thereof to but excluding the date
such amount is paid in full at the rate set forth in Section 2.04(c) of the
Agreement.
The Borrower shall have the right, at the Borrower's option exercisable by
delivery of three (3) days' prior written notice to Lender, to pay the Term
Loan in whole or part on any Interest Payment Date and to pay the whole or any
part of the portion of the Term Loan subject to the Alternate Base Rate on any
date, in either case without premium or penalty; provided, however, that the
minimum prepayment amount with respect to the Term Loan shall be $500,000. If
the Borrower prepays a portion of the Term Loan subject to the LIBO Rate on a
day other than an Interest Payment Date, the Borrower shall compensate Lender
for any losses as set forth in Section 2.03(b) of the Agreement.
If any payment of principal or interest on this Note comes due and payable
on a day that is not a Business Day, such payment shall be payable on the next
succeeding Business Day.
<PAGE> 16
This Note is issued under, and is subject to the terms and conditions of,
the Agreement.
All payments of principal and interest hereunder shall be paid when due
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived.
This Note shall be governed by and construed and interpreted in accordance
with the law, without regard to principles governing choice of law, of the
State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by its
duly authorized officer this 1st day of August, 1994.
ARISTECH CHEMICAL CORPORATION
By:
------------------------------
Title:
---------------------------
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<PAGE> 17
EXHIBIT B
ARISTECH CHEMICAL CORPORATION
REVOLVING CREDIT NOTE
U.S. $100,000,000 Pittsburgh, Pennsylvania
August 1, 1994
For value received, ARISTECH CHEMICAL CORPORATION (the "BORROWER") hereby
promises to pay to the order of MITSUBISHI INTERNATIONAL CORPORATION
("LENDER"), on or before the Maturity Date, the principal sum of U.S.
$100,000,000, or such lesser amount as may be unpaid and outstanding under that
certain Term Loan and Revolving Credit Agreement, dated as of August 1, 1994,
entered into by and between Borrower and Lender (the "AGREEMENT"), together
with interest on the unpaid principal balance hereof as provided in the
Agreement. All initially capitalized terms used herein without definition
shall have the meanings attributed to such terms in the Agreement unless the
context clearly requires otherwise.
Interest shall be due and payable on each Interest Payment Date, determined
in accordance with the Agreement, until the principal balance of all Revolving
Credit Loans is paid in full.
If any amount payable by the Borrower under this Note (including the
principal hereof and interest hereon) is not paid when due (whether at stated
maturity or otherwise), interest shall accrue on such amount to the extent
permitted by applicable law from the due date thereof to but excluding the date
such amount is paid in full at the rate set forth in Section 3.04(c) of the
Agreement.
The Borrower shall have the right, at the Borrower's option exercisable by
delivery of three (3) days prior written notice to Lender, to pay the Revolving
Credit Loans in whole or part on any Interest Payment Date and to pay the whole
or any part of the portion of the Revolving Credit Loans subject to the
Alternate Base Rate on any date, in either case without premium or penalty;
provided, however, that the minimum prepayment amount with respect to the
Revolving Credit Loans shall be $500,000. If the Borrower prepays a portion of
the Revolving Credit Loan subject to the LIBO Rate on a day other than an
Interest Payment Date, the Borrower shall compensate Lender for any losses as
set forth in Section 3.03(b) of the Agreement.
If any payment of principal or interest on this Note comes due and payable
on a day that is not a Business Day, such payment shall be payable on the next
succeeding Business Day.
<PAGE> 18
This Note is issued under, and is subject to the terms and conditions of,
the Agreement.
All payments of principal and interest hereunder shall be paid when due
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived.
This Note shall be governed by and construed and interpreted in accordance
with the law, without regard to principles governing choice of law, of the
State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by its
duly authorized officer this 1st day of August, 1994.
ARISTECH CHEMICAL CORPORATION
By:
------------------------------
Title:
---------------------------
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<PAGE> 19
FIRST AMENDMENT
This First Amendment, dated as of January 4, 1995, by and between ARISTECH
CHEMICAL CORPORATION, a Delaware corporation (the "BORROWER"), and MITSUBISHI
INTERNATIONAL CORPORATION, a Delaware corporation (the "LENDER"),
WITNESSETH THAT:
WHEREAS, the Borrower and the Lender entered into a Term Loan and Revolving
Credit Agreement dated as of August 1, 1994 (the "ORIGINAL AGREEMENT"); and
WHEREAS, the Borrower and the Lender desire to amend the Original Agreement
to, inter alia, increase the amount of revolving credit loans available to the
Borrower and extend the maturity date of the Original Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Definitions. Except as set forth herein, terms used in this First
Amendment which are defined in the Original Agreement are herein used as
therein defined.
2. Change in Maturity Date. The definition of Maturity Date contained in
Section 1.01 of the Original Agreement is hereby amended to read in full as
follows:
"MATURITY DATE" shall mean 3:00 p.m., New York time, on March 31, 1995 or
such later date as may be mutually agreed by the Borrower and the Lender at
such time.
3. Increase in Amount of Revolving Credit Loans. The first sentence of
Section 3.01 of the Original Agreement is hereby amended to read in full as
follows:
Subject to the terms and conditions hereof, the Lender shall make Revolving
Credit Loans to Borrower from time to time at Borrower's request, the
aggregate outstanding principal amount of which shall not exceed
<PAGE> 20
Two Hundred Fifty Million Dollars (U.S. $250,000,000) at any time, which
Loans Borrower may repay and reborrow from time to time until the Maturity
Date.
4. Effectiveness. This First Amendment shall become effective immediately
upon (a) execution and delivery by the Borrower and the Lender of this First
Amendment; (b) execution and delivery by the Borrower of the Revolving Credit
Note, the form of which is attached to this First Amendment as Exhibit A
hereto; and (c) execution and delivery by Mitsubishi Corporation of an
Affirmation of Guarantee, the form of which is attached to this First Amendment
as Exhibit B. Immediately upon the effectiveness of this First Amendment, the
Lender shall deliver to the Borrower the Borrower's Revolving Credit Note dated
August 1, 1994 in the principal amount of U.S. $100,000,000, marked
"cancelled".
5. Miscellaneous.
(a) Except as specifically amended by the provisions hereof, the Original
Agreement shall remain in full force and effect.
(b) This First Amendment may be executed in any number of counterparts
each of which, when so executed and delivered by all parties, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
(c) This First Amendment shall be governed by the laws of the State of New
York, excluding its rules relating to the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as
of the day and year first above written.
- 2 -
<PAGE> 21
ARISTECH CHEMICAL CORPORATION
By: /s/ W. D. WALSTON
---------------------------
Title: Treasurer
------------------------
MITSUBISHI INTERNATIONAL
CORPORATION
By: /s/ H. TAKEUCHI
---------------------------
Title: General Manager,
Finance Division
------------------------
- 3 -
<PAGE> 22
Exhibit A
ARISTECH CHEMICAL CORPORATION
REVOLVING CREDIT NOTE
U.S. $250,000,000 Pittsburgh, Pennsylvania
January 4, 1995
For value received, ARISTECH CHEMICAL CORPORATION (the "BORROWER") hereby
promises to pay to the order of MITSUBISHI INTERNATIONAL CORPORATION (the
"LENDER"), on or before the Maturity Date, the principal sum of U.S.
$250,000,000, or such lesser amount as may be unpaid and outstanding under that
certain Term Loan and Revolving Credit Agreement, dated as of August 1, 1994,
entered into by and between Borrower and Lender, as the same may be amended,
modified or supplemented from time to time (the "AGREEMENT"), together with
interest on the unpaid principal balance hereof as provided in the Agreement.
All initially capitalized terms used herein without definition shall have the
meanings attributed to such terms in the Agreement unless the context clearly
requires otherwise.
Interest shall be due and payable on each Interest Payment Date, determined
in accordance with the Agreement, until the principal balance of all Revolving
Credit Loans is paid in full.
If any amount payable by the Borrower under this Note (including the
principal hereof and interest hereon) is not paid when due (whether at stated
maturity or otherwise), interest shall accrue on such amount to the extent
permitted by applicable law from the due date thereof to but excluding the date
such amount is paid in full at the rate set forth in Section 3.04(c) of the
Agreement.
The Borrower shall have the right, at the Borrower's option exercisable by
delivery of three (3) Business Days prior written notice to Lender, to pay the
Revolving Credit Loans in whole or part on any Interest Payment Date and to pay
the whole or any part of the portion of the Revolving Credit Loans subject to
the Alternate Base Rate on any date, in either case without premium or penalty;
provided, however, that the minimum prepayment amount with respect to the
Revolving Credit Loans shall be $500,000. If the Borrower prepays a portion of
the Revolving Credit Loan subject to the LIBO Rate on a day other than an
Interest Payment Date, the Borrower shall compensate Lender for any losses as
set forth in Section 3.03(b) of the Agreement.
If any payment of principal or interest on this Note comes due and payable
on a day that is not a Business Day, such payment shall be payable on the next
succeeding Business Day.
<PAGE> 23
This Note is issued under, and is subject to the terms and conditions of,
the Agreement.
All payments of principal and interest hereunder shall be paid when due
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived.
This Note shall be governed by and construed and interpreted in accordance
with the law, without regard to principles governing choice of law, of the
State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by its
duly authorized officer this 4th day of January, 1995.
ARISTECH CHEMICAL CORPORATION
By:
------------------------------
Title:
---------------------------
- 2 -
<PAGE> 24
Exhibit B
AFFIRMATION OF GUARANTEE
Pursuant to the Guarantee Letter dated July 25, 1994 and effective as of
August 1, 1994 (the "GUARANTEE"), in favor of Mitsubishi International
Corporation (the "LENDER") and in accordance with the terms thereof, the
undersigned Guarantor (as defined therein) has absolutely and unconditionally
guaranteed the full payment and performance of all indebtedness, obligations
and liabilities of Aristech Chemical Corporation, a Delaware corporation (the
"COMPANY") to the Lender under the Term Loan and Revolving Credit Agreement
dated as of August 1, 1994 (the "CREDIT AGREEMENT") and any other documents and
agreements contemplated thereby or relating thereto.
The undersigned Guarantor hereby consents and agrees to all amendments to
the Credit Agreement as of the date hereof, including the First Amendment,
dated as of January 4, 1995 by and between the Company and the Lender, and all
transactions contemplated thereby; and further affirms that the Guarantee
remains in full force and effect, and that the liability of the Guarantor
thereunder is not discharged or diminished in any way whatsoever.
WITNESS the due execution hereof as of the effective date of the First
Amendment.
MITSUBISHI CORPORATION
By:
-----------------------
Title:
--------------------
<PAGE> 25
SECOND AMENDMENT
This Second Amendment, dated as of March 31, 1995, by and between ARISTECH
CHEMICAL CORPORATION, a Delaware corporation (the "BORROWER"), and MITSUBISHI
INTERNATIONAL CORPORATION, a Delaware corporation (the "LENDER"),
WITNESSETH THAT:
WHEREAS, the Borrower and the Lender entered into a Term Loan and Revolving
Credit Agreement dated as of August 1, 1994, as amended by the First Amendment
dated as of January 4, 1995 (as amended, the "ORIGINAL AGREEMENT"); and
WHEREAS, the Borrower and the Lender desire to amend the Original Agreement
to extend the maturity date of the Original Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Definitions. Except as set forth herein, terms used in this First
Amendment which are defined in the Original Agreement are herein used as
therein defined.
2. Change in Maturity Date. The definition of Maturity Date contained in
Section 1.01 of the Original Agreement is hereby amended to read in full as
follows:
"MATURITY DATE" shall mean 3:00 p.m., New York time, on March 31, 1996.
3. Effectiveness. This Second Amendment shall become effective immediately
upon execution and delivery by the Borrower and the Lender of this Second
Amendment.
4. Miscellaneous.
<PAGE> 26
(a) Except as specifically amended by the provisions hereof, the Original
Agreement shall remain in full force and effect.
(b) This Second Amendment may be executed in any number of counterparts
each of which, when so executed and delivered by all parties, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
(c) This Second Amendment shall be governed by the laws of the State of
New York, excluding its rules relating to the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
ARISTECH CHEMICAL CORPORATION
By: /s/ W.D. WALSTON
---------------------------------
Title: Treasurer
------------------------------
MITSUBISHI INTERNATIONAL
CORPORATION
By: /s/ H. TAKEUCHI
---------------------------------
Title: General Manager, Finance Div.
------------------------------
- 2 -
<PAGE> 27
THIRD AMENDMENT
This Third Amendment, dated as of March 31, 1996, by and between
ARISTECH CHEMICAL CORPORATION, a Delaware corporation (the "BORROWER"), and
MITSUBISHI INTERNATIONAL CORPORATION, a Delaware corporation (the "LENDER"),
WITNESSETH THAT:
WHEREAS, the Borrower and the Lender entered into a Term Loan and
Revolving Credit Agreement dated as of August 1, 1994, as amended by the First
Amendment dated as of January 4, 1995, as amended by the Second Amendment dated
as of March 31, 1995 (as amended, the "ORIGINAL AGREEMENT"); and
WHEREAS, the Borrower and the Lender desire to amend the Original
Agreement to extend the maturity date of the Original Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Definitions. Except as set forth herein, terms used in this
Third Amendment which are defined in the Original Agreement are herein used as
therein defined.
2. Change in Maturity Date. The definition of Maturity Date
contained in Section 1.01 of the Original Agreement is hereby amended to read
in full as follows:
"Maturity Date" shall mean 3:00 p.m., New York time, on March 31, 1997
or such later date as may be mutually agreed by the Borrower and the
Lender.
3. Effectiveness. This Third Amendment shall become effective
immediately upon execution and delivery by the Borrower and the Lender of this
Third Amendment.
4. Miscellaneous.
<PAGE> 28
(a) Except as specifically amended by the provisions hereof, the
Original Agreement shall remain in full force and effect.
(b) This Third Amendment may be executed in any number of
counterparts each of which, when so executed and delivered by all parties,
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
(c) This Third Amendment shall be governed by the laws of the
State of New York, excluding its rules relating to the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as of the day and year first above written.
ARISTECH CHEMICAL CORPORATION
By: /s/ W.D. WALSTON
------------------------------------
Title: Treasurer
---------------------------------
MITSUBISHI INTERNATIONAL CORPORATION
By: /s/ H. TAKEUCHI
-------------------------------------
Title: Vice President & General Manager
----------------------------------
- 2 -
<PAGE> 29
Fourth Amendment
This Fourth Amendment, dated as of September 30, 1996, by and between
Aristech Chemical Corporation, a Delaware corporation (the "BORROWER") and
Mitsubishi International Corporation, a Delaware corporation (the "LENDER"),
WITNESSETH THAT:
WHEREAS, the Borrower and the Lender entered into a Term Loan and
Revolving Credit Agreement dated as of August 1, 1994, as amended by the First
Amendment dated as of January 4, 1995, as amended by the Second Amendment dated
as of March 31, 1995, and as amended by the Third Amendment dated as of March
31, 1996 (as amended, the "ORIGINAL AGREEMENT"); and
WHEREAS, the Borrower and the Lender desire to amend the Original
Agreement to, among other things, divide the amount of the revolving credit
loans available to the Borrower into two tranches, adjust maturity dates
thereof, and adjust the payment of interest thereof;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Definitions
Except as herein set forth, terms used in this Fourth Amendment which
are defined in the Original Agreement are herein used as therein defined.
2. Change in Maturity Date
The definition of Maturity Date contained in Section 1.01 of the
Original Agreement is hereby amended to read in full as follows:
"Maturity Date" shall mean:
<PAGE> 30
(a) For Tranche A, 3:00 p.m., New York time, on April 18,
2002 or such later date as may be mutually agreed by
the Borrower and the Lender at or before such time.
(b) For Tranche B, 3:00 p.m., New York time, on March 31,
1997 or such later date as may be mutually agreed by
the Borrower and the Lender at or before such time.
3. Division of Amount of Revolving Credit Loans into Two Tranches
A second and third paragraphs are added to Section 3.01 of the
Original Agreement to read in their entirety as follows:
The Two Hundred Fifty Million Dollar ($250,000,000.00) maximum
aggregate outstanding principal amount shall be divided into a Tranche
A which shall have a One Hundred Fifty Million Dollar
($150,000,000.00) maximum aggregate outstanding principal amount
("Tranche A") and a Tranche B which shall have a One Hundred Million
Dollar ($100,000,000.00) maximum aggregate outstanding principal
amount ("Tranche B"). The parties agree that all borrowings
outstanding under the Revolving Credit Loans as of September 30, 1996
shall be Tranche A borrowings. If loans are taken in the future, the
Borrower will designate in writing from which tranche they are being
made.
Notwithstanding anything herein to the contrary, Tranche B
will terminate automatically upon the successful completion of the
Borrower's issuance of One Hundred Fifty Million Dollars
($150,000,000.00) of 10-year notes in a debt
- 2 -
<PAGE> 31
offering to be placed through Merrill Lynch & Co., et al., which debt
offering is scheduled for completion in November 1996, or such later
date as determined by the Borrower (the "Offering"). Any amounts
outstanding under Tranche B at the time of such termination shall
become immediately due and payable upon such termination. The
Borrower shall provide the Lender with reasonably satisfactory written
notice of the successful completion of the Offering and the date of
such completion as soon as possible after its completion.
4. Change in Payment of Interest
Section 3.04(a)(i) of the Original Agreement is amended, effective as
of the date of the Offering, to read in its entirety as follows:
(i) 0.1875% in excess of the LIBO Rate or.
5. Effectiveness
This Fourth Amendment shall become effective immediately upon
execution and delivery by the Borrower and Lender of this Fourth Amendment.
6. Miscellaneous
(a) Except as specifically amended by the provisions hereof, the
Original Agreement shall remain in full force and effect.
(b) This Fourth Amendment may be executed in counterparts, each of
which, when so executed and delivered by all parties, shall be
an original, but all such counterparts shall together
constitute but one and the same instrument.
- 3 -
<PAGE> 32
(c) This Fourth Amendment shall be governed by the laws of the
State of New York, excluding its rules relating to the
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment as of the day and year first above written.
ARISTECH CHEMICAL CORPORATION
By: /s/ W.D. WALSTON
----------------------------------
Title: Treasurer
-------------------------------
MITSUBISHI INTERNATIONAL CORPORATION
By: /s/ M. BANDO
----------------------------------
Title: S.V.P., COO, CHEMICALS GROUP
-------------------------------
- 4 -
<PAGE> 1
EXHIBIT 10.03
$20,000,000 DISCRETIONARY CREDIT FACILITY
DISCRETIONARY CREDIT AGREEMENT
by and among
ARISTECH CHEMICAL CORPORATION
MITSUBISHI CORPORATION
and
THE CHASE MANHATTAN BANK, N.A.
and
PNC BANK, N.A.
Dated as of January 4, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.01 Certain Definitions . . . . . . . . . . . . . . -1-
1.02 Construction . . . . . . . . . . . . . . . . . . -5-
1.03 Accounting Principles . . . . . . . . . . . . . -5-
ARTICLE II
DISCRETIONARY CREDIT FACILITY . . . . . . . . . . . . . . . . . . . -5-
2.01 Discretionary Credit . . . . . . . . . . . . . . -5-
2.02 Bid Loan Requests . . . . . . . . . . . . . . . -6-
2.03 Bidding for, Accepting and Making Bid Loans . . -6-
2.04 Bid Loan Notes . . . . . . . . . . . . . . . . -7-
2.05 Interest After Default . . . . . . . . . . . . -7-
ARTICLE III
PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . -7-
3.01 Payments . . . . . . . . . . . . . . . . . . . -7-
3.02 Interest Payment Dates . . . . . . . . . . . . -8-
3.03 Voluntary Prepayments . . . . . . . . . . . . . -8-
3.04 Additional Compensation in Certain
Circumstances . . . . . . . . . . . . . . . . . -8-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . -9-
4.01 Borrower's Representations and Warranties . . . -9-
(a) Organization and Qualification . . . . . . -9-
(b) Power and Authority . . . . . . . . . . . -9-
(c) Validity and Binding Effect . . . . . . . -9-
(d) No Conflict . . . . . . . . . . . . . . . -9-
(e) Financial Statements . . . . . . . . . . . -10-
(f) Margin Stock . . . . . . . . . . . . . . . -10-
(g) Full Disclosure . . . . . . . . . . . . . -10-
(h) Consents and Approvals . . . . . . . . . . -10-
4.02 MC Representations and Warranties . . . . . . . -10-
(a) Organization and Qualification . . . . . . -10-
(b) Power and Authority . . . . . . . . . . . -10-
(c) Validity and Binding Effect . . . . . . . -10-
(d) No Conflict . . . . . . . . . . . . . . . -10-
(e) Financial Statements . . . . . . . . . . . -11-
ARTICLE V
CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . -11-
5.01 Conditions to Each Bid Loan . . . . . . . . . . -11-
ARTICLE VI
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . -12-
6.01 Affirmative Covenants . . . . . . . . . . . . . -12-
(a) Preservation of Existence, etc. . . . . . . -12-
(b) Keeping of Records and Books of Account . -13-
(c) Use of Proceeds . . . . . . . . . . . . . -13-
6.02 Negative Covenants . . . . . . . . . . . . . . . -13-
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
(a) Liquidations, Mergers, Consolidations,
Sales . . . . . . . . . . . . . . . . . . . -13-
(b) Minimum Net Worth . . . . . . . . . . . . . -13-
6.03 Reporting Requirements . . . . . . . . . . . . -13-
(a) Quarterly Financial Statements . . . . . . -13-
(b) Annual Financial Statements . . . . . . . -14-
(c) Certificate of the Borrower . . . . . . . -14-
(d) Notice of Default . . . . . . . . . . . . -15-
(e) Other Reports and Information . . . . . . -15-
ARTICLE VII
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . -15-
7.01 Events of Default . . . . . . . . . . . . . . . -15-
7.02 Consequences of Event of Default . . . . . . . -17-
ARTICLE VIII
THE BANKS . . . . . . . . . . . . . . . . . . . . . . . . -18-
8.01 Reliance by Banks . . . . . . . . . . . . . . . -18-
8.02 Banks in Their Individual Capacities . . . . . -18-
8.03 Equalization of Banks . . . . . . . . . . . . . -19-
ARTICLE IX
MISCELLANEOUS -19-
9.01 Modifications, Amendments or Waivers . . . . . -19-
9.02 No Implied Waivers; Cumulative Remedies:
Writing Required . . . . . . . . . . . . . . . -19-
9.03 Reimbursement and Indemnification of Banks by
the Borrower; Taxes . . . . . . . . . . . . . . -19-
9.04 Holidays . . . . . . . . . . . . . . . . . . . -20-
9.05 Notices . . . . . . . . . . . . . . . . . . . . -20-
9.06 Severability . . . . . . . . . . . . . . . . . -21-
9.07 Governing Law . . . . . . . . . . . . . . . . . -21-
9.08 Prior Understanding . . . . . . . . . . . . . . -21-
9.09 Duration; Survival . . . . . . . . . . . . . . -21-
9.10 Successors and Assigns . . . . . . . . . . . . -22-
9.11 Confidentiality . . . . . . . . . . . . . . . . -22-
9.12 Counterparts . . . . . . . . . . . . . . . . . -23-
9.13 Bank's Consent . . . . . . . . . . . . . . . . -23-
9.14 Exceptions . . . . . . . . . . . . . . . . . . -23-
9.15 Consent to Forum; Waiver of Jury Trial . . . . -23-
9.16 MC Guaranty . . . . . . . . . . . . . . . . . . -23-
</TABLE>
(ii)
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
EXHIBITS Page
<S> <C> <C>
EXHIBIT 1.01(A) - Form of Bid Loan Note
EXHIBIT 2.03 - Form of Bid Loan Acceptance with
Certification
EXHIBIT 5.01(c)(1) - Form of Opinion of Borrower's Counsel
EXHIBIT 5.01(c)(2) - Form of Opinion of MC Counsel
EXHIBIT 6.03 - Form of Compliance Certificate
</TABLE>
(iii)
<PAGE> 5
DISCRETIONARY CREDIT AGREEMENT
THIS DISCRETIONARY CREDIT AGREEMENT is dated as of January 4,
1995, and is made by and among ARISTECH CHEMICAL CORPORATION, a Delaware
corporation (the "Borrower"), MITSUBISHI CORPORATION, a Japanese corporation
("MC") and THE CHASE MANHATTAN BANK, N.A., and PNC BANK, N.A. (collectively
"the Banks" and individually a "Bank").
WITNESSETH:
WHEREAS, the Borrower desires to be able to request the Banks
to consider extending loans to the Borrower in an amount not to exceed an
aggregate of $20,000,000; and
WHEREAS, if either or both of the Banks in their sole
discretion in response to a specific request of Borrower bid to provide loans
to the Borrower and the Borrower accepts such bid, any such loans are made
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, covenant and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. In addition to words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
following meanings, respectively, unless the context hereof clearly requires
otherwise:
Agreement shall mean this Discretionary Credit
Agreement as the same may be supplemented or amended from time to time
including all schedules and exhibits hereto.
Authorized Officer shall mean those persons
designated by written notice to the Banks from the Borrower, authorized to
execute notices, reports and other documents required hereunder. The Borrower
may amend such list of persons from time to time by giving written notice of
such amendment to the Banks.
Banks shall mean The Chase Manhattan Bank, N.A. and
PNC Bank, N.A., and their respective successors and assigns, each of which is
referred to herein as a Bank.
Base Rate shall mean the greater of (i) the interest
rate per annum announced from time to time by a Bank at its Principal Office as
its then prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the
<PAGE> 6
Banks, or (ii) the Federal Funds Effective Rate plus one-half of one percent
(1/2%) per annum.
Bid shall have the meaning assigned to such term in
Section 2.03(i).
Bid Loan Aggregate Limit shall have the meaning
assigned to such term in Section 2.02.
Bid Loan Borrowing Date shall mean, with respect to
any Bid Loan, the date for the making thereof which shall be a Business Day.
Bid Loan Notes shall mean collectively and Bid Loan
Note shall mean separately all of the Bid Loan Notes of the Borrower in the
form of Exhibit 1.01(A) evidencing the Bid Loans together with all amendments,
extensions, renewals, replacements, refinancings or refunds thereof in whole or
in part.
Bid Loan Period shall have the meaning assigned to
such term in Section 2.02.
Bid Loan Request shall have the meaning assigned to
such term in Section 2.02.
Bid Loans shall mean collectively and Bid Loan shall
mean separately all of the Bid Loans or any Bid Loan made by any of the Banks
to the Borrower pursuant to Sections 2.03.
Borrower shall mean Aristech Chemical Corporation, a
corporation organized and existing under the laws of the State of Delaware.
Business Day shall mean a day on which commercial
banks are open for business in Pittsburgh, Pennsylvania, and New York City, New
York.
Consolidated Net Worth shall mean as of any date of
determination total stockholders' equity of the Borrower and its Subsidiaries
as of such date determined and consolidated in accordance with GAAP.
Dollar, Dollars, U.S. Dollars and the symbol $ shall
mean lawful money of the United States of America.
Event of Default shall mean any of the Events of
Default described in Section 7.01 of this Agreement.
Expiration Date shall mean January 3, 1996.
Federal Funds Effective Rate shall mean the rate per
annum (based on a year of 360 days and actual days elapsed
- 2 -
<PAGE> 7
and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve
Bank of New York (or any successor) on such day as being the weighted average
of the rates on overnight Federal funds transactions arranged by Federal funds
brokers on the previous trading day, as computed and announced by such Federal
Reserve Bank (or any successor) in substantially the same manner as such
Federal Reserve Bank computes and announces the weighted average it refers to
as the "Federal Funds Effective Rate" as of the date of this Agreement;
provided, if such Federal Reserve Bank (or its successor) does not announce
such rate on any day, the "Federal Funds Effective Rate" for such day shall be
the Federal Funds Effective Rate for the last day of which such rate was
announced.
GAAP shall mean generally accepted accounting
principles as are in effect from time to time, subject to the provisions of
Section 1.03 hereof, and applied on a consistent basis (except for changes in
application in which the Borrower's independent certified public accountants
concur) both as to classification of items and amounts.
Guaranty of any person shall mean any obligation of
such person guaranteeing or in effect guaranteeing any liability or obligation
of any other person in any manner, whether directly or indirectly, including,
without limiting the generality of the foregoing, any agreement to indemnify or
hold harmless any other person, any performance bond or other suretyship
arrangement and any other form of assurance against loss, except endorsement of
negotiable or other instruments for deposit or collection in the ordinary
course of business.
Indebtedness shall mean as to any person at any time,
any and all indebtedness, obligations or liabilities (whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, or joint or several) of such person for or in respect of: (i)
borrowed money, (ii) amounts raised under or liabilities in respect of any note
purchase or acceptance credit facility, (iii) reimbursement obligations under
any letter of credit, currency swap agreement, interest rate swap, cap, collar
or floor agreement or other interest rate management device, (iv) any other
transaction (including without limitation forward sale or purchase agreements,
capitalized leases and conditional sales agreements) having the commercial
effect of a borrowing of money entered into by such person to finance its
operations or capital requirements (but not including trade payables and
accrued expenses incurred in the ordinary course of business which are not
represented by a promissory note or other evidence of indebtedness and which
are not more than thirty (30) days past due), or (v) any Guaranty of
Indebtedness for borrowed money.
- 3 -
<PAGE> 8
Law shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, opinion, release,
ruling, order, injunction, writ, decree or award of any Official Body.
Loan Documents shall mean this Agreement, the Bid
Loan Notes, and any other instruments, certificates or documents delivered or
contemplated to be delivered hereunder or thereunder or in connection herewith
or therewith, as the same may be supplemented or amended from time to time in
accordance herewith or therewith, and Loan Document shall mean any of the Loan
Documents.
Loan Party shall mean the Borrower.
Loans shall mean collectively and Loan shall mean
separately all Bid Loans.
Material Adverse Change shall mean any set of
circumstances or events which (a) has or could reasonably be expected to have
any material adverse effect whatsoever upon the validity or enforceability of
this Agreement or any other Loan Documents, (b) is or could reasonably be
expected to be material and adverse to the business, properties, assets,
financial condition, results of operations or prospects of MC or of Borrower
and Borrower's Subsidiaries taken as a whole, (c) impairs materially or could
reasonably be expected to impair materially the ability of MC or of Borrower
and Borrower's Subsidiaries taken as a whole to duly and punctually pay or
perform its Indebtedness, or (d) impairs materially or could reasonably be
expected to impair materially the ability of the Banks or any of the Banks, to
the extent permitted, to enforce their legal remedies pursuant to this
Agreement or any other Loan Document.
Notes shall mean the Bid Loan Notes.
Official Body shall mean any national, federal,
state, local or other government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality of
either, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.
Person shall mean any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.
Potential Default shall mean any event or condition
which with notice, passage of time or a determination by the Banks, or any
combination of the foregoing, would constitute an Event of Default.
- 4 -
<PAGE> 9
Principal Office shall mean the main banking office
of a Bank.
Regulation U shall mean Regulation U, T, G or X as
promulgated by the Board of Governors of the Federal Reserve System, as amended
from time to time.
Subsidiary of any person at any time shall mean (i)
any corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such person or one or
more of such person's Subsidiaries, or any partnership of which such person is
a general partner or of which 50% or more of the partnership interests is at
the time directly or indirectly owned by such person or one or more of such
person's Subsidiaries, and (ii) any corporation, trust, partnership or other
entity which is controlled or capable of being controlled by such person or one
or more of such person's Subsidiaries.
1.02 Construction. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular, the
singular the plural and the part the whole, "or" has the inclusive meaning
represented by the phrase "and/or," and "including" has the meaning represented
by the phrase "including without limitation." The words "hereof," "herein,"
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. The section and
other headings contained in this Agreement and the Table of Contents preceding
this Agreement are for reference purposes only and shall not control or affect
the construction of this Agreement or the interpretation thereof in any
respect. Section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified.
1.03 Accounting Principles. Except as otherwise provided
in this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP.
ARTICLE II
DISCRETIONARY CREDIT FACILITY
2.01 Discretionary Credit. The Borrower acknowledges that
this is not a committed line of credit and that neither Bank
- 5 -
<PAGE> 10
has any obligation to make any loan to Borrower or if a Bid Loan is made, to
extend or renew any such Bid Loan.
2.02 Bid Loan Requests. Except as otherwise provided herein,
the Borrower may from time to time prior to the Expiration Date request that
the Banks bid to make loans (collectively "Bid Loans" and singularly a "Bid
Loan") by telephonic inquiry to the Banks not later than 11:00 A.M. Pittsburgh
time on the proposed Bid Loan Borrowing Date (each, a "Bid Loan Request"), it
being understood that the Banks may rely on the authority of any individual
making such a telephonic request without the necessity of receipt of any
written confirmation. Each Bid Loan Request shall specify the proposed Bid
Loan Borrowing Date, the term of the proposed Bid Loan (the "Bid Loan Period")
which may be no less than 1 day and no longer than 90 days and the maximum
principal amount (the "Requested Amount") of such Bid Loan, which shall be not
less than $50,000 and shall be an integral multiple of $50,000. After giving
effect to such Bid Loan and any other Bid Loan made on or before the Bid Loan
Borrowing Date, the aggregate amount of the Bid loans of all Banks outstanding
shall not exceed $20,000,000 (the "Bid Loan Aggregate Limit").
2.03 Bidding for, Accepting and Making Bid Loans.
(i) Bidding. Each Bank in its sole and
unfettered discretion in response to a Bid Loan Request may either decline to
bid or determine to submit a bid. If a Bank submits a bid (the "Bid") to the
Borrower, the Bank shall bid no later than 12:00 p.m. on the proposed Bid Loan
Borrowing Date, the Bid shall specify: (A) the principal amount of proposed
Bid Loans offered by such Bank (the "Offered Amount") which (i) may be less
than, but shall not exceed, the Requested Amount and (ii) shall be at least
$50,000 and shall be an integral multiple of $50,000, and (B) the interest rate
applicable to such proposed Bid Loan which rate shall be affixed throughout the
Loan Period, shall be based on a year of 360 days.
(ii) Accepting Bids. The Borrower shall irrevocably
accept or reject Bids by notifying each Bank which submitted a Bid of such
acceptance or rejection by telephone on or before 12:15 P.M. Pittsburgh time on
the Bid Loan Borrowing Date (the Borrower's acceptance of a Bid shall be
immediately confirmed by Borrower in writing by letter, facsimile or telex
substantially in the form of Exhibit 2.03 hereto delivered to each Bank whose
Bid was accepted, and the Borrower shall immediately notify by letter,
facsimile or telex each Bank of the aggregate outstanding Bid Loans after
giving effect to the accepted Bid or Bids). If the borrower elects to accept
any Bids, its acceptance must meet the following conditions: (1) the total
amount which Borrower accepts from all Banks must exceed $50,000 and be in
integral multiples of $50,000 and may not
- 6 -
<PAGE> 11
exceed the Requested Amount; (2) the Borrower must accept Bids based solely on
the cost to the Borrower of each Bid (interest rate together with any
transaction costs which would be incurred) in ascending order of the cost of
such Bids; (3) the Borrower may not borrow Bid Loans from any Bank on the Bid
Loan Borrowing Date in an amount exceeding such Bank's Offered Amount; and (4)
if each Bank submits a Bid at the same interest rate, the Borrower in its
discretion may accept either Bid or partially accept both Bids.
(iii) Funding Bid Loans. Each Bank whose Bid or
portion thereof is accepted shall make such Bid Loan by making funds available
to the Borrower on or before 2:00 P.M. on the Bid Loan Borrowing Date.
(iv) Several Obligations. The Obligations of the
Banks to make Bid Loans after their Bids have been accepted are several. No
Bank shall be responsible for the failure of any other Bank to make any Bid
Loan following an accepted Bid.
2.04 Bid Loan Notes. The obligation of the Borrower to
repay the aggregate unpaid principal amount of the Bid Loans made to it by each
Bank, together with interest thereon, shall be evidenced by a Bid Loan Note
dated as of the Closing Date payable to the order of such Bank in a face amount
equal to $20,000,000.
2.05 Interest After Default. To the extent permitted by
Law, upon the occurrence and during the continuation of an Event of Default,
any principal, interest, fee or other amount payable hereunder to a Bank shall
bear interest for each day thereafter until paid in full (before and after
judgment) at a rate per annum which shall be equal to two hundred (200) basis
points (2% per annum) above the Base Rate of such Bank. The Borrower
acknowledges that such increased interest rate reflects, among other things,
the fact that such Loans or other amounts have become a substantially greater
risk given their default status and that the Banks are entitled to additional
compensation for such risk.
ARTICLE III
PAYMENTS
3.01 Payments. All payments and prepayments to be made in
respect of principal, interest, or other amounts due from the Borrower
hereunder shall be payable prior to 11:00 A.M. (Pittsburgh time) on the date
when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrower, and without setoff,
counterclaim or other deduction or withholding of any nature whether for taxes
or otherwise, and an action therefor shall immediately accrue. Such payments
shall be made to each Bank at its Principal Office in U.S. Dollars and in
immediately available
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funds. Each Bank's statement of account, ledger or other relevant record
shall, in the absence of manifest error, be conclusive as the statement of the
amount of principal of and interest on the Bid Loans and other amounts owing
under this Agreement and shall be deemed an "account stated."
3.02 Interest Payment Dates. Interest on each Bid Loan shall
be due and payable in arrears on the first Business Day of each month and on
the Expiration Date or upon acceleration of the Bid Loan Notes.
3.03 Voluntary Prepayments.
(a) The Borrower shall have the right at its
option from time to time to prepay the Bid Loans in whole or part without
premium or penalty (except as provided in subsection (b) below or in Section
3.04 hereof):
(b) Whenever the Borrower desires to prepay any
part of the Loans, it shall provide a prepayment notice to each Bank at least
one (1) Business Day prior to the date of prepayment of Loans setting forth the
date, which shall be a Business Day, on which the proposed prepayment is to be
made and the amount of the prepayment.
(c) All prepayment notices shall be irrevocable.
The principal amount of the Loans for which a prepayment notice is given,
together with interest on such principal amount shall be due and payable on the
date specified in such prepayment notice as the date on which the proposed
prepayment is to be made.
3.04 Additional Compensation in Certain Circumstances. The
Borrower shall indemnify each Bank against all liabilities, losses or expenses
(including loss of margin, any loss or expense incurred in liquidating or
employing deposits from third parties and any loss or expense incurred in
connection with funds acquired by a Bank to fund or maintain Bid Loans which
such Bank sustains or incurs as a consequence of any
(i) payment or prepayment of any Bid Loan on a day
other than the last day of the corresponding Bid Loan Period (whether or not
such payment or prepayment is mandatory, voluntary or automatic and whether or
not such payment or prepayment is then due),
(ii) attempt by the Borrower to revoke (expressly,
by later inconsistent notices or otherwise) in whole or part any notice
relating to Bid Loan Requests under Section 2.02 or prepayments under Section
3.03, or
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(iii) default by the Borrower in the performance or
observance of any covenant or condition contained in this Agreement or any
other Loan Document, including without limitation any failure of the Borrower
to pay when due (by acceleration or otherwise) any principal, interest, or any
other amount due hereunder.
If any Bank sustains or incurs any such loss or expense it
shall from time to time notify the Borrower of the amount determined in good
faith by such Bank (which determination shall be conclusive absent manifest
error and may include such assumptions, allocations of costs and expenses and
averaging or attribution methods as such Bank shall deem reasonable) to be
necessary to indemnify such Bank for such loss or expense. Such notice shall
set forth in reasonable detail the basis for such determination. Such amount
shall be due and payable by the Borrower to such Bank ten (10) Business Days
after such notice is given.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Borrower's Representations and Warranties. The Borrower
represents and warrants to the Banks and each of the Banks as follows:
(a) Organization and Qualification. The Borrower and
each Subsidiary is a corporation, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has the lawful
power to own or lease its properties and to engage in the business it presently
conducts or proposes to conduct and is duly licensed or qualified and in good
standing in each jurisdiction where the property owned or leased by it or the
nature of the business transacted by it or both makes such licensing or
qualification necessary, except for licensing or qualifications in
jurisdictions in which the borrower or any Subsidiary does not have significant
operations, assets, businesses or properties.
(b) Power and Authority. The Borrower has full power
to enter into, execute, deliver and carry out this Agreement and the other Loan
Documents to which it is a party, to incur the Indebtedness contemplated by the
Loan Documents and to perform its obligations under the Loan Documents to which
it is a party and all such actions have been duly authorized by all necessary
proceedings on its part.
(c) Validity and Binding Effect. This Agreement has
been and each other Loan Document, when duly executed and delivered by the
Borrower, will have been duly and validly executed and delivered by the
Borrower. This Agreement and the other Loan Documents when delivered by the
Borrower pursuant to the provisions hereof will constitute, legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except to the extent that
enforceability of any of the foregoing Loan Documents may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or limiting the
right of specific performance.
(d) No Conflict. Neither the execution and delivery
of this Agreement or the other Loan Documents by the Borrower nor the
consummation of the transactions herein or therein contemplated or compliance
with the terms and provisions hereof or thereof by them will conflict with,
constitute a default under or result in any breach of (i) the terms and
conditions of the certificate of incorporation, by-laws or other organizational
documents of the Borrower or (ii) or any Law or of any material agreement or
instrument or order, writ, judgment, injunction or decree to which the
Borrower is a party or by which it is bound or to which it is subject, or
result in the creation or enforcement of any Lien, charge or encumbrance
whatsoever upon any property (now or hereafter acquired) of the Borrower.
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<PAGE> 15
(e) Financial Statements.
(A) Historical Statements. The Borrower has
delivered to the Banks copies of its audited consolidated year- end financial
statements for and as of the end of the fiscal year ended December 31, 1993
(the "Annual Statements"). In addition, the Borrower has delivered to the
Banks copies of its unaudited consolidated interim financial statements for the
fiscal year to date and as of the end of the fiscal quarter ended September 30,
1994 (the "Interim Statements") (the Annual and Interim Statements being
collectively referred to as the "Historical Statements"). The Historical
Statements were compiled from the books and records maintained by the
Borrower's management, are correct and complete and fairly represent the
consolidated financial condition of the Borrower and its Subsidiaries as of
their dates and the results of operations for the fiscal periods then ended and
have been prepared in accordance with GAAP consistently applied, subject (in
the case of the Interim Statements) to normal year-end audit adjustments.
(B) Accuracy of Financial Statements.
Neither the Borrower nor any Subsidiary has any material liabilities,
contingent or otherwise, or forward or long-term commitments that are not
disclosed in the Annual Statements or in the notes thereto, and except as
disclosed therein there are no unrealized or anticipated losses from any
commitments of the Borrower or any Subsidiary which may cause a Material
Adverse Change. Since December 31, 1993, no Material Adverse Change has
occurred.
(f) Margin Stock. No part of the proceeds of any
Loan has been or will be used, immediately, incidentally or ultimately, to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock or to refund Indebtedness
originally incurred for such purpose, or for any purpose which entails a
violation of or which is inconsistent with the provisions of the regulations of
the Board of Governors of the Federal Reserve System. Neither the Borrower nor
any Subsidiary holds or intends to hold margin stock in such amounts that more
than 25% of the reasonable value of the assets of the Borrower or any
Subsidiary are or will be represented by margin stock.
(g) Full Disclosure. Neither this Agreement nor
any other Loan Document, nor any certificate, statement, agreement or other
documents furnished to the Banks or any Bank in connection herewith or
therewith, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made, not
misleading.
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<PAGE> 16
(h) Consents and Approvals. No consent,
approval, exemption, order or authorization of, or a registration or filing
with any Official Body or any other person is required by any Law or any
agreement in connection with the execution, delivery and carrying out of this
Agreement and the other Loan Documents by the Borrower.
4.02 MC Representations and Warranties. MC represents and
warrants to the Banks and each of the Banks as follows:
(a) Organization and Qualification. MC is a
corporation, duly organized, validly existing and in good standing under the
laws of Japan.
(b) Power and Authority. MC has full power to
enter into, execute, deliver and carry out this Agreement and to perform its
obligations under this Agreement and all such actions have been duly authorized
by all necessary proceedings on its part.
(c) Validity and Binding Effect. This Agreement
has been duly executed and delivered by MC. This Agreement constitutes legal,
valid and binding obligations of MC enforceable against MC in accordance with
its respective terms, except to the extent that enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or limiting the
right of specific performance.
(d) No Conflict. Neither the execution and
delivery of this Agreement nor the consummation of the transactions herein or
therein contemplated or compliance with the terms and provisions hereof or
thereof by them will conflict with, constitute a default under or result in any
breach of (i) the terms and conditions of the certificate of incorporation,
by-laws or other organizational documents of MC or (ii) of any Law to which MC
is subject.
(e) Financial Statements.
(A) Historical Statements. MC has delivered
to the Bank copies of its audited consolidated year-end financial statements
for and as of the end of its fiscal year ended March 31, 1994 "the "MC
Statements"). The MC Statements were compiled from the books and records
maintained by the MC's management, are correct and complete and fairly
represent the consolidated financial condition of MC and its Subsidiaries as of
their date and the results of operations for the fiscal periods then ended and
have been prepared in accordance with accounting principles applicable to
corporations doing business in Japan consistently applied, subject to normal
year-end audit adjustments.
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<PAGE> 17
(B) Accuracy of Financial Statements.
Neither MC nor any Subsidiary of MC has any material liabilities, contingent or
otherwise, or forward or long-term commitments that are not disclosed in the MC
Statements or in the notes thereto, and except as disclosed therein there are
no unrealized or anticipated losses from any commitments of MC or any
subsidiary of MC which may cause a Material Adverse Change. Since March 31,
1994, no Material Adverse Change has occurred.
ARTICLE V
CONDITIONS OF LENDING
5.01 Conditions to Each Bid Loan. The obligation of each
Bank which has made a Bid that has been accepted by the Borrower to make the
related Bid Loan hereunder is subject to the performance by the Borrower of its
obligations to be performed hereunder at or prior to the making of any such Bid
Loan and to the satisfaction of the following further conditions:
(a) The representations and warranties of the
Borrower and MC contained in Article IV hereof shall be true and accurate on
and as of the date of such Bid Loan with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and the Borrower shall have
performed and complied with all covenants and conditions hereof; no Event of
Default or Potential Default under this Agreement shall have occurred and be
continuing or shall exist; and the Bid Loan Request shall be accompanied by a
certificate of the Borrower, dated the Closing Date and signed by the Chief
Executive Officer, President or Chief Financial Officer of the Borrower, to
each such effect;
(b) There shall have been delivered to the Banks
for the benefit of each Bank a certificate dated the date hereof and signed by
the Secretary or an Assistant Secretary of the Borrower, certifying as
appropriate as to:
(i) all action taken by the Borrower in
connection with this Agreement and the other Loan Documents;
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers and, in the case of the Borrower,
specifying the Authorized Officers permitted to act on behalf of the Borrower
for purposes of this Agreement and the true signatures of such officers, on
which the Banks and each Bank may conclusively rely; and
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<PAGE> 18
(iii) the copies of its organizational
documents, including its certificate of incorporation and bylaws previously
delivered to the banks remain in effect on the date hereof.
(c) There shall be delivered to the Banks for the
benefit of each Bank a written opinion of the General Counsel for the Borrower
in the form of Exhibit 5.01(c)(1) hereto and Mr. Mashade Ide, counsel for MC in
the form of Exhibit 5.01(c)(2), each dated the date hereof.
(d) The Borrower shall have paid or cause to be
paid to the Banks for itself and for the account of the Banks to the extent not
previously paid all costs and expenses for which the Banks are entitled to be
reimbursed.
(e) The making of such Bid Loan when aggregated
with all other outstanding Bid Loans shall not exceed the Bid Loan Aggregate
Limit.
ARTICLE VI
COVENANTS
6.01 Affirmative Covenants. The Borrower covenants and
agrees that until payment in full of the Bid Loans and interest thereon,
satisfaction of all of the Borrower's other obligations hereunder and
termination of this Agreement, the Borrower shall comply at all times with the
following affirmative covenants:
(a) Preservation of Existence, etc. The Borrower
and MC shall each maintain its corporate existence and its license or
qualification and good standing in each jurisdiction in which its ownership or
lease of property or the nature of its business makes such license or
qualification necessary.
(b) Keeping of Records and Books of Account. The
Borrower shall, and shall cause each Subsidiary to, maintain and keep proper
books of record and account which enable the Borrower and its Subsidiaries to
issue financial statements in accordance with GAAP and as otherwise required by
applicable Laws of any Official Body having jurisdiction over the Borrower or
any Subsidiary, and in which full, true and correct entries shall be made in
all material respects of all its dealings and business and financial affairs.
(c) Use of Proceeds. The Borrower will use the
proceeds of the Bid Loans only for lawful purposes and such uses shall not
contravene any applicable Law or any other provision hereof.
6.02 Negative Covenants. The Borrower covenants and
agrees that until payment in full of the Bid Loans and interest
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<PAGE> 19
thereon, satisfaction of all of the Borrower's other obligations hereunder and
termination of this Agreement, the Borrower shall comply with the following
negative covenants:
(a) Liquidations, Mergers, Consolidations, Sales.
The Borrower shall not dissolve, liquidate or wind-up its affairs. The
Borrower shall not become a party to any merger or consolidation unless it has
delivered at least 91 days prior notice thereof to the Banks.
(b) Minimum Net Worth. The Borrower shall not
permit its Consolidated Net Worth to be less than $1.00.
6.03 Reporting Requirements. The Borrower covenants and
agrees that until payment in full of the Bid Loans and interest thereon,
satisfaction of all of the Borrower's other obligations hereunder and
termination of this Agreement, the Borrower will furnish to a Bank upon request
therefor of such Bank:
(a) Quarterly Financial Statements. As soon as
available and in any event within forty-five (45) calendar days after the end
of each fiscal quarter in each fiscal year of Borrower, financial statements of
the Borrower, consisting of a balance sheet as of the end of such fiscal
quarter and related statements of income, stockholders' equity and cash flows
for the fiscal quarter then ended and the fiscal year through that date, all in
reasonable detail and certified (subject to normal year-end audit adjustments)
by the Chief Executive Officer, President or Chief Financial Official of the
Borrower, as having been prepared in accordance with GAAP, consistently
applied, and setting forth in comparative form the respective financial
statements for the corresponding date and period in the previous fiscal year.
(b) Annual Financial Statements. As soon as
available and in any event within ninety (90) days after the end of each fiscal
year of the Borrower, annual financial statements of the Borrower described
below and as soon as available and in any event within 150 days after the end
of each fiscal year of MC the annual financial statements of MC described
below. The annual financial statements of Borrower and MC shall consist of a
balance sheet as of the end of such fiscal year, and related statements of
income, stockholders' equity and cash flows for the fiscal year then ended, all
in reasonable detail and setting forth in comparative form the financial
statements as of the end of and for the preceding fiscal year, and certified by
independent certified public accountants of nationally recognized standing in
the case of Borrower and internationally recognized standing in the case of MC,
in each case satisfactory to the Banks. The certificate or report of
accountants shall be free of qualifications (other than any consistency
qualification that may
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<PAGE> 20
result from a change in the method used to prepare the financial statements as
to which such accountants concur) and shall not indicate the occurrence or
existence of any event, condition or contingency which would materially impair
the prospect of payment or performance of any covenant, agreement or duty of
the Borrower or MC under any of the Loan Documents. The annual financial
statements of Borrower shall be accompanied by a letter of Borrower's
accountants substantially to the effect that, based upon their ordinary and
customary examination of the affairs of the Borrower, as applicable, performed
in connection with the preparation of such consolidated financial statements,
and in accordance with generally accepted auditing standards, they are not
aware of the existence of any condition or event which constitutes an Event of
Default or Potential Default or, if they are aware of such condition or event,
stating the nature thereof and confirming the Borrower's calculations with
respect to the certificate to be delivered pursuant to Section 6.03(d) hereof
with respect to such financial statements.
(c) Certificate of the Borrower. Concurrently with
any financial statements of the Borrower furnished to the Banks pursuant to
Sections 6.03(a) and 6.03(b) hereof, a certificate of the Borrower signed by
the Chief Executive Officer, President or Chief Financial Officer of the
Borrower, in the form of Exhibit 6.03 hereto, to the effect that (i) the
representations and warranties of the Borrower contained in Article IV hereof
are true on and as of the date of such certificate with the same effect as
though such representations and warranties had been made on and as of such date
(except representations and warranties which expressly relate solely to an
earlier date or time) and the Borrower has performed and complied with all
covenants and conditions hereof, (ii) no Event of Default or Potential Default
exists and is continuing on the date of such certificate and (iii) containing
calculations in sufficient detail to demonstrate compliance as of the date of
the financial statements with Section 6.02(b) hereof.
(d) Notice of Default. Promptly after any officer
of the Borrower has learned of the occurrence of an Event of Default or
Potential Default, a certificate signed by the Chief Executive Officer,
President or Chief Financial Officer of the Borrower setting forth the details
of such Event of Default or Potential Default and the action which the Borrower
proposes to take with respect thereto.
(e) Other Reports and Information. Within 10
Business Days after the entry of any final judgment or orders for the payment
of money in excess of $5,000,000 in the aggregate against the Borrower by a
court having jurisdiction in the premises which judgment is not discharged,
vacated, bonded or stayed pending appeal within a period of thirty (30) days
from the date of entry, notice of the amount, court and parties to
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<PAGE> 21
such proceeding shall be given by the Borrower to the Banks. Promptly upon
their becoming available to the Borrower such other reports and information as
the Banks may from time to time reasonably request.
ARTICLE VII
DEFAULT
7.01 Events of Default. An Event of Default shall mean the
occurrence or existence of any one or more of the following events or
conditions (whatever the reason therefor and whether voluntary, involuntary or
effected by operation of Law):
(a) The Borrower shall fail to pay any principal of
any Bid Loan or shall fail to pay any interest on any Bid Loan or any other
amount owing hereunder or under the other Loan Documents after such principal,
interest or other amount becomes due in accordance with the terms hereof or
thereof;
(b) Any representation or warranty made at any time
by the Borrower herein or by the Borrower in any other Loan Document, or in any
certificate, other instrument or statement furnished pursuant to the provisions
hereof or thereof, shall prove to have been false or misleading in any material
respect as of the time it was made or furnished;
(c) The Borrower shall default in the observance or
performance of any covenant contained in Section 6.01 or Section 6.02 hereof;
(d) A default or event of default shall occur at any
time under the terms of any other agreement involving borrowed money or the
extension of credit or any other Indebtedness under which the Borrower or any
Subsidiary may be obligated as borrower or guarantor in excess of $10,000,000
in the aggregate, or under which MC is obligated as borrower or with respect to
which MC defaults on its obligations as a guarantor in either instance in
excess of $100,000,000 in the aggregate, and such breach, default or event of
default consists of the failure to pay (beyond any period of grace permitted
with respect thereto, whether waived or not) any indebtedness when due (whether
at stated maturity, by acceleration or otherwise) or if such breach or default
permits or causes the acceleration of any indebtedness (whether or not such
right shall have been waived) or the termination of any commitment to lend;
(e) Any of the Loan Documents shall cease to be
legal, valid and binding agreements enforceable against the party executing the
same or such party's successors and assigns (as permitted under the Loan
Documents) in accordance with the respective terms thereof or shall in any way
be terminated (except in accordance with its terms) or become or be declared
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<PAGE> 22
ineffective or inoperative or shall in any way be challenged or contested or
cease to give or provide the respective Liens, security interests, rights,
titles, interests, remedies, powers or privileges intended to be created
thereby;
(f) The Borrower or MC ceases to be solvent or
admits in writing its inability to pay its debts as they mature;
(g) A proceeding shall have been instituted in a
court having jurisdiction in the premises seeking a decree or order for relief
in respect of the Borrower or MC in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, or a receiver, liquidator, assignee, custodian, trustee, sequestrator,
conservator (or similar official) of the Borrower or MC for any substantial
part of its property, or for the winding-up or liquidation of its affairs, and
such proceeding shall remain undismissed or unstayed and in effect for a period
of thirty (30) consecutive days or such court shall enter a decree or order
granting any of the relief sought in such proceeding; or
(h) The Borrower or MC shall commence a voluntary
case under any applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall consent to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or other similar official) of
itself or for any substantial part of its property or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any action in furtherance of any of the
foregoing.
7.02 Consequences of Event of Default.
(a) If an Event of Default specified under
subsections (a) through (f) of Section 7.01 hereof shall occur and be
continuing, the Banks shall be under no further obligation to make a Bid Loan
for any accepted Bids hereunder and each Bank (i) by written notice to the
Borrower, declare the unpaid principal amount of its Bid Loan Note then
outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to such Bank hereunder and thereunder to be
forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to such Bank without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived; and
(b) If an Event of Default specified under
subsections (g) or (h) of Section 7.01 hereof shall occur, the Banks shall be
under no further obligations to make a Bid Loan
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<PAGE> 23
for any accepted Bids hereunder and the unpaid principal amount of the Bid Loan
Notes then outstanding and all interest accrued thereon, any unpaid fees and
all other Indebtedness of the Borrower to the Banks hereunder and thereunder
shall be immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived; and
(c) If an Event of Default shall occur and be
continuing, any Bank to whom any obligation is owed by the Borrower hereunder
or under any other Loan Document and any branch, subsidiary or affiliate of
such Bank or participant anywhere in the world shall have the right, in
addition to all other rights and remedies available to it, without notice to
the Borrower, to set-off against and apply to the then unpaid balance of all
the Bid Loans and all other obligations of the Borrower hereunder or under any
other Loan Document any debt owing to, and any other funds held in any manner
for the account of, the Borrower by such Bank or by such branch, subsidiary or
affiliate, including, without limitation, all funds in all deposit accounts
(whether time or demand, general or special, provisionally credited or finally
credited, or otherwise) now or hereafter maintained by the Borrower for its own
account (but not including funds held in custodian or trust accounts) with such
Bank or participant or such branch, subsidiary or affiliate. Such right shall
exist whether or not any Bank or the Banks shall have made any demand under
this Agreement or any other Loan Document, whether or not such debt owing to or
funds held for the account of the Borrower is or are matured or unmatured and
regardless of the existence or adequacy of any collateral, guaranty or any
other security, right or remedy available to any Bank or the Banks; and
(d) If an Event of Default shall occur and be
continuing, and whether or not the Banks shall have accelerated the maturity of
Bid Loans of the Borrower pursuant to any of the foregoing provisions of this
Section 7.02, any Bank, if owed any amount with respect to the Notes, may
proceed to protect and enforce its rights by suit in equity, action at law
and/or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Agreement or the Bid Notes,
including as permitted by applicable Law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of the Banks or such Bank; and
(e) From and after the date on which a Bank has
taken any action pursuant to this Section 7.02 and until all obligations of the
Borrower have been paid in full, any and all proceeds received by a Bank from
the exercise of any remedy by a Bank, shall be applied as follows:
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<PAGE> 24
(i) first, to reimburse the Banks for
out-of-pocket costs, expenses and disbursements, including without limitation
reasonable attorneys' fees and legal expenses, incurred by the Banks in
connection with collection of any obligations of the Borrower under any of the
Loan Documents;
(ii) second, to the repayment of all
Indebtedness then due and unpaid of the Borrower to the Banks incurred under
this Agreement or any of the Loan Documents, whether of principal, interest,
fees, expenses or otherwise, in such manner as the Banks may determine in its
discretion; and
(iii) the balance, if any, as required by
Law.
ARTICLE VIII
THE BANKS
8.01 Reliance by Banks. A Bank shall be entitled to rely
upon any writing, telegram, telex or teletype message, resolution, notice,
consent, certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper person or persons of the
Borrower.
8.02 Banks in Their Individual Capacities. Each of the Banks
and their respective affiliates may, without liability to account, except as
prohibited herein, make loans to, accept deposits from, discount drafts for,
act as trustee under indentures of, and generally engage in any kind of banking
or trust business with, the Borrower and its affiliates, as though such Bank
were not a Bank hereunder.
8.03 Equalization of Banks. The Banks agree among themselves
that, with respect to all amounts received by any Bank for application on any
obligation hereunder or under any Bid Loan Note or under any such
participation, whether received by voluntary payment, by realization upon
security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source or pursuant to the guaranty
set forth in Section 9.16 hereof, equitable adjustment will be made so that, in
effect, all such excess amounts will be shared ratably among the Banks and such
holders in proportion to their interests in payments under the Bid Loan Notes,
except as otherwise provided in Section 3.04(a) hereof.
ARTICLE IX
MISCELLANEOUS
9.01 Modifications, Amendments or Waivers. With the written
consent of the Banks, the Borrower and MC may from time
- 20 -
<PAGE> 25
to time enter into written agreements amending or changing any provision of
this Agreement or any other Loan Document or the rights of the Banks or the
Borrower hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the obligations of the Borrower hereunder
or thereunder; except that with respect to any waiver or consent regarding the
terms of any particular Bid Loan, only the consent of the Bank which made such
Bid Loan need be obtained.
9.02 No Implied Waivers; Cumulative Remedies; Writing
Required. No course of dealing and no delay or failure of any Bank in
exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or
operate as a waiver thereof; nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such a right, power,
remedy or privilege preclude any further exercise thereof or of any other
right, power, remedy or privilege. The rights and remedies of the Banks under
this Agreement and any other Loan Documents are cumulative and not exclusive of
any rights or remedies which they would otherwise have. Any waiver, permit,
consent or approval of any kind or character on the part of any Bank of any
breach or default under this Agreement or any such waiver of any provision or
condition of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing.
9.03 Reimbursement and Indemnification of Banks by the
Borrower; Taxes. The Borrower agrees unconditionally upon demand to pay or
reimburse to each Bank and to save such Bank harmless against (i) liability for
the payment of all reasonable out-of-pocket costs, expenses and disbursements
(including fees and expenses of counsel for each Bank except with respect to
(a) and (b) below), incurred by such Bank (a) in connection with the
administration and interpretation of this Agreement, and other instruments and
documents to be delivered hereunder, (b) relating to any amendments, waivers or
consents pursuant to the provisions hereof, (c) in connection with the
enforcement of this Agreement or any other Loan Document, or collection of
amounts due hereunder or thereunder or the proof and allowability of any claim
arising under this Agreement or any other Loan Document, whether in bankruptcy
or receivership proceedings or otherwise, and (d) in any workout, restructuring
or in connection with the protection, preservation, exercise or enforcement of
any of the terms hereof or of any rights hereunder or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings, or (ii) all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Bank, in its capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken or
- 21 -
<PAGE> 26
omitted by such Bank hereunder or thereunder, provided that the Borrower shall
not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
(A) if the same results from such Bank's gross negligence or willful
misconduct, or (B) if the Borrower was not given notice of the subject claim
and the opportunity to participate in the defense thereof, at its expense, or
(C) if the same results from a compromise or settlement agreement entered into
without the consent of the Borrower. The Banks will attempt to minimize the
fees and expenses of legal counsel for the Banks which are subject to
reimbursement by the Borrower hereunder by considering the usage of one law
firm to represent the Banks if appropriate under the circumstances. The
Borrower agrees unconditionally to save the Banks harmless from and against any
and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions.
9.04 Holidays. Whenever any payment or action to be made or
taken hereunder shall be stated to be due on a day which is not a Business Day,
such payment or action shall be made or taken on the next following Business
Day.
9.05 Notices. All notices, requests, demands, directions and
other communications (collectively "notices") given to or made upon any party
hereto under the provisions of this Agreement shall be by telephone or in
writing (including telex or facsimile communication) unless otherwise expressly
permitted hereunder and shall be delivered or sent by telex or facsimile to the
respective parties at the addresses and numbers set forth under their
respective names on the signature pages hereof or in accordance with any
subsequent unrevoked written direction from any party to the others. All
notices shall, except as otherwise expressly herein provided, be effective (a)
in the case of telex or facsimile, when received, (b) in the case of
hand-delivered notice, when hand delivered, (c) in the case of telephone, when
telephoned, provided, however, that in order to be effective, telephonic
notices must be confirmed in writing no later than the next day by letter,
facsimile or telex, (d) if given by mail, four (4) days after such
communication is deposited in the mails with first class postage prepaid,
return receipt requested, and (e) if given by any other means (including by air
courier), when delivered; PROVIDED, that notices to the Banks shall not be
effective until received. Any Bank giving any notice to the Borrower shall
simultaneously send a copy thereof to the Banks, and the Banks shall promptly
notify the other Banks of the receipt by it of any such notice.
9.06 Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any
- 22 -
<PAGE> 27
jurisdiction such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.
9.07 Governing Law. This Agreement shall be deemed to be a
contract under the laws of the State of New York and for all purposes shall be
governed by and construed and enforced in accordance with the laws of the State
of New York without regard to its conflict of laws principles.
9.08 Prior Understanding. This Agreement supersedes all
prior understandings and agreements, whether written or oral, between the
parties hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.
9.09 Duration; Survival. All representations and warranties
of the Borrower and MC contained herein or made in connection herewith shall
survive the making of Bid Loans and shall not be waived by the execution and
delivery of this Agreement, any investigation by the Banks, the making of Bid
Loans, or payment in full of the Bid Loans. All covenants and agreements of
the Borrower contained in Sections 6.01, 6.02 and 6.03 herein shall continue in
full force and effect from and after the date hereof until termination of this
Agreement and payment of all sums due hereunder. All covenants and agreements
of the Borrower contained herein relating to the payment of principal,
interest, premiums, additional compensation or expenses and indemnification,
including those set forth in the Notes, Article V and Section 9.03 hereof,
shall survive payment in full of the Bid Loans and termination of this
Agreement. The Guaranty Agreement shall terminate upon indefeasible payment in
full to the Banks of all sums due the Banks under the Agreement (including
payment by MC of any sums previously paid but received by the Borrower from the
banks pursuant to Section 547 or Section 548 of the United States Bankruptcy
Code, 11 U.S.C. Section 547 and 548, or other Laws).
9.10 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Banks, the Borrower and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights and obligations hereunder or any interest herein.
Each Bank may, at its own cost, make assignments of or sell participations in
all or any part of any particular Bid Loan made by it to one or more banks or
other entities, subject prior to a Default or Event of Default to the consent
of the Borrower with respect to any assignee, such consent not to be
unreasonably withheld. Upon delivery of a copy of the assignment agreement to
Borrower, an assignee of a particular Bid Loan shall have, to the extent of
- 23 -
<PAGE> 28
such assignment (unless otherwise provided therein), the same rights, benefits
and obligations as it would have if it had been a signatory Bank hereunder and
made that particular Bid Loan. In the case of a participation, the participant
shall only have the rights specified in Section 7.02(c) (the participant's
rights against such Bank in respect of such participation to be those set forth
in the agreement executed by such Bank in favor of the participant relating
thereto and not to include any voting rights and all amounts payable by
Borrower or MC hereunder or thereunder shall be determined as if such Bank had
not sold such participation. Each Bank may furnish any publicly available
information concerning Borrower and MC and any other information concerning
Borrower and MC in the possession of such Bank from time to time to assignees
and participants (including prospective assignees or participants) provided
such assignees and participants first agree in writing to be bound by the
provisions of Section 9.11 hereof.
9.11 Confidentiality. The Banks each agree to keep
confidential all information obtained from the Borrower which is nonpublic and
confidential or proprietary in nature (including any information the Borrower
specifically designates as confidential), except as provided below, and to use
such information only in connection with their respective capacities under this
Agreement and for the purposes contemplated hereby. The Banks shall be
permitted to disclose such information (i) to outside legal counsel,
accountants and other professional advisors who need to know such information
in connection with the administration and enforcement of this Agreement,
subject to agreement of such persons to maintain the confidentiality, (ii) to
the extent requested by any bank regulatory authority or, with notice to the
Borrower, as otherwise required by applicable Law or by any subpoena or similar
legal process, or in connection with any investigation or proceeding arising
out of the transactions contemplated by this Agreement, (iii) to assignees and
participants as contemplated by Section 9.10, (iv) if it becomes publicly
available other than as a result of a breach of this Agreement or becomes
available from a source not subject to confidentiality restrictions, or (v) the
Borrower shall have consented to such disclosure.
9.12 Counterparts. This Agreement may be executed by
different parties hereto on any number of separate counterparts, each of which,
when so executed and delivered, shall be an original, and all such counterparts
shall together constitute one and the same instrument.
9.13 Bank's Consent. Whenever any Bank's consent is required
to be obtained under this Agreement or any of the other Loan Documents as a
condition to any action, inaction, condition or event, the Banks and each Bank
shall be authorized to give or withhold such consent in its sole and absolute
discretion and to
- 24 -
<PAGE> 29
condition its consent upon the giving of additional collateral, the payment of
money or any other matter.
9.14 Exceptions. The representations, warranties and
covenants contained herein shall be independent of each other and no exception
to any representation, warranty or covenant shall be deemed to be an exception
to any other representation, warranty or covenant contained herein unless
expressly provided, nor shall any such exceptions be deemed to permit any
action or omission that would be in contravention of applicable Law.
9.15 Consent to Forum; Waiver of Jury Trial. The Borrower
and MC each hereby irrevocably consents to the nonexclusive jurisdiction of the
state and federal courts, located in New York City, New York, and waives
personal service of any and all process upon it and consents that all such
service of process be made by certified or registered mail directed to the
Borrower at the addresses provided for in Section 11.06 hereof and service so
made shall be deemed to be completed upon actual receipt thereof. Each of the
Borrower and MC waives any objection to jurisdiction and venue of any action
instituted against it as provided herein and agrees not to assert any defense
based on lack of jurisdiction or venue. The Borrower, MC and the Banks hereby
waive trial by jury in any action, suit, proceeding or counterclaim of any kind
arising out of or related to this Agreement, any other Loan Document or the
Collateral to the full extent permitted by Law.
9.16 MC Guaranty. MC hereby absolutely, unconditionally and irrevocably
(a) guarantees and becomes surety for the full and
punctual payment when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, of all obligations of the
Borrower with respect to this Agreement and the Loan Documents, whether for
principal, interest, or otherwise (including all such amounts which would
become due but for the operation of the automatic stay under Section 362(a) of
the United States Bankruptcy Code, 11 U.S.C. Section 362(a), and the Operation
of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C.
Section 506(b) and Section 506(b)), and
(b) indemnifies and holds harmless each Bank and
each holder of a Note for any and all costs and expenses (including reasonable
attorney's fees and expenses) incurred by such Bank or such holder, as the case
may be, in enforcing any rights under this guaranty.
This is an agreement of suretyship as well as of guaranty, is
a guarantee of payment and performance and not merely of collectibility, and is
in no way conditioned upon any
- 25 -
<PAGE> 30
attempt to collect from or proceed against the Borrower or upon any other event
or circumstance. The obligations of MC are direct and primary, are independent
of the Borrower's obligations and a separate action or proceeding may be
brought regardless of whether an action or proceeding is brought against the
Borrower. The obligations of MC are absolute, unconditional and irrevocable,
irrespective of (i) any increase or decrease or change in the amount borrowed
by the Borrower (whether or not contemplated by the Loan Documents), but not in
excess of the Bid Loan Aggregate Limit of $20,000,000 (provided that if the Bid
Loan Aggregate Limit of $20,000,000 were to be exceeded, MC Guaranty shall
still remain in effect for $20,000,000 of principal of Bid Loans and interest
and charges thereon), (ii) any failure to assert any breach, failure of a
condition or default under the Loan Documents, (iii) any defense, set-off or
counterclaim of the Borrower (excluding only the defense of full, strict and
indefeasible payment and performance), and (iv) the effect of any stay or
injunction resulting from the pendency of any bankruptcy, insolvency or similar
proceeding involving the Borrower. MC waives all notices, disclosures and
demand of any nature which might otherwise be required including, without
limitation, any notice of nonpayment, nonperformance, dishonor or protest under
any Loan Document, any right to a marshalling of assets, any benefit of any
statute of limitations, any requirement to mitigate damages resulting from a
default any right pertaining to election of remedies.
- 26 -
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Agreement as of the day and year
first above written.
ATTEST: ARISTECH CHEMICAL
CORPORATION
/s/ D.F. Tuthill By: /s/William D. Walston
------------------------
William D. Walston
[Seal] Title: Treasurer
Address for Notices:
600 Grant Street, Room 910
Pittsburgh, PA 15219-2704
Telecopier No. (412) 433-7939
Attention: M. P. DiClemente
Telephone No. (412) 433-7677
MITSUBISHI CORPORATION
By: /s/ Shinji Kajiwara
------------------------
Mr. Shinji Kajiwara
Title: General Manager
International Finance
Department
Address for Notices:
6-3, Marunouchi 2 - Chome,
Chiyoda-KU
Tokyo 100-86, Japan
Telecopier No. 011-813-3210-2518
Attention: Mr. Masanori Ito
Telephone No. 011-813-3210-2941
- 27 -
<PAGE> 32
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Peter M. Hilton
------------------------
Title: Vice President
Address for Notices:
One PNC Plaza
Pittsburgh, PA 15265
Telecopier No. (412) 762-6484
Attention: Peter M. Hilton
Telephone No. (412) 762-8417
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Peter Dedousis
------------------------
Title: Managing Director
Address for Notices:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, NY 10081
Telecopier No. (212) 552-1477
Attention: Loretta Fava
Telephone No. (212) 552-7529
- 28 -
<PAGE> 33
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
CHASE
January 23, 1995
Aristech Chemical Corporation
600 Grant Street, Room 910
Pittsburgh, Pennsylvania 15219-2704
Mitsubishi Corporation
3-1, Marunouchi 2 - Chome,
Chiyoda-KU
Tokyo 100-86, Japan
Dear Ladies and Gentlemen:
Reference is hereby made to the Discretionary Credit Agreement (the
"Credit Agreement") among Aristech Chemical Corporation, Mitsubishi
Corporation, The Chase Manhattan Bank, N.A. ("Chase") and PNC, N.A. All terms
defined in the Credit Agreement shall be used herein as defined in the Credit
Agreement unless otherwise defined herein or the context otherwise requires.
For valuable consideration, the receipt of which is hereby
acknowledged by the parties hereto, the Borrower, MC and Chase hereby agree
with respect to each Bid Loan made by Chase to the Borrower, that, in addition
to the dates interest is payable thereon pursuant to Section 3.02 of the credit
Agreement, interest also shall be due and payable thereon on the same date
principal of such Bid Loan is due and payable.
This letter agreement shall be effective when counterparts of this
letter amendment shall have been executed by the Borrower, MC and Chase.
Except as specifically amended hereby, all the provisions of the
Credit Agreement with respect to each Bid Loan made by Chase to the Borrower
shall remain unamended and in full force and effect.
THE CHASE MANHATTAN BANK, N.A.
By /s/ Peter Dedousis
------------------------
Name: Peter Dedousis
Title: Managing Director
<PAGE> 34
Agreed and Accepted:
ARISTECH CHEMICAL CORPORATION
By /s/ W. D. Walston
------------------------
Name: W. D. Walston
Title: Treasurer
MITSUBISHI CORPORATION
By
------------------------
Name:
Title:
- 2 -
<PAGE> 35
FIRST AMENDMENT TO DISCRETIONARY CREDIT AGREEMENT
THIS FIRST AMENDMENT TO DISCRETIONARY CREDIT AGREEMENT is dated as of
December 20, 1995 (the "Amendment") and is made by and among ARISTECH CHEMICAL
CORPORATION, a Delaware corporation (the "Borrower"), MITSUBISHI CORPORATION, a
Japanese corporation ("MC") and THE CHASE MANHATTAN BANK, N.A. and PNC BANK,
NATIONAL ASSOCIATION (collectively, the "Banks" and individually a "Bank").
WITNESSETH:
WHEREAS, the Borrower, MC and the Banks are parties to that certain
Discretionary Credit Agreement dated as of January 4, 1995 (as the same has
been amended, the "Credit Agreement");
WHEREAS, the parties hereto desire to amend the Expiration Date under
the Credit Agreement; and
WHEREAS, defined terms used herein shall have the meanings given to
them in the Credit Agreement.
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally
bound hereby, covenant and agree as follows:
1. Expiration Date. The definition of "Expiration Date"
contained in Section 1.01 of the Credit Agreement is hereby amended and
restated to read as follow:
"Expiration Date shall mean January 3, 1997."
2. Conditions Precedent. The effectiveness of this amendment is
conditioned upon satisfaction of each of the following conditions precedent:
(a) Event of a Default; Certificate. The representations
and warranties of the Borrower and MC contained in Article IV of the Credit
Agreement shall be true and accurate on and as of the date of this Amendment
with the same effect as though such representations and warranties had been
made on and as of such date (except representations and warranties which relate
solely to an earlier date or time, which representations and warranties shall
be true and correct on and as of the specific dates or times referred to
therein), and the Borrower shall have performed and complied with all covenants
and conditions herein and in the Credit Agreement; no Event of Default or
Potential Default under the Credit Agreement shall have occurred and be
continuing or shall exist; Borrower shall have delivered to the Banks a
certificate of the Borrower, dated the date hereof and signed by the Chief
Executive Officer,
<PAGE> 36
Treasurer, President or Chief Financial Officer of the Borrower to each such
effect.
(b) Secretary's Certificate. There shall have been
delivered to the Banks for the benefit of each Bank a certificate dated the
date hereof and signed by the Secretary or an Assistant Secretary of the
Borrower, certifying as to (i) all action taken by the Borrower in connection
with this Amendment; (ii) the names of the officer or officers authorized to
sign this Amendment and the true signatures of such officer or officers.
(c) Opinions. There shall be delivered to the Banks for
the benefit of each Bank a written opinion of the General Counsel for the
Borrower in the form of Exhibit 2(c)(1) hereto and Mr. Masatoshi Ide, counsel
for MC in the form of Exhibit 2(c)(2), each dated the date hereof;
(d) Reimbursement of Expenses. The Borrower shall have
paid or cause to be paid to the Banks for itself and for the account of the
Banks to the extent not previously paid all costs and expenses for which the
Banks are entitled to be reimbursed.
3. Addresses for Notices. The Address for notices to The Chase
Manhattan Bank, N.A. is hereby amended to read as set forth on Schedule 3
hereto.
4. Full Force and Effect. The Credit Agreement and each of the
other Loan Documents remain in full force and effect on and after the date of
this Amendment. The parties hereto do not amend or waive any provisions of the
Credit Agreement or the other Loan Documents except as expressly set forth
herein.
- 2 -
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Agreement as of the day and year first
above written.
ATTEST: ARISTECH CHEMICAL CORPORATION
/s/ Mark K. McNally By: /s/ William D. Walston
- --------------------------- -------------------------
Mark K. McNally, William D. Walston,
Secretary Treasurer
[SEAL]
MITSUBISHI CORPORATION
By: /s/ Mr. Hirotaka Shimoyoshi
---------------------------
Mr. Hirotaka Shimoyoshi,
General Manager,
International Finance
Department
- 3 -
<PAGE> 38
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Peter M. Hilton
--------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Peter Dedousis
--------------------------
Title: Managing Director
- 4 -
<PAGE> 1
EXHIBIT 10.04
AGREEMENT
This Agreement, made and entered into this 4th day of January, 1995, by and
between Mitsubishi Corporation ("MC") and Aristech Chemical Corporation
("ARS"),
WITNESSETH:
Article 1. MC's Execution of the Affirmation of Guarantee
Subject to the other terms and conditions herein contained, MC agrees
to execute and deliver an Affirmation of Guarantee (the "Guarantee
Affirmation") in connection with the amendment of the Term Loan and Revolving
Credit Agreement by and between ARS and Mitsubishi International Corporation,
dated as of August 1st, 1994, as amended as of January 4, 1995 (the "Loan
Agreement").
Article 2. Guarantee Fee
In consideration of MC's execution and delivery of the Guarantee
Affirmation and its guarantee of the Loan Agreement, ARS agrees to pay to MC a
guarantee fee calculated on a daily basis as .60 percent of the outstanding
balance of the loan facilities provided under the Loan Agreement (the
"Guarantee Fee"). The Guarantee Fee shall accrue until its payment date.
Article 3. Payment of Guarantee Fee
The Guarantee Fee shall be payable semiannually on the last business
day of March and September for the immediately preceding six-month period. All
Guarantee Fee payments shall be made by 5 o'clock P.M. New York time at the
Head Office of The Mitsubishi Bank, Tokyo, Japan for the account of MC.
Article 4. Indemnity
ARS hereby irrevocably and unconditionally agrees and undertakes to
indemnify and hold harmless MC against and from all costs, losses, damages,
actions, proceedings, claims, demands, liabilities, charges and expenses of
whatsoever nature and howsoever arising that MC may incur, suffer or sustain or
have imposed on it by reason of, arising in any way out of or in relation to
the guarantee and shall pay to MC immediately on first demand of MC such sum(s)
as MC certifies with proof of payment (any such certificate being conclusive
and binding on the parties hereto).
Article 5. Old Agreement
This Agreement supersedes and replaces the Agreement between the
parties hereto dated July 21, 1994 with respect to the payment of a guarantee
fee by ARS to MC.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate as of the day and year first above written.
MITSUBISHI CORPORATION ARISTECH CHEMICAL CORPORATION
/s/ NORIYOSHI FUKUYAMA /s/ W. D. WALSTON
- ---------------------- -----------------
Noriyoshi Fukuyama W. D. Walston
General Manager Treasurer
Aristech Department
<PAGE> 3
AMENDED AGREEMENT
This Amendment Agreement is made and entered into as of June 3, 1996, by and
between Mitsubishi Corporation ("MC") and Aristech Chemical Corporation
("ARS"). It is hereby agreed and confirmed with regard to the amendment and
modification of certain provisions of the agreement dated January 4, 1995
between the parties hereto concerning the affirmation of the guarantee letter
issued by MC in favor of Mitsubishi International Corporation (the "Original
Agreement") as follows:
1. Change of Guarantee Fee Rate.
The provisions of Article 2 of the Original Agreement shall be amended
to read in full as follows:
"Article 2. Guarantee Fee
In consideration of MC's execution and deliver of the Guarantee
Affirmation and its guarantee of the Loan Agreement, ARS agrees to pay
to MC a guarantee fee calculated on a daily basis as .30 percent of
the outstanding balance of the loan facilities provided under the Loan
Agreement (the "Guarantee Fee"). The Guarantee Fee shall accrue until
its payment date."
The aforementioned amendment shall be effective on and from June 3,
1996."
2. Miscellaneous.
Except as specifically amended by the foregoing provisions hereof, the
Original Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to
be executed by their respective representatives thereunto duly authorized as of
the day and year first above written.
MITSUBISHI CORPORATION ARISTECH CHEMICAL CORPORATION
/s/ HAJIME KOGA /s/ W.D. WALSTON
- --------------- ----------------
General Manager Treasurer
Aristech Department
<PAGE> 1
EXHIBIT 10.05
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
BY AND BETWEEN
ARISTECH CHEMICAL CORPORATION
as Seller
AND
ASHLAND INC.
as Buyer
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
April 28, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. THE TRANSACTION
1.1 Sale and Purchase of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Enumeration of Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Retained Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.5 Physical Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.6 Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.7 Determination of Working Capital . . . . . . . . . . . . . . . . . . . . . . . . 11
1.8 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.9 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.10 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.11 Certain Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.12 Continuing Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.13 Certain Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER
2.1 Organization; Corporate Power and Authority . . . . . . . . . . . . . . . . . . 29
2.2 Authorization and Enforceability . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.4 Certain Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.5 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.7 Certain Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . 33
2.8 Permits; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.9 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.10 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.11 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.12 Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.14 Sufficiency of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.15 Maintenance of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.16 Customers and Suppliers Relations . . . . . . . . . . . . . . . . . . . . . . . 39
2.17 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.18 Violation of Certain Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.19 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.20 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . 41
2.21 Limitation on Seller's Warranties . . . . . . . . . . . . . . . . . . . . . . . 41
2.22 Knowledge Concerning Buyer's Representations . . . . . . . . . . . . . . . . . . 42
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization; Corporate Power and
Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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3.2 Authorization and Enforceability . . . . . . . . . . . . . . . . . . . . . . . . 42
3.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.4 Absence of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.5 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.6 Knowledge Concerning Seller's
Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IV. COVENANTS OF THE PARTIES
4.1 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.2 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.3 Access to and Preservation of Information
and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.5 Transition Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.6 Non-competition and Non-interference
by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.7 Non-Interference by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.8 Identification of Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.9 Return of Polyester Resins . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.10 Colton Resins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.11 Cleaning of Colton Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE V. CLOSING
5.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.4 Deliveries by Both Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VI. CERTAIN ADDITIONAL COVENANTS
6.1 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.2 Fulfillment of Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . 64
6.3 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . 64
6.4 Use of Name "Aristech Chemical Corporation" . . . . . . . . . . . . . . . . . . 65
6.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VII. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.2 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.3 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.4 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.5 Limitations on Indemnification Obligations . . . . . . . . . . . . . . . . . . . 69
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ARTICLE VIII. ENVIRONMENTAL INDEMNIFICATION AND OTHER ENVIRONMENTAL MATTERS
8.1 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.3 Provisions Relating to All Properties . . . . . . . . . . . . . . . . . . . . . 85
8.4 Provisions Relating to Neville Island
Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
8.5 Provisions Relating to Other Production
Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
8.6 Provisions Relating to Distribution
Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
8.7 Environmental Indemnification Cap . . . . . . . . . . . . . . . . . . . . . . . 169
8.8 Transfer of Buyer's Environmental
Indemnification Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
ARTICLE IX. MISCELLANEOUS
9.1 Alternative Dispute Resolution Process . . . . . . . . . . . . . . . . . . . . . 181
9.2 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
9.3 Exclusion of Certain Damages . . . . . . . . . . . . . . . . . . . . . . . . . . 186
9.4 Survival of Indemnification Provisions . . . . . . . . . . . . . . . . . . . . . 187
9.5 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
9.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
9.7 Certain Understandings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
9.8 Sales and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
9.9 Amendments, Waivers and Consents . . . . . . . . . . . . . . . . . . . . . . . . 190
9.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
9.11 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
9.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
9.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
9.14 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 192
9.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
9.16 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
</TABLE>
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SCHEDULES
Schedule 1.2(a) - Certain Real Estate
Schedule 1.2(b) - Buyer's Neville Island Plant
Schedule 1.2(c) - Excluded Equipment at Business Sites
Schedule 1.2(e) - Certain Equipment
Schedule 1.2(g) - Vehicles
Schedule 1.2(h) - Real Property Leases
Schedule 1.2(i) - Personal Property Leases
Schedule 1.2(j) - Permits
Schedule 1.2(k) - Certain Orders and Agreements
Schedule 1.2(l) - Purchased Intellectual Property
Schedule 1.3(d) - Retained Accounts Receivable
Schedule 1.3(k) - Retained Intellectual Property
Schedule 1.9 - Purchase Price Allocation
Schedule 1.10(a) - Assumed Collective Bargaining
(iii) Agreements
Schedule 1.11(a) - Business Employees
Schedule 1.11(b) - Employee Benefits
Schedule 2.3 - Consents and Approvals
Schedule 2.4 - Certain Financial Statements
Schedule 2.5 - Conduct of Business
Schedule 2.6 - Litigation
Schedule 2.7 - Certain Contracts and Commitments
Schedule 2.9 - Leased Real Estate
Schedule 2.10(a) - Encumbrances on Personal Property
Schedule 2.11 - Labor Relations
Schedule 2.13 - Environmental Matters
Schedule 4.5(a) - Transitional Employees
Schedule 8.7(e) - Escalation Methodology for
Environmental Cap, Retained Premises
Cap and UPR Cap
EXHIBITS
Exhibit "A" - Seller's Accounting Policies
Exhibit "B" - Form of Assumption and
Assignment Agreement
Exhibit "C" - Form of Seller's Supply Contract
Exhibit "D" - Form of Buyer's PA Supply Contract
Exhibit "E" - Form of Buyer's 2-EH Supply Contract
Exhibit "F" - Form of Opinion of Seller's
Counsel
Exhibit "G" - Form of Mitsubishi Corporation Letter
Agreement
Exhibit "H" - Form of Opinion of Buyer's Counsel
Exhibit "I" - Form of Services Agreement
Exhibit "J" - Form of Easement Agreement
Exhibit "K" - Form of Lease Agreement
Exhibit "L" - Form of Confidentiality Agreement
</TABLE>
[The above Schedules and Exhibits to this Agreement are not being filed
herewith. The Registrant agrees to furnish supplementally a copy of any such
omitted Schedule or Exhibit to the Commission upon request.]
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Section In Which Defined
- ------------ ------------------------
<S> <C>
1994 Daily Throughput Rates . . . . . . . . . . . . . . . . . . . Section 8.3(f)(i)(D)
Access Easement Areas . . . . . . . . . . . . . . . . . . . . . . Section 8.4(a)
Additional Operating Space . . . . . . . . . . . . . . . . . . . Section 8.2(a)
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Annual Deductible Amount . . . . . . . . . . . . . . . . . . . . Section 8.5(e)(i)
Appropriate and Reasonable Criteria . . . . . . . . . . . . . . . Section 8.2(b)
Arbitration Notice . . . . . . . . . . . . . . . . . . . . . . . Section 8.3(v)(C)(1)
Aristech Environmental Condition . . . . . . . . . . . . . . . . Section 8.4(g)
Arrangement for treatment or disposal . . . . . . . . . . . . . . Section 8.2(c)
Assessed Environmental Conditions . . . . . . . . . . . . . . . . Section 8.4(p)(v)
Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . . Section 1.10(a)
Assumption and Assignment Agreement . . . . . . . . . . . . . . . Section 5.2(d)
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Business Employees. . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(o)
Business Interruption Costs . . . . . . . . . . . . . . . . . . . Section 8.2(d)
Business Sites . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.8
Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Buyer Damages . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.3
Buyer Environmental Conditions . . . . . . . . . . . . . . . . . Section 8.2(e)
Buyer Environmental Report . . . . . . . . . . . . . . . . . . . Section 2.13
Buyer Exacerbated Conditions . . . . . . . . . . . . . . . . . . Section 8.7(a)(iii)
Buyer Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . Section 7.3
Buyer Regulated Substance . . . . . . . . . . . . . . . . . . . . Section 8.2(f)
Buyer's 2-EH Supply Contract . . . . . . . . . . . . . . . . . . Section 5.2(h)
Buyer's Ancillary Documents . . . . . . . . . . . . . . . . . . . Section 3.1
Buyer's Environmental Indemnification Rights . . . . . . . . . . Section 8.8
Buyer's Neville Island Plant. . . . . . . . . . . . . . . . . . . Section 1.2(b)
Buyer's Operating Space . . . . . . . . . . . . . . . . . . . . . Section 8.2(g)
Buyer's PA Supply Contract . . . . . . . . . . . . . . . . . . . Section 5.2(g)
Buyer's Percentage . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(h)
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(i)
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(j)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.1
Closing Inventory. . . . . . . . . . . . . . . . . . . . . . . . Section 1.5
COBRA Provisions. . . . . . . . . . . . . . . . . . . . . . . . . Section 1.11(c)
Colton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.8(b)
Colton Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.8(b)(ii)(B)(1)
Colton Resins. . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(f)
Confidential Business Information . . . . . . . . . . . . . . . . Section 4.1(d)
Construction or Expansion Project . . . . . . . . . . . . . . . . Section 8.2(k)
</TABLE>
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<CAPTION>
Defined Term Section In Which Defined
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<S> <C>
Continuing Liability . . . . . . . . . . . . . . . . . . . . . . Section 1.12(a)
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.7
Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.3(v)(A)
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.5(b)(iii)
Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.2(a)
DER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.4(p)(iv)
Determination. . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.12(e)
Direct Reports . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.11(d)(i)
Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Distribution Facilities . . . . . . . . . . . . . . . . . . . . . Section 8.6
Easement Agreement . . . . . . . . . . . . . . . . . . . . . . . Section 5.4(b)
Environmental Assessment . . . . . . . . . . . . . . . . . . . . Section 8.2(k)
Environmental Cap . . . . . . . . . . . . . . . . . . . . . . . . Section 8.7(a)
Environmental Condition . . . . . . . . . . . . . . . . . . . . . Section 8.2(m)
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(n)
Environmental Professional . . . . . . . . . . . . . . . . . . . Section 8.2(o)
Environmental Study . . . . . . . . . . . . . . . . . . . . . . . Section 8.4(o)(ii)
EPCRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(ac)(ii)
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.11(c)
Financial Statements . . . . . . . . . . . . . . . . . . . . . . Section 2.4
Governmental Approval . . . . . . . . . . . . . . . . . . . . . . Section 8.2(p)
HMOs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.11(b)(iii)
Identified Environmental Conditions . . . . . . . . . . . . . . . Section 8.5(d)
Indemnification Payments . . . . . . . . . . . . . . . . . . . . Section 8.7(a)(i)
Indemnification Obligations . . . . . . . . . . . . . . . . . . . Section 8.7(b)
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . Section 7.5(b)(i)
Indemnified Person . . . . . . . . . . . . . . . . . . . . . . . Section 4.5(f)
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . Section 7.5(b)(i)
Jacksonville Incinerator . . . . . . . . . . . . . . . . . . . . Section 8.3(f)(i)
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.5(a)(iii)
Lead Party . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.3(j)(i)
Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(h)
MA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.3(f)(i)(A)
MSDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(ac)(i)
Neville Island Facility. . . . . . . . . . . . . . . . . . . . . Section 1.2(b)
Non-Competition Claims. . . . . . . . . . . . . . . . . . . . . . Section 1.2(o)
Non-Conforming Goods. . . . . . . . . . . . . . . . . . . . . . . Section 1.5
Non-Lead Party . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.3(j)(ii)
Off-Site Locations . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(q)
Operating Easement Areas . . . . . . . . . . . . . . . . . . . . Section 8.4(a)
Other Confidential Information . . . . . . . . . . . . . . . . . Section 4.1(d)
</TABLE>
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<TABLE>
<CAPTION>
Defined Term Section In Which Defined
- ------------ ------------------------
<S> <C>
Other Environmental Conditions . . . . . . . . . . . . . . . . . Section 8.5(e)
Other Production Facilities . . . . . . . . . . . . . . . . . . . Section 8.5
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.5(d)
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.8
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . Section 2.10(a)
Pre-Closing Environmental Condition . . . . . . . . . . . . . . . Section 8.2(s)
Pre-Closing Waste . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(t)
Project Affected Soils . . . . . . . . . . . . . . . . . . . . . Section 8.2(u)
Project Area . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(v)
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(w)
Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4
Purchase Price Adjustment. . . . . . . . . . . . . . . . . . . . Section 1.6
Purchased Accounts Receivable. . . . . . . . . . . . . . . . . . Section 1.2(l)
Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Purchased Intellectual Property. . . . . . . . . . . . . . . . . Section 1.2(n)
Purchased Inventory. . . . . . . . . . . . . . . . . . . . . . . Section 1.2(f)
Raw Materials. . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(f)
RCRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(x)
Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(b)
Regulated Substance . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(y)
Regulatory Remediation Standard . . . . . . . . . . . . . . . . . Section 8.2(z)
Regulatory Remediation Standards . . . . . . . . . . . . . . . . Section 8.4(p)(iii)
Release to the Environment . . . . . . . . . . . . . . . . . . . Section 8.2(aa)
Remaining UPR Cap . . . . . . . . . . . . . . . . . . . . . . . . Section 8.8(b)(ii)(B)(1)
Required by Law . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(ab)
Required Regulated Substance Records . . . . . . . . . . . . . . Section 8.2(ac)
Retained Assets. . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
Retained Intellectual Property. . . . . . . . . . . . . . . . . . Section 1.3(k)
Retained Liabilities. . . . . . . . . . . . . . . . . . . . . . . Section 1.10(b)
Retained Premises . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(ad)
Retained Premises Cap . . . . . . . . . . . . . . . . . . . . . . Section 8.7(e)
Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Seller Damages . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.4
Seller Indemnitees . . . . . . . . . . . . . . . . . . . . . . . Section 7.4
Seller's Ancillary Documents . . . . . . . . . . . . . . . . . . Section 2.1
Seller's Neville Island Plant. . . . . . . . . . . . . . . . . . Section 1.3(m)
Seller's Percentage . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(ae)
Seller's Supply Contract . . . . . . . . . . . . . . . . . . . . Section 5.2(f)
Severance Payments. . . . . . . . . . . . . . . . . . . . . . . . Section 1.11(d)(i)
Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.10(b)
Terminated Direct Report . . . . . . . . . . . . . . . . . . . . Section 1.11(d)(i)
Title Commitment Reports . . . . . . . . . . . . . . . . . . . . Section 2.10(b)
Transferred Employees. . . . . . . . . . . . . . . . . . . . . . Section 1.11(a)
</TABLE>
- iii -
<PAGE> 9
<TABLE>
<CAPTION>
Defined Term Section In Which Defined
- ------------ ------------------------
<S> <C>
Transition Period . . . . . . . . . . . . . . . . . . . . . . . . Section 4.5(e)
Transitional Employee Payments . . . . . . . . . . . . . . . . . Section 4.5(d)
Transitional Employees . . . . . . . . . . . . . . . . . . . . . Section 4.5(a)
TSCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.2(n)
UPR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
USW Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.10(a)(iii)
Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(g)
Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . Section 1.6
</TABLE>
- iv -
<PAGE> 10
ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement ("AGREEMENT") is made as of
April 28, 1995, by and between Aristech Chemical Corporation, a Delaware
corporation ("SELLER"), and Ashland Inc., a Kentucky corporation ("BUYER"),
through its Ashland Chemical Company Division.
Seller is engaged in, among other things, the production and
sale of unsaturated polyester resins ("UPR") and maleic anhydride ("MA") and
the distribution of UPR and other polyester products ("DISTRIBUTION"). Seller
desires to sell and transfer to Buyer and Buyer desires to purchase from
Seller, certain assets relating to Seller's UPR, MA and Distribution businesses
(collectively, the "BUSINESS") on the terms and subject to the conditions
contained in this Agreement. In consideration of the mutual agreements
contained herein, Seller and Buyer, intending to be legally bound, agree as
follows:
ARTICLE I
THE TRANSACTION
---------------
1.1. SALE AND PURCHASE OF ASSETS. At the Closing referred to in
Section 5.1 below, Seller shall sell and transfer to Buyer, and Buyer shall
purchase from Seller, all of Seller's right,
<PAGE> 11
title and interest in and to the assets, properties and rights of Seller as of
the date of the Closing that are used in or directly relate to the conduct of
the Business, wherever such assets are located and whether real, personal or
mixed, tangible or intangible, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in Seller's books or financial statements (the "PURCHASED ASSETS"),
except that the Purchased Assets shall not include any of the assets,
properties and rights described in Section 1.3 below (the "RETAINED ASSETS").
1.2. ENUMERATION OF PURCHASED ASSETS. Without limiting the
generality of the foregoing, the Purchased Assets shall include the following
assets owned by Seller and used in the Business (except to the extent that any
of the following assets are also enumerated in Section 1.3 below as being
Retained Assets):
(a) all those certain lots and pieces of ground, together with
the buildings, structures and other improvements erected thereon, and all
easements, rights and privileges appurtenant to any of the foregoing, owned by
Seller and located at Bartow, Florida, Jacksonville, Arkansas, and Colton,
California, each as more particularly described in Schedule 1.2(a);
(b) each of such buildings, structures and other improvements,
together with all easements, rights and privileges appurtenant thereto, owned
by Seller and located at Seller's
- 2 -
<PAGE> 12
facility at Neville Island, Pennsylvania (the "NEVILLE ISLAND FACILITY"), as
are described in Schedule 1.2(b) ("BUYER'S NEVILLE ISLAND PLANT"), (Buyer's
Neville Island Plant, together with the real property described in Section
1.2(a), are collectively referred to herein as the "REAL ESTATE");
(c) all of Seller's furniture, fixtures, equipment, machinery,
spare parts, tools, dies, supplies and all other tangible personal property
(other than inventory) located upon or affixed to Buyer's Neville Island Plant,
as are described in Schedule 1.2(b) or that are located upon or affixed to the
other Real Estate or the Leased Premises, except for those items set forth in
Schedule 1.2(c);
(d) those items of Seller's equipment, machinery, spare parts,
tools, dies, supplies and other tangible personal property (other than
inventory) described in Schedule 1.2(b) as are located at the Seller's Neville
Island Plant (as defined in Section 1.3(m));
(e) the equipment located at Seller's corporate research center
in Monroeville, Pennsylvania, used in connection with the molding group and
pilot plant operations of the polyester technical group of Seller, all as more
particularly described in Schedule 1.2(e);
- 3 -
<PAGE> 13
(f) Seller's inventory of resins being cured at the Colton,
California Business Site (as defined in Section 2.8) (the "COLTON RESINS"),
together with all those other items of Seller's inventory of raw materials
("RAW MATERIALS"), work-in-process, finished goods, packaging and supplies held
for use in the conduct of the Business, wherever located and whether or not
carried on Seller's books of account (collectively with the Colton Resins, the
"PURCHASED INVENTORY");
(g) each of such trucks, tractors, trailers and other vehicles
owned by Seller and used in the Business as is more particularly described in
Schedule 1.2(g) (the "VEHICLES");
(h) Seller's leasehold interest as lessee of the real property
(such real property, together with that described in Schedule 2.9, being
collectively referred to herein as the "LEASED PREMISES") subject to the leases
listed in Schedule 1.2(h);
(i) all of Seller's leasehold interest as lessee of the personal
property subject to the leases listed in Schedule 1.2(i);
(j) each of Seller's Permits (as hereinafter defined) listed in
Schedule 1.2(j);
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<PAGE> 14
(k) all of Seller's sales orders and sales contracts, purchase
orders and purchase contracts, quotations and bids, license agreements, supply
agreements and other contracts and agreements to which Seller is a party and
that relate exclusively to the Business, including without limitation those
listed in Schedule 1.2(k);
(l) all of Seller's trade and other notes and accounts
receivable (collectively, the "PURCHASED ACCOUNTS RECEIVABLE"), advance
payments and prepaid items and expenses arising from the Business and existing
on the Closing Date, except for those listed in Schedule 1.3(d);
(m) all of Seller's books, records, manuals, documents, books of
account, correspondence, sales and credit reports, customer lists, literature,
brochures, advertising material and the like that relate exclusively to the
Business;
(n) those of Seller's intellectual property licenses, patents
and applications therefor, trade secrets, copyrights and applications therefor,
proprietary manufacturing processes and other intellectual property or
industrial property rights that are used in the Business and that are described
on Schedule 1.2(n), including the right to use the name "Aristech Chemical
Corporation" and derivatives thereof pursuant to Section 6.4 (collectively, the
"PURCHASED INTELLECTUAL PROPERTY"); and
- 5 -
<PAGE> 15
(o) Seller's causes of action, if any and to the extent
assignable, for enforcement of any agreement between Seller and any person
employed by Seller in the Business prior to the Closing ("BUSINESS EMPLOYEES")
restricting such person's right to engage in any activity competing with the
Business ("NON-COMPETITION CLAIMS"); provided, however, that if Buyer receives
any payment as a result of the enforcement of a Non-Competition Claim, whether
in settlement of or as damages for such claim, Buyer shall, upon receipt of
such payment, pay to Seller that part of such payment allocable to such
Business Employee's conduct prior to the Closing.
1.3. RETAINED ASSETS. Notwithstanding the provisions of Sections
1.1 and 1.2, all of the following assets, properties and rights of Seller shall
be excluded from the Purchased Assets and shall constitute the Retained Assets:
(a) all of Seller's assets, properties and rights related to
businesses of Seller other than the Business, including any assets located or
generally maintained at Seller's corporate headquarters in Pittsburgh,
Pennsylvania;
(b) all of Seller's cash on hand and in banks, cash equivalents,
deposits and investments;
(c) all of Seller's negotiable instruments and chattel paper;
- 6 -
<PAGE> 16
(d) those of Seller's accounts receivable relating to the
Business as are listed on Schedule 1.3(d);
(e) all of Seller's bank accounts, checkbooks and canceled
checks;
(f) Seller's minute book, corporate seal and federal, state and
local tax returns and accounting ledgers;
(g) all insurance policies of Seller and Seller's rights in
connection therewith;
(h) all of Seller's federal, state or local income tax benefits,
claims or receivables;
(i) all of Seller's rights of indemnification, claims and causes
of action of any nature whatsoever that relate to the conduct of the Business
prior to the Closing (other than the Non-Competition Claims);
(j) all of Seller's rights under this Agreement and under all
purchase orders, purchase contracts or other agreements, instruments or
contracts related to Seller's trade payables;
(k) such of Seller's intellectual property licenses, patents and
applications therefor, trade secrets, copyrights and applications therefor,
trade names and applications therefor,
- 7 -
<PAGE> 17
trade dress, and names and slogans, including without limitation, any rights to
use the name "Aristech Chemical Corporation" or any derivative thereof (except
as provided in Section 6.4), proprietary manufacturing processes and other
intellectual property rights used in the Business as are described in Schedule
1.3(k) (collectively, the "RETAINED INTELLECTUAL PROPERTY");
(l) all those certain lots and pieces of ground underlying
Buyer's Neville Island Plant, and all easements, rights and privileges
appurtenant thereto;
(m) all lots and pieces of ground owned by Seller, together with
the buildings, structures and other improvements erected thereon, that comprise
the Neville Island Facility (other than Buyer's Neville Island Plant), and all
easements, rights and privileges appurtenant thereto ("SELLER'S NEVILLE ISLAND
PLANT");
(n) all of Seller's furniture, fixtures, equipment, machinery,
spare parts, tools, dies, supplies and all other tangible personal property
located upon or affixed to Seller's Neville Island Plant other than that set
forth in Schedule 1.2(b); and
(o) those items of Seller's equipment, machinery, spare parts,
tools, dies, supplies, and other tangible personal property (other than
inventory) located upon or affixed to the
- 8 -
<PAGE> 18
Real Estate or the Leased Premises as are set forth in Schedule 1.2(c).
1.4. PURCHASE PRICE. The aggregate purchase price for the
Purchased Assets shall be $81,350,000 (the "PURCHASE PRICE"), subject to
adjustment as provided in Section 1.6, plus the assumption of certain
liabilities of Seller, as provided in Section 1.10.
1.5. PHYSICAL INVENTORY. The parties shall conduct a physical
count and inspection of the inventory of Seller held for use exclusively in the
Business as of the close of business on the Closing Date (the "CLOSING
INVENTORY"). During such process, Seller and Buyer shall identify the
following items of inventory, Seller's standard product cost of which, per
item, exceeds $25,000: (a) polyester resins and other polyester based products
that are more than seven (7) months old based on the batch record date of
production thereof, and (b) waxes, catalysts and mold care products that are
more than twelve (12) months old based on the date of shipment thereof to
Seller (collectively, the "NON-CONFORMING GOODS"). Buyer shall purchase all of
the Closing Inventory (including items described in clauses (a) and (b),
Seller's standard product cost of which is $25,000 or less). The parties shall
negotiate in good faith to determine within three (3) business days after the
Closing Date a mutually agreeable purchase price for all Non-Conforming Goods,
and Buyer shall purchase all of the Non-Conforming Goods at the agreed upon
- 9 -
<PAGE> 19
price. The purchase price for Non-Conforming Goods sold pursuant to this
Section 1.5 shall be paid by virtue of the Purchase Price Adjustment (as
defined below).
1.6. PURCHASE PRICE ADJUSTMENT. If the Working Capital (as
defined below) at the Closing Date, as determined in accordance with Section
1.7, is less than $26,400,000, then the Purchase Price shall be reduced
dollar-for-dollar by the amount of such deficiency. If the Working Capital at
the Closing Date, as so determined, is greater than $26,400,000, then the
Purchase Price shall be increased dollar-for-dollar by the amount of such
excess. For purposes hereof, "WORKING CAPITAL" means (i) the sum of (a) the
market value, as of the Closing Date, of the Raw Materials, (b) Seller's
standard product cost, as of August 1, 1994, of work-in-process and finished
goods being purchased by Buyer hereunder (other than Non-Conforming Goods),
adjusted dollar-for-dollar to reflect the increase or decrease in the market
value of the raw material component of such standard product cost from August
1, 1994 to the Closing Date, (c) the agreed upon purchase price for any Non-
Conforming Goods purchased by Buyer pursuant to Section 1.5, and (d) the face
amount, as of the Closing Date, of the Purchased Accounts Receivable less 3% of
such face amount, less (ii) 0.5% of the sum of (i)(a) and (b). "PURCHASE PRICE
ADJUSTMENT" means the post-closing adjustment to the Purchase Price pursuant to
this Section 1.6.
- 10 -
<PAGE> 20
1.7. DETERMINATION OF WORKING CAPITAL. (a) Promptly after the
Closing, Seller (with such assistance as Seller shall reasonably request of
Buyer and its representatives) shall calculate the amount of the Purchase Price
Adjustment based on its books and records of account maintained in accordance
with Seller's standard practices with respect to the Business. For purposes of
making such calculation, (i) the inventory to be taken into account in such
calculation shall not include any items that are not purchased by Buyer
pursuant to Section 1.5, (ii) the market value of raw materials shall be equal
to the price applicable to such raw materials, delivered to the appropriate
Business Site, as of the Closing Date, and (iii) the face amount of the
Purchased Accounts Receivable shall be computed without taking into account any
allowances against such accounts, including allowances for uncollectible
accounts, warranties and returns.
(b) As soon as reasonably practicable following the Closing
Date, but in no event later than twenty (20) days thereafter, Seller shall
deliver to Buyer notice of the amount of the Purchase Price Adjustment
calculated in accordance with Section 1.7(a), showing Seller's calculation in
reasonable detail. Buyer and its representatives shall be provided complete
access to Seller's books and records and all workpapers and other information
used by Seller to make such calculation. Such notice, when delivered by Seller
to Buyer, shall be conclusive and binding on the parties for purposes of
determining the
- 11 -
<PAGE> 21
Purchase Price Adjustment, unless Buyer notifies Seller within fifteen (15)
days after receipt of the notice of its disagreement therewith (stating with
reasonable specificity the reasons for any disagreement). If the disagreement
can not be resolved by the parties within thirty (30) days after Seller
receives notice thereof, payment of the undisputed amount shall be made in
accordance with Section 1.8 and the items in dispute shall be submitted to
arbitration conducted as provided in Section 9.1.
1.8. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid
by Buyer to Seller at the Closing as follows:
(a) $81,350,000 by wire transfer of federal funds to PNC Bank,
N.A., Pittsburgh, PA, ABA No. 043000096, Credit: Aristech Chemical Corporation
Concentration Account No. 2-948495; and
(b) by Buyer's assumption of Seller's liabilities as provided in
Section 1.10. Any amounts owing Buyer or Seller as a result of a Purchase
Price Adjustment shall be paid by Seller or Buyer to the other, as the case may
be, within ten (10) days after the amount is finally determined pursuant to
Section 1.7, by wire transfer of federal funds.
1.9. ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that
the Purchase Price shall be allocated among the Purchased Assets in accordance
with the allocation set forth in Schedule 1.9. Buyer and Seller agree that
each will report the federal,
- 12 -
<PAGE> 22
state and local income and other tax consequences of the purchase and sale
contemplated hereby in a manner consistent with such allocation and that
neither will take any position inconsistent therewith upon examination of any
tax return, in any refund claim, in any litigation, or otherwise.
1.10. ASSUMPTION OF LIABILITIES.
(a) At the Closing, Buyer shall assume and agree to discharge
and perform promptly when due the following liabilities and obligations of
Seller, whether direct or indirect, material or immaterial, known or unknown,
absolute, contingent or otherwise, to the extent such liabilities and
obligations accrue after the Closing (except as provided in Section
1.10(a)(vi)) (collectively, the "ASSUMED LIABILITIES"):
(i) all liabilities and obligations of Seller under the
contracts, leases and other agreements associated
with the Business Assets (but not including any
accounts payable or agreements relating to
employment, deferred compensation, welfare benefits,
independent contractors, consultants or any aspects
of the employment relationship, except to the extent
provided in Sections 1.10(a)(iii) and (vi) and in
Section 8.3(g) and except for the Distributorship/
Independent Contractor Agreements referred to on
- 13 -
<PAGE> 23
Schedule 2.7) or otherwise comprising part of the
Purchased Assets;
(ii) all liabilities and obligations of Seller under the
Permits listed in Schedule 1.2(j);
(iii) all of Seller's liabilities and obligations under the
collective bargaining agreements listed in Schedule
1.10(a)(iii) and any agreements related thereto, but
not that certain Agreement between Seller and the
United Steelworkers of America dated November 30,
1994, covering Business Employees at the Neville
Island Facility, and any related agreements
(collectively, the "USW AGREEMENT");
(iv) subject to Section 1.12, all claims, liabilities,
obligations, litigation, arbitration proceedings or
other actions in any way relating to the Business or
the Purchased Assets, arising out of occurrences,
transactions, events or incidents occurring after the
Closing Date (as hereinafter defined), including all
liabilities and obligations incurred after the Closing
Date as a result of Buyer's continuation of any
pattern or practice established or engaged in by
Seller prior to the Closing Date;
- 14 -
<PAGE> 24
(v) subject to Section 1.12, all occupational disease and
other workers' compensation claims (whether insured or
otherwise), and claims for employee pay (including
vacation pay and sick pay) and any other employee
benefits (except to the extent Seller remains liable
therefor pursuant to Section 1.11) by persons who at
or prior to the Closing Date are or were Business
Employees, arising while such persons are employed by
Buyer or otherwise arising out of events occurring on
or after the Closing Date; and
(vi) Seller's obligation to make severance payments to the
Terminated Direct Reports, to the extent provided in
Section 1.11(d), and Seller's obligations to make
severance payments to those Business Employees
employed as drivers in the Distribution component of
the Business as provided in Section 1.11(e). These
obligations shall constitute Assumed Liabilities,
notwithstanding the extent to which they may have
accrued prior to the Closing.
(b) All liabilities and obligations of Seller (whether direct or
indirect, material or immaterial, known or unknown, absolute, accrued,
contingent or otherwise) that do not
- 15 -
<PAGE> 25
constitute Assumed Liabilities shall be retained by Seller (collectively, the
"RETAINED LIABILITIES").
1.11. CERTAIN EMPLOYEE MATTERS.
(a) On or prior to the Closing Date, Buyer shall make offers of
employment, effective as of the Closing Date, to such salaried and hourly
Business Employees as are identified on Schedule 1.11(a) and who are actively
at work with Seller as of the Closing Date. Buyer shall prescribe the manner
by which such offers may be accepted. Seller has provided Buyer a written list
of all the Business Employees, which includes the employee's name, social
security number, hourly rate or bi-weekly salary, job title, annual earnings,
date of hire, years and types of service recognized by Seller as of November 9,
1994, as supplemented by the updates of such list as of January 31, 1995 and
March 20, 1995. Seller represents and warrants that the information on such
list was accurate as of the time specified in such list and, notwithstanding
anything to the contrary in Section 7.1, such representation and warranty shall
survive indefinitely beyond the Closing Date. Buyer has notified Seller of the
names of all the Business Employees, who have accepted offers of employment
(the "TRANSFERRED EMPLOYEES").
(b) Except as may otherwise be expressly provided in this
Section 1.11(b), the Transferred Employees shall be treated as newly hired
employees of Buyer.
- 16 -
<PAGE> 26
(i) The offer of employment, if accepted, will not
provide for any certain term of employment, and all
who accept such offer shall be employees-at-will of
Buyer. Buyer shall pay the Transferred Employees
wages that are substantially equivalent to those paid
the Transferred Employees by Seller immediately prior
to Closing, and shall assign each of the Transferred
Employees duties and responsibilities that are
substantially equivalent to those assigned such
Transferred Employee by Seller immediately prior to
Closing. Buyer shall also provide the Transferred
Employees a package of benefits that is suitable in
light of the Transferred Employees' particular
circumstances.
(ii) The Transferred Employees shall be eligible to
participate in the qualified and non-qualified
pension, stock bonus, profit sharing and retirement
plans (except for the Ashland Oil, Inc. Leveraged
Employee Stock Ownership Plan, unless and until some
or all of the Transferred Employees become members of
a designated eligible group for participation
thereunder under the procedures generally applicable
for acquired employees) in which similarly situated
employees of Buyer participate, and Buyer and such
plans shall recognize, solely for purposes of
eligibility and
- 17 -
<PAGE> 27
vesting (and not for benefit accrual) under Buyer's
said plans, the Transferred Employees' years of
credited service with Seller prior to the Closing
Date. Buyer shall amend said plans as of the Closing
Date to recognize such service with Seller; provided,
however, that nothing herein shall be construed as
conferring on any Transferred Employee any right to,
in or under any such plan of Buyer other than pursuant
to the terms of such plans, as so amended, and as from
time to time in effect.
(iii) The Transferred Employees shall be eligible to
participate in health and life plans (including
accidental death and dismemberment plans) in which
similarly situated employees of Buyer are eligible to
participate, and Buyer and such plans shall recognize,
solely for the purposes of eligibility under Buyer's
said health and life (and accidental death and
dismemberment) plans, the Transferred Employees'
employment with Seller prior to the Closing Date. Such
recognition of prior service shall also count for
purposes of determining whether any Transferred
Employee becomes eligible for any retiree health,
retiree life or retiree accidental death and
dismemberment plan benefits. Buyer shall amend said
plans as of the Closing
- 18 -
<PAGE> 28
Date to recognize such service with Seller; provided,
however, that nothing herein shall be construed as
conferring on any Transferred Employee any right to,
in or under any such plan of Buyer other than pursuant
to the terms of such plans, as so amended, and as from
time to time in effect. The eligibility of
Transferred Employees to participate in Buyer's health
and life plans shall not be delayed or limited in any
way by pre-existing conditions; provided, however,
that the applicable proof of health conditions in such
plans shall be applied pursuant to their terms if any
Transferred Employee fails to timely enroll himself or
herself or his or her dependents (when dependent
coverage is applicable and available) within thirty
(30) days of first becoming eligible. All claims
incurred with regard to any Transferred Employee
before the Closing Date and which are covered under
the applicable health, life or accidental death and
dismemberment plans of Seller shall be payable under
the terms of the applicable plan of Seller. All other
claims incurred with regard to any Transferred
Employee and which are covered under the applicable
health, life or accidental death or dismemberment
plans of Buyer shall be payable under the terms of the
applicable plan of Buyer. The Transferred
- 19 -
<PAGE> 29
Employees who participated in health maintenance
organizations ("HMOs") immediately prior to the
Closing shall be provided the opportunity to enroll in
the Buyer's indemnity plan on the same terms and
subject to the same conditions as the Transferred
Employees who did not so participate in HMOs. All the
Transferred Employees shall be offered participation
in the HMOs available to other similarly situated
employees of the Buyer at the time and in the same
manner as such participation is ordinarily offered.
(iv) The Transferred Employees shall be eligible to
participate in sick pay and short term and long term
disability plans in which similarly situated employees
of Buyer are eligible to participate. Buyer shall
recognize for purposes of such plans the Transferred
Employees' employment with Seller prior to the Closing
Date. Buyer shall amend said plans as of the Closing
Date to recognize such service with Seller; provided,
however, that nothing herein shall be construed as
conferring on any Transferred Employee any right to,
in or under any such plan of Buyer other than pursuant
to the terms of such plans, as so amended, and as from
time to time in effect.
- 20 -
<PAGE> 30
(v) The Transferred Employees shall be eligible for other
benefits in which or policies under which similarly
situated employees of Buyer are eligible. Buyer
shall recognize for purposes of such plans the
Transferred Employees' employment with Seller prior
to the Closing Date. Buyer shall amend said benefits
and policies as of the Closing Date to recognize such
service with Seller; provided, however, that nothing
herein shall be construed as conferring on any
Transferred Employee any right to, in or under any
such benefits and policies of Buyer other than
pursuant to the terms of such benefits and policies,
as so amended, and as from time to time in effect.
The Transferred Employees shall be eligible for paid
vacation benefits under the policies of the Buyer
that apply to similarly situated employees of the
Buyer and, for this purpose, the Transferred
Employees' service with the Seller prior to the
Closing Date shall be counted.
(vi) Buyer shall use its best efforts to notify Seller of
the termination of employment or reemployment of any
Transferring Employee. Such notification shall be
made within thirty (30) days of the date of
termination of employment or reemployment.
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<PAGE> 31
(c) For purposes of the COBRA health continuation of coverage
provisions (hereafter referred to as the "COBRA PROVISIONS") contained in
Section 4980B(f) of the Internal Revenue Code of 1986 and in Sections 601
through 608 of the Employee Retirement Income Security Act of 1974 ("ERISA"),
the Transferred Employees shall be considered to have undergone a termination
of employment with Seller. It is the understanding and intention of the Seller
and Buyer that no group health plan maintained by Buyer shall constitute a
successor plan to any of the Seller's group health plans and the Buyer is not a
successor employer with respect to any of the Seller's group health plans and
the Seller is not a predecessor employer with respect to the Buyer's group
health plans, within the meaning of the COBRA Provisions. It is the further
understanding and intention of Seller and Buyer, however, that the health plan
coverage to be afforded to the Transferred Employees pursuant to Section
1.11(b)(iii) shall be coverage that, pursuant to Section 602(2)(D)(i) of ERISA,
terminates any continuation coverage rights the Transferred Employees might
otherwise have under the COBRA Provisions as a result of termination of
employment with Seller.
(d) (i) Subject to clause (ii) of this Section 1.11(d), the
parties agree that responsibility for all amounts paid ("SEVERANCE PAYMENTS")
to any Business Employee (including any Transitional Employee, as defined in
Section 4.5(a)) who is a Direct Report (as defined below) and who is ultimately
successful
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in collecting any benefits under Seller's severance plan or policies based on
such Business Employee's termination prior to January 1, 1997 in connection
with the transactions contemplated hereby ("TERMINATED DIRECT REPORT") shall be
allocated as follows: All Severance Payments made to the first fifty-five (55)
Terminated Direct Reports shall be for Seller's account, and all Severance
Payments made to all other Terminated Direct Reports shall be for Buyer's
account. Any Business Employees employed by Seller at the Neville Island
Facility who are terminated at any time before January 1, 1997 shall constitute
Terminated Direct Reports to the extent they are successful in collecting
Severance Payments as hereinabove provided. The drivers referred to in Section
1.11(e) shall not be deemed Terminated Direct Reports for purposes of this
paragraph (d). For purposes of this Section 1.11(d), the term "DIRECT REPORTS"
shall mean those employees of Seller 100% of whose time is charged to the
Business based on Seller's policies in effect immediately prior to Closing and
shall not include such employees as corporate attorneys, accounting staff and
information services personnel whose time is not charged 100% to the Business
on such basis.
(ii) (A) In the event that more than fifty-five (55)
Direct Reports who are entitled to Severance Payments are terminated within
thirty (30) days of Closing, the average Severance Payment payable to all such
Direct Reports terminated within thirty (30) days of Closing shall be
calculated, and Seller shall be deemed to have satisfied all of its obligations
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under Section 1.11(d) upon making Severance Payments to Terminated Direct
Reports (regardless of the number of such Terminated Direct Reports) in an
aggregate amount equal to fifty-five (55) times such average Severance Payment.
All Severance Payments in excess of the amount specified in the foregoing
sentence shall be paid by Buyer.
(B) In the event that less than fifty-five (55) Direct
Reports who are entitled to Severance Payments are terminated within thirty
(30) days of Closing, Seller shall pay the actual Severance Payments for the
first fifty-five (55) Terminated Direct Reports who shall be determined in
accordance with the order in which Seller makes Severance Payments to
Terminated Direct Reports, and Buyer shall pay the actual Severance Payments
for all other Terminated Direct Reports.
(iii) Seller shall notify Buyer of any Severance Payments
made to Terminated Direct Reports for Buyer's account pursuant to Section
1.11(d). Buyer shall reimburse Seller in full therefor within five (5) working
days after Buyer's receipt of such notice. Any amount not reimbursed within
such five-day period shall bear interest, from the date the corresponding
Severance Payment was made by Seller until the date such amount is reimbursed
to Seller, at the prime lending rate charged by Mellon Bank, N.A. during such
period.
(e) Buyer shall pay all amounts payable to any Business Employee
employed by Seller as a driver in connection with the
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Distribution component of the Business who is ultimately successful in
collecting any benefits under Seller's severance plan or policies based on such
Business Employee's termination in connection with the transactions
contemplated hereby. Seller shall notify Buyer of any such payments made to
such Business Employees, and Buyer shall reimburse Seller in full therefor
within five (5) working days after Buyer's receipt of such notice. Any amount
not reimbursed within such five-day period shall bear interest, from the date
the corresponding severance payment was made by Seller until the date such
amount is reimbursed to Seller, at the prime lending rate charged by Mellon
Bank, N.A. during such period.
(f) Except as provided in Section 1.10(a)(vi), it is expressly
agreed and acknowledged by the parties hereto that Buyer has assumed no
liability for any wages or benefits that Seller or any of its affiliates
provided to Seller's employees including, but not limited to, retiree medical
benefits, retiree life insurance benefits, benefits under the COBRA Provisions,
employment contracts, qualified or non-qualified retirement benefits, and
benefits which could be payable with respect to services, expenses or other
events that occurred prior to the Closing Date under any plan, policy or
program of the Seller.
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1.12. CONTINUING LIABILITIES.
(a) The term "CONTINUING LIABILITY" shall mean any liability
that commences, or that arises from facts in existence, prior to the Closing
and that continues, or the facts giving rise to which continue, to exist after
the Closing. Subject to clause (b), Seller is indemnifying Buyer against
Continuing Liabilities to the extent arising from Seller's operation of the
Business prior to Closing pursuant to Section 7.3(e), and Buyer is indemnifying
Seller against Continuing Liabilities to the extent arising from Buyer's
operation of the Business after Closing pursuant to Section 7.4(d).
(b) Within ten (10) days after either party receives notice or
otherwise becomes aware of the existence of a Continuing Liability as to which
such party intends to seek indemnification from the other party, such party
shall notify the other party. Either party's failure to so notify the other
of a Continuing Liability, shall constitute a waiver by the failing party of
all rights to indemnification by the other arising from such Continuing
Liability. Promptly after the delivery of such notice, Seller and Buyer shall
consult with each other in good faith to develop a joint strategy for defending
against the Continuing Liability, including allocation of the costs of such
defense.
(c) In the event that a claim is made against only one of the
parties as a result of a Continuing Liability, such party
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shall not be entitled to any indemnification by the other party with respect to
such claim unless such party permits the other party to participate in and
control the defense of such claim jointly and equally with it. Notwithstanding
the foregoing, the party against which the claim is made may, after consulting
the other party, settle such claim in its sole discretion; provided that such
party obtains as a condition to such settlement a full and complete release of
the other party from all claims arising from such Continuing Liability.
(d) If a third party makes a claim against both Seller and
Buyer, or if both Seller and Buyer are otherwise called upon to defend a claim
arising from a Continuing Liability, each of Seller and Buyer shall separately
defend itself against such claim with representatives of its choosing, unless
the parties otherwise agree.
(e) Any determination of the extent to which a Continuing
Liability arises from Seller's operation of the Business prior to Closing or
Buyer's operation of the Business after Closing (a "DETERMINATION"), shall be
subject to the following:
(i) To the extent that a court hearing a claim arising from
a Continuing Liability makes a final, non-appealable
Determination, the parties shall be bound thereby.
(ii) In all other cases, the parties shall attempt in good
faith to agree upon a Determination. If the parties are
unable jointly to make a Determination, the matter
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shall be submitted to the alternative dispute resolution
procedure described in Section 9.1.
(iii) Any Determination shall be made by consideration of
all the factors relevant to the causation of such Continuing
Liability. For purposes of illustration and not in
limitation of the foregoing, in the case of a Continuing
Liability arising from occupational injury or disease to
persons employed by both Seller and Buyer the relevant
factors shall include without limitation the duration and
extent of exposure to operative conditions while an employee
of each party. The date of manifestation of injury or
disease shall not be solely determinative of the date on
which the exposure commenced, but shall be a relevant factor
for consideration.
1.13. CERTAIN CONSENTS. Nothing in this Agreement shall be
construed as an attempt to assign any contract, agreement, permit, franchise,
or claim included in the Purchased Assets which is by its terms or in law
nonassignable without the consent of the other party or parties thereto, unless
such consent shall have been given, or as to which all the remedies for the
enforcement thereof enjoyed by Seller would not, as a matter of law, pass to
Buyer as an incident of the assignments provided for by this Agreement. In
order, however, to provide Buyer the full benefits of every contract,
agreement, permit, franchise and claim of the character described in the
immediately preceding sentence, Seller shall, to the extent reasonably
necessary and at Buyer's cost, cooperate with Buyer in any reasonable
arrangement designed to provide the benefits thereof to Buyer. Without
limiting the generality of any provision contained elsewhere herein, the
non-assignment of the foregoing shall not, to the
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extent the liabilities hereunder would have been Assumed Liabilities but for
this Section 1.13, affect the status of such liabilities as Assumed
Liabilities. Nothing in this Section shall in any way diminish Seller's
obligations hereunder to obtain all consents and approvals prior to or at
Closing as are necessary to enable Seller to convey or assign good and valid
title to all the Purchased Assets to Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Buyer as follows:
2.1. ORGANIZATION; CORPORATE POWER AND AUTHORITY. Seller is a
corporation duly organized, existing and in good standing under the laws of the
State of Delaware. Seller has all requisite corporate power and authority to
conduct the Business as it is now being conducted and to make, execute, deliver
and perform this Agreement and each agreement, document or instrument to be
delivered by Seller pursuant to this Agreement (collectively, the "SELLER'S
ANCILLARY DOCUMENTS").
2.2. AUTHORIZATION AND ENFORCEABILITY. Seller has full corporate
power and authority to enter into and perform this Agreement and Seller's
Ancillary Documents. This Agreement has been duly executed and delivered by
Seller and constitutes, and
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each of Seller's Ancillary Documents, when executed and delivered by Seller
shall constitute, the legal, valid and binding obligation of Seller,
enforceable against it in accordance with its terms.
2.3. CONSENTS AND APPROVALS. (a) Except for (i) applicable
requirements of the HSR Act (as hereinafter defined) and (ii) governmental
permits, authorizations, consents and approvals that have been obtained or will
be obtained on or prior to the Closing Date, there is no requirement applicable
to Seller to make any material filing with, or to obtain any material permit,
authorization, consent or approval of, any governmental or regulatory authority
as a condition to the lawful consummation by Seller of the sale of the
Purchased Assets pursuant to this Agreement. Except as set forth in Schedule
2.3, no consent, approval or authorization of, or registration or filing with,
any other person or entity is required in connection with the execution and
delivery by Seller of this Agreement and Seller's Ancillary Documents and the
consummation by Seller of the transactions contemplated hereby and thereby.
(b) Except as provided in Schedule 2.3 (and assuming compliance
with the HSR Act), neither the execution and delivery of this Agreement and
Seller's Ancillary Documents, nor the consummation by Seller of the
transactions contemplated hereby or thereby, will, at the date hereof (i)
contravene any provision of Seller's Certificate of Incorporation or Bylaws,
(ii) result in a
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breach of or constitute a default under any material license, franchise, note,
bond, mortgage, indenture, loan or credit agreement or other material agreement
or instrument related to the Business to which Seller is a party or by which
Seller or any of the Purchased Assets may be bound, or (iii) violate any
statute or administrative regulation, or any order, writ, injunction, judgment
or decree of any court or of any governmental authority applicable to the
Business or by which any of the Purchased Assets may be bound, which in either
of the foregoing cases (ii) or (iii) would have a material adverse effect on
the business, operations or financial condition of the Business, taken as a
whole, or of any element of the Business, i.e., UPR, MA or Distribution.
2.4. CERTAIN FINANCIAL STATEMENTS. Seller has previously
delivered to Buyer certain financial statements reflecting the historical
financial results of the Business for each of the calendar years from 1989
through 1994, inclusive, and for each of the months and for the year to date
from January 1 through March 31, 1995 (collectively, the "FINANCIAL
STATEMENTS"). Except as provided in Schedule 2.4, the Financial Statements
have been prepared in accordance with Seller's internal accounting policies and
procedures, a summary of which is attached hereto as Exhibit A, which Exhibit A
includes a description of the respects in which such policies and procedures
deviate from generally accepted accounting policies as in effect on the date
hereof.
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2.5. CONDUCT OF BUSINESS. Except as contemplated by this
Agreement or as set forth in Schedule 2.5, since March 31, 1995, Seller has
not, with respect to the Business:
(a) Sold or transferred any material portion of its assets or
property, except for (i) sales of inventory in the usual and ordinary course of
business and (ii) cash applied in payment of Seller's liabilities in the usual
and ordinary course of business;
(b) Suffered any material loss, or any material interruption in
use, of any material assets or property (whether or not covered by insurance),
on account of fire, flood, riot, strike or other hazard or act of God;
(c) Suffered any material adverse change to the operations,
properties, assets, liabilities or financial condition of the Business, taken
as a whole, or of any element thereof; i.e., UPR, MA or Distribution (other
than changes affecting the Business' industry, or any such element's industry,
generally);
(d) Waived any material right other than in the ordinary course
of business;
(e) Without limitation by the enumeration of any of the
foregoing, entered into any transaction other than in the usual
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and ordinary course of business without Buyer's consent, which consent shall be
deemed to have been granted if Buyer has failed to object to such transaction
in writing within five (5) days after receipt of written notice thereof from
Seller; or
(f) Suffered any disposition or lapse of any of the Purchased
Intellectual Property.
2.6. LITIGATION. Except as set forth in Schedule 2.6, (a) no
notice or service of process has been received by Seller with respect to any
material claim, action, suit, proceeding or investigation pending against
Seller with respect to the Business, or the use of the Purchased Assets, or the
transaction contemplated hereby, and (b) to the best of Seller's knowledge, no
such claim, action, suit, proceeding or investigation is threatened, in either
case at law or in equity or before or by any federal, state or other
governmental authority that (i) relates directly to the Business, or (ii) would
prevent consummation of the transaction contemplated hereby. Except as set
forth in Schedule 2.6, Seller is not subject to any outstanding order, writ,
injunction or decree that (i) relates directly to the Business, or (ii) would
prevent consummation of the transaction contemplated hereby.
2.7. CERTAIN CONTRACTS AND COMMITMENTS. Except as set forth in
Schedules 1.2(h), 1.2(i), 1.2(k), 1.10(a)(iii), 2.7 and 2.9, Seller is not a
party to or bound by any lease, contract or
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commitment, oral or written, formal or informal, of the following types
relating to the Business:
(a) Union or other collective bargaining agreements;
(b) Licenses or other agreements relating to patent, trademark
and other intellectual property rights;
(c) Lease or sublease agreements under which it is either lessor
or sublessor or lessee or sublessee;
(d) Sales agency and distributorship agreements or agreements
providing for the services of an independent contractor; or
(e) Agreements under which any products of the Business are
manufactured by others for sale by Seller.
Each agreement, contract, lease, license, commitment or instrument of
Seller being assumed by Buyer hereunder (collectively, the "CONTRACTS") is in
full force and effect. Seller is not and, to the knowledge of Seller without
investigation, no other party is, in material default or breach under any of
the Contracts.
2.8. PERMITS; COMPLIANCE WITH LAW. Seller possesses all licenses,
permits, registrations and governmental approvals (the
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"PERMITS") that are required in order for Seller to conduct the Business as
presently conducted, except for those the failure to possess which would not
materially impair Seller's ability to conduct the Business at any of its plants
in Bartow, Florida, Jacksonville, Arkansas, Colton, California or Neville
Island, Pennsylvania, or at any of its Distribution facilities (collectively,
the "BUSINESS SITES"). Seller is not aware that it has failed to comply with
any laws and regulations applicable to the Business or the Purchased Assets,
except for failures to comply that do not presently materially impair Seller's
ability to conduct the Business at any of the Business Sites. The
representation and warranty provided in this Section 2.8 do not apply to
Permits required under applicable Environmental Law, which are exclusively
provided for under Section 8.3(d). The representation and warranty provided
under this Section 2.8 do not apply to compliance with laws and regulations
relating to the environment; matters relating to compliance with Environmental
Law are exclusively provided for under Sections 2.13, 8.3(e) and 8.3(f). For
purposes of this Agreement, "ENVIRONMENTAL LAW" shall have the meaning given in
Section 8.2(n).
2.9. REAL ESTATE. Except as set forth on Schedule 2.9, the
Leased Premises are leased to Seller pursuant to written leases, true and
correct copies of which have been delivered to Buyer. There are no
condemnation proceedings pending, or to Seller's knowledge threatened, with
respect to any portion of the Real Estate.
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2.10. TITLE. (a) Seller has good title to all of the Purchased
Assets (other than real property and interests therein and the Purchased
Intellectual Property), and none of such property is subject to any mortgage,
pledge, lien, restriction, encumbrance, license, covenant, claim, security
interest, charge or any other matter affecting title, except (i) minor items,
none of which materially detracts from the value of or impairs the use of the
affected property, (ii) mechanics', carriers', workmen's, repairmen's or other
like liens arising in the ordinary course of business, (iii) liens for current
taxes, assessments and other governmental charges not yet due and payable, and
(iv) as disclosed on Schedule 2.10(a) (all of the foregoing referred to
collectively as the "PERMITTED ENCUMBRANCES"). This paragraph (a) does not
apply to real property or interests in real property, such items being the
subject of Section 2.10(b), or to the Purchased Intellectual Property, which is
the subject of Section 2.12 below. Seller acknowledges that it shall remain
responsible for satisfying the obligations secured by the liens referred to in
clauses (ii), (iii) and (to the extent not assumed by Buyer hereunder) (iv),
when and as such obligations become due and payable.
(b) Schedules 1.2(a), 1.2(b), 1.2(h) and 2.9 set forth a correct
description of all real property and interests in real property included in the
Purchased Assets. Buyer has received a title commitment report for and survey
of each parcel of land included in the Real Estate (collectively, the "TITLE
COMMITMENT
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<PAGE> 46
REPORTS" and the "SURVEYS," respectively). Seller has (a) good fee title to
all real property and interests in real property shown on Schedules 1.2(a) and
1.2(b) owned by it and (b) to Seller's knowledge, good leasehold interests in
all real property subject to the leases described in Schedules 1.2(h) and 2.9
and leased by it, in each case free and clear of all mortgages, liens, security
interests, easements, covenants, rights-of-way and other encumbrances or
restrictions of any nature whatsoever, except (i) Permitted Encumbrances, (ii)
easements, covenants, rights-of-way and other encumbrances or restrictions of
record, (iii) zoning and other similar restrictions, (iv) unrecorded easements,
covenants, rights-of-way or other restrictions that do not materially impair
the use of the property to which they relate in the Business as presently
conducted and (v) as otherwise shown on the Title Commitment Reports and the
Surveys. Seller acknowledges that it shall remain responsible for satisfying
the obligations secured by the liens referred to in clauses (ii), (iii) and (to
the extent not assumed by Buyer hereunder) (iv), of Section 2.10(a), when and
as such obligations become due and payable.
2.11. LABOR RELATIONS. Except as disclosed in Schedule 2.11, (a)
no Business Employee is represented by a union or other labor organization; (b)
there is no unfair labor practice complaint pending before the National Labor
Relations Board, or to Seller's knowledge threatened, against Seller with
respect to the Business; (c) there is no labor strike or stoppage
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by Business Employees pending, or to the knowledge of Seller, threatened; and
(d) there is no pending labor grievance by any Business Employee.
2.12. INTELLECTUAL PROPERTY RIGHTS. The Purchased Intellectual
Property, together with the Retained Intellectual Property, constitutes all
intellectual property rights that are owned, licensed or used by Seller and
that are material to the Business. Seller's retention of the Retained
Intellectual Property will not materially impair Buyer's ability to conduct the
Business. Seller owns, or has the right to use without interference from any
other party, all of the Purchased Intellectual Property. No claim, suit or
action is pending, or, to the knowledge of Seller, threatened, against Seller,
alleging that Seller is infringing upon the intellectual property rights of
others in the conduct of the Business or challenging the validity of the
Purchased Intellectual Property, or alleging that Seller's use of the Purchased
Intellectual Property infringes or conflicts with the rights of others. Seller
is not aware that it is infringing upon the intellectual property rights of
others in the conduct of the Business.
2.13. ENVIRONMENTAL MATTERS. Except as set forth in Schedule 2.13
and except for those matters referred to in Buyer's document entitled "Project
A Site Issues" dated December 16, 1994 with respect to the Business Sites (the
"BUYER ENVIRONMENTAL REPORT"), Seller has not, with respect to the Real Estate,
the
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Leased Premises or the conduct of the Business, received within the last two
(2) years any written notice of violation of any Environmental Laws (as defined
in Section 8.2) from any federal, state or other governmental authority, which
violation is currently existing and has caused, or if not corrected, will
cause, a material adverse change to the operations, properties, assets,
liabilities or financial condition of the Business or of any element thereof,
i.e., UPR, MA or Distribution.
2.14. SUFFICIENCY OF THE ASSETS. The Purchased Assets, together
with the Retained Assets, constitute sufficient assets for Seller's operation
of the Business as presently conducted.
2.15. MAINTENANCE OF EQUIPMENT. The equipment being purchased by
Buyer hereunder has been maintained by Seller in all material respects in
accordance with the standard maintenance policies of Seller in effect during
Seller's ownership thereof.
2.16. CUSTOMERS AND SUPPLIERS RELATIONS. Seller has not received
any notice that (a) any single customer of the Business that accounted for more
than 5% of the total net sales of the Business for the twelve-month period
ended on December 31, 1994, or (b) any current supplier that is material to the
Business and could not be replaced by Seller at substantially comparable cost,
will terminate its business relations with Seller.
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2.17. Tax Matters. Seller has timely paid all federal, state and
local income, profit, franchise, sales, use, employment and similar taxes, and
all interest and penalties thereon due and payable by it as of the Closing
Date, and has filed all federal, state and local tax returns which have been
required to be filed on or prior to the Closing Date, the non-payment of or
failure to file which would result in a lien or encumbrance on any Purchased
Asset, or would result in Buyer becoming liable or responsible therefor.
Seller will timely pay all tax liabilities, assessments, and interest and
penalties thereon that have accrued but that are not yet due and payable, the
non-payment of which would result in a lien or encumbrance on any Purchased
Asset or would result in Buyer becoming liable therefor. All ad valorem and
other taxes (excluding income taxes) assessed against the Purchased Assets and
payable as of the Closing Date have been paid. Seller shall file all ad
valorem tax returns for the Purchased Assets held by Seller on assessment date
January 1, 1995, or on any other assessment date occurring prior to the
Closing.
2.18. VIOLATION OF CERTAIN LAWS. To its knowledge, Seller has
not, with respect to the Business, taken or agreed to take any action in
violation of the Foreign Corrupt Practices Act or the Export Administration
Act.
2.19. FINDERS' FEES. Neither Seller nor any of its officers,
directors or employees has made any agreement or taken
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any other action that might cause Buyer to become liable for any brokerage
fees, commissions or finders' fees in connection with the transaction
contemplated hereby and by Seller's Ancillary Documents.
2.20. ACCURACY OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty by Seller in this Agreement or in any of Seller's
Ancillary Documents, or in any Exhibit, certificate or other instrument
furnished to Buyer by Seller pursuant hereto or thereto, contains or will
contain, as of the time made, any untrue statement of a material fact;
provided, however, that Seller shall not be deemed to have breached this
representation as a result of any inaccuracy arising from (a) facts that
generally apply to or affect businesses in the industries in which the Business
is operated, or (b) facts or matters that are the subject of, or that are
purported to be excluded from, any other representation or warranty made by
Seller in any such agreement or instrument.
2.21. LIMITATION ON SELLER'S WARRANTIES. BUYER AGREES THAT IT IS
PURCHASING THE PURCHASED ASSETS "AS IS", "WHERE IS" WITHOUT ANY REPRESENTATION
OR WARRANTY AS TO CONDITION, VALUE, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF THE PURCHASED ASSETS OR THE FUTURE PROFITABILITY OR
FUTURE EARNINGS PERFORMANCE OF THE BUSINESS OR THE PURCHASED ASSETS.
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2.22. KNOWLEDGE CONCERNING BUYER'S REPRESENTATIONS. Neither
Seller nor any of its representatives has knowledge of any breach by Buyer or
the failure to be true and correct of any of Buyer's representations or
warranties set forth in this Agreement or in Buyer's Ancillary Documents (as
defined below) or in any Exhibit, Schedule, certificate or other instrument
furnished pursuant hereto or thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.1. ORGANIZATION; CORPORATE POWER AND AUTHORITY. Buyer is a
corporation duly organized, existing and in good standing under the laws of the
Commonwealth of Kentucky. Buyer has full corporate power and authority to
make, execute, deliver and perform this Agreement and each agreement, document
or instrument to be delivered by Buyer pursuant to this Agreement
(collectively, the "BUYER'S ANCILLARY DOCUMENTS").
3.2. AUTHORIZATION AND ENFORCEABILITY. The execution, delivery
and performance by Buyer of this Agreement and Buyer's Ancillary Documents have
been duly authorized by all necessary action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and constitutes, and
each of Buyer's Ancillary Documents, when executed and delivered by Buyer
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shall constitute, the legal, valid and binding obligations of Buyer,
enforceable against it in accordance with their respective terms.
3.3. CONSENTS AND APPROVALS. (a) Except for (i) applicable
requirements of the HSR Act and (ii) governmental permits, authorizations,
consents and approvals that have been obtained or will be obtained on or prior
to the Closing Date, there is no requirement applicable to Buyer to make any
material filing with, or to obtain any material permit, authorization, consent
or approval of, any governmental or regulatory authority as a condition to the
lawful consummation by Buyer of the purchase of the Purchased Assets pursuant
to this Agreement. No consent, approval or authorization of, or registration
or filing with, any other person or entity is required in connection with the
execution and delivery by Buyer of this Agreement and Buyer's Ancillary
Documents and the consummation by Buyer of the transactions contemplated hereby
and thereby.
(b) Assuming compliance with the HSR Act, neither the execution
and delivery of this Agreement and Buyer's Ancillary Documents, nor the
consummation by Buyer of the transaction contemplated hereby, will to the
knowledge of Buyer, at the date hereof (i) contravene any provision of Buyer's
Articles of Incorporation or Bylaws, (ii) result in a breach of or constitute a
default under any material note, bond, mortgage indenture, loan or credit
agreement or other material agreement or instrument to
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which Buyer is a party or by which Buyer's assets may be bound, or (iii)
violate any statute or administrative regulation, or of any order, writ,
injunction, judgment or decree of any court or of any governmental authority
applicable to Buyer or by which any of Buyer's assets may be bound.
3.4. ABSENCE OF PROCEEDINGS. No action or proceeding has been
instituted against Buyer before any court or other governmental body (a)
seeking to restrain or prohibit the execution and delivery of this Agreement or
any of Buyer's Ancillary Documents or the consummation of the transactions
contemplated hereby or thereby, or (b) that could if decided adversely to
Buyer, have a material adverse effect on Buyer's ability to perform its
obligations under this Agreement or any of Buyer's Ancillary Documents.
3.5. FINDERS' FEES. Neither Buyer nor any of its officers,
directors or employees has made any agreement or taken any other action that
might cause Seller to become liable for any brokerage fees, commissions or
finders' fees in connection with the transaction contemplated hereby and by
Buyer's Ancillary Documents.
3.6. KNOWLEDGE CONCERNING SELLER'S REPRESENTATIONS. Neither
Buyer nor any of its representatives has knowledge of any breach by Seller or
the failure to be true and correct of any of Seller's representations or
warranties set forth in this
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Agreement or in Seller's Ancillary Documents or in any Exhibit, Schedule,
certificate or other instrument furnished pursuant hereto or thereto.
ARTICLE IV
COVENANTS OF THE PARTIES
4.1. CONFIDENTIAL INFORMATION. (a) Seller agrees that it shall
not use the Confidential Business Information for any purpose hereafter and
that it shall use its best efforts to maintain the confidentiality of the
Confidential Business Information.
(b) Buyer agrees that it shall not use the Other Confidential
Information for any purpose hereafter and that it shall use its best efforts to
maintain the confidentiality of the Other Business Information.
(c) In the event that Seller or Buyer is requested or required
(by oral question or request for information or documents in legal proceedings,
interrogatories, subpoena, civil investigative demand or similar process) to
disclose any Confidential Business Information or Other Confidential
Information, respectively, Seller or Buyer, as the case may be, shall provide
the other party with prompt notice of any such request or requirement so that
the other party may seek an appropriate protective order. If the other party
fails to seek
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or obtain such order prior to the time disclosure is required, Seller or Buyer,
as the case may be, shall be free to comply with any such request or
requirement at that time without limitation under the provisions of this
Section 4.1.
(d) For purposes of this Section 4.1, the term "CONFIDENTIAL
BUSINESS INFORMATION" means all information of any kind relating directly to
the Business, including the Purchased Intellectual Property, financial data,
projections, marketing information, reports, process designs, economics, and
any and all drawings, engineering, data specifications and other information
regarding the Business. The term "OTHER CONFIDENTIAL INFORMATION" means the
Retained Intellectual Property and all information of any kind relating to
Seller's businesses other than the Business, wherever obtained and regardless
of the manner in which it is obtained. Neither the term "Confidential Business
Information" nor the term "Other Confidential Information" includes information
which (i) becomes generally available to the public other than as a result of a
disclosure by Seller or Buyer, respectively, or their respective
representatives, or (ii) becomes available to Seller or Buyer, respectively, on
a non-confidential basis from a source other than Buyer or Seller,
respectively, or their respective representatives, provided that such source is
not bound by a confidentiality agreement with Buyer or Seller, respectively.
The term "Other Confidential Information" also excludes information which was
available to
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Buyer on a non-confidential basis prior to its disclosure to Buyer by Seller or
its representatives.
(e) Without limiting any other rights or remedies available to
the parties, each of Seller and Buyer will be entitled to equitable relief
(including without limitation injunctive relief) for any breach or failure to
abide by the provisions of this Section 4.1.
4.2. PUBLICITY. Except as may be required by applicable law or
by applicable stock exchange rules, press releases and other publicity
concerning this transaction (including without limitation statements to
customers) shall be made only with the prior agreement of Seller and Buyer as
to the form, content and timing thereof (and, in any event, Seller and Buyer
shall use all best efforts to consult and agree with each other with respect to
the form, content and timing of any such required press release or other
publicity). The foregoing shall not apply to Buyer's communications with
investment bankers and other professionals in the investment community.
4.3. ACCESS TO AND PRESERVATION OF INFORMATION AND RECORDS. For
a period of ten (10) years following the Closing Date or for the period
indicated by the respective party's record retention policy, whichever is
shorter, each of Buyer and Seller shall preserve the books and records of the
Business and shall provide such access to such books and records as the other
party shall
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reasonably request for purposes of preparing tax reports or returns required to
be filed by each other party, and responding to audits thereof. Buyer and
Seller shall also provide written notice to the other party not less than
thirty (30) days prior to destroying any such books or records, and shall
permit such other party to take possession thereof. Buyer and Seller shall
also provide the other party such information as such other party shall
reasonably request for such purposes.
4.4. COOPERATION. From and after the Closing Date, each of Buyer
and Seller shall provide to the other such assistance and such access to its
employees and to the records referred to in Section 4.3, and shall otherwise
cooperate fully with the other, as shall be reasonably necessary in connection
with any threatened, pending or future demand, claim, action, cause of action,
suit or proceeding related to the Business, whether or not arising out of
events occurring prior to, on or after the Closing Date.
4.5. TRANSITION PERIOD.
(a) During the Transition Period (as hereinafter defined),
Seller shall provide to Buyer the services on a full-time basis of the
employees of Seller identified in Schedule 4.5(a) (the "TRANSITIONAL
EMPLOYEES"); provided, that such persons do not elect, of their own initiative,
to terminate their employment with Seller during such period. During the
Transition Period, the Transitional Employees shall perform such services
related to
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the conduct of the Business as Buyer shall determine from time to time. Seller
shall be responsible for all personnel matters regarding the Transitional
Employees. Such matters shall include, but not be limited to, promotions,
transfers, compensation, employee benefits, performance evaluations, all
disciplinary actions up to and including termination of employment and
compliance with all applicable employment and tax laws and related regulations
at the federal, state and local level, including income tax withholding and
payment of the employer and employee share of employment and unemployment tax.
Seller shall have the final decision to terminate employment of any
Transitional Employees. Notwithstanding the foregoing sentence, Buyer retains
the right to cease using the services of any particular Transitional Employee
at any time as Buyer deems appropriate. Seller agrees that the Transitional
Employees shall observe those work hours at work locations of the Business as
determined by Buyer's on-site supervisory officials. Seller shall consult with
Buyer in order to attempt to resolve all questions and needs of Buyer regarding
the work hours of the Transitional Employees. During the Transition Period,
Seller may redeploy any Transitional Employee within Seller's own organization;
provided that Seller places another of Seller's employees in the position from
which the Transitional Employee is so redeployed.
(b) It is expressly acknowledged by the parties hereto that
nothing in this Agreement is intended or shall be construed
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to create an employer/employee relationship between Buyer and the Transitional
Employees and it is expressly agreed and acknowledged by the parties that
Seller is the common law employer of the Transitional Employees. In the event
the Internal Revenue Service or any other governmental agency should question
or challenge the employment status of the Transitional Employees, the parties
hereto agree that both Seller and Buyer shall have the right to participate in
any discussion or negotiation occurring with such agency or agencies,
irrespective of with whom or by whom such discussion or negotiation is
initiated.
(c) During the Transition Period, Seller shall use commercially
reasonable efforts to provide such additional assistance to Buyer as Buyer
shall request in order to effect the orderly transition from Seller's to
Buyer's operation of the Business. Such assistance may include receiving
orders and inquiries from customers of the Business and directing such orders
and inquiries to Buyer, assisting Buyer in developing computer services to
support the Business and providing such interim computer services to Buyer.
(d) Seller shall not charge Buyer any fee for the services of
the Transitional Employees provided pursuant to Section 4.5(a) or for any
transitional assistance provided by Seller pursuant to Section 4.5(c), except
that within thirty (30) days after demand therefor, Seller shall reimburse
Buyer for all reasonable travel expenses incurred by Transitional Employees or
any other employee
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in providing services to or for the benefit of Seller pursuant to Section
4.5(a) or 4.5(c).
(e) The "TRANSITION PERIOD" shall be the ninety (90) day period
immediately following the Closing Date; provided, however, that Buyer may
extend the Transition Period for additional thirty (30) day periods by giving
written notice to Seller at least ten (10) days prior to the date that the
Transition Period would otherwise expire; provided further, however, that in no
event shall the Transition Period extend beyond one hundred and eighty (180)
days following the Closing Date.
(f) Buyer agrees to release, indemnify, defend, save and hold
Seller and its officers, directors, employees, agents, successors and permitted
assigns (any or all of the foregoing hereinafter referred to as an "INDEMNIFIED
PERSON"), harmless from and against any and all demands, claims, actions or
causes of action, assessments, losses, damages, deficiencies, liabilities,
costs and expenses (including but not limited to reasonable attorneys' fees and
expenses, and the aggregate amount paid in reasonable settlement of any
actions, suits, proceedings, or claims, or threats thereof, to which any
Indemnified Person may become subject under any statute or common law or
otherwise), asserted against, imposed upon, resulting to or incurred by any
Indemnified Person, directly or indirectly, as a result of or in connection
with any claim directly or indirectly based on or arising from the performance
of services for Buyer by Seller or
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the Transitional Employees pursuant to this Section 4.5. The parties
acknowledge that it is the intent of this Section 4.5(f) that Seller bear no
cost or liability of any nature whatsoever (whether arising from claims made by
the Transitional Employees or by others as a result of the acts of Transitional
Employees or otherwise) as a consequence of Seller's provision of transitional
services to Buyer pursuant to this Section 4.5. The foregoing indemnification
provisions shall survive the Closing and completion of the services rendered to
Buyer by Seller and the Transitional Employees hereunder, shall be in addition
to any other liability which Buyer may otherwise have to Seller, and shall
inure to the benefit of the heirs, personal representatives, successors and
assigns of each Indemnified Person.
4.6. NON-COMPETITION AND NON-INTERFERENCE BY SELLER.
(a) Except as otherwise required by law, regulation or a court
of competent jurisdiction, Seller shall not, for a period of two (2) years
after the Closing Date, without the prior written consent of Buyer, either (i)
directly or indirectly provide any advisory or consulting services for, invest
in (other than stock in a publicly held corporation which is traded on a
recognized securities exchange) or otherwise operate any corporation,
partnership, organization, proprietorship, or other entity which develops,
manufactures, sells or distributes unsaturated polyester resins or maleic
anhydride in competition with the Business in each of the states in the United
States in
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which Seller conducted the Business and each element thereof, i.e., UPR, MA and
Distribution, or (ii) intentionally and knowingly induce or attempt to induce
any supplier, employee, agent or other representative or associate of Buyer
involved in the Business as conducted by Buyer to terminate its relationship
with Buyer.
(b) Notwithstanding the foregoing, the following shall not
constitute a breach by Seller of Section 4.6(a): (i) Seller's production,
whether through its ownership of Avonite, Inc. or otherwise, of solid surfacing
materials using polyester resins as feedstock; or (ii) Seller's hiring of any
person who voluntarily, and without inducement by Seller, seeks employment by
Seller.
(c) Notwithstanding Section 4.6(a), Seller shall have complete
freedom to develop, patent, test market, produce, have toll produced, market,
license others, sell and conduct all other business related to all Retained
Intellectual property as contained in Schedule 1.3(k) as well as any
continuations, divisions, reissues, continuations-in-part, foreign counterpart
applications thereof, and improvements thereon, and any patents issuing
therefrom including, but not limited to (i) compositions containing maleimides,
such as in U.S. Patent 5,983,669, (ii) methods of inhibiting the growth of
zebra mussels, such as in U.S. Patent 5,288,409, (iii) water blown,
thermosetting, unsaturated polyester-polyurethane hybrid foam formulations and
components as described in U.S. Patent 5,344,852 hereinafter
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referred to as "Hyrizon" and (iv) unsaturated laminating resins having low
organic emissions and their constituent monomers comprising epoxylated and/or
alkoxylated bisphenol-A acrylates, methacrylates, diacrylates and
dimethacrylates, hereinafter referred to as "LOER" such as described in U.S.
Patent 5,292,841 and patent applications listed on Schedule 1.3(k) having the
title "Laminating Resins Having Low Organic Emissions." Seller shall provide
Buyer the opportunity to produce LOER under non-exclusive license and shall
give Buyer an opportunity to toll produce Hyrizon and LOER for market
development if Seller desires such production or toll production and the
parties agree to the terms thereof. Buyer shall be considered to have received
confidential information associated with products included in Schedule 1.3(k)
by nature of this transaction and shall keep confidential all related
information and shall not produce, sell, or otherwise practice business related
to products described in Schedule 1.3(k) without written consent from Seller.
(d) Seller acknowledges that in the event of any breach of the
covenants set forth in clause (a) of this Section 4.6, Buyer and its successors
and permitted assigns shall be entitled to injunctive relief and to such other
and further relief as is proper in the circumstances.
4.7. NON-INTERFERENCE BY BUYER. Buyer shall not, for a period of
two (2) years after the Closing Date, without the prior written consent of
Seller, intentionally and knowingly induce or
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attempt to induce any supplier, employee, agent or other representative or
associate of Seller to terminate its relationship with Seller. Notwithstanding
the foregoing, Buyer's hiring of any person who voluntarily and without
inducement by Buyer, seeks employment with Buyer shall not constitute a breach
by Buyer of this Section 4.7. Buyer acknowledges that in the event of any
breach of this Section 4.7, Seller and its successors and permitted assigns
shall be entitled to injunctive relief and to such other and further relief as
is proper in the circumstances.
4.8. IDENTIFICATION OF GOODS. Buyer shall assure that any goods
and all packaging materials related to the Business shipped after the Closing
Date shall clearly identify Buyer as the producer or distributor thereof and
shall bear no marks or other features identifying Seller as the producer or
distributor thereof or otherwise referring to Seller in any way.
4.9. RETURN OF POLYESTER RESINS.
(a) Buyer shall notify Seller if any customer of the Business,
claiming that polyester resins shipped by Seller prior to
the Closing Date do not conform to the specifications
applicable thereto, returns such resins to Buyer within
ninety (90) days after Seller's shipment thereof. Upon
receipt of such notification, Seller may request such
verification and documentation
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of the alleged non-conformity and the return date as Seller
shall reasonably request.
(b) Seller shall have no liability for any polyester resins so
returned that are returned more than ninety (90) days after
Seller's shipment thereof or that conform to applicable
specifications. Any credit offered the customer, other
concession made or any cost incurred by Buyer in connection
with such resins shall be solely for the account of Buyer.
(c) Subject to the following sentence, if the returned polyester
resins do not conform to applicable specifications, Buyer
shall re-work the returned resin, and Seller shall pay Buyer
$.30 per pound of resin so re-worked, plus reasonable
freight charges for the original shipment of the resins to
the customer and for the customer's return, plus an amount
equal to Seller's standard product cost of the resin as of
the date of Closing based on Seller's accounting records.
With respect to resins shipped in tank wagons that are not
accepted by customers due to deviations from applicable
specifications, but which resins can be adjusted and
reshipped, Seller shall pay Buyer $.15 per pound of affected
resins, plus reasonable freight charges for the customer's
return and for reshipping the adjusted resin to the
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customers. The final disposition of all material that does
not conform with applicable specifications shall be the sole
responsibility of Buyer and any credits or other concessions
granted to the customer by Buyer in respect of the returned
resins shall be solely for the account of Buyer.
4.10. COLTON RESINS. The Colton Resins are Purchased Inventory
being transferred to Buyer at Closing. Buyer shall be solely responsible for
completing the curing of the Colton Resins and for disposing of them after
Closing.
4.11. CLEANING OF COLTON TANKS. Seller shall be responsible for
cleaning the five (5) tanks located at the Colton, California Business Site
that contain gelled heels. To the extent that such cleaning has not been
completed as of the Closing, Buyer shall permit Seller, at Seller's option, to
supervise and direct such cleaning after Closing. In consideration of such
cleaning, Buyer shall pay Seller at Closing $50,000 in addition to the Purchase
Price. Any costs incurred for such cleaning in excess of such amount shall be
solely for Seller's account. Any waste generated as a result of such cleaning
shall be considered Pre-Closing Waste (as defined in Section 8.2(t)) and shall
be subject to the provisions of Sections 8.3(a) and (b).
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ARTICLE V
CLOSING
-------
5.1. CLOSING. The closing of the purchase and sale of the
Purchased Assets and the other transactions contemplated hereby (the "CLOSING")
is taking place at 10:00 a.m., local time, on April 28, 1995 at the offices of
Kirkpatrick & Lockhart, 1500 Oliver Building, Pittsburgh, Pennsylvania, or at
such other time, date or place as the parties mutually agree (the "CLOSING
DATE").
5.2. DELIVERIES BY SELLER. At the Closing, Seller is also
delivering to Buyer each of the following:
(a) a special warranty deed or deeds to the Real Estate, duly
executed and acknowledged by Seller and in recordable form (collectively, the
"DEEDS");
(b) a special warranty bill of sale and instrument of assignment
with respect to the other Purchased Assets, duly executed by Seller;
(c) an assignment or assignments of the Purchased Intellectual
Property, duly executed by Seller;
(d) an Assignment and Assumption Agreement in substantially the
form attached hereto as Exhibit B (the "ASSUMPTION AND ASSIGNMENT AGREEMENT"),
duly executed by Seller;
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(e) an assignment of all transferable or assignable licenses,
permits and warranties relating to the Purchased Assets, duly executed by
Seller;
(f) a long-term supply agreement, whereby Seller shall purchase
MA from Buyer, in substantially the form attached hereto as Exhibit C
("SELLER'S SUPPLY CONTRACT"), duly executed by Seller;
(g) a long-term supply agreement, whereby Buyer shall purchase
phthalic anhydride from Seller, in substantially the form attached hereto as
Exhibit D ("BUYER'S PA SUPPLY CONTRACT"), duly executed by Seller;
(h) A long-term supply agreement, whereby Buyer shall purchase 2
ethyl-hexanol from Seller, in substantially the form attached hereto as Exhibit
E ("BUYER'S 2-EH SUPPLY CONTRACT"), duly executed by Seller;
(i) title certificates to each of the Vehicles (together with
any other transfer forms necessary to transfer title to the Vehicles), duly
executed by Seller;
(j) a Good Standing Certificate of Seller in the State of
Delaware as of a date within ten (10) days prior to the Closing Date;
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(k) an incumbency and specimen signature certificate signed by
the officers of Seller who execute this Agreement or any of Seller's Ancillary
Documents and certified by the Secretary of Seller;
(l) true and correct copies of Seller's Certificate of
Incorporation since the date of its incorporation certified by the Secretary of
State of Delaware and Seller's bylaws certified by the Secretary of Seller;
(m) resolutions of the Board of Directors of Seller authorizing
the execution and delivery of this Agreement and Seller's Ancillary Documents
and the performance by Seller of the transactions contemplated hereby and
thereby, certified by the Secretary of Seller;
(n) the opinion of Kirkpatrick & Lockhart, legal counsel to
Seller, in substantially the form attached hereto as Exhibit F; and
(o) a letter agreement of Mitsubishi Corporation in
substantially the form attached hereto as Exhibit G.
5.3. DELIVERIES BY BUYER. At the Closing, Buyer is also
delivering to Seller each of the following:
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(a) a wire transfer of federal funds in accordance with Section
1.8(a);
(b) the Assumption and Assignment Agreement, duly executed by
Buyer;
(c) Buyer's PA Supply Contract, duly executed by Buyer;
(d) Buyer's 2-EH Supply Contract, duly executed by Buyer;
(e) Seller's Supply Contract, duly executed by Buyer;
(f) a good standing certificate of Buyer in its state of
incorporation as of a date within ten (10) days prior to the Closing Date;
(g) an incumbency and specimen signature certificate signed by
the officers of Buyer who execute this Agreement or any of Buyer's Ancillary
Documents and certified by the Secretary of Buyer;
(h) resolutions of the Board of Directors of Buyer authorizing
the execution and delivery of this Agreement and Buyer's Ancillary Documents,
and the performance of the transactions contemplated hereby and thereby,
certified by the Secretary of Buyer;
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(i) the opinion of Robert G. O'Brien, legal counsel to Buyer, in
substantially the form attached hereto as Exhibit H;
(j) a check in the amount of $50,000 pursuant to Section 4.11;
and
(k) appropriate sales and use tax exemption certificates for
inventory, machinery and equipment being purchased hereunder.
5.4. DELIVERIES BY BOTH PARTIES. At the Closing, each party is
also delivering to the other each of the following agreements related to the
Neville Island Facility:
(a) a Services Agreement substantially in the form attached
hereto as Exhibit I;
(b) an Irrevocable Easement Agreement (the "EASEMENT AGREEMENT")
covering the parcels of land underlying Buyer's Neville Island Plant and
certain other matters substantially in the form attached hereto as Exhibit J;
(c) a Lease Agreement covering certain space at Buyer's Neville
Island Plant and Seller's Neville Island Plant substantially in the form
attached hereto as Exhibit K; and
(d) a Confidentiality Agreement substantially in the form
attached hereto as Exhibit L.
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ARTICLE VI
CERTAIN ADDITIONAL COVENANTS
----------------------------
6.1. COSTS AND EXPENSES. (a) Except as set forth in Section 9.8,
each party hereto shall bear all fees and expenses incurred by such party in
connection with, relating to or arising out of the execution, delivery and
performance of this Agreement, the Ancillary Documents and the transactions
contemplated hereby and thereby, including without limitation, financial
advisors', attorneys', accountants' and other professional fees and expenses.
(b) Notwithstanding Section 6.1(a), the cost of
obtaining the Title Commitment Reports and the Surveys shall be borne by the
parties as follows: (i) such costs relating to the Jacksonville, Arkansas
Business Site shall be borne by Seller, (ii) such costs relating to the Neville
Island, Pennsylvania Business Site shall be borne by Buyer and (iii) such costs
relating to the Bartow, Florida and Colton, California Business Sites shall be
borne equally by Seller and Buyer.
(c) Notwithstanding Section 6.1(a), all accrued expenses
associated with Real Estate, such as electricity, gas, water, sewer, telephone,
property taxes, security services and similar items, shall be pro-rated between
Buyer and Seller as of the Closing. All such expenses attributable to the
period on or prior to the Closing Date shall be for the account of Seller, and
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all such expenses attributable to the period after the date hereof shall be for
the account of Buyer. Buyer and Seller shall settle such amounts on or before
July 31, 1995, except that settlement of such amounts arising from property
taxes shall occur within sixty (60) days after receipt of the applicable
property tax bill.
6.2. FULFILLMENT OF ASSUMED LIABILITIES. From and after Closing,
Buyer shall pay, discharge and perform each of the Assumed Liabilities when and
as due and shall observe all of the covenants, terms and conditions of each and
every agreement related to the Assumed Liabilities.
6.3. COLLECTION OF ACCOUNTS RECEIVABLE. (a) After the Closing,
Buyer shall have the right and authority to collect for Buyer's own account all
the Purchased Accounts Receivable and Buyer shall use commercially reasonable
efforts to collect all the Purchased Accounts Receivable. Seller shall
promptly (i) endorse and deliver to Buyer any checks or other payment
instruments payable to Seller that are received by Seller, whether directly or
through a lockbox, on account of the Purchased Accounts Receivable and (ii)
deliver to Buyer any checks or other payment instruments received by Seller,
whether directly or through a lockbox, and payable to or otherwise intended for
Buyer on account of the Purchased Accounts Receivable.
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(b) In the event that during the two-year period following the
Closing, Buyer collects any amount in respect of the Purchased Accounts
Receivable in excess of 97% of the aggregate face value of the Purchased
Accounts Receivable, Buyer shall remit 50% of the amount of such excess to
Seller within thirty (30) days after Buyer's receipt thereof. Within fifteen
(15) days after the end of each calendar month following the Closing, Buyer
shall provide Seller an accounts aging statement with respect to all Purchased
Accounts Receivable that remain uncollected as of the last day of such month.
Such statement shall also reflect all amounts collected during such month in
respect of the Purchased Accounts Receivable.
(c) For a period of two (2) years following the Closing Date,
Buyer shall preserve all of Buyer's correspondence, books, records and all
other information related to the Purchased Accounts Receivable. Seller shall
be permitted reasonable access to such information for purposes of verifying
Buyer's collections and reviewing Buyer's collection efforts in respect of the
Purchased Accounts Receivable.
6.4. USE OF NAME "ARISTECH CHEMICAL CORPORATION". Buyer
acknowledges that except for the Purchased Intellectual Property, it is not
acquiring any right to use patents, trademarks, service marks, trade names,
logos or other intellectual property used by Seller in connection with the
Business, including without limitation, the name "Aristech Chemical
Corporation" or any
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derivative thereof; provided, however, that Buyer shall be permitted for a
period of one (1) year after the Closing, to identify Seller as the preceding
owner of the Purchased Assets in communications with customers and potential
customers of the Business.
6.5. FURTHER ASSURANCES. The parties shall execute such further
documents and perform such further acts as may be necessary to transfer and
convey the Purchased Assets to Buyer upon the terms contained in this Agreement
and the Ancillary Documents and to otherwise comply with the terms of and
consummate the transactions contemplated hereby and thereby.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
7.1. SCOPE. This Article VII shall govern the parties'
indemnification rights and obligations with respect to all matters other than
environmental matters, which are governed exclusively by Article VIII except to
the extent expressly provided in Section 8.1.
7.2. SURVIVAL OF REPRESENTATIONS. Except as set forth in the
following sentence, all representations and warranties made by any party in
this Agreement shall survive the Closing for a period of one (1) year from the
Closing Date. Notwithstanding
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the foregoing, the representations and warranties contained in Sections 2.2,
2.10, 2.22, 3.2 and 3.6 shall never terminate or expire. All claims for
damages made by virtue of any representation or warranty shall be made under,
and subject to the limitations set forth in, this Article VII.
7.3. INDEMNIFICATION BY SELLER. Subject to the terms and
conditions of this Article VII, Seller shall indemnify, defend, save and hold
Buyer and its officers, directors, employees, agents, successors and permitted
assigns (collectively, "BUYER INDEMNITEES") harmless from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
deficiencies, liabilities, costs and expenses (including reasonable attorneys'
fees and expenses, interest, penalties, and all judgments and reasonable
amounts paid in investigation, defense or settlement of or in connection with
any threatened, pending or future claim, action, suit or proceeding, whether
criminal, civil, administrative or investigative) (collectively, "BUYER
DAMAGES") asserted against, imposed upon, resulting to or incurred by any of
Buyer Indemnitees, directly or indirectly, in connection with, or arising out
of, or resulting from (a) a breach of any of Seller's representations and
warranties, (b) a breach or nonfulfillment of any of the covenants or
agreements made by Seller in or pursuant to this Agreement or any of Seller's
Ancillary Documents, (c) all Retained Liabilities, (d) any failure to comply
with any "bulk sales" laws applicable to the sale of the Purchased Assets
hereunder, and (e) Seller's
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operation of the Business prior to the Closing Date (including Continuing
Liabilities to the extent arising therefrom), except as set forth in Section
7.5(b).
7.4. INDEMNIFICATION BY BUYER. Subject to the terms and
conditions of this Article VII, Buyer shall indemnify, defend, save and hold
Seller and its officers, directors, employees, agents, successors and permitted
assigns (collectively, "SELLER INDEMNITEES") harmless from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
deficiencies, liabilities, costs and expenses (including reasonable attorneys'
fees and expenses, interest, penalties, and all judgments and reasonable
amounts paid in investigation, defense or settlement of or in connection with
any threatened, pending or future claim, action, suit or proceeding, whether
criminal, civil, administrative or investigative) (collectively, "SELLER
DAMAGES") asserted against, imposed upon, resulting to or incurred by any of
Seller Indemnitees, directly or indirectly, in connection with, or arising out
of, or resulting from, (a) a breach of any of Buyer's representations and
warranties, (b) a breach or nonfulfillment of any of the covenants or
agreements made by Buyer in or pursuant to this Agreement or any of Buyer's
Ancillary Documents, (c) all Assumed Liabilities, (d) Buyer's operation of the
Business after the Closing Date, including Continuing Liabilities to the extent
arising therefrom, and (e) Seller's provision of transitional assistance in
accordance with Section 4.5.
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7.5. LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.
(a) Seller's obligations to indemnify Buyer Indemnitees against
any Buyer Damages pursuant to Section 7.3 shall be subject to all of the
following limitations:
(i) No indemnification shall be required to be made by Seller
pursuant to section 7.3(a) until the aggregate amount of
Buyer Damages thereunder exceeds $50,000, and then only to
the extent of the excess of such Buyer Damages over $50,000.
(ii) Seller's aggregate obligations to indemnify Buyer
Indemnitees pursuant to Section 7.3(a) shall not exceed
$30,000,000. Except as set forth in Section
7.5(a)(iii)(A)(2), no such monetary limit shall apply to
Seller's obligations to indemnify Buyer Indemnitees pursuant
to Sections 7.3(b), (c), (d) or (e).
(iii) Except for a breach of the representation set forth in
Section 2.8 or as expressly provided in (A) below or in
Sections 8.3(e) and 8.3(f), Seller shall not be obligated to
indemnify Buyer Indemnitees under Section 7.3(e) or
otherwise by reason of any alleged failure of the Purchased
Assets or the Business to comply with any applicable laws,
statutes, regulations, codes,
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ordinances, binding policies and case law or other legal
requirements (collectively, "LAWS").
(A) With regard to any condition of non-compliance (other
than non-compliance with applicable Environmental
Laws, which is exclusively governed by Article VIII)
that was not known by Buyer prior to Closing, and
that could not have been discovered by the exercise
of due diligence by Buyer prior to Closing, Seller
shall indemnify Buyer for the reasonable cost of
correcting any such condition, subject to the
following qualifications:
(1) Buyer shall notify Seller of such condition
of non-compliance prior to the expiration of
the applicable notice period, as follows:
(a) For non-compliance with applicable
federal requirements, four (4) months
after the Closing Date;
(b) For non-compliance with
Pennsylvania, California or Florida
state requirements, arising from the
Purchased Assets or the Business
conducted at Neville Island, Colton,
California or
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Bartow, Florida, respectively, eight
(8) months after the Closing Date;
and
(c) For all other non-compliance, twelve
(12) months after the Closing Date.
(2) Seller's aggregate obligations to indemnify
Buyer Indemnitees for any condition of
non-compliance referred to in this clause
(iii) shall not exceed $500,000.
(3) No indemnification shall be required to be
made by Seller for any condition of
non-compliance referred to in this clause
(iii) until the aggregate amount of Buyer
Damages thereunder exceeds $20,000, and then
only to the extent of the excess of such
Buyer Damages over such amount.
(4) Under no circumstance shall Seller be
obligated to indemnify Buyer Indemnitees with
respect to any conditions of non-compliance
with the following Laws:
(a) The process safety management
standard regulations under the
Occupational Safety and Health Act;
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(b) The Americans with Disabilities Act;
or
(c) The Toxic Substances Control Act, to
the extent not covered by Sections
8.3(e) or 8.3(f).
(5) No indemnification shall be required to be
made by Seller with respect to any condition
of non-compliance that did not exist as of
the Closing Date.
(iv) To the extent the subject matter of the claim is covered by
insurance held by Buyer, or the Buyer Indemnitee is
otherwise entitled to recovery from a third party with
respect to such claim, Seller shall be subrogated to Buyer's
or the Buyer Indemnitee's rights against such insurer or
other third party.
(v) No indemnification shall be required to be made with respect
to any action or inaction by Buyer or a Buyer Indemnitee
subsequent to the Closing Date causing, or causing an
increase in, Buyer Damages.
(b) The indemnification obligations of both Seller (pursuant to
Section 7.3) and Buyer (pursuant to Section 7.4) are subject to the following
limitations:
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(i) the amount of any recovery by a Buyer Indemnitee or a Seller
Indemnitee, as the case may be, shall be net of any foreign,
federal, state and/or local income tax benefits inuring to
the indemnified party (the "INDEMNIFIED PARTY") as a result
of the state of facts that entitled the Indemnified Party to
recover from Seller or Buyer, as the case may be (the
"INDEMNIFYING PARTY");
(ii) neither the Buyer Indemnitees nor the Seller Indemnitees may
recover with respect to a misrepresentation or breach of
warranty or covenant by Seller or Buyer, respectively, if at
or before the Closing Buyer or Seller, respectively, had
actual knowledge of the misrepresentation or breach of
warranty or covenant; and
(iii) the Indemnifying Party shall be obligated to indemnify the
Indemnified Party only for those Buyer Damages or Seller
Damages, as the case may be (collectively the "DAMAGES"), as
to which the Indemnified Party has given the Indemnifying
Party written notice (A) in the case of indemnification
pursuant to Section 7.3(a) or Section 7.4(a), within six (6)
months after the expiration of the representations and
warranties; and (B) in all
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other cases, as promptly as practicable (but in any event
described in clause (A) or (B), no later than six (6) months
after the Indemnified Party's discovery of the facts giving
rise to such claim). Any written notice delivered pursuant
to this clause (iii) shall set forth with specificity the
basis of the claim for Damages and an estimate of the amount
thereof.
ARTICLE VIII
ENVIRONMENTAL INDEMNIFICATION AND
OTHER ENVIRONMENTAL MATTERS
---------------------------
8.1. SCOPE. Except for Seller's representation set forth in
Section 2.13, this Article VIII shall exclusively govern the rights of the
parties with respect to environmental matters related to the Business Sites.
8.2. DEFINITIONS. For purposes of this Article VIII, the
following terms shall have the meanings set forth in this Section 8.2:
(a) "ADDITIONAL OPERATING SPACE" means the structures, space or
parcels of land at the Neville Island Facility (other than Buyer's Neville
Island Plant or the Operating Easement Areas) as to which Buyer obtains, after
the date hereof, an
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ownership or possessory interest for the purposes of conducting operations.
(b) "APPROPRIATE AND REASONABLE CRITERIA" means environmental
cleanup criteria based on a site-specific assessment of risks, considering the
environmental media affected by the contaminants or conditions, the reasonably
foreseeable uses of the Premises and any other natural resources affected or
potentially affected by the contaminants or conditions, the physical setting of
the affected area, potential pathways of contaminant migration, the
characteristics of the contaminants involved, the technical feasibility and
cost-effectiveness of cleanup, removal, or remediation alternatives that might
be pursued, and human health and environmental protection levels indicated in
guidance documents issued by federal or state environmental agencies, and other
relevant factors.
(c) "ARRANGEMENT FOR TREATMENT OR DISPOSAL" for purposes of
Sections 8.3(a) and 8.3(c) shall mean any arrangement for treatment or disposal
of waste that, under the particular facts of the situation, results in the
imposition of liability upon the entity or person who "arranged for disposal or
treatment" pursuant to Section 107(a)(3) of the CERCLA, 42 U.S.C. Section
9707(a)(3) or counterpart state Environmental Laws.
(d) "BUSINESS INTERRUPTION COSTS" means where there is a loss of
access to or use of an affected production unit or facility for a period in
excess of five (5) days, the costs
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actually incurred to provide a replacement of production, products or services
that would have otherwise been provided by the affected unit or facility, and
the expenses incurred in ordinary maintenance of the affected unit or facility.
(e) "BUYER ENVIRONMENTAL CONDITIONS" means (i) with respect to
Buyer's Operating Space or the Access Easement Areas, all Environmental
Conditions resulting from (A) the release of any Regulated Substances arising
from Buyer's operation of the Polyester or MA businesses upon Buyer's Operating
Space, or arising from any other use or activities conducted by Buyer on
Buyer's Operating Space or the Access Easement Areas; or (B) the migration of
Regulated Substances at Buyer's Operating Space or the Access Easement Areas as
of the Closing Date to the extent that such migration, or the costs associated
therewith, are caused or increased by Buyer's actions or by Buyer's failure to
act where Buyer has an obligation to act arising under law, this Agreement, or
any Ancillary Document; and (ii) with respect to the other Production
Facilities or the Distribution Facilities, all Environmental Conditions
resulting from (A) the release of any Regulated Substances arising from Buyer's
operation of any of the Other Production Facilities or the Distribution
Facilities, or arising from any other use or activities conducted by Buyer at
any of such Properties, or (B) the migration of Regulated Substances at any of
the Other Production Facilities or the Distribution Facilities as of the
Closing Date to the extent such migration or the costs associated therewith are
caused or
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<PAGE> 86
increased by Buyer's actions or by Buyer's failure to act where Buyer has an
obligation to act arising under law, this Agreement, or any Ancillary Document.
(f) "BUYER REGULATED SUBSTANCE" means any Regulated Substance
released as a result of Buyer's operations, use or activities.
(g) "BUYER'S OPERATING SPACE" means (i) Buyer's Neville Island
Plant, (ii) the Operating Easement Areas and (iii) the Additional Operating
Space, if any.
(h) "BUYER'S PERCENTAGE" means a fraction, the numerator of
which is equal to the land component of Buyer's Operating Space, plus one-half
of the roadways included in the Access Easement Areas, and the denominator of
which is equal to the total area of land comprising the Neville Island
Facility. Buyer's Percentage as of the Closing Date is 34.85%.
(i) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., and
regulations promulgated thereunder.
(j) "CLAIMS" means any suits, claims, actions, damages, losses,
costs (including costs of defense, settlement and reasonable attorney's fees),
liabilities, obligations, expenses, damages, fines, or penalties. Unless
specifically stated in an indemnification provision in this Article VIII,
"Claims" does not include Business Interruption Costs. Except for Business
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Interruption Costs where specifically provided, Claims does not include any
consequential, indirect, incidental, or other similar damages (including
without limitation lost profits) incurred by any indemnified party, under any
form or theory of action whatsoever, whether in contract or otherwise.
(k) "CONSTRUCTION OR EXPANSION PROJECT" means any project at
Buyer's Neville Island Plant involving the construction of new or expanded
structures, the installation of new equipment, or any modification to
structures or equipment that increases the capacity of such facilities; but
does not include any project that solely involves the in-kind replacement
(including in-kind replacement with new equipment) or repair of previously
existing equipment or structures.
(l) "ENVIRONMENTAL ASSESSMENT" means a systematic evaluation of
potential environmental contamination at a site, or portion of a site, that
includes both soil and groundwater sampling and analysis. Such an assessment
may involve sampling focused on those areas where, based on reviews of site
history and current or past operations, it is believed that contamination is
more probable to occur.
(m) "ENVIRONMENTAL CONDITION" means the presence of a Regulated
Substance (other than a naturally-occurring substance) on or at a property
(including, but not limited to, the presence in surface water, groundwater,
soils or subsurface strata).
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<PAGE> 88
(n) "ENVIRONMENTAL LAW" shall mean any federal, state or local
statute, law, rule, regulation, ordinance, code, or policy having the force of
law relating to the environment or Regulated Substances, including, without
limitation: CERCLA, 42 U.S.C. Section 9601 et seq.; the Superfund Amendments
and Reauthorization Act, Public Law 99-499, 100 Stat. 1613; RCRA, 42 U.S.C.
Section 6901, et seq.; the National Environmental Policy Act, 42 U.S.C. Section
4321; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; Section 6 of
the Toxic Substances Control Act (including regulations promulgated thereunder,
"TSCA"), 15 U.S.C. Section 2605 (but not including Sections 4 and 5 of TSCA, 15
U.S.C. Section 2603-2604); the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801; the Federal Water Pollution Control Act, 33 U.S.C. Section
1251 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701, et seq.;
the Clean Air Act, 42 U.S.C. Section 7401 et seq., and counterpart state
statutes, and regulations adopted thereunder.
(o) "ENVIRONMENTAL PROFESSIONAL" means a registered professional
engineer, registered professional geologist, environmental scientist or
attorney, each of whom has a minimum of 10 years of experience with respect to
environmental regulatory issues and remediation of environmental contamination.
(p) "GOVERNMENTAL APPROVAL" means any permit, license,
authorization, consent, approval, waiver, exception, variance, order, or
exemption issued by any federal, state or local governmental authority.
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<PAGE> 89
(q) "OFF-SITE LOCATIONS" means locations other than the Business
Sites.
(r) "OPERATING EASEMENT AREAS" shall have the meaning ascribed
in Section 8.4(a).
(s) "PRE-CLOSING ENVIRONMENTAL CONDITION" means an Environmental
Condition on or at a Business Site that existed as of the Closing Date.
(t) "PRE-CLOSING WASTE" means hazardous or non-hazardous
industrial waste in containers generated by Seller as a result of industrial
operations at the Business Sites prior to the Closing Date. Except to the
extent provided in Section 4.11 with respect to the waste generated as a result
of the cleaning referred to therein, Pre-Closing Waste does not include
contaminated media (such as soil or groundwater), tank bottoms or other
material currently stored or contained in raw material, product or process
tanks.
(u) "PROJECT AFFECTED SOILS" means soils underlying, or directly
affected by activities undertaken in connection with, any project involving the
construction, installation, expansion, repair, or replacement of any equipment
or structures. Project Affected Soils includes, but is not limited to, soils
excavated or disturbed in order to provide for footings, foundations, or access
to underground facilities associated with such a project.
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<PAGE> 90
(v) "PROJECT AREA" means the area underlying, or directly
affected by activities undertaken in connection with, any project involving the
construction, installation, expansion, repair, or replacement of any equipment
or structures. The Project Area includes, but is not limited to, any area
excavated in order to provide for footings, foundations, or access to
underground facilities associated with such a project.
(w) "PROPERTIES" means the real properties and leased
facilities, together with Buyer's Operating Space, being acquired by Buyer as
part of the Purchased Assets.
(x) "RCRA" means the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., and regulations promulgated thereunder.
(y) "REGULATED SUBSTANCE" means any pollutant, contaminant,
hazardous substance, hazardous material, toxic substance, toxic pollutant,
solid waste, municipal waste, industrial waste, or hazardous waste, that is
defined as such and is subject to regulation under any applicable Environmental
Law.
(z) "REGULATORY REMEDIATION STANDARD" means any environmental
cleanup standards established by statute, duly-adopted regulations, or policies
that have the force of law.
(aa) "RELEASE TO THE ENVIRONMENT" means the spilling, leaking,
pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping
or disposal of any Regulated
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Substance into surface water, groundwater, soil, the land surface or
subsurface, or ambient air. Release to the Environment does not include:
(i) A release of solids or liquids onto an impervious
surface that is promptly contained and cleaned up,
and that does not come into contact with soil,
stormwater, surface water or groundwater.
(ii) A release of a Regulated Substance that is approved
by, and conducted in full compliance with, a
Governmental Approval issued under an applicable
Environmental Law.
(iii) Fugitive air emissions allowable under applicable
Environmental Law.
Where the term "Release to the Environment" is not capitalized, the word
"release" when used in relation to a substance or material has the same meaning
as defined in Section 101(22) of CERCLA, 42 U.S.C. Section 9601(22).
(ab) "REQUIRED BY LAW" means an action that is specifically
mandated by an injunction, order, consent order, permit or license condition,
or other legally-binding document issued by a government agency, or that is
specifically mandated by a statute
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or by an applicable regulation or standard issued by a government agency.
(ac) "REQUIRED REGULATED SUBSTANCE RECORDS" means the following
records for Regulated Substances used, stored, produced, released, or present
at the Properties:
(i) Material Safety Data Sheets ("MSDS") for all
materials where the employer is required to obtain
and maintain such MSDS information under the
Occupational Safety and Health Act, 29 U.S.C. Section
651-678;
(ii) Emergency and Hazardous Chemical Inventory data to the
extent required under the Emergency Planning and
Community Right to Know Act (including regulations
promulgated thereunder, "EPCRA") Section 312, 42
U.S.C. Section 11022;
(iii) Toxic Chemical Release Inventory data to the extent
required under EPCRA Section 313, 42 U.S.C. Section
11023;
(iv) Air emission inventory data as required under the
federal Clean Air Act or equivalent state laws, and
applicable regulations and permit conditions;
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(v) Discharge monitoring reports and wastewater
monitoring data, as required pursuant to the federal
Clean Water Act, state water quality and water
pollution control laws, and applicable regulations
and permit conditions;
(vi) Manifests for all hazardous or other special wastes
requiring such manifests under applicable laws and
regulations, shipped from or received at Buyer's
Operating Space;
(vii) Hazardous waste biennial reports as required under 40
C.F.R. Section 262.41, and any more frequent similar
reports required under state regulations (e.g., 25 Pa.
Code Section 262.41); and
(viii) Waste Determinations rendered pursuant to 40 C.F.R.
Section 262.11 and similar state regulations (e.g., 25
Pa. Code Section 262.11);
(ix) Chemical analyses of wastes as required under federal
or state waste management rules (e.g., 25 Pa. Code
Section 287.54);
(x) Residual waste reports and records as required under
25 Pa. Code Section Section 287.52 and 287.55 or
similar state regulations in other jurisdictions;
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(xi) Chemical Manufacturers Association waste survey forms;
and
(xii) Any other record concerning Regulated Substances that
must be maintained by the site owner or operator as
Required by Law.
(ad) "RETAINED PREMISES" means the Neville Island Facility other
than Buyer's Operating Space.
(ae) "SELLER'S PERCENTAGE" means a fraction, the numerator of
which is equal to the land component of the Retained Premises, plus one-half of
the roadways included in the Access Easement Areas, and the denominator of
which is equal to the total area of land comprising the Neville Island
Facility. Seller's Percentage as of the Closing Date is 65.15%.
8.3. PROVISIONS RELATING TO ALL PROPERTIES. The provisions set
forth in this Section 8.3 shall apply to all the Properties.
(a) PRE-CLOSING SHIPMENTS/TREATMENT/DISPOSAL. Seller agrees to
retain liability for, and to indemnify, defend, save and hold harmless Buyer
Indemnitees from and against Claims arising from (i) the shipment by Seller
prior to the Closing Date of any Regulated Substances from the Properties, or
(ii) the arrangement by Seller prior to the Closing Date for the treatment or
disposal at Off-Site Locations of Regulated Substances
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generated at the Properties, or (iii) the shipment or arrangement for treatment
or disposal by Seller of Pre-Closing Waste.
(b) INVENTORY AND DISPOSITION OF PRE-CLOSING WASTE MATERIALS.
Prior to Closing, Seller and Buyer have jointly inventoried and listed the
hazardous and non-hazardous wastes present at the Properties. Seller has used
all reasonable efforts to remove such Pre-Closing Waste from the Properties
prior to Closing. To the extent that such Pre-Closing Waste has not been
removed from the Properties prior to Closing, Seller agrees to arrange for
proper shipment, treatment and disposal of such wastes within sixty (60) days
of Closing (unless Seller is precluded from such action by applicable law, in
which case Seller shall arrange for proper shipment, treatment and disposal of
such waste as soon as practicable. If Seller fails or is unable to take such
action, Seller shall reimburse Buyer for any expenses incurred by Buyer in
arranging for the shipment, treatment and disposal of such wastes at a facility
acceptable to Seller and Seller shall indemnify Buyer Indemnitees pursuant to
clause (a) above with respect to such wastes).
(c) POST-CLOSING SHIPMENTS/TREATMENT/DISPOSAL. Buyer shall be
responsible for, and agrees to indemnify, defend, save and hold harmless Seller
Indemnitees from and against any Claims arising from the shipment after the
Closing Date of any Regulated Substances, or for the arrangement by Buyer for
the treatment or disposal at Off-Site Locations of any Regulated Substances
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generated at the Properties. In no event shall Buyer be required to indemnify,
hold harmless or defend Seller Indemnitees against any Claims arising from the
shipment or arrangement for treatment, storage or disposal of Pre-Closing Waste
at Off-Site Locations, regardless of when such Pre-Closing Waste is shipped.
(d) INDEMNIFICATION FOR FAILURE TO HOLD REQUIRED GOVERNMENTAL
APPROVALS. Seller agrees, for a period of one (1) year after Closing, to
indemnify, defend, save and hold harmless Buyer Indemnitees from and against
Claims arising from failure of Seller to have obtained and hold any
Governmental Approval required under applicable Environmental Law as of the
Closing Date in order to conduct the Business at the Business Sites in the
manner in which it was conducted as of the Closing Date.
(e) INDEMNIFICATION FOR PRE-CLOSING VIOLATIONS. Seller agrees
to indemnify, defend, save and hold harmless Buyer Indemnitees from and against
any enforcement proceedings or penalties relating to alleged violations of
Environmental Laws that occurred prior to the Closing Date resulting from
operation of the Business. This clause (e) does not cover:
(i) Any Claims relating to violations occurring after the
Closing Date (including any allegations of violations
by Buyer resulting from Buyer's continuation of any
pattern or practice
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established or engaged in by Seller prior to the
Closing Date).
(ii) Any Claims relating to investigation or remediation of
any Environmental Condition on or at the Properties,
Environmental Conditions being addressed in Sections
8.4, 8.5 and 8.6.
Where an enforcement proceeding or penalty relates to violations of
Environmental Laws committed by both Seller before the Closing Date and Buyer
after the Closing Date, the costs of defense of any such proceeding and any
penalty shall be apportioned between the parties according to the number,
magnitude and seriousness of the violations committed by each (considering,
among other factors, the manner in which the regulatory agency or adjudicating
forum calculated the penalty imposed). (For example, if in a proceeding
involving exceedances of air emission limits, a daily penalty of $1000 per day
was assessed for a violation that occurred on each of the 6 days prior to
Closing, and the 4 days after Closing, Seller would be responsible for $6000 of
the penalty, and Buyer would be responsible for $4000 of the penalty. If,
however, the agency calculated the seriousness of the penalty as being $100 per
day for the 6 days of violations that occurred before Closing, and $1000 a day
for the 4 days of violations that occurred after Closing, Seller would be
responsible for $600, and Buyer would be responsible for $4000.)
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(f) PRE-CLOSING COMPLIANCE ITEMS.
(i) Seller shall be responsible for making modifications
to the incinerator located at the Jacksonville,
Arkansas Business Site (the "JACKSONVILLE
INCINERATOR") in accordance with the following
provisions:
(A) Seller shall make or cause to be made
modifications to the Jacksonville Incinerator
(the "MODIFICATIONS") required to cause the
incinerator to perform in accordance with the
warranty set forth in clause (D) below.
(B) To the extent that the Modifications are not
completed as of the Closing, Buyer shall
permit Seller, at Seller's option, to
supervise and direct the implementation of
the remaining Modifications. Buyer shall, at
no cost to Seller, provide Seller's
employees, agents and contractors access to,
and reasonable accommodation at, the
Jacksonville, Arkansas Business Site for such
purpose. The parties shall consult with each
other to determine a mutually convenient time
or times during which such access and
accommodation will be provided so as to
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assure that the Modifications are implemented
in a manner that is as cost efficient for
Seller as possible.
(C) Buyer shall indemnify, defend, save and hold
harmless Seller Indemnitees from and against
all Claims based on injury, loss or damage to
property or persons (including without
limitation, Buyer's and Seller's personnel,
business invitees, and consultants or
contractors engaged by either party in
connection with the Modifications) directly
or indirectly arising in connection with or
related to the installation of the
Modifications, except to the extent any such
Claims arise from the negligence or willful
misconduct of Seller's personnel, business
invitees, and consultants or contractors, in
which case, Seller shall indemnify Buyer
Indemnitees from and against any such Claims.
Buyer shall provide a safe work environment
for Seller's personnel and any contractors,
consultants or other persons involved in the
Modifications and will provide any necessary
and relevant health and safety information to
such persons. However, Seller shall be
responsible for ensuring that its personnel,
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contractors, and consultants are trained in
relevant safety procedures and follow Buyer's
safety rules and regulations.
(D) Seller warrants to Buyer that upon completion
of the planned Modifications, the
Jacksonville Incinerator will be capable of
performing reliably when handling daily
volumes of liquid phase and vapor phase
throughput equal to the daily throughput rate
experienced by the Seller in 1994 (the "1994
DAILY THROUGHPUT RATES"). For purposes of
this warranty, the Jacksonville Incinerator
shall be deemed to perform reliably if, when
operated in compliance with the incinerator's
operating instructions and good engineering
practice, it is capable of incinerating
liquid phase and vapor phase wastes from the
polyester resin manufacturing process in
volumes not exceeding the respective 1994
Daily Throughput Rates, and of producing air
emissions in compliance with Air Operating
Permit No. 821-AR-1 in effect as of the
Closing Date, with no more incinerator bypass
operating time than allowed in Air Operating
Permit No. 821-AR-1 (including the
cross-referenced portions of the application
for
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such Air Operating Permit relating to bypass
operating times). Upon completion of the
Modifications, Seller shall have the right to
conduct a test of the Jacksonville Incinerator
to measure its capability of complying with
these criteria. Such test shall be performed
by an independent consultant, and Buyer shall
have the right to observe the test. In the
event that such test (or any subsequent test)
performed by the independent consultant, in
which the incinerator is operated over a
period of three (3) consecutive days in
compliance with the incinerator's operating
instructions and good engineering practice,
indicates compliance with these criteria,
Seller shall be deemed to have satisfied all
of its obligations under the warranty set
forth in this clause (D) and shall have no
further liability to Buyer under Section
8.3(f)(i). In the event such test indicates
non-compliance with these criteria, Seller
shall have the right to make such further
adjustments and modifications and to conduct
such further tests as Seller shall deem
necessary and appropriate.
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<PAGE> 102
(E) Seller makes no warranty in Section
8.3(f)(i)(D) with respect to the performance
of the Jacksonville Incinerator at daily
throughput rates of either liquid phase or
vapor phase liquids that exceed the 1994
Daily Throughput Rates. The warranty set
forth in Section 8.3(f)(i)(D) shall be void
and of no further effect if (i) Buyer
operates the Jacksonville Incinerator with
inputs of liquid phase or vapor phase wastes
in volumes greater than the respective 1994
Daily Throughput Rates; or (ii) Buyer
operates the Jacksonville Incinerator in a
manner that does not comply with the
incinerator's operating instructions and good
engineering practice.
(ii) All those pre-Closing environmental compliance issues
identified by Buyer in its due diligence investigation
are set forth in the Buyer Environmental Report (as
defined in Section 2.13). Except as set forth in
Sections 8.3(d) and (e), under no circumstance shall
Seller be liable to Buyer in any respect whatsoever,
directly or indirectly, in connection with any of the
matters referred to in the Buyer Environmental Report
or any other pre-Closing instance of non-compliance
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with applicable environmental laws, whether known or
unknown, and Buyer hereby releases Seller from any and
all liability in connection with all such matters.
Buyer acknowledges that it has negotiated a reduction
in the Purchase Price as full and sufficient
consideration for the foregoing release.
(g) TITLE V PERMIT. Prior to Closing, Seller had commenced
preparation of the Title V air permit application for Bartow, Florida which is
due November 15, 1995. As of the Closing, Buyer shall take over and complete
the preparation of the application and Buyer shall assume Seller's unaccrued
obligations under its contract with the consultant engaged to prepare the
application.
(h) DISCLAIMER OF LIABILITY. No provision of this Agreement or
any of the Ancillary Documents (including any indemnification or cost-sharing
arrangement between Seller and Buyer) shall constitute an admission of
liability by either Buyer or Seller as to Claims made by third parties with
respect to Environmental Conditions or compliance with Environmental Laws.
(i) COOPERATION REGARDING CLAIMS AGAINST OTHER RESPONSIBLE
PARTIES. Notwithstanding any indemnification or cost-sharing arrangement
between Buyer and Seller, both parties agree to cooperate with each other in
pursuing any claims that may be made
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against other parties (including predecessor owners or operators of the
Properties) who may be responsible for Environmental Conditions or other
liabilities, and in pursuing any claims that may be pursued against insurers
who may have provided insurance coverage against such claims, liabilities,
losses, occurrences, incidents, or events, in accordance with the following
arrangements:
(i) For matters on which Seller has an obligation to
defend:
(A) Buyer shall, without charge to Seller, provide
access to Buyer's employees and records.
(B) Buyer agrees that, to the extent necessary or
appropriate, Seller may include Buyer's name
on any complaint or other pleading asserting
claims against other responsible parties, and
on any complaint or other pleading asserting
a claim against an insurer (other than a
claim arising under an insurance policy
issued to Buyer).
(C) Seller and Buyer agree to consult with each
other regarding the pursuit of any defenses
or claims (under the terms of a joint defense
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agreement that assures the confidentiality and
privileges of such communications), and Seller
will consider Buyer's comments regarding such
proceedings, but Seller shall have the
ultimate right, in its discretion, to render
all decisions regarding the pursuit of such
claims and defenses.
(D) The legal fees and other costs incurred to
assert such defenses or claims shall be borne
by Seller.
(ii) For matters on which Buyer has an obligation to
defend:
(A) Seller shall, without charge to Buyer, provide
access to Seller's employees and records.
(B) Seller agrees that, to the extent necessary
or appropriate, Buyer may include Seller's
name on any complaint or other pleading
asserting claims against other responsible
parties, and on any complaint or other
pleading asserting a claim against an insurer
(other than a claim arising under an
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insurance policy issued to Seller or its
parent).
(C) Seller and Buyer agree to consult with each
other regarding the pursuit of any defenses
or claims (under the terms of a joint defense
agreement that assures the confidentiality
and privileges of such communications), and
Buyer will consider Seller's comments
regarding such proceedings, but Buyer shall
have the ultimate right, in its discretion,
to render all decisions regarding the pursuit
of such claims and defenses.
(D) The legal fees and other costs incurred to
assert such defenses or claims shall be borne
by Buyer.
(iii) For matters on which both parties have
cross-obligations to indemnify or defend, or for
matters that are subject to cost-sharing arrangements
(such as claims related to Other Environmental
Conditions under Section 8.5(e)):
(A) Buyer and Seller shall make available to each
other, without charge, their respective
employees and records.
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(B) Seller and Buyer agree to consult with each
other regarding the pursuit of any defenses
or claims (under the terms of a joint defense
agreement that assures the confidentiality
and privileges of such communications).
(C) Any legal fees or other costs incurred in
asserting such defenses and claims shall be
allocated between the parties in accordance
with their respective shares of
responsibility for the Environmental
Condition or violations as ultimately
adjudicated.
(j) RELATIONSHIP BETWEEN PARTIES.
(i) Where a party is designated the "LEAD PARTY" with
respect to an Environmental Condition, unless the
parties otherwise agree, the Lead Party shall be
responsible for:
(A) the provision of all notices to governmental
authorities Required by Law;
(B) engagement of such consultants or other
professionals to prepare any required studies,
assessments, or plans;
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(C) consulting with, and obtaining the comments
of the other party, with respect to any draft
studies, assessments, or plans;
(D) submission of any correspondence to, and
coordination of communications with, any
involved governmental agencies; and
(E) any negotiations with involved governmental
agencies.
(ii) The Lead Party shall promptly give the other party
(the "NON-LEAD PARTY") notice and copies of any
correspondence to or from any governmental agency
concerning the Environmental Condition. The other
party shall be advised of, and have the opportunity to
attend any meetings with any involved governmental
agency.
(iii) Except as provided in Section 8.3(j)(iv), the Non-Lead
Party shall not engage in any ex parte communications
with any involved governmental agency or other entity
or person regarding the Environmental Condition,
without notice to and the approval of the Lead Party.
The Non-Lead Party shall engage in no communication
and shall take no action that would hinder, render
more difficult or
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render more expensive the remediation of the
Environmental Condition in accordance with the terms
of the Agreement. If the Non-Lead Party breaches
either of these covenants, the Non-Lead Party shall
release, indemnify, save and hold harmless the Lead
Party and its officers, directors, employees, agents,
successors and permitted assigns for any additional
costs incurred as a result of such communication or
action.
(iv) The Non-Lead Party may engage in a communication with
an involved governmental agency, without notice to and
the approval of the Lead Party, if:
(A) the Non-Lead Party is Required by Law to make
a notification to the governmental agency
within a time period that does not
practicably allow an opportunity to first
notify and receive the approval of the Lead
Party, provided that the Non-Lead Party shall
notify the Lead Party of any such
notification as soon as practicable following
the provision of such a notice; or
(B) a governmental agency conducts an unannounced
inspection or otherwise initiates a
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communication with the Non-Lead Party of which
the Non-Lead Party did not have prior notice,
provided that the Non-Lead Party shall notify
the Lead Party as soon as practicable
following such communication.
In making any such required notification or any
communication, the Non-Lead Party shall in no event
advocate or take any action that would hinder, render
more difficult or render more expensive the
remediation of the Environmental Condition in
accordance with the terms of this Agreement.
(k) ALTERNATIVE DISPUTE RESOLUTION PROCESS. Disputes regarding
the application of these environmental provisions in Article VIII (including
the determination of responsibility for Environmental Conditions) shall be
subject to the following alternative dispute resolution process:
(i) INVOCATION. The resolution procedures shall be
invoked when either party sends a written notice to
the other. The notice shall describe the nature of
the dispute or conflict and the party's position with
respect to such dispute or conflict. The parties
shall expeditiously schedule consultations or a
meeting to discuss the dispute
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or conflict informally in accordance with Section
8.3(k)(iii).
(ii) DESIGNATION OF TECHNICAL AND MANAGEMENT
REPRESENTATIVES.
(A) The following Technical Representatives have
been designated for the purposes of this
provision:
For Buyer: Vice President,
Environmental, Health and
Safety of Ashland Chemical
Company, or his or her
designees.
For Seller: Vice President,
Environmental Affairs, Health
and Safety of Aristech
Chemical Corporation, or his
or her designees.
(B) The following Management Representatives have
been designated for purposes of this
provision:
For Buyer: President, Ashland Chemical
Company, or his or her
designees.
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For Seller: President, Aristech Chemical
Corporation, or his or her
designees.
(C) Any Technical Representative or Management
Representative designation may be changed by
the appointing organization, by written
notice to the other party.
(iii) TECHNICAL CONSULTATION. Any conflicts or disputes
shall, in the first instance, be the subject of
informal consultation and discussion between the
Technical Representatives. The period of informal
technical consultations and discussions shall not
extend beyond thirty (30) days from the date of the
first consultations or meetings between the Technical
Representatives, unless the parties agree to extend
this period.
(iv) REFERENCE TO MANAGEMENT REPRESENTATIVES. In the event
that the Technical Representatives are unable to reach
agreement during the technical consultation and
discussion period under Section 8.3(k)(iii), the issue
shall be referred to the Management Representatives
for informal negotiation. The period of informal
negotiations shall not extend beyond sixty (60) days
from the
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date of the first meeting between the Management
Representatives, unless the parties agree to extend
this period. The Management Representatives may
request the assistance of an independent mediator if
they believe that such a mediator would be of
assistance to the efficient resolution of the dispute.
(v) FORMAL RESOLUTION PROCEDURES. In the event that the
Management Representatives are unable to resolve the
matter within the period provided in Section
8.3(k)(iv), the matter shall be resolved in
accordance with the formal resolution procedures set
forth in this clause (v).
(A) Where (prior to the initiation of arbitration
under Section 8.3(k)(v)(C)) an action has
been initiated in a court or similar
adjudicating forum ("COURT") by a third party
asserting Claims against both Buyer and
Seller, and such Court has jurisdiction to
adjudicate the relative contribution
liability of the respective parties, Buyer
and Seller shall (unless they mutually agree
otherwise) utilize the Court to adjudicate
any dispute between themselves regarding
liabilities for such Claims, and the final
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decision of such Court (after the exhaustion
of any available appeals) shall be binding on
the parties.
(B) Where (prior to the initiation of arbitration
under Section 8.3(k)(v)(C)) an action has
been initiated in a Court by a third party
asserting Claims against only one of the
parties (but for which the named party
believes the other party has an obligation of
indemnification or defense), the parties
agree to submit any dispute between
themselves to arbitration under Section
8.3(k)(v)(C) unless they mutually agree to
submit such matter to the Court; provided,
however, if in such a Court proceeding the
initially unnamed party is, as a result of
subsequent pleadings by a third party, added
as a named party, and the Court undertakes
the adjudication of relative contribution
liability of the respective parties prior to
the conclusion of arbitration, Buyer and
Seller shall (unless they otherwise agree)
terminate any pending arbitration and submit
their respective claims to the Court, and the
final decision of such Court (after the
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<PAGE> 115
exhaustion of any available appeals) shall be
binding on the parties.
(C) Except as provided in Sections 8.3(k)(v)(A)
and 8.3(k)(v)(B), the parties shall submit
any claim to binding arbitration and any
controversy or claim arising out of or
relating to the provisions set forth in this
Article VIII or the breach thereof shall be
settled and finally determined by arbitration
in Pittsburgh, Pennsylvania, or at such other
location as the parties may agree, in
accordance with the terms of this Section
8.3(k)(v)(C).
(1) INITIATION OF ARBITRATION PROCESS.
Upon the occurrence of a dispute,
and failure of the parties to
resolve such dispute through the
informal processes described in
Sections 8.3(k)(iii) and 8.3(k)(iv),
either party may initiate the
arbitration process set forth in
this Section 8.3(k)(v)(C) by giving
written notice to the other party
(the "ARBITRATION NOTICE").
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<PAGE> 116
(2) SELECTION OF ARBITRATOR(S). Within
thirty (30) days of the Arbitration
Notice, the parties shall either
agree upon the appointment of a
single mutually-approved independent
Environmental Professional to serve
as arbitrator; or, if the parties
are unable to agree upon a single
arbitrator, each of the parties
shall appoint an Environmental
Professional to serve as arbitrator,
and the two individuals so named
shall, within thirty (30) additional
days, agree upon a third independent
Environmental Professional (who
shall be an environmental lawyer) to
serve as the third arbitrator. The
parties shall mutually cooperate to
retain the arbitrator(s) upon terms
and conditions mutually satisfactory
to the parties as soon as
practicable after selection of the
arbitrator(s).
(3) FEES. The fees of the arbitrator(s)
shall be paid one-half by Seller and
one-half by Buyer.
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<PAGE> 117
(4) DISCOVERY. For a period of sixty
(60) days following the appointment
of the arbitrator(s) (or such longer
period as the parties may mutually
agree or the arbitrator(s) may
direct), the parties shall have the
right to engage in such discovery
relevant to the matters in dispute
as is allowed pursuant to the
discovery rules of the Pennsylvania
Rules of Civil Procedure.
(5) RESOLUTION. The arbitrator(s) shall
decide such disputes pursuant to the
Commercial Arbitration Rules of the
American Arbitration Association in
force at the time of the
arbitration. The arbitrator(s)
shall be required to make a final
determination, not subject to
appeal, within thirty (30) days from
the receipt of such dispute by the
arbitrator(s), and the parties shall
be bound by the terms of such final
determination. Where three
arbitrators are appointed, the
decision may be rendered by a
majority of the arbitrators. The
determination by the arbitrator(s)
shall be made in writing
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and shall contain written findings of
fact, and may be specifically
enforced by a court of competent
jurisdiction. The arbitrator(s)
shall determine a fair and equitable
allocation of the reasonable expenses
of the parties incurred in connection
with the resolution of any dispute
hereunder. Each party shall bear its
own attorney's fees, unless the
arbitrator(s) shall determine that
the nature of the action or defense
of the losing party was frivolous, in
which event the arbitrator shall
determine a fair and equitable
attorney's fee to be paid by the
losing party to the prevailing party.
(6) INDEPENDENCE OF ARBITRATOR. The
arbitrator(s) shall retain
independence of all parties to this
Agreement, and neither party shall
engage or attempt to engage the
services of the arbitrator(s) for
any other purposes without prior
written notice to the other party.
(l) NATURE OF PRESUMPTIONS. Where any provision provides for a
presumption to be used in determining responsibility for an
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<PAGE> 119
Environmental Condition, such presumption shall be a rebuttable presumption.
Such presumption shall place the burden of going forward and the burden of
persuasion upon the party against whom the presumption applies. The
presumption may be overcome by a preponderance of the evidence to the contrary.
(m) INDEMNIFICATION/DEFENSE ARRANGEMENTS. Where either party
agrees to indemnify and defend the other, the following shall apply:
(i) the amount of any recovery by a Buyer Indemnitee or a
Seller Indemnitee, as the case may be, shall be net
of any foreign, federal, state and/or local income
tax benefits inuring to the Indemnified Party as a
result of the state of facts that entitled the
Indemnified Party to recover from the Indemnifying
Party.
(ii) the Indemnifying Party shall be obligated to indemnify
the Indemnified Party only for those claims as to
which the Indemnified Party has given the Indemnifying
Party written notice as promptly as practicable, but
in any event no later than forty-five (45) days after
the Indemnified Party's discovery of the facts giving
rise to any such claim. Any written notice delivered
pursuant to this clause (ii) shall set forth with
specificity
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the basis of the claim and an estimate of the amount
thereof.
(iii) the Indemnifying Party shall have the right to conduct
and control, through counsel of its choosing, any
third party claim, action or suit, and the
Indemnifying Party may compromise or settle the same.
The Indemnified Party shall be permitted to
participate in the defense of any such action or suit
through counsel chosen by it; provided that the fees
and expenses of such counsel shall be borne
exclusively by the Indemnified Party.
(iv) With respect to any obligation of the Indemnifying
Party arising out of an order, directive, or mandate
of an environmental agency or other governmental body,
the parties agree that the Indemnifying Party shall
have the right to appeal the terms and conditions of
such order, directive or mandate, and may postpone
compliance with its terms pending final disposition of
the appeal (provided that the terms and conditions are
stayed by operation of law or action of the relevant
authority). The Indemnified Party agrees to cooperate
with the Indemnifying Party to the extent necessary to
effectuate the right of appeal. The Indemnifying
Party who exercises the
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option to appeal agrees to indemnify, defend, save and
hold harmless the Indemnified Party and its officers,
directors, employees, agents, successors and permitted
assigns from and against any liabilities or damages
(including penalties) arising as a consequence.
8.4. PROVISIONS RELATING TO NEVILLE ISLAND FACILITY. The
provisions set forth in this Section 8.4 shall apply exclusively to the Neville
Island Facility.
(a) STRUCTURE. Seller is selling to Buyer the Polyester and MA
production equipment and structures, the Technical Center, and certain other
structures at the Neville Island Facility that constitute Buyer's Neville
Island Plant. Seller is also granting Buyer an easement in certain designated
parcels of land under and around Buyer's Neville Island Plant (the "OPERATING
EASEMENT AREAS") as depicted on Exhibit C to the Easement Agreement. Also
pursuant to the Easement Agreement, Seller is granting Buyer easements in
respect of other portions of the Neville Island Facility as depicted on Exhibit
B to the Easement Agreement, to permit Buyer, its employees and business
invitees access to, parking at and egress from Buyer's Neville Island Plant and
the Operating Easement Areas and, as depicted on Exhibit D to the Easement
Agreement, to permit Buyer access to certain utility assets at Seller's Neville
Island Plant (collectively, the "ACCESS EASEMENT AREAS").
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<PAGE> 122
(b) APPROVAL OF ACTIVITIES.
(i) Buyer will not undertake any modification of the
facilities on or included in Buyer's Operating Space
involving (i) a Construction or Expansion Project, or
(ii) the installation of new equipment for material
or waste handling, processing, storage, treatment or
disposal, without the express prior approval of
Seller, which approval will not be unreasonably
withheld (considering among other factors the need
for such modifications to maintain the efficient
operation of Buyer's business at Neville Island, the
need for such modifications to comply with applicable
regulatory or other requirements, and the impact of
the proposed modifications on the Retained Premises).
If such a project involves excavation of land
underlying Buyer's Operating Space, Section
8.4(b)(iv) shall apply.
(ii) Buyer shall not make any change to the processes or
methods of Polyester or MA production involving the
introduction, use, or production of any chemical not
in use as of the Closing Date without written
notification to Seller identifying such new chemical.
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(iii) Buyer shall only conduct on Buyer's Operating Space
Polyester and MA production, related distribution of
Polyester and MA chemicals, and related research and
quality control laboratory operations, and shall not
undertake the production or distribution of any other
chemical products or other businesses or activities on
Buyer's Operating Space without the express prior
approval of Seller, which approval shall not be
unreasonably withheld.
(iv) Buyer will not undertake any activity involving
excavation of the land under Buyer's Operating Space
without notice to Seller; and Buyer shall not
undertake any activity involving excavation of the
land under Buyer's Operating Space (other than
excavation Required by Law, or excavation required to
undertake in-kind replacement, maintenance or repair
of equipment or structures on or included in Buyer's
Operating Space) without the express prior approval of
Seller, which approval shall be in Seller's sole
discretion.
(c) MINIMIZATION OF EXCAVATION. If Buyer undertakes any New
Construction or Expansion Project, any project involving the maintenance,
repair or in-kind replacement of any then existing equipment or structures on
or included in Buyer's Operating
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Space, or any project that is Required by Law, Buyer shall take all reasonable
steps in the design and implementation of such project to minimize the area of
soils to be excavated or disturbed.
(d) INDEMNIFICATION FOR BUYER VIOLATIONS. Buyer agrees to
indemnify, defend, save and hold harmless Seller Indemnitees from and against
any Claims (including Business Interruption Costs) arising out of the alleged
violation of any applicable Environmental Law associated with the operation by
Buyer of the Polyester or MA businesses on Buyer's Operating Space or
associated with any other use or activities conducted by Buyer on Buyer's
Operating Space or the Access Easement Areas. For purposes of this provision,
Claims includes Business Interruption Costs incurred by Seller as a result of
the revocation or suspension of any permit held by Seller, or the denial of any
permit or permit renewal to Seller, where Buyer's violation is the substantial
and proximate cause of such permit revocation, suspension or denial.
(e) INDEMNIFICATION FOR SELLER VIOLATIONS. Seller agrees to
indemnify, defend, save and hold harmless Buyer Indemnitees from and against
any Claims (including Business Interruption Costs) arising out of the alleged
violation of any applicable Environmental Law associated with the operation by
Seller of its businesses on the Retained Premises or associated with any other
use or activities conducted by Seller on the Retained Premises,
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including the Access Easement Areas. For purposes of this provision, Claims
includes Business Interruption Costs incurred by Buyer as a result of the
revocation or suspension of any permit held by Buyer, or the denial of any
permit or permit renewal to Buyer, where Seller's violation is the substantial
and proximate cause of such permit revocation, suspension or denial.
(f) ENVIRONMENTAL CONDITIONS CAUSED BY BUYER RELEASES AND
ACTIVITIES. Buyer shall be responsible for and agrees to indemnify, defend,
save and hold harmless Seller Indemnitees from and against any Claims relating
to Buyer Environmental Conditions. Where a release of a Buyer Regulated
Substance affects soils such as to require remediation, Buyer shall be solely
responsible for the remediation of any such affected soils, irrespective of
whether such soils also contain other Regulated Substances not related to the
Buyer Regulated Substance; provided that Buyer shall not be responsible under
this Section 8.3(f) for the remediation of soils containing a Buyer Regulated
Substance in combination with an other Regulated Substance if the nature and
concentration of the Buyer Regulated Substance does not require remediation.
(g) ENVIRONMENTAL CONDITIONS CAUSED BY SELLER RELEASES AND
ACTIVITIES. Seller shall be responsible for and agrees to indemnify, defend,
save and hold harmless Buyer Indemnitees from and against any Claims relating
to Environmental Conditions resulting from the release of any Regulated
Substances arising
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from Seller's operation after Closing of its business upon the Retained
Premises, or arising from any other use or activities conducted after Closing
by Seller on the Retained Premises, including the Access Easement Areas
(collectively, an "ARISTECH ENVIRONMENTAL CONDITION").
(h) PROVISIONS RELATING TO CONDITION OF EQUIPMENT, RECORDKEEPING
AND INSPECTIONS.
(i) Buyer acknowledges that, prior to the Closing Date,
it has had the right to inspect the exterior of all
equipment and to review past testing and maintenance
records relating to all equipment (including tanks
and pipelines) being acquired on the Operating
Easement Areas.
(ii) Buyer shall maintain all material and waste handling,
storage, processing, treatment and control equipment
on Buyer's Operating Space in good condition, and
shall conduct periodic inspections and tests of such
equipment to the extent (i) Required by Law or (ii)
consistent with Seller's inspection and testing
practices for such equipment prior to the Closing
Date, whichever is more stringent. Buyer shall keep
records of all such required inspections and tests.
Seller may at any time advise Buyer in writing if
Seller
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believes that a modification of inspection or testing
practices is indicated by then prevailing good
engineering and operating practices; however, Seller
shall be under no obligation to advise Buyer regarding
such practices, and Buyer shall be solely responsible
for the maintenance, inspection and testing of its
equipment on Buyer's Operating Space.
(iii) Buyer will keep accurate records of Regulated
Substances used, stored, treated, disposed, discharged
or generated on Buyer's Operating Space. Such records
shall include all Required Regulated Substance Records
and inventory records, production records, purchase
orders, change orders related to purchase orders, and
requisitions concerning Regulated Substances.
(iv) Buyer will keep accurate records of, and promptly
notify Seller of, the Release to the Environment of
any Regulated Substance, whether or not such release
is reportable to governmental authorities.
(v) Seller shall have the right at any time upon
reasonable notice to inspect any portion of Buyer's
Operating Space and any of the records referred to in
Sections 8.4(b)(ii) through (iv),
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and to investigate any actual or suspected Release to
the Environment of a Regulated Substance. In the
event of an exigent condition, involving an actual or
threatened Release to the Environment that poses, or
is reasonably anticipated to pose, a significant
threat of pollution to surface water, groundwater or
other environmental media, Seller shall have the right
of immediate access to Buyer's Operating Space. In
conducting any such inspection or investigation,
Seller shall take all reasonable steps to avoid
interference with Buyer's operations on Buyer's
Operating Space.
(vi) Seller and Buyer agree to coordinate any investigation
of an actual or suspected Release to the Environment.
If Buyer undertakes adequate sampling or testing in
response to an actual or suspected Release to the
Environment, Seller shall refrain from conducting
duplicative tests or sampling; provided that Seller
shall have a right (at its expense) to observe such
investigations and to obtain and analyze split
samples.
(i) PROVISION OF SELLER RECORDS. Seller agrees to provide Buyer
with all Required Regulated Substance Records regarding Regulated Substances
used, stored, treated, disposed, discharged or generated on the Operating
Easement Areas by Seller prior to
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the Closing Date, to the extent that such information is in Seller's
possession.
(j) PRE-CLOSING ENVIRONMENTAL CONDITIONS. Seller agrees to
indemnify, defend, save and hold harmless Buyer Indemnitees from and against
any Claims relating to any Pre-Closing Environmental Conditions, subject to the
limitations and conditions in Sections 8.4(k) through 8.4(n) and Section
8.4(p)(v).
(k) RESPONSIBILITY FOR REMEDIATION TRIGGERED BY NEW CONSTRUCTION
AND EXPANSION. If Buyer undertakes any Construction or Expansion Project on
Buyer's Operating Space (other than a project Required by Law), and such
Construction or Expansion Project results in disclosure of an Environmental
Condition on Buyer's Operating Space that requires remediation under applicable
Environmental Law:
(i) Buyer shall be solely responsible for all costs of
remediating Project Affected Soils and all costs of
remediating any Buyer Environmental Condition;
(ii) Buyer shall be responsible for Buyer's Percentage of
the costs of required remediation of any disclosed
Environmental Condition (other than a Buyer
Environmental Condition) within Buyer's
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Operating Space that affects media other than Project
Affected Soils; and
(iii) Seller shall be responsible for Seller's Percentage of
the costs of required remediation of any Environmental
Condition (other than Buyer Environmental Condition)
within Buyer's Operating Space that affects media
other than Project Affected Soils.
(l) RESPONSIBILITY FOR REMEDIATION TRIGGERED BY REPAIR,
REPLACEMENT OR PROJECTS REQUIRED BY LAW. If Buyer undertakes any project
involving the repair, maintenance or in-kind replacement of any then existing
equipment or structures on or included in Buyer's Operating Space, or any
project that is Required by Law, and such project results in the disclosure of
an Environmental Condition that requires remediation under applicable
Environmental Law:
(i) Buyer shall be responsible for the costs of required
remediation of Project Affected Soils and the costs
of required remediation of any Buyer Environmental
Condition; and
(ii) Seller shall be responsible for the costs of required
remediation of any Environmental
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Condition, other than a Buyer Environmental Condition
and other than Project Affected Soils.
(m) ALLOCATION WHERE LIABILITY FOR ENVIRONMENTAL CONDITIONS IS
SHARED. Except as otherwise provided in Sections 8.4(f), 8.4(k) or 8.4(l) or
otherwise specifically provided in this Agreement, where (after the application
of the presumptions contained in Section 8.4(n)) it is determined that an
Environmental Condition that requires remediation is the result of a Buyer
Environmental Condition in combination with either a Pre-Closing Environmental
Condition or an Aristech Environmental Condition, liability for any Claims
associated with or arising from such Environmental Condition shall be allocated
equitably between Seller and Buyer, based on a consideration of (among others)
the following factors:
(i) Whether, but for the Environmental Condition for
which one of the parties is solely responsible, an
obligation to investigate or remediate would have
arisen for the other party;
(ii) The relative quantity, toxicity and area affected by
the Regulated Substances for which the respective
parties are responsible;
(iii) The degree to which the Regulated Substance for which
a party is responsible affects the selection
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<PAGE> 132
of the remedy, the cost of the remedy, and the period
of time over which the remedy must be implemented; and
(iv) Other relevant considerations.
(n) DETERMINATION OF PRE-CLOSING ENVIRONMENTAL CONDITIONS/BUYER
ENVIRONMENTAL CONDITIONS.
(i) The parties agree that, prior to the conduct of an
Environmental Assessment (such as provided under
Section 8.4(p)), the following presumptions will be
used in the determination of whether an Environmental
Condition discovered at Buyer's Operating Space or
the Access Easement Areas is a Pre-Closing
Environmental Condition or a Buyer Environmental
Condition:
(A) If the Environmental Condition involves a
Regulated Substance that was not used,
generated, or stored by Buyer, and is not a
decomposition product of a substance used,
generated, or stored by Buyer, it shall be
presumed that the Environmental Condition is
a Pre-Closing Environmental Condition.
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<PAGE> 133
(B) If the Environmental Condition involves a
Regulated Substance that was used, generated,
or stored by Buyer, or is a decomposition
product of a substance used, generated, or
stored by Buyer, and such Regulated Substance
was not used, generated or stored by Seller,
it shall be presumed that the Environmental
Condition is a Buyer Environmental Condition.
(C) If the Environmental Condition involves a
Regulated Substance that was used, generated,
or stored by both Seller and Buyer, or is a
decomposition product of such a substance,
then:
(1) in the absence of evidence that such
Environmental Condition resulted
from a release of the Regulated
Substance by Buyer, the
Environmental Condition shall be
presumed to be a Pre-Closing
Environmental Condition.
(2) if there is evidence that the
Environmental Condition resulted
from a release of a Regulated
Substance by Buyer, the
Environmental Condition shall
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<PAGE> 134
be presumed to be a Buyer
Environmental Condition.
(ii) If an Environmental Assessment is conducted of Buyer's
Operating Space, the parties agree that the following
presumptions will be used in the determination of
whether an Environmental Condition discovered at
Buyer's Operating Space or the Access Easement Areas,
either in or after the Environmental Assessment, is a
Pre-Closing Environmental Condition or a Buyer
Environmental Condition:
(A) If the Environmental Condition involves a
Regulated Substance that was not used,
generated, or stored by Buyer, and is not a
decomposition product of a substance used,
generated or stored by Buyer, it shall be
presumed that the Environmental Condition is
a Pre-Closing Environmental Condition.
(B) If the Environmental Condition involves a
Regulated Substance that was used, generated,
or stored by Buyer, or is a decomposition
product of a substance used, generated or
stored by Buyer, and such Regulated Substance
was not used, generated or stored by Seller,
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<PAGE> 135
it shall be presumed that the Environmental
Condition is a Buyer Environmental Condition.
(C) If the Environmental Condition involves a
Regulated Substance that was used, generated,
or stored by both Seller and Buyer, or is a
decomposition product of such a substance, it
shall be presumed that:
(1) the concentrations and areas
affected by the Regulated Substance
as identified in the Environmental
Assessment are a Pre-Closing
Environmental Condition in the
absence of evidence that such
Environmental Condition resulted
from a release of the Regulated
Substance by Buyer;
(2) an Environmental Condition found
after the completion of the
Environmental Assessment involving
the presence of any Regulated
Substance that was not identified in
the Environmental Assessment, and is
not the decomposition product of a
substance identified in the
Environmental Assessment, is a Buyer
Environmental Condition;
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<PAGE> 136
(3) an Environmental Condition found
after the completion of the
Environmental Assessment involving
the presence in soils of a Regulated
Substance, or breakdown product
thereof, at a higher concentration
or in a different area than
identified in the Environmental
Assessment, is a Buyer Environmental
Condition.
Where an Environmental Condition found after
the completion of the Environmental
Assessment involves the presence in
groundwater of a Regulated Substance, or
decomposition product thereof, in higher
concentrations or in different areas than
identified in the Environmental Assessment,
no presumptions shall be made.
(iii) The parties agree that, at all times, the following
presumptions will be used in the determination of
whether an Environmental Condition discovered at
Buyer's Operating Space or Easement Areas is a
Pre-Closing Environmental Condition or a Buyer
Environmental Condition:
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<PAGE> 137
(A) If an Environmental Condition relates to a
Regulated Substance that Buyer has used,
generated or stored, but where Buyer has
failed to maintain accurate records with
respect to the use and management of such
substance as required under Section 8.4(h),
it shall be presumed that the Environmental
Condition is a Buyer Environmental Condition.
(B) If an Environmental Condition is located in
the vicinity of equipment that Buyer
operated, and relates to a Regulated
Substance used in relation to such equipment,
and Buyer has failed to inspect and test such
equipment as required under Section 8.4(h),
it shall be presumed that the Environmental
Condition is a Buyer Environmental Condition.
(o) CONTACTS WITH AGENCIES/ENVIRONMENTAL STUDIES AND
ASSESSMENTS.
(i) DESIGNATION OF LEAD PARTIES.
(A) Buyer shall be the Lead Party with respect to
any Buyer Environmental Condition and an
Environmental Study (as defined in Section
8.4(o)(ii)) undertaken with respect to
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<PAGE> 138
maintenance, monitoring, repair or replacement
of equipment or structures on or included in
Buyer's Operating Space.
(B) Seller shall be the Lead Party with respect
to any Environmental Condition on Buyer's
Operating Space other than a Buyer
Environmental Condition or an Environmental
Study undertaken with respect to maintenance,
monitoring, repair or replacement of
equipment or structures on or included in
Buyer's Operating Space.
(ii) ENVIRONMENTAL STUDIES. Buyer shall not undertake any
environmental study, testing or sampling of soils or
groundwater under Buyer's Operating Space
("ENVIRONMENTAL STUDY") without notice to Seller.
(A) No such Environmental Study shall be
undertaken by Buyer (unless such study is
Required by Law) without the approval of
Seller.
(B) Where such an Environmental Study is ordered
or otherwise directed by a governmental
agency, Buyer shall provide Seller with
prompt notice of such a requirement, and
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<PAGE> 139
Seller shall have the right to appeal such
action.
(C) If Buyer believes an Environmental Study is
otherwise Required by Law, Buyer shall
provide Seller with written notice, stating
the reasons why Buyer believes the study is
Required by Law. If Seller believes to the
contrary, Seller shall so notify Buyer within
fourteen (14) days of receiving the notice
from Buyer, stating the reasons Seller
believes that the Environmental Study is not
Required by Law.
(D) Where such an Environmental Study is
requested by a governmental agency, but not
Required by Law, Buyer shall provide prompt
notice of such request, and the parties shall
consult regarding the appropriate response to
such request; provided that no such
Environmental Study shall be undertaken
without the approval of Seller.
(E) If Buyer undertakes an Environmental Study
that is not Required by Law without Seller's
approval, Buyer shall be solely responsible
for any Environmental Conditions disclosed by
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<PAGE> 140
such study, and all indemnifications by Seller
with respect to such Environmental Conditions
shall be void.
(F) Whether or not a study is Required by Law,
except for a Buyer Environmental Condition or
the Environmental Studies related to the
maintenance, monitoring, repair or
replacement of a structure on Buyer's
Operating Space, Seller shall have the option
(exercisable in Seller's sole discretion) to
be Lead Party in any such Environmental
Study.
(p) OPTION TO CONDUCT ASSESSMENT/REMEDIATION PLAN.
(i) Seller has the option, at any time (whether or not
Required by Law) to conduct an Environmental
Assessment of Buyer's Operating Space.
(ii) On the basis of such Environmental Assessment, Seller
may (whether or not Required by Law) prepare a
remediation plan to address any Environmental
Condition that requires remediation under applicable
Environmental Law.
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<PAGE> 141
(iii) The parties agree that any remediation plan shall be
designed to meet any environmental cleanup standards
established by statute, duly-adopted regulations, or
policies that have the force of law ("REGULATORY
REMEDIATION STANDARDS"). Where remediation is
required under then current Environmental Laws, but
definitive Regulatory Remediation Standards have not
been adopted, the remediation plan shall be based on
an Appropriate and Reasonable Criteria. The parties
agree that, unless otherwise mandated by applicable
governmental agencies having jurisdiction over the
Environmental Condition, the remediation plan to be
proposed and implemented shall be that alternative for
meeting such Regulatory Remediation Standards or
Appropriate and Reasonable Criteria that: (i) has the
least cost (considering the present discounted value
of both capital cost and operating and maintenance
costs), and (ii) does not unreasonably interfere with
the operations on Buyer's Operating Space.
(iv) Seller shall submit any proposed remediation plan to
the Pennsylvania Department of Environmental Resources
("DER") or any other appropriate regulatory authority.
Upon approval of the remediation plan, Seller shall
implement the plan
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<PAGE> 142
(subject to reimbursement by Buyer for any costs
associated with remediation of Buyer Environmental
Conditions).
(v) Upon completion of the work prescribed under the
approved remediation plan, Seller shall be relieved
of any further liability for Pre-Closing
Environmental Conditions at Buyer's Operating Space
to the extent that such Pre-Closing Environmental
Conditions were located in areas evaluated as part of
the Environmental Assessment submitted to the DER or
other appropriate regulatory authority and the
Pre-Closing Environmental Conditions involve
substances that were analyzed for (either directly or
through surrogate parameters) as part of the
Environmental Assessment ("ASSESSED ENVIRONMENTAL
CONDITIONS"). (As an example, if the Environmental
Assessment evaluated samples for total petroleum
hydrocarbons, it would be deemed to have evaluated
constituent petroleum hydrocarbons.) Buyer shall
release any further claims against Seller relating to
such Assessed Environmental Conditions at Buyer's
Operating Space (including Pre-Closing Environmental
Conditions, whether known or unknown), and Buyer
shall indemnify, defend, save and hold harmless
Seller Indemnitees against any
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<PAGE> 143
Claims related to Assessed Environmental Conditions
discovered at Buyer's Operating Space after the
completion of the approved remediation plan.
(q) ACCESS FOR REMEDIATION. Buyer acknowledges that
investigation and remediation of Environmental Conditions may include testing,
monitoring and other activities on Buyer's Operating Space related to the
Environmental Conditions. Access for such activities shall be provided under
the following arrangements:
(i) Seller and Buyer shall consult in efforts to
coordinate any such activities with operations on
Buyer's Operating Space, and Seller shall take all
reasonable steps to minimize interference with
Buyer's operations.
(ii) Seller shall have the right to enter Buyer's Operating
Space at any time and from time to time for the
purpose of conducting any activity in connection with
investigation, remediation and monitoring of
Environmental Conditions, whether pursuant to a
remediation plan or otherwise. (This provision shall
supersede any contrary or inconsistent provision in
any agreement or other
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<PAGE> 144
instrument granting Buyer rights in or otherwise
relating to Buyer's Operating Space.)
(iii) Seller agrees that it will not make any change in
Buyer's Operating Space or use Buyer's Operating Space
for any purpose not necessary and appropriate to the
performance of the investigation, remediation and
monitoring of Environmental Conditions.
(iv) During any investigation, remediation, or monitoring
work, Seller agrees to comply with all applicable
laws, regulations, rules or permits pertaining to
Buyer's Operating Space, including environmental,
occupational health and safety, and other health and
safety laws. Seller agrees to indemnify, defend, save
and hold harmless Buyer Indemnitees from and against
any Claims arising from failure to comply with such
laws.
(v) Upon completion of any work required for
investigation, remediation, or monitoring of
Environmental Conditions, Seller shall promptly
restore any structures, pavement, or other parts of
Buyer's Operating Space to substantially the
condition they were in prior to engaging in such
work.
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<PAGE> 145
(vi) Where Seller voluntarily undertakes an Environmental
Assessment or remediation plan, other than an
Environmental Assessment or remediation plan that is
Required by Law or that is undertaken in connection
with a project Required by Law, Seller shall be
responsible for, and agrees to indemnify Buyer from
and against, any Business Interruption Costs incurred
by Buyer as a proximate cause of such work. Where an
Environmental Assessment or remediation plan is
Required by Law, Seller shall not be liable for any
Business Interruption Costs.
(vii) Except as provided in Sections 8.4(q)(iv) through
8.4(q)(vi), and except for the willful or negligent
acts or omissions of Seller, Seller shall not be
liable for any loss or damage of any kind caused by
Seller's activities on Buyer's Operating Space in
connection with such investigation, remediation and
monitoring activities.
(r) STORMWATER SYSTEM LIABILITIES.
(i) The parties understand that they will be sharing a
common stormwater sewer system and outfall, that will
receive and discharge stormwater associated
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<PAGE> 146
with industrial activities generated at both Buyer's
facilities on Buyer's Operating Space, and Seller's
facilities on the Retained Premises.
(ii) In the event of a discharge of stormwater that
contains pollutants in excess of applicable effluent
limitations, or that otherwise violates any applicable
regulation, permit term or condition, the parties
agree to cooperate in the investigation of the source
of such pollutants or the cause of such
non-compliance.
(A) If the pollutant is a chemical that is used,
generated, or stored by Buyer in connection
with the Polyester or MA operations or other
Buyer operations at Buyer's Operating Space,
but is not used, generated, or stored by
Seller in connection with the operations on
the Retained Premises, it will be presumed
that Buyer is responsible.
(B) If the pollutant is a chemical that is used,
generated or stored by Seller in connection
with the operations on the Retained Premises,
but is not used, generated or stored by Buyer
in connection with the Polyester, MA or other
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<PAGE> 147
Buyer operations, it will be presumed that
Seller is responsible.
(C) If the pollutant is a chemical that is used,
generated, or stored by both Seller and
Buyer, no presumptions shall be made
regarding responsibility.
(D) Either party shall have the opportunity to
demonstrate that an effluent limit exceedance
or other violation is a result of
infiltration from contaminated groundwater,
in which event responsibility for the
violation shall be apportioned in accordance
with the allocation of liability for the
Environmental Conditions giving rise to such
contamination.
(iii) Each of Buyer and Seller, to the extent it is
responsible for the discharge of the pollutant or the
area that was the source of the pollutant causing the
non-compliance shall indemnify, defend and hold
harmless Seller Indemnitees or Buyer Indemnitees,
respectively, for all costs, damages, claims,
liabilities and penalties arising or resulting from
such non-compliance.
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<PAGE> 148
(iv) If a determination cannot be made regarding the source
of the pollutant causing the non-compliance, the
parties shall proportionately share any costs relating
to the non-compliance event based on Buyer's
Percentage and Seller's Percentage.
(s) Effect of Services Agreement. The provisions of the
Services Agreement, including without limitation the requirement that Seller's
employees provide certain maintenance and other services for Buyer, shall have
no effect on the obligations and rights of the parties as set forth in this
Section 8.4. To the extent that the provisions of this Section 8.4 are
inconsistent with the provisions of the Services Agreement, the provisions of
this Section 8.4 shall control.
8.5. PROVISIONS RELATING TO OTHER PRODUCTION FACILITIES. The
provisions set forth in this Section 8.5 shall apply exclusively to the Bartow,
Florida, Jacksonville, Arkansas and Colton, California Business Sites (the
"OTHER PRODUCTION FACILITIES").
(a) POST-CLOSING VIOLATIONS. Buyer agrees to indemnify, defend,
save and hold harmless Seller Indemnitees from and against any Claims arising
out of the alleged violation of any applicable Environmental Law associated
with the operation by Buyer of the Other Production Facilities or arising from
any
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<PAGE> 149
other use or activities conducted by Buyer on the Other Production Facilities.
(b) ENVIRONMENTAL CONDITIONS CAUSED BY BUYER RELEASES AND
ACTIVITIES. Buyer shall be responsible for and agrees to indemnify, defend,
save and hold harmless Seller Indemnitees from and against any Claims relating
to Buyer Environmental Conditions at the Other Production Facilities. Where a
release of a Buyer Regulated Substance affects soils such as to require
remediation, Buyer shall be solely responsible for the remediation of any such
affected soils, irrespective of whether such soils also contain other Regulated
Substances not related to the Buyer Regulated Substance; provided that Buyer
shall not be responsible under this Section 8.5(b) for the remediation of soils
containing a Buyer Regulated Substance in combination with an other Regulated
Substance if the nature and concentration of the Buyer Regulated Substance does
not require remediation.
(c) PROVISIONS RELATING TO CONDITION OF EQUIPMENT AND
RECORDKEEPING.
(i) Buyer acknowledges that, prior to Closing it has had
the right to inspect the exterior of and to review
past testing and maintenance records relating to all
equipment (including tanks and pipelines) being
acquired at the Other Production Facilities.
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<PAGE> 150
(ii) Buyer shall maintain all material and waste handling,
storage, processing, treatment and control equipment
at the Other Production Facilities in good condition,
and shall conduct periodic inspections and tests of
such equipment to the extent (i) Required by Law or
(ii) consistent with Seller's inspection and testing
practices for such equipment prior to the Closing
Date, whichever is more stringent. Buyer shall keep
records of all such required inspections and tests.
Seller may at any time advise Buyer in writing if
Seller believes that a modification of inspection or
testing practices is indicated by then prevailing good
engineering and operating practices; however, Seller
shall be under no obligation to advise Buyer regarding
such practices, and Buyer shall be solely responsible
for the maintenance, inspection and testing of its
equipment at the Other Production Facilities.
(iii) Buyer will keep accurate records of all Regulated
Substances used, stored, treated, disposed, discharged
or generated at the Other Production Facilities for a
period of at least twenty-four (24) years from
Closing. Such records shall include all Required
Regulated Substance Records and inventory records,
production records,
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<PAGE> 151
purchase orders, change orders related to purchase
orders, and requisitions concerning Regulated
Substances.
(iv) For a period of twenty-four (24) years from Closing,
Buyer will keep accurate records of, and promptly
notify Seller of, any Release to the Environment of
any Regulated Substance at the Other Production
Facilities whether or not such release is reportable
to governmental authorities.
(v) Seller shall have the right at any time upon
reasonable notice to inspect any of the records
required to be maintained by Buyer under this
provision.
(d) INDEMNIFICATION FOR IDENTIFIED ENVIRONMENTAL CONDITIONS.
Seller agrees to indemnify, defend, save and hold harmless Buyer Indemnitees
from and against any Claims relating to those Pre-Closing Environmental
Conditions at the Other Production Facilities that are specifically identified
in this paragraph (d) (the "IDENTIFIED ENVIRONMENTAL CONDITIONS"), to the
extent and in the manner described for each such Identified Environmental
Condition.
(i) With respect to the following Environmental
Conditions, Seller shall be liable for all Claims,
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<PAGE> 152
including all costs of investigation and remediation:
(A) At Colton: Contamination in and resulting
from the former waste pit area, identified as
Solid Waste Management Unit #7 in the RCRA
Facility Assessment issued by U.S. EPA,
Region IX (November, 1988).
(B) At Bartow: Phosphate contamination in
groundwater caused by mining and processing
operations on lands contiguous to the Bartow
Property.
Contamination in and resulting from the
former waste pond identified as a Solid Waste
Management Unit in a document entitled
"Information Regarding Potential Releases
from Solid Waste Management Units" for
Aristech Chemical Corp., Bartow, Polyester
Unit initially submitted by Seller to U.S.
EPA on an unknown date, and portions amended
July 14, 1988; provided that such
contamination does not involve any Regulated
Substances of a type stored or used by Buyer
in or near the maintenance shed located above
and overlying such waste pit area.
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<PAGE> 153
(ii) With respect to the following Environmental
Conditions, Seller shall be liable for all costs
relating to closure of the listed units until such
closure is approved by the environmental agency having
jurisdiction under RCRA. After such closure has been
approved, Seller shall be responsible for any
additional assessments or investigations of the
affected units and areas (including RCRA facility
investigations) required as a result of such unit
having previously been a solid waste management unit
subject to RCRA corrective action. Any Environmental
Condition found as a result of such post-closure
investigation shall be treated as an Other
Environmental Condition, and any liability associated
with required remediation of, or Claims relating to,
such other Environmental Condition shall be allocated
between Seller and Buyer in accordance with Section
8.5(e), based on the year in which the contamination
is identified and confirmed.
(A) At Colton: The former hazardous waste
incinerator.
(B) At Bartow: The former sprayfield.
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<PAGE> 154
(iii) With respect to the following Environmental
Conditions, that relate to solid waste management
units and areas of concern, Seller shall be
responsible for any additional assessments or
investigations of the affected area (including RCRA
facility investigations) required as a result of such
unit having previously been a solid waste management
unit subject to RCRA corrective action. Any
Environmental Condition found as a result of such
investigation shall be treated as an Other
Environmental Condition, and any liability associated
with required remediation of, or Claims relating to,
such Other Environmental Condition shall be allocated
between Seller and Buyer in accordance with Section
8.5(e), based on the year in which the contamination
is identified and confirmed.
(A) At Colton: The 17 Solid Waste Management
Units and 3 Areas of Concern identified in
the RCRA Facility Assessment issued by the
U.S. EPA, Region IX (November, 1988).
(B) At Jacksonville: The 16 Solid Waste
Management Units and 18 Areas of Concern
identified in the RCRA Facility Assessment
issued by U.S. EPA, Region VI (June, 1988).
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<PAGE> 155
(C) At Bartow: The 8 Solid Waste Management
Units identified in a document entitled
"Information Regarding Potential Releases
from Solid Waste Management Units" for
Aristech Chemical Corp., Bartow, Polyester
Unit initially submitted by Seller to U.S.
EPA on an unknown date, and portions amended
July 14, 1988.
(iv) With respect to the following Environmental
Conditions, that relate to former (previously removed)
underground storage tanks, if the areas of such former
tanks are listed in a RCRA Facility Assessment as a
solid waste management unit or as an area of concern,
Seller shall be responsible for any additional
assessments or investigations of the affected area
(including RCRA facility investigations) required as a
result of such unit having been listed as a solid
waste management unit subject to RCRA corrective
action. Any Environmental Condition found as a result
of such investigation shall be treated as an Other
Environmental Condition, and any liability associated
with required remediation of, or Claims relating to,
such other Environmental Condition shall be allocated
between Seller and Buyer in accordance with Section
8.5(e), based on the year
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<PAGE> 156
in which the contamination is identified and
confirmed.
(A) At Bartow: The area of the former, previously
removed, 500 gallon diesel fuel underground
storage tank.
(B) The area of the former, previously removed,
1,000 gallon 2-ethylhexanol underground
storage tank.
(v) Buyer shall exercise due care with respect to the
areas of the Identified Environmental Conditions so
as to avoid any actions that exacerbate the
conditions (including but not limited to actions that
increase the concentration or cause the migration of
contamination) or that render more difficult or
expensive the investigation or remediation of such
conditions. If Buyer fails to exercise such due care
and takes any such action that exacerbates an
Identified Environmental Condition, or that renders
more difficult or expensive the investigation or
remediation of such conditions, Buyer shall be liable
for the additional costs incurred as a result of such
action, and any associated increase or migration of
contamination resulting from such action.
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<PAGE> 157
(e) ALLOCATION OF RESPONSIBILITY FOR OTHER ENVIRONMENTAL
CONDITIONS. Liabilities associated with required remediation of, or Claims
relating to (i) Environmental Conditions discovered at the Other Production
Facilities, other than Buyer Environmental Conditions and Identified
Environmental Conditions, and (ii) any Environmental Conditions that are
discovered following any post-closure investigation as described in Sections
8.5(d)(ii) through 8.5(d)(iv) (collectively referred to as "OTHER ENVIRONMENTAL
CONDITIONS") shall be allocated as follows:
(i) DEDUCTIBLE. The first $20,000 per Other Production
Facility and $40,000 in the aggregate of all Other
Production Facilities (the "ANNUAL DEDUCTIBLE
AMOUNT"), of costs incurred in each year shall be
borne by Buyer. If the costs incurred in any year
exceed the Annual Deductible Amount, all such costs
that exceed the Annual Deductible Amount, shall be
shared in accordance with Sections 8.5(e)(ii) through
8.5(e)(vi).
(ii) SHARES RELATED TO SOLID WASTE MANAGEMENT UNITS. For
those Environmental Conditions arising from previous
Solid Waste Management Units subject to RCRA
corrective action as specifically identified in
Sections 8.5(d)(ii) and 8.5(d)(iii) the disclosure of
which is not triggered by Buyer's actions (as
specified in Section 8.5(e)(v)),
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<PAGE> 158
Seller and Buyer shall share those costs in excess of the Annual Deductible
Amount in the following ratios:
<TABLE>
<CAPTION>
===============================================================================
Time Period Seller Share Buyer Share
- -------------------------------------------------------------------------------
<S> <C> <C>
Year 1 (Closing Date to 100% 0%
First Anniversary)
- -------------------------------------------------------------------------------
Year 2 100% 0%
- -------------------------------------------------------------------------------
Year 3 100% 0%
- -------------------------------------------------------------------------------
Year 4 100% 0%
- -------------------------------------------------------------------------------
Year 5 100% 0%
- -------------------------------------------------------------------------------
Year 6 95% 5%
- -------------------------------------------------------------------------------
Year 7 90% 10%
- -------------------------------------------------------------------------------
Year 8 85% 15%
- -------------------------------------------------------------------------------
Year 9 80% 20%
- -------------------------------------------------------------------------------
Year 10 75% 25%
- -------------------------------------------------------------------------------
Year 11 70% 30%
- -------------------------------------------------------------------------------
Year 12 65% 35%
- -------------------------------------------------------------------------------
Year 13 60% 40%
- -------------------------------------------------------------------------------
Year 14 55% 45%
- -------------------------------------------------------------------------------
</TABLE>
- 149 -
<PAGE> 159
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------
Year 15 50% 50%
- -------------------------------------------------------------------------------
Year 16 45% 55%
- -------------------------------------------------------------------------------
Year 17 40% 60%
- -------------------------------------------------------------------------------
Year 18 35% 65%
- -------------------------------------------------------------------------------
Year 19 30% 70%
- -------------------------------------------------------------------------------
Year 20 25% 75%
- -------------------------------------------------------------------------------
Year 21 20% 80%
- -------------------------------------------------------------------------------
Year 22 15% 85%
- -------------------------------------------------------------------------------
Year 23 10% 90%
- -------------------------------------------------------------------------------
Year 24 5% 95%
- -------------------------------------------------------------------------------
Year 25 and thereafter 0% 100%
===============================================================================
</TABLE>
This Section 8.5(e)(ii) only applies to the
previously identified solid waste management units,
and does not apply to "areas of concern" identified
in Sections 8.5(d)(ii) or 8.5(d)(iii); such areas of
concern are subject to the provisions of Section
8.5(e)(iii).
(iii) SHARES RELATED TO ALL OTHER ENVIRONMENTAL CONDITIONS.
For all those other Environmental Conditions not
arising from solid waste management
- 150 -
<PAGE> 160
units, the disclosure or remediation of which is not triggered by Buyer's
actions (as specified in Section 8.5(e)(v)), Seller and Buyer shall share those
costs in excess of the Annual Deductible Amount in the following ratios:
<TABLE>
<CAPTION>
===============================================================================
Time Period Seller Share Buyer Share
- -------------------------------------------------------------------------------
<S> <C> <C>
Year 1 (Closing Date to 100% 0%
First Anniversary)
- -------------------------------------------------------------------------------
Year 2 95% 5%
- -------------------------------------------------------------------------------
Year 3 90% 10%
- -------------------------------------------------------------------------------
Year 4 85% 15%
- -------------------------------------------------------------------------------
Year 5 80% 20%
- -------------------------------------------------------------------------------
Year 6 75% 25%
- -------------------------------------------------------------------------------
Year 7 70% 30%
- -------------------------------------------------------------------------------
Year 8 65% 35%
- -------------------------------------------------------------------------------
Year 9 60% 40%
- -------------------------------------------------------------------------------
Year 10 55% 45%
- -------------------------------------------------------------------------------
Year 11 50% 50%
- -------------------------------------------------------------------------------
Year 12 45% 55%
- -------------------------------------------------------------------------------
</TABLE>
- 151 -
<PAGE> 161
<TABLE>
<S> <C> <C>
Year 13 40% 60%
- -------------------------------------------------------------------------------
Year 14 35% 65%
- -------------------------------------------------------------------------------
Year 15 30% 70%
- -------------------------------------------------------------------------------
Year 16 25% 75%
- -------------------------------------------------------------------------------
Year 17 20% 80%
- -------------------------------------------------------------------------------
Year 18 15% 85%
- -------------------------------------------------------------------------------
Year 19 10% 90%
- -------------------------------------------------------------------------------
Year 20 5% 95%
- -------------------------------------------------------------------------------
Year 21 and thereafter 0% 100%
===============================================================================
</TABLE>
(iv) The parties' respective shares of the costs of any study or investigation
of an Other Environmental Condition (whether determined by reference to
Section 8.5(e)(ii) or 8.5(e)(iii)) shall be determined based upon the
year in which the study or investigation is ordered or required by a
governmental agency to be undertaken, or otherwise shall be based upon
the year in which the study or investigation is commenced. The parties'
respective shares of the costs of any required remediation of an Other
Environmental Condition
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<PAGE> 162
(whether determined by reference to Section 8.5(e)(ii)
or 8.5(e)(iii)) shall be determined based upon the
year in which the contamination is identified and
confirmed as a result of sampling, testing or other
scientific quantitative evidence.
(v) SURCHARGE.
(A) If an Environmental Condition is disclosed,
or requires remediation, as a result of any
project undertaken by Buyer at the Other
Production Facilities (other than a project
involving the maintenance, repair or in-kind
replacement of then existing equipment or a
project Required by Law), or as a result of
an environmental test, study, investigation
or assessment conducted by Buyer (other than
a test, study, investigation or assessment
that is Required by Law or that is
necessitated by a project involving the
maintenance, repair or in-kind replacement of
then existing equipment), Buyer's share as
specified in Section 8.5(e)(ii) or
8.5(e)(iii) shall be increased by twenty-five
(25) percentage points.
- 153 -
<PAGE> 163
(B) If through the course and as a result of any
communication with any governmental agency by
Buyer, or any officer, director, manager,
employee or agent of Buyer (other than a
notification or communication Required by
Law), Buyer advocates, suggests, or otherwise
invites action by a governmental agency to
undertake or require an environmental study
or remediation of an Environmental Condition
at the Other Production Facilities, Buyer's
share as specified in Section 8.5(e)(ii) or
8.5(e)(iii) shall be increased by twenty-five
(25) percentage points.
(C) Except for notifications that are Required by
Law to be immediately provided (such as
notifications of spills or releases of
Regulated Substances above reportable
quantities), if Buyer believes a study,
notification or communication is Required by
Law, Buyer shall provide Seller with written
notice, stating the reasons why Buyer
believes the study, notification or
communication is Required by Law. If Seller
believes to the contrary, Seller shall so
notify Buyer within fourteen (14) days of
receiving the notice from Buyer, stating the
- 154 -
<PAGE> 164
reasons Seller believes that the study,
notification or communication is not Required
by Law.
(vi) RELEASE AND INDEMNIFICATION. After (A) the 20th
anniversary following the Closing Date (that is, in
year 21 and thereafter) with respect to Environmental
Conditions referred to in Section 8.2(e)(iii), and
(B) the 24th anniversary following the Closing Date
(that is, in year 25 and thereafter with respect to
Environmental Conditions referred to in Section
8.2(e)(ii), Buyer shall indemnify, defend, save and
hold harmless Seller Indemnitees from and against any
Claims relating to Environmental Conditions at the
Other Production Facilities (other than for those
Identified Environmental Conditions for which Seller
retains continuing liability under Section 8.5(d)).
(f) SPECIAL PRESUMPTIONS. The parties agree that, at all times,
the following presumptions shall be used in the determination of whether an
Environmental Condition discovered at an Other Production Facility Property is
a Buyer Environmental Condition:
(i) If an Environmental Condition relates to a
Regulated Substance that Buyer has used, generated
- 155 -
<PAGE> 165
or stored, but where Buyer has failed to maintain
accurate records with respect to the use and
management of such substance as required under Section
8.5(c), it shall be presumed that the Environmental
Condition is a Buyer Environmental Condition.
(ii) If an Environmental Condition is located in the
vicinity of equipment that Buyer operated, and
relates to a Regulated Substance used in relation to
such equipment, and Buyer has failed to inspect and
test such equipment as required under Section 8.5(c),
it shall be presumed that the Environmental Condition
is a Buyer Environmental Condition.
(g) ALLOCATION WHERE LIABILITY FOR ENVIRONMENTAL CONDITIONS IS
SHARED. Except as otherwise provided in Section 8.5(b) or otherwise
specifically provided in this Agreement, where (after the application of the
presumptions contained in Section 8.5(f)) it is determined that an
Environmental Condition that requires remediation is the result of a Buyer
Environmental Condition in combination with either an Identified Environmental
Condition or an Other Environmental Condition, liability for any Claims
associated with or arising from such Environmental Condition shall be allocated
equitably between Seller and Buyer, based on a consideration of (among others)
the following factors:
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<PAGE> 166
(i) Whether, but for the Environmental Condition for
which one of the Parties is solely responsible, an
obligation to investigate or remediate would have
arisen for the other party;
(ii) The relative quantity, toxicity and area affected by
the Regulated Substances for which the respective
parties are responsible;
(iii) The degree to which the Regulated Substance for which
a party is responsible affects the selection of the
remedy, the cost of the remedy, and the period of
time over which the remedy must be implemented; and
(iv) Other relevant considerations.
(h) CONTACTS WITH AGENCIES/DESIGNATION OF LEAD PARTIES.
(i) Buyer shall be the Lead Party with respect to any
Buyer Environmental Condition, and with respect to
any Other Environmental Condition that is discovered
and confirmed in and after (A) Year 11 with respect
to those Environmental Conditions referred to in
Section 8.5(e)(iii), and (B) Year 15 with respect to
those Environmental Conditions referred to in Section
8.5(e)(ii).
- 157 -
<PAGE> 167
(ii) Seller shall be the Lead Party with respect to any
Identified Environmental Condition.
(iii) At its option and upon written notification to Buyer,
Seller shall be the Lead Party with respect to any
Other Environmental Condition that is discovered and
confirmed prior to Year 11 or Year 15, as applicable.
(i) OPTION TO CONDUCT ASSESSMENT/REMEDIATION PLAN.
(i) For the first ten (10) years after Closing, Seller
has the option, at any time (whether or not Required
by Law) to conduct an Environmental Assessment of any
Other Production Facility.
(ii) If an Environmental Assessment is conducted at an
Other Production Facility, the parties agree that the
following presumptions will be used in the
determination of whether an Environmental Condition
discovered at the Other Production Facility, either
in or after the Environmental Assessment, is an Other
Environmental Condition or a Buyer Environmental
Condition:
(A) If the Environmental Condition involves a
Regulated Substance that was not used,
- 158 -
<PAGE> 168
generated, or stored by Buyer, and is not a
decomposition product of a substance used,
generated or stored by Buyer, it shall be
presumed that the Environmental Condition is
an Other Environmental Condition.
(B) If the Environmental Condition involves a
Regulated Substance that was used, generated,
or stored by Buyer, or is a decomposition
product of a substance used, generated or
stored by Buyer, and such Regulated Substance
was not used, generated or stored by Seller,
it shall be presumed that the Environmental
Condition is a Buyer Environmental Condition.
(C) If the Environmental Condition involves a
Regulated Substance that was used, generated,
or stored by both Seller and Buyer, or is a
decomposition product of such a substance, it
shall be presumed that:
(1) the concentrations and areas
affected by the Regulated Substance
as identified in the Environmental
Assessment are Other Environmental
Conditions in the absence of
evidence that such Environmental
- 159 -
<PAGE> 169
Condition resulted from a release of
the Regulated Substance by Buyer;
(2) an Environmental Condition found
after the completion of the
Environmental Assessment involving
the presence of any Regulated
Substance that was not identified in
the Environmental Assessment, and is
not the decomposition product of a
substance identified in the
Environmental Assessment, is a Buyer
Environmental Condition;
(3) an Environmental Condition found
after the completion of the
Environmental Assessment involving
the presence in soils of a Regulated
Substance, or decomposition product
thereof, at a higher concentration
or in a different area than
identified in the Environmental
Assessment, is a Buyer Environmental
Condition.
Where an Environmental Condition found after
the completion of the Environmental
Assessment involves the presence in
groundwater of a Regulated Substance, or
- 160 -
<PAGE> 170
decomposition product thereof, in higher
concentrations or in different areas than
identified in the Environmental Assessment, no
presumptions shall be made.
(iii) On the basis of such Environmental Assessment, Seller
may (whether or not Required by Law) prepare a
remediation plan to address any Environmental
Condition that requires remediation under applicable
Environmental Law.
(iv) The parties agree that any remediation plan
(including any remediation plan to address an
Identified Environmental Condition) shall be designed
to meet Regulatory Remediation Standards. Where
remediation is required under then current
Environmental Laws, but definitive Regulatory
Remediation Standards have not been adopted, the
remediation plan shall be based on Appropriate and
Reasonable Criteria. The parties agree that, unless
otherwise mandated by applicable governmental
agencies having jurisdiction over the Environmental
Condition, the remediation plan to be proposed and
implemented shall be that alternative for meeting
such Regulatory Remediation Standards or Appropriate
and Reasonable Criteria that: (i) has the least cost
- 161 -
<PAGE> 171
(considering the present discounted value of both
capital cost and operating and maintenance costs), and
(ii) does not unreasonably interfere with the
operations on the Other Production Facility.
(v) Seller shall submit any proposed remediation plan to
the applicable state environmental agency. Upon
approval of the remediation plan, Seller shall
implement the plan (subject to reimbursement by Buyer
for any costs associated with remediation of Buyer
Environmental Conditions and Buyer's share of costs
for Other Environmental Conditions).
(vi) Upon completion of the work at an Other Production
Facility prescribed under the approved remediation
plan, Seller shall be relieved of any further
liability for Environmental Conditions at the Other
Production Facility to the extent that such
Environmental Conditions are Assessed Environmental
Conditions. (As an example, if the Environmental
Assessment evaluated samples for total petroleum
hydrocarbons, it would be deemed to have evaluated
constituent petroleum hydrocarbons.) Buyer shall
release any further claims against Seller relating to
such Assessed Environmental Conditions at the
applicable Other
- 162 -
<PAGE> 172
Production Facility (whether known or unknown), and
Buyer shall indemnify, defend, save and hold harmless
Seller Indemnitees against any Claims related to
Assessed Environmental Conditions discovered at such
Other Production Facility after the completion of the
approved remediation plan.
(j) ACCESS FOR INVESTIGATION AND REMEDIATION. Buyer acknowledges
that investigation and remediation of Environmental Conditions at the Other
Production Facilities may include testing, monitoring and other activities at
the Other Production Facilities related to the Environmental Conditions. Buyer
shall provide Seller and Seller's consultants, contractors and agents with
access to, and reasonable accommodation at, the Other Production Facilities for
such purposes under the following arrangements:
(i) Seller and Buyer will agree to consult in efforts to
coordinate any such activities with operations at the
Other Production Facilities, in order to take all
reasonable steps to minimize interference with
Buyer's operations.
(ii) Anything in this Agreement to the contrary
notwithstanding, Seller shall have the right to enter
the Other Production Facilities at any time and from
time to time for the purpose of
- 163 -
<PAGE> 173
conducting any activity in connection with
investigation, remediation and monitoring of
Environmental Conditions, whether pursuant to a
remediation plan or otherwise.
(iii) Seller agrees that it will not make any change in the
Other Production Facilities or use the Other
Production Facilities for any purpose not necessary
and appropriate to the performance of the
investigation, remediation and monitoring of
Environmental Conditions.
(iv) During any investigation, remediation, or monitoring
work, Seller agrees to comply with all applicable
laws, regulations, rules or permits pertaining to the
applicable Other Production Facility, including
environmental, occupational health and safety, and
other health and safety laws. Seller agrees to
indemnify, defend, save and hold harmless Buyer
Indemnitees from and against any Claims arising from
failure to comply with such laws.
(v) Upon completion of any work required for
investigation, remediation, or monitoring of
Environmental Conditions, Seller shall promptly
restore any structures, pavement, or other parts
- 164 -
<PAGE> 174
of the Other Production Facilities to substantially
the condition they were in prior to engaging in such
work.
(vi) Where Seller voluntarily undertakes an Environmental
Assessment or remediation plan, other than an
Environmental Assessment or remediation plan that is
Required by Law, Seller shall be responsible for, and
agrees to indemnify Buyer from and against, any
Business Interruption Costs incurred by Buyer as a
proximate cause of such work. Where an Environmental
Assessment or Remediation Plan is Required by Law,
Seller shall not be liable for any Business
Interruption Costs.
(vii) Except as provided in Sections 8.5(j)(iv) through
8.5(j)(vi), and except for the willful or negligent
acts or omissions of Seller, Seller shall not be
liable for any loss or damage of any kind caused by
Seller's activities at the Other Production
Facilities in connection with such investigation,
remediation and monitoring activities.
8.6. PROVISIONS RELATING TO DISTRIBUTION FACILITIES. The
provisions set forth in this Section 8.6 shall apply exclusively to the
Business Sites other than the Neville Island Facility and
- 165 -
<PAGE> 175
the Other Production Facilities (the "DISTRIBUTION FACILITIES").
(a) POST-CLOSING VIOLATIONS. Buyer agrees to indemnify, defend,
save and hold harmless Seller Indemnitees from and against any Claims arising
out of the alleged violation of any applicable Environmental Law associated
with the operation by Buyer of the Distribution Facilities or arising from any
other use or activities conducted by Buyer at the Distribution Facilities.
(b) ENVIRONMENTAL CONDITIONS CAUSED BY BUYER RELEASES AND
ACTIVITIES. Buyer shall be responsible for and agrees to indemnify, defend,
save and hold harmless Seller Indemnitees from and against any Claims relating
to Buyer Environmental Conditions at the Distribution Facilities. Where a
release of any Buyer Regulated Substance affects soils such as to require
remediation, Buyer shall be solely responsible for the remediation of any such
affected soils, irrespective of whether such soils also contain other Regulated
Substances not related to the Buyer Environmental Condition.
(c) ANKENY DISTRIBUTION FACILITY. With respect to Pre-Closing
Environmental Conditions at the Ankeny, Iowa Distribution Facility arising from
the former operations of the Albaugh Chemical Company at the Property, to the
extent that Buyer is not indemnified by virtue of the indemnification to the
lessee of such Distribution Facility from the lessor thereof, Seller shall
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<PAGE> 176
be responsible for (and indemnify, defend, save and hold harmless Buyer
Indemnitees from and against) a proportionate share of the non-indemnified
costs incurred by Buyer. The proportionate share shall be determined based on
the period of time Seller and Buyer respectively have been in possession under
the current lease. This indemnity is subject to the following terms and
conditions:
(i) If Buyer renews or renegotiates the current lease,
Seller's obligation under this Section 8.6(c) shall
terminate upon the expiration date of the current
term of the lease.
(ii) If Buyer does not renew or renegotiate the current
lease, Seller's obligation under this Section 8.6(c)
shall not expire.
(d) OTHER DISTRIBUTION FACILITIES. Seller agrees to indemnify,
defend, save and hold harmless Buyer Indemnitees from and against any Claims
relating to any Pre-Closing Environmental Conditions at the Distribution
Facilities (except for the Ankeny, Iowa Distribution Facility, which is
provided for in Section 8.6(c)). Seller's obligation under this Section 8.6(d)
shall terminate upon (i) the date on which Buyer vacates the premises of such
Distribution Facility, or (ii) the expiration date of the current term of the
lease for any such Distribution Facility, whichever is earlier.
- 167 -
<PAGE> 177
(e) ALLOCATION WHERE LIABILITY FOR ENVIRONMENTAL CONDITIONS IS
SHARED. Except as provided in Section 8.6(b), where an Environmental Condition
that requires remediation is the result of a Buyer Environmental Condition in
combination with a Pre-Closing Environmental Condition, liability for any
Claims associated with or arising from such Environmental Condition shall be
allocated equitably between Seller and Buyer, based on a consideration of
(among others) the following factors:
(i) Whether, but for the Environmental Condition for
which one of the parties is solely responsible, an
obligation to investigate or remediate would have
arisen for the other party;
(ii) The relative quantity, toxicity and area affected by
the Regulated Substances for which the respective
parties are responsible;
(iii) The degree to which the Regulated Substance for which
a party is responsible affects the selection of the
remedy, the cost of the remedy, and the period of
time over which the remedy must be implemented;
(iv) Other relevant considerations.
- 168 -
<PAGE> 178
(f) ACCESS. Buyer acknowledges that investigation and remediation
of Environmental Conditions at the Distribution Facilities may include testing,
monitoring and other activities at the Distribution Facilities related to the
Environmental Conditions. Buyer shall provide Seller and Seller's consultants,
contractors and agents with access to, and reasonable accommodation at, the
Distribution Facilities for such purposes under the same arrangements as
provided under Sections 8.5(j)(i) through 8.5(j)(vii).
8.7. ENVIRONMENTAL INDEMNIFICATION CAP.
(a) Seller's Indemnification Obligations (as defined in Section
8.7(b)) shall terminate, and Seller shall have no further obligations
thereunder, when the aggregate of the following payments and expenditures by
Seller exceeds $34 million, subject to adjustment as provided in Section 8.7(e)
(the "ENVIRONMENTAL CAP"):
(i) Payments made to Buyer and its successors or
permitted assigns (each of which shall be deemed to
be included in the term "Buyer" as used in this
Section 8.7) or any other entity or person for
indemnification or defense of Claims arising from
Pre-Closing Environmental Conditions, Identified
Environmental Conditions, or Other Environmental
Conditions at the Properties ("INDEMNIFICATION
- 169 -
<PAGE> 179
PAYMENTS"). Payments made in respect of post-Closing
Aristech Environmental Conditions (such as cleanup of
post-Closing spills caused by Seller on the Retained
Premises) shall not be applied against the
Environmental Cap.
(ii) Expenditures incurred by Seller in response to any
Environmental Condition at the Properties (including
Pre-Closing Environmental Conditions, Identified
Environmental Conditions, Other Environmental
Conditions and, to the extent, if any, Seller does
not receive indemnification therefor, those matters,
such as Buyer Environmental Conditions, as to which
Buyer has an indemnification obligation under this
Article VIII).
(iii) Expenditures incurred by Seller in response to any
Pre-Closing Environmental Condition at the Retained
Premises to the extent that such Environmental
Condition is caused or exacerbated as a result of any
action by Buyer or any failure by Buyer to act where
Buyer has an obligation to act arising under law,
this Agreement, or any Ancillary Document ("BUYER
EXACERBATED CONDITIONS"). The aggregate amount of
expenditures under this clause (iii) that may be
- 170 -
<PAGE> 180
applied against the Environmental Cap is $4 million
(subject to escalation as provided in Section 8.7(e)).
(b) "INDEMNIFICATION OBLIGATIONS" means all obligations of Seller
under this Article VIII to indemnify, defend, save and hold harmless Buyer
Indemnitees in respect of any of the matters described in Sections 8.7(a)(i)
and 8.7(a)(ii). The term shall include any payments made directly by Seller to
third parties in respect of such indemnification obligations.
(c) Anything to the contrary herein notwithstanding, payments made
and expenditures incurred with respect to Sections 8.3(a) and 8.3(b) shall not
be applied against the Environmental Cap.
(d) Buyer (on behalf of itself and its successors and assigns)
hereby releases and forever discharges Seller, its successors and assigns, from
Seller's Indemnification Obligations and from any and all Claims of every kind,
name and nature, which Buyer had, has, or may in the future have against
Seller, with respect to (i) Environmental Conditions at the Properties and (ii)
Pre-Closing Environmental Conditions at the Retained Premises that are Buyer
Exacerbated Conditions, to the extent that such Indemnification Obligations and
Claims exceed the Environmental Cap.
- 171 -
<PAGE> 181
(e) The Environmental Cap and the $4 million figure referred to in
Section 8.7(a)(iii) (the "RETAINED PREMISES CAP") shall be escalated on a
quarterly basis in accordance with the methodology described in Schedule
8.7(e).
8.8. TRANSFER OF BUYER'S ENVIRONMENTAL INDEMNIFICATION RIGHTS.
Buyer's rights under this Article VIII ("BUYER'S ENVIRONMENTAL INDEMNIFICATION
RIGHTS") shall not be transferable except as follows:
(a) Buyer may transfer Buyer's Environmental Indemnification
Rights to any of the following transferees:
(i) the successor or surviving corporation in a corporate
merger or reorganization to which Buyer is a party;
(ii) the company resulting from the incorporation by Buyer
of a wholly-owned subsidiary to which substantially
all the assets (including the UPR business) of the
Ashland Chemical Company division of Buyer are
transferred; and
(iii) the purchaser of substantially all the assets
(including the UPR business) of the Ashland Chemical
Company division of Buyer.
- 172 -
<PAGE> 182
(b) Buyer may not assign Buyer's Environmental Indemnification
Rights in connection with either (X) a sale of all the assets of
Buyer's UPR business (separately from a sale of all the assets of the
Ashland Chemical Company division of Buyer), or (Y) the sale of the
Colton, California Business Site ("COLTON") without Seller's prior
written consent, which consent shall not be unreasonably withheld.
(i) (A) Seller's failure to consent to any transfer
referred to in clause (X) or (Y) of this
Section 8.8(b) shall be deemed reasonable if
the prospective transferee (1) is (or
controls, is under common control with or is
controlled by) a person or an entity that has
historically had an adversarial relationship
with Seller; (2) intends to use any of the
facilities for any purpose other than the
production and/or sale of unsaturated
polyester resins and, in the case of Buyer's
Operating Space, maleic anhydride; or (3) has
a tangible net worth of less than $100
million in the case of a transaction referred
to in clause (X) of this Section 8.8(b), or
$25 million in the case of a transaction
referred to in clause (Y) of this Section
8.8(b).
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<PAGE> 183
(B) In all other cases, Seller's failure to
consent shall be presumed to be reasonable if
any of the following criteria applies to the
prospective transferee: (1) it has
demonstrated (a) a lack of ability or
intention to comply with Environmental Law,
or (b) a recurring pattern or practice of
violating Environmental Law; (2) it has
engaged in unlawful activity under
Environmental Law that is not being corrected
to the satisfaction of the governmental
agency or agencies with jurisdiction over the
violation; or (3) it does not possess
substantial experience in the production of
chemical products.
(ii) Any assignment as to which Seller grants its consent
under this subparagraph (b) shall automatically, and
without any action on the part of Seller, Buyer or
Buyer's transferee, give rise to the caps described
in clauses (A) through (D) of this Section 8.8(b)(ii)
and the releases set forth in Section 8.8(b)(iii).
(A) If Buyer sells all of the assets of Buyer's
UPR business (including Colton), all of
Buyer's Environmental Indemnification Rights
- 174 -
<PAGE> 184
shall be subject to a cap equal to $15
million, adjusted as set forth in Clauses (C)
and (D) (the "UPR Cap").
(B) (1) If Buyer sells Colton prior to selling
the remainder of the assets of Buyer's UPR
business, Buyer shall have the option, upon
prior written notice to Seller, of allocating
up to $3 million out of the UPR Cap to
Colton. The amount so allocated to Colton
shall become the "COLTON CAP", and the amount
of the UPR Cap less the Colton Cap shall be
the "REMAINING UPR CAP." (For example, if
Buyer allocates $2 million of the UPR Cap to
the Colton Cap, the Remaining UPR Cap shall
be $13 million.)
(2) Upon the sale of Colton, all of Buyer's
Environmental Indemnification Rights relating
to Colton shall be subject to the Colton Cap;
and the Environmental Cap provided in Section
8.7 shall be reduced by the amount of the
Colton Cap. If no amount is allocated by
Buyer to Colton, all of Buyer's Environmental
Indemnification Rights with respect to Colton
shall terminate upon the sale of Colton (that
is, neither Buyer nor the purchaser of Colton
from Buyer shall have any further rights
- 175 -
<PAGE> 185
under the Buyer's Environmental
Indemnification Rights with respect to matters
relating to Colton).
(3) Upon the subsequent sale of the remainder
of the assets of Buyer's UPR business, all of
Buyer's Environmental Indemnification Rights
with respect to such assets shall be subject
to the Remaining UPR Cap, adjusted as set
forth in Clauses (C) and (D).
(C) The amount of the UPR Cap in effect
immediately following a sale of Buyer's UPR
business (including Colton) shall be $15
million, less the aggregate Indemnification
Payments and expenditures made by Seller in
response to Environmental Conditions at the
Properties during the period from Closing
until the date of the sale. If Colton is
sold prior to a sale of the remainder of
Buyer's UPR business: (1) the amount of the
Colton Cap in effect immediately after the
sale of Colton shall be an amount up to $3
million (determined as per clause (B) above),
less all the Indemnification Payments and
expenditures made by Seller in response to
Environmental Conditions at or related to
- 176 -
<PAGE> 186
Colton during the period from Closing until
the date of the sale; and (2) the amount of
the Remaining UPR Cap that shall be in effect
immediately after the subsequent sale of the
UPR business shall be the UPR Cap minus the
Colton Cap (determined as per clause (B)
above), less (x) all Indemnification Payments
and all expenditures made by Seller in
response to Environmental Conditions at other
Properties from the Closing until the date of
sale of the UPR business, and (y) all
expenditures made by Seller in response to
Environmental Conditions at Colton from the
Closing until the sale of Colton, to the
extent not deducted under clause (1) of this
Section 8.8(b)(ii)(C).
(D) The amount of the UPR Cap and the Remaining
UPR Cap shall be escalated on a quarterly
basis in accordance with the methodology set
forth in Schedule 8.7(e). The Colton Cap
shall not be increased under any
circumstances.
(iii) Releases effective on certain sales:
(A) Effective upon the sale of Buyer's UPR
business (including Colton), Buyer (on behalf
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<PAGE> 187
of itself and its successors and assigns)
hereby releases and forever discharges Seller,
its successors and assigns, from Seller's
Indemnification Obligations and from any and
all Claims of every kind, name and nature,
which Buyer had, has, or may in the future
have against Seller, with respect to (i)
Environmental Conditions at the Properties and
(ii) Pre-Closing Environmental Conditions at
the Retained Premises that are Buyer
Exacerbated Conditions, to the extent that
such Indemnification Obligations and Claims
exceed the UPR Cap.
(B) Effective upon the sale of Colton (if
sold prior to the remainder of Buyer's UPR
business, Buyer (on behalf of itself and its
successors and assigns) hereby releases and
forever discharges Seller, its successors and
assigns, from Seller's Indemnification
Obligations and from any and all Claims of
every kind, name and nature, which Buyer had,
has, or may in the future have against Seller,
with respect to Environmental Conditions at
Colton, to the extent that such
Indemnification Obligations and Claims exceed
the Colton Cap.
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<PAGE> 188
(C) If Colton is sold prior to the sale of the
remainder of Buyer's UPR business, then
effective upon the subsequent sale of the
remainder of Buyer's UPR business, Buyer (on
behalf of itself and its successors and
assigns) hereby releases and forever
discharges Seller, its successors and
assigns, from Seller's Indemnification
Obligations and from any and all Claims of
every kind, name and nature, which Buyer had,
has, or may in the future have against
Seller, with respect to (i) Environmental
Conditions at the Properties and (ii)
Pre-Closing Environmental Conditions at the
Retained Premises that are Buyer Exacerbated
Conditions, to the extent that such
Indemnification Obligations and Claims exceed
the Remaining UPR Cap.
(c) Except as provided in Section 8.8(a) or 8.8(b), Buyer may not
transfer any of Buyer's Environmental Indemnification Rights with respect to
any of the Properties, in part or as a whole, unless Seller, in its sole and
absolute discretion, approves the transfer in advance. Seller may impose any
condition whatsoever on the grant of such approval, including the termination
of its environmental indemnification obligations under this Article VIII at any
of the Properties.
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(d) The assignee of, or successor to, Buyer's Environmental
Indemnification Rights in any transfer permitted under Sections 8.8(a) through
8.8(c) must assume or succeed to all of Buyer's obligations under this Article
VIII effective simultaneously with such transfer; provided, however, that no
such assumption shall relieve Buyer of its obligations under this Article VIII.
(e) In the event that the assignee of or successor to Buyer's
Environmental Indemnification Rights in any transfer permitted under Section
8.8(a) through 8.8(c) is not an entity that controls, is under common control
with or is controlled by Buyer, Buyer's Environmental Indemnification Rights
shall not be further assignable to any other person or entity by such assignee
or successor. Buyer shall require as a condition precedent to any such
transfer that the transferee acknowledge to Seller in writing that it may not
assign Buyer's Environmental Indemnification Rights and that it is bound by the
release contained in Section 8.8(b)(iii).
(f) For purposes of this Section 8.8 the term "control" means
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through the
ownership of voting securities, by contract or otherwise.
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<PAGE> 190
(g) Any attempt to transfer Buyer's Environmental Indemnification
Rights in violation of this Section 8.8 shall be void and of no effect.
ARTICLE IX
MISCELLANEOUS
-------------
9.1. ALTERNATIVE DISPUTE RESOLUTION PROCESS. Except as provided in
Section 1.12, disputes regarding the application of any of the provisions of
this Agreement other than those contained Article VIII (which disputes are
governed exclusively by Section 8.3(k)) shall be subject to the following
alternative dispute resolution process:
(a) INVOCATION. The resolution procedures shall be invoked when
either party sends a written notice to the other. The notice shall describe
the nature of the dispute or conflict and the party's position with respect to
such dispute or conflict. The parties shall expeditiously schedule
consultations or a meeting to discuss the dispute or conflict informally in
accordance with subparagraph (b) of this Section 9.1.
(b) DESIGNATION OF MANAGEMENT REPRESENTATIVES. The following
Management Representatives have been designated for purposes of this Section
9.1:
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For Buyer: President, Ashland Chemical
Company, or his or her designees.
For Seller: President, Aristech Chemical
Corporation, or his or her designees.
Any Management Representative designation may be changed by the appointing
organization, by written notice to the other party.
(c) INITIAL CONSULTATION. Any conflicts or disputes shall, in the
first instance, be the subject of informal consultation and discussion between
an executive officer or management-level employee designated by Buyer's
Management Representative and an executive officer or management-level employee
designated by Seller's Management Representative. The period of informal
consultations and discussions shall not extend beyond thirty (30) days from the
date of the first consultations or meetings between such designees, unless the
parties agree to extend this period.
(d) REFERENCE TO MANAGEMENT REPRESENTATIVES. In the event that
the Management Representatives' designees are unable to reach agreement during
the informal consultation and discussion period under Section 9.1(c), the issue
shall be referred to the Management Representatives for informal negotiation.
The period of informal negotiations shall not extend beyond sixty (60) days
from the date of the first meeting between the Management
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<PAGE> 192
Representatives, unless the parties agree to extend this period. The
Management Representatives may request the assistance of an independent
mediator if it is believed that the assistance of such a mediator would be of
assistance to the efficient resolution of the dispute.
(e) FORMAL RESOLUTION PROCEDURES. In the event that the
Management Representatives are unable to resolve the matter within the period
provided in Section 9.1(d), the parties shall submit the dispute to binding
arbitration in Pittsburgh, Pennsylvania, or at such other location as the
parties may agree, in accordance with the terms of this subparagraph (e).
(i) INITIATION OF ARBITRATION PROCESS. Upon the
occurrence of a dispute, and failure of the parties
to resolve such dispute through the informal
processes described in Sections 9.1(c) and 9.1(d),
either party may initiate the arbitration process set
forth in this clause (i) by giving written notice to
the other party.
(ii) SELECTION OF ARBITRATOR(S). Within thirty (30) days
after the notice referred to in clause (i), the
parties shall either agree upon the appointment of a
single mutually-approved independent Commercial
Attorney to serve as arbitrator; or, if the parties
are unable to agree
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upon a single arbitrator, each of the parties shall
appoint a Commercial Attorney to serve as arbitrator,
and the two individuals so named shall, within thirty
(30) additional days, agree upon a third independent
Commercial Attorney to serve as the third arbitrator.
The parties shall mutually cooperate to retain the
arbitrator(s) upon terms and conditions mutually
satisfactory to the parties as soon as practicable
after selection of the arbitrator(s). For purposes of
this clause (ii) the term "Commercial Attorney" shall
mean an attorney having at least ten (10) years
experience in commercial transactions of the type
contemplated by this Agreement and in the preparation,
negotiation and interpretation of the documentation of
such transactions.
(iii) FEES. The fees of the arbitrator(s) shall be paid
one-half by Seller and one-half by Buyer.
(iv) DISCOVERY. For a period of sixty (60) days following
the appointment of the arbitrator(s) (or such longer
period as the parties may mutually agree or the
arbitrator(s) may direct), the parties shall have the
right to engage in such discovery relevant to the
matters in dispute as is
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<PAGE> 194
allowed pursuant to the discovery rules of the
Pennsylvania Rules of Civil Procedure.
(v) RESOLUTION. The arbitrator(s) shall decide such
disputes pursuant to the Commercial Arbitration Rules
of the American Arbitration Association in force at
the time of the arbitration. The arbitrator(s) shall
be required to make a final determination, not
subject to appeal, within thirty (30) days from the
receipt of such dispute by the arbitrator(s), and the
parties shall be bound by the terms of such final
determination. Where three arbitrators are
appointed, the decision may be rendered by a majority
of the arbitrators. The determination by the
arbitrator(s) shall be made in writing and shall
contain written findings of fact, and may be
specifically enforced by a court of competent
jurisdiction. The arbitrator(s) shall determine a
fair and equitable allocation of the reasonable
expenses of the parties incurred in connection with
the resolution of any dispute hereunder. Each party
shall bear its own attorney's fees, unless the
arbitrator(s) shall determine that the nature of the
action or defense of the losing party was frivolous,
in which event the arbitrator shall determine a fair
and equitable attorney's
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<PAGE> 195
fee to be paid by the losing party to the prevailing
party.
(vi) INDEPENDENCE OF ARBITRATOR. The arbitrator(s) shall
retain independence of all parties to this Agreement,
and neither party shall engage or attempt to engage
the services of the arbitrator(s) for any other
purposes without prior written notice to the other
party.
9.2. EXCLUSIVE REMEDY. Except as provided in Sections 4.1, 4.6 and
4.7, the remedies provided in Article VII and Article VIII shall be the sole
and exclusive remedy of Buyer and Seller (and of any other of Buyer's
Indemnitees or Seller's Indemnitees), under or in connection with this
Agreement, the Ancillary Documents, any certificate or agreement delivered in
connection herewith or therewith or the transactions contemplated hereby and
thereby. Subject to Sections 4.1, 4.6 and 4.7, the only legal action that may
be asserted by any party or with respect to any matter under this Agreement or
the Ancillary Documents shall be a contract action to enforce, or to recover
damages for the breach of, this Article VII or Article VIII. Without limiting
the generality of the preceding sentence, no legal action sounding in tort or
strict liability may be maintained by any party. Notwithstanding the
foregoing, Buyer shall be entitled to exercise all of the remedies to which it
is otherwise entitled under the Deeds.
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<PAGE> 196
9.3. EXCLUSION OF CERTAIN DAMAGES. EXCEPT AS EXPRESSLY SET FORTH
WITH RESPECT TO BUSINESS INTERRUPTION COSTS IN ARTICLE VIII, IN NO EVENT SHALL
SELLER BE LIABLE TO BUYER (OR ANY OTHER BUYER INDEMNITEE) FOR ANY
CONSEQUENTIAL, INDIRECT, INCIDENTAL OR OTHER SIMILAR DAMAGES, INCLUDING WITHOUT
LIMITATION LOST PROFITS FOR ANY BREACH OR DEFAULT UNDER, OR ANY ACT OR OMISSION
ARISING OUT OF OR IN ANY WAY RELATING TO, THIS AGREEMENT, THE ANCILLARY
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY CONCERNING OR
RELATING TO ANY OF THE FOREGOING, UNDER ANY FORM OR THEORY OF ACTION
WHATSOEVER, WHETHER IN CONTRACT OR OTHERWISE.
9.4. SURVIVAL OF INDEMNIFICATION PROVISIONS. The provisions of
Section 1.12, Article VII and Article VIII shall survive the Closing.
9.5. CONSTRUCTION. As used herein, unless the context otherwise
requires: (a) the terms defined herein shall have the meaning set forth herein
for all purposes; (b) references to "Article" or "Section" are to an article or
section hereof; (c) all "Exhibits" and "Schedules" referred to herein are
incorporated herein by reference and made a part hereof; (d) "include",
"includes" and "including" are deemed to be followed by "without limitation"
whether or not they are in fact followed by such word or words of like import;
(e) "writing," "written" and comparable terms refer to printing, typing,
lithography and other means of reproducing words in a visible form; (f)
"hereof," "herein," "hereunder" and comparable terms refer to the entirety
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<PAGE> 197
of this Agreement and not to any particular article, section or other
subdivision hereof or attachment hereto; (g) (i) "knowledge" of Seller means
the actual knowledge of the President, any Vice President, Secretary/General
Counsel, Group Vice President, Seller's Plant Managers at each of the Neville
Island Facility and the Other Production Facilities, and those persons
reporting directly to any of the foregoing, and (ii) "knowledge" of Buyer means
the actual knowledge of the President, Group Vice Presidents, Vice Presidents
of Composite Polymers, Fiberglass Reinforced Plastics and the Petrochemical
Divisions of Ashland Chemical Company Division of Buyer and Robert G. O'Brien,
Esq. in his capacity as Deputy General Counsel of Ashland Chemical Company, and
those persons reporting directly to any of the foregoing; (h) references to any
gender include references to all genders, and references to the singular
include references to the plural and vice versa; (i) references to an agreement
or other instrument or statute or regulation are referred to as amended and
supplemented from time to time (and, in the case of a statute or regulation, to
any successor provision); and (j) the table of contents and headings of the
various articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions thereof.
9.6. NOTICES. All notices, and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made (a) the second day
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<PAGE> 198
after mailing, if sent by registered or certified mail, return receipt
requested, (b) upon delivery, if sent by hand delivery, (c) when received, if
sent by prepaid overnight carrier, with a record of receipt, or (d) the first
day after dispatch, if sent by cable, telegram, facsimile or telecopy (with a
copy simultaneously sent by registered or certified mail, return receipt
requested), to the parties at the following addresses (or at such other
addresses as shall be specified by the parties by like notice):
(i) if to Buyer, to:
Ashland Chemical Company
5200 Paul G. Blazer Memorial Parkway
Columbus, Ohio 43216
Attention: President
Telecopy: (614) 790-3823
with a required copy to:
Ashland Chemical Company
5200 Paul G. Blazer Memorial Parkway
Columbus, Ohio 43216
Attn: Robert G. O'Brien, Esq.
Telecopy: (614) 790-4268
(ii) if to Seller, to:
Aristech Chemical Corporation
600 Grant Street
Pittsburgh, PA 15230-0250
Attn: President
Telecopy: (412) 433-7819
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<PAGE> 199
with a required copy to:
Aristech Chemical Corporation
600 Grant Street
Pittsburgh, PA 15230-0250
Attention: General Counsel
Telecopy: (412) 433-7753
and to:
Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, PA 15222
Attn: George R. Knapp, Esq.
Telecopy: (412) 355-6501
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
9.7. CERTAIN UNDERSTANDINGS. Neither party makes any
representation or warranty, express or implied, with respect to the Business,
the Purchased Assets or otherwise regarding the subject matter of this
Agreement except as set forth herein. Neither party nor any other person will
have or be subject to any liability to the other party or any other person
resulting from the distribution to or by either party, or either party's use
of, any information regarding the Business or the Purchased Assets not included
in this Agreement.
9.8. SALES AND TRANSFER TAXES. Buyer shall pay all recording fees
and all sales and use taxes, and real estate transfer and any other conveyance
taxes arising in connection with the sale and transfer of the Purchased Assets
to Buyer
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<PAGE> 200
pursuant to this Agreement; provided, however, that real property transfer
taxes shall be paid 50% by Buyer and 50% by Seller.
9.9. AMENDMENTS, WAIVERS AND CONSENTS. The parties may, by mutual
agreement, amend this Agreement in any respect by written instrument signed by
the parties. Any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefit thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, representation, warranty, covenant, agreement or condition
shall not operate as a waiver of or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this Section 9.9.
9.10. ENTIRE AGREEMENT. This Agreement and the Ancillary Documents
constitute the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written. Any matter that is disclosed in any Schedule is deemed to
have been disclosed for the purposes of all relevant provisions of this
Agreement and the Ancillary Documents. The inclusion of any item in the
Schedules is not evidence of the
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<PAGE> 201
materiality of such item for the purpose of this Agreement and the Ancillary
Documents. The parties make no representations or warranties to each other,
except as contained in this Agreement and the Ancillary Documents, and any and
all prior representations and warranties made by any party or its
representatives, whether verbally or in writing, are deemed to have been merged
into this Agreement and the Ancillary Documents, it being intended that no such
prior representations or warranties shall survive the execution and delivery of
this Agreement and the Ancillary Documents.
9.11. NO ASSIGNMENT. Except to the extent expressly provided in
Section 8.8, neither party may assign this Agreement or the rights, interests
and obligations hereunder, by operation of law or otherwise without the prior
written consent of the other party.
9.12. SUCCESSORS AND ASSIGNS. This Agreement and all the rights and
powers granted hereby will bind and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
9.13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to its conflict of laws provisions, unless and to the extent
that the laws of another jurisdiction mandatorily apply.
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<PAGE> 202
9.14. NO THIRD PARTY BENEFICIARIES. This Agreement is not intended
to confer any rights or remedies hereunder upon any person other than the
parties hereto (and, solely with respect to Article VII and Article VIII, the
Buyer Indemnitees and Seller Indemnitees) and their respective successors and
permitted assigns.
9.15. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transaction contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transaction contemplated hereby is fulfilled to the
extent possible.
9.16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
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<PAGE> 203
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ARISTECH CHEMICAL CORPORATION
By: /s/ CHARLES HAMILTON
--------------------------
Title: President
-------------------
ASHLAND INC.
By: /s/ D. J. D'ANTONI
--------------------------
Title: Sr. Vice President
-------------------
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<PAGE> 1
EXHIBIT 10.06
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
this ___ day of ___________, 1996, by and among Aristech Chemical Corporation,
a Delaware corporation (hereinafter referred to as the "Company"), and the
individual identified on the signature page of this Agreement (the
"Executive").
W I T N E S E T H:
WHEREAS, the Board of Directors of the Company (the "Board")
has approved the Company entering into agreements with certain key executives
of the Company providing for certain severance protection following a Change in
Control (as hereinafter defined);
WHEREAS, the Executive is a key executive of the Company;
WHEREAS, the Board believes that, should the possibility of a
Change in Control arise, it is imperative that the Company be able to receive
and rely upon the Executive's advice, if requested, as to the best interests of
the Company and its stockholders without concern that he or she might be
distracted by the personal uncertainties and risks created by the possibility
of a Change in Control; and
WHEREAS, in addition to the Executive's regular duties, he or
she may be called upon to assist in the assessment of a possible Change in
Control, advise management and the Board as to whether such Change in Control
would be in the best interests of the Company and its stockholders, and to take
such other actions as the Board determines to be appropriate;
NOW THEREFORE, to assure the Company that it will have the
continued dedication of the Executive and the availability of his or her advice
and counsel notwithstanding the possibility, threat, or occurrence of a Change
in Control, and to induce the Executive to remain in the employ of the Company,
and for other good and valuable consideration, the Company and the Executive,
intending to be legally bound, agree as follows:
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<PAGE> 2
Article 1. Definitions
Whenever used in this Agreement, the following terms shall
have the meanings set forth below when the initial letter of the word is
capitalized:
(a) "Accrued Obligations" shall have the meaning given to
such term in Section 3.1(b).
(b) "Annual Base Salary" shall have the meaning given to
such term in Section 2.2(b)(i).
(c) "Base Salary" shall mean the salary of record paid by
the Company to the Executive as annual salary,
excluding amounts received under incentive or other
bonus plans, whether or not deferred.
(d) "Beneficiary" shall mean the persons or entities
designated or deemed designated by the Executive
pursuant to Section 8.2 herein.
(e) "Cause" shall mean the occurrence of any one or more of
the following:
(i) action by the Executive involving willful and
wanton malfeasance involving specifically a
wholly wrongful and unlawful act;
(ii) the Executive being convicted of a felony;
or
(iii) a material violation by the Executive of any
rule, regulation or policy of the Company
generally applicable to all employees.
(f) A "Change in Control" shall mean, and shall be deemed
to have occurred upon the occurrence of, any one of the
following events:
(i) any transaction that results in Mitsubishi
Corporation and its subsidiaries (which shall
include any corporation in an unbroken chain of
corporations beginning with Mitsubishi
Corporation if each of the corporations other
than the last corporation in the unbroken chain
owns stock possessing at least fifty percent (50
percent) of the total combined voting power
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<PAGE> 3
of all classes of stock in one of the other
corporations in the chain) (collectively, the "MC
Group") no longer being the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, as amended),
which shall in any event include having the power
to vote (or cause to be voted at the direction of
any member of the MC Group pursuant to contract,
irrevocable proxy or otherwise) of stock
possessing at least fifty percent (50 percent) of
the combined voting power of the issued and
outstanding shares of all classes of the
Company's stock entitled to vote generally in the
election of directors ("Voting Stock"), whether
as a result of the issuance of securities of the
Company, any direct or indirect transfer of
securities of the Company or otherwise; or
(ii) approval by the stockholders of the Company of a
reorganization, merger or consolidation, unless,
following such reorganization, merger or
consolidation, the MC Group beneficially owns,
directly or indirectly, stock possessing at least
fifty percent (50 percent) of the total combined
voting power of the issued and outstanding shares
of all classes of Voting Stock of the corporation
resulting from such reorganization, merger or
consolidation; or
(iii) approval by the stockholders of the Company of a
complete liquidation or dissolution of the
Company; or
(iv) the sale or other disposition of sixty percent
(60 percent) or more by value of the assets of
the Company other than to a corporation with
respect to which, following such sale or
disposition, the MC Group beneficially owns,
directly or indirectly, stock possessing at least
fifty percent (50 percent) of the total combined
voting power of the issued and outstanding shares
of all classes of Voting Stock.
(g) "Change in Control Date" shall have the meaning given
to such term in Section 2.1.
(h) "Disability" shall mean the absence of the Executive
from the Executive's duties with the
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<PAGE> 4
Company on a full-time basis for one hundred
eighty-three (183) consecutive business days as a
result of incapacity due to mental or physical illness
which is determined to be total and permanent by a
physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal
representative.
(i) "Effective Date of Termination" shall mean the date on
which the Executive's employment with the Company
terminates.
(j) "Employment Period" shall have the meaning given to
such term in Section 2.1.
(k) "Good Reason" shall mean, without the Executive's
express written consent, the occurrence of any one or
more of the following:
(i) A material diminution of the Executive's
authorities, duties, responsibilities, and status
(including offices, titles, and reporting
requirements) as an employee of the Company from
those in effect as of one hundred eighty (180)
days prior to the Change in Control, other than
an insubstantial and inadvertent act that is
remedied by the Company promptly after receipt of
notice thereof given by the Executive, and other
than any such alteration which is consented to by
the Executive in writing;
(ii) The Company's requiring the Executive to be based
at a location in excess of fifty (50) miles from
the location of the Executive's principal job
location or office immediately prior to the
Change in Control, except for required travel on
the Company's business to an extent substantially
consistent with the Executive's present business
obligations;
(iii) A reduction in the Executive's base salary or any
material reduction by the Company of the
Executive's other compensation or benefits from
that in effect immediately before the Change in
Control occurred;
(iv) The failure of the Company to obtain a
satisfactory agreement from any successor to the
Company to assume and agree to
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<PAGE> 5
perform the Company's obligations under this
Agreement, as contemplated in Article 6 herein;
and
(v) Any purported termination by the Company of the
Executive's employment that is not effected
pursuant to a Notice of Termination satisfying
the requirements of Section 3.6 herein, and for
purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate employment for Good
Reason shall not be affected by the Executive's (A)
incapacity due to physical or mental illness or (B)
continued employment following the occurrence of any
event constituting Good Reason herein.
(l) "Notice of Termination" shall have the meaning given to
such term in Section 3.6.
(m) "Other Benefits" shall have the meaning given to such
term in Section 3.1(e).
(n) "Recent Average Bonus" shall have the meaning given to
such term in Section 2.2(b)(ii).
(o) "Severance Benefits" shall have the meaning given to
such term in Section 3.1.
Article 2. Employment
2.1. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, subject to the terms and conditions of this Agreement,
for the period (the "Employment Period") commencing on the date that a Change
in Control occurs (the "Change in Control Date") and ending on the third
anniversary of such date.
2.2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all
material respects with the most significant of those
held, exercised and assigned
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<PAGE> 6
at any time during the one hundred eighty (180)- day
period immediately preceding the Change in Control
Date, and (B) the Executive's services shall be
performed at the location where the Executive was
employed immediately preceding the Change in Control
Date or any office or location less than fifty (50)
miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the
Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal
investments, so long as such activities do not violate
applicable corporate policy as in effect on the Change
in Control Date and do not materially interfere with
the performance of the Executive's responsibilities as
an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that
to the extent that any such activities have been
conducted by the Executive prior to the Change in
Control Date, the continued conduct of such activities
(or the conduct of activities similar in nature and
scope thereto) subsequent to the Change in Control Date
shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the
Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary
("Annual Base Salary") which shall be paid at a
rate at least equal to twelve (12) times the
highest monthly base salary paid or payable to
the Executive by the Company in respect of the
twelve (12)-month period immediately preceding
the month in which the Change in Control Date
occurs. During the Employment Period, the
Annual
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<PAGE> 7
Base Salary shall be reviewed no more than
twelve (12) months after the last salary
increase awarded to the Executive prior to the
Change in Control Date and thereafter at least
annually. Any increase in Annual Base Salary
shall not serve to limit or reduce any other
obligation to the Executive under this
Agreement. Annual Base Salary shall not be
reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so
increased.
(ii) Annual Bonus. In addition to Annual Base
Salary, the Executive shall be awarded, for each
fiscal year ending during the Employment Period,
an annual bonus (the "Recent Average Bonus") in
cash at least equal to average annual bonus paid
to the Executive with respect to the three most
recent fiscal years of the Company completed
prior to the Change in Control Date. Each such
Recent Average Bonus shall be paid no later
than the end of the third month of the fiscal
year next following the fiscal year for which
the Recent Average Bonus is awarded, except to
the extent that the Executive shall elect to
defer the receipt of such Recent Average Bonus.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be
entitled to participate in the Company's Long
Term Incentive Plan and all savings, retirement
and incentive plans, practices, policies and
programs applicable generally to other peer
executives of the Company and on the same basis
as such peer executives, but in no event shall
such plans, practices, policies and programs
provide the Executive with benefit opportunities
less favorable than the most favorable of those
provided by the Company for the Executive under
such plans, practices, policies and programs as
in effect during the one hundred eighty (180)-
day period prior to the Change in Control Date.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the
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<PAGE> 8
Executive's family, as the case may be, shall be
eligible for participation in and shall receive
all benefits under welfare benefit plans,
practices, policies and programs provided by the
Company (including, without limitation, medical,
prescription, dental, disability, employee life,
group life, accidental death and travel accident
insurance plans and programs) to the extent
applicable generally to other peer executives of
the Company, but in no event shall such plans,
practices, policies and programs provide the
Executive with benefit opportunities less
favorable than the most favorable of those
provided by the Company for the Executive under
such plans, practices, policies and programs as
in effect during the one hundred eighty
(180)-day period prior to the Change in Control
Date.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses
incurred by the Executive in accordance with the
policies, practices and procedures of the
Company to the extent applicable generally to
other peer executives of the Company.
(vi) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe
benefits in accordance with the plans,
practices, programs and policies of the Company
in effect for other peer executives of the
Company, but in no event shall such plans,
practices, policies and programs provide the
Executive with benefit opportunities less
favorable than the most favorable of those
provided by the Company for the Executive under
such plans, practices, policies and programs as
in effect during the one hundred eighty (180)-
day period prior to the Change in Control Date.
Article 3. Termination of Employment
3.1. Without Cause; For Good Reason. In the event that
during the Employment Period either the Executive's employment is involuntarily
terminated by the Company without Cause or the Executive voluntarily terminates
of the Executive's
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<PAGE> 9
employment with the Company for Good Reason, the Executive shall be entitled to
receive from the Company severance benefits ("Severance Benefits") as follows
(but subject to Sections 3.7 and 3.8):
(a) The Executive shall receive a single lump sum
payment within thirty (30) days of the Effective
Date of Termination in an amount equal to 2.99
times the sum of (i) the highest rate of the
Executive's rate of Annual Base Salary in effect
during the twelve (12) month period prior to the
Change in Control at any time up to and including
the Effective Date of Termination and (ii) the
Recent Average Bonus.
(b) The Executive shall receive an amount, paid within
thirty (30) days of the Effective Date of
Termination, equal to the Executive's unpaid Base
Salary, accrued but unused vacation pay, earned but
unpaid bonuses with respect to the prior fiscal
year of the Company and amounts under the Company's
Long Term Incentive Plan and all other cash
entitlements ("Accrued Obligations") through the
Effective Date of Termination.
(c) The Executive shall receive an amount, paid within
thirty (30) days of the Effective Date of
Termination, equal to the product of (i) the Recent
Average Bonus and (ii) a fraction, the numerator of
which is the number of days in the current fiscal
year through the Effective Date of Termination, and
the denominator of which is 365.
(d) All welfare benefits, including medical, dental,
vision, life and disability benefits pursuant to
plans under which the Executive and/or the
Executive's family is eligible to receive benefits
and/or coverage shall be continued for a period of
thirty-six (36) months after the Effective Date of
Termination. Such benefits shall be provided to
the Executive at no less than the same coverage
level as in effect as of the Change in Control
Date. The Company shall pay the full cost of such
continued benefits, except that the Executive shall
bear any portion of such cost as was required to be
borne by key executives of the Company generally at
the Change in Control Date.
(e) All other benefits under applicable plans,
practices, programs and policies of the Company
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<PAGE> 10
("Other Benefits") shall be timely paid or
provided.
3.2. Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of any Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Effective Date
of Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 3.2 shall include without limitation, and
the Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the Company
to the estates and beneficiaries of peer executives of the Company under such
plans, programs, practices and policies relating to death benefits, if any, as
in effect with respect to other peer executives and their beneficiaries at any
time during the one hundred twenty (120)-day period immediately preceding the
Change in Control Date or, if more favorable to the Executive's estate and/or
the Executive's beneficiaries, as in effect on the date of the Executive's
death with respect to other peer executives of the Company and their
beneficiaries.
3.3. Disability. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a lump
sum in cash within thirty (30) days of the Effective Date of Termination. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 3.3 shall include, and the Executive shall be entitled after
the Effective Date of Termination to receive, disability and other benefits at
least equal to the most favorable of those generally provided by the Company to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the one hundred twenty (120)-day period immediately preceding the
Effective Date of Termination or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter generally with respect
to other peer executives of the Company and their families.
3.4. With Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period or if the Executive voluntarily terminates
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<PAGE> 11
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely payment or
provision of Other Benefits. In such case, all Accrued Obligations shall be
paid to the Executive in a lump sum in cash within thirty (30) days of the
Effective Date of Termination.
3.5. Termination in Anticipation of Change in Control.
Anything in this Agreement to the contrary notwithstanding, if the Executive's
employment with the Company is terminated prior to the date on which a Change
in Control occurs either (i) by the Company other than for Cause or (ii) by the
Executive for Good Reason, and it is reasonably demonstrated that termination
of employment (a) was at the request of an unrelated third party who has taken
steps reasonably calculated to effect a Change in Control, or (b) otherwise
arose in connection with or in anticipation of the Change in Control, then for
all purposes of this Agreement the termination shall be deemed to have occurred
upon a Change in Control and the Executive will be entitled to Severance
Benefits as provided in Section 3.1 hereof.
3.6. Notice of Termination. Any termination by the Company
for Cause or by the Executive for Good Reason shall be communicated by Notice
of Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Effective Date of Termination is other
than the date of receipt of such notice, specifies the termination date (which
date shall be not more than thirty (30) days after the giving of such notice).
The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
3.7. Withholding of Taxes. The Company shall withhold from
any amounts payable under this Agreement all federal, state, local, or other
taxes as legally shall be required to be withheld.
3.8. Certain Excise Taxes. Notwithstanding any other
provision of this Agreement to the contrary, if tax counsel selected by the
Company and acceptable to the Executive (which acceptance shall not be
unreasonably withheld) determines that any portion of any payment under this
Agreement would constitute
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<PAGE> 12
an "excess parachute payment," then the payments to be made to the Executive
under this Agreement shall be reduced (but not below zero) such that the value
of the aggregate payments that the Executive is entitled to receive under this
Agreement and any other agreement or plan or program of the Company shall be
one dollar ($1) less than the maximum amount of payments which the Executive
may receive without becoming subject to the tax imposed by Section 4999 of the
Internal Revenue Code; provided, however, that the foregoing limitation shall
not apply in the event that such tax counsel determines that the benefits to
the Executive under this Agreement on an after-tax basis (i.e., after federal,
state and local income and excise taxes) if such limitation is not applied
would exceed the after-tax benefits to the Executive if such limitation is
applied. Such tax counsel shall make such determinations, and provide to the
Company and the Executive written notice supporting such determinations, within
fifteen (15) business days after the Change in Control.
3.9. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 3.9 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
Article 4. The Company's Payment Obligations
4.1. Payment Obligations Absolute. The Company's obligation
to make the payments and the arrangements provided for herein shall be absolute
and unconditional, and shall not be affected by any circumstances, including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive or any other party. All
amounts payable by the Company hereunder shall be paid without notice or
demand. Each and every payment made hereunder by the Company shall be final,
and the Company shall not seek to recover all or any part of such payment from
the Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever. Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall have no obligation to make any payment to the
Executive hereunder to the extent, but
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<PAGE> 13
only to the extent, that such payment is prohibited by the terms of any final
order of a Federal or state court or regulatory agency of competent
jurisdiction; provided, however, that such an order shall not affect, impair,
or invalidate any provision of this Agreement not expressly subject to such
order.
4.2. Contractual Rights to Benefits. This Agreement
establishes and vests in the Executive a contractual right to the benefits to
which he is entitled hereunder. Nothing herein contained shall require or be
deemed to require, or prohibit or be deemed to prohibit, the Company to
segregate, earmark, or otherwise set aside any funds or other assets, in trust
or otherwise, to provide for any payments to be made or required hereunder. The
Executive shall not be obligated to seek other employment in mitigation of the
amounts payable or arrangements made under any provision of this Agreement, and
the obtaining of any such other employment shall in no event effect any
reduction of the Company's obligations to make the payments and arrangements
required to be made under this Agreement.
Article 5. Enforcement and Legal Remedies
5.1 Resolution of Differences Over Breaches of Agreement. In
the event of any controversy, dispute or claim arising out of, or relating to
this Agreement, or the breach thereof, or arising out of any other matter
relating to the Executive's employment with the Company or the termination of
such employment, the Company and the Executive agree that such underlying
controversy, dispute or claim shall be settled by arbitration conducted in
Pittsburgh, Pennsylvania in accordance with this Section 5.1 of the Agreement
and the Commercial Arbitration Rules of the American Arbitration Association.
The matter shall be heard and decided, and award rendered by a panel of three
(3) arbitrators. The Company and the Executive shall each select one arbitrator
from the American Arbitration Association National Panel of Commercial
Arbitrators and the American Arbitration Association shall elect a third
arbitrator from the National Panel of Commercial Arbitrators. The award
rendered by such arbitration panel shall be final and binding as between the
parties hereto and their heirs, executors, administrators, successors and
assigns, and judgment on the award may be entered by any court having
jurisdiction thereof.
5.2 Cost of Enforcement. Solely for purposes of determining
the allocation of the costs as described below, the Company will be considered
the prevailing party in a dispute if the arbitration panel determines that: (1)
the Company has not breached this Agreement and (2) the claim by the Executive
or his beneficiary was not made in good faith. Otherwise, Executive or his
beneficiary will be considered the prevailing party. In the event that the
Company is the prevailing party, the fee of the arbitrators and all necessary
expenses of the hearing (excluding
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<PAGE> 14
any attorneys' fees incurred by the Company) including stenographic reporter,
if employed, shall be paid by the other party. In the event that Executive or
his beneficiary is the prevailing party, the fee of the arbitrators and all
necessary expenses of the hearing (including all attorneys' fees incurred by
Executive or his beneficiary in pursuing his claim), including the fees of a
stenographic reporter if employed, shall be paid by the Company.
Article 6. Binding Effect; Successors
The rights of the parties hereunder shall inure to the
benefit of their respective successors, assigns, nominees, or other legal
representatives. The Company shall require any successor (whether direct or
indirect, by purchase, merger, reorganization, consolidation, acquisition of
property or stock, liquidation, or otherwise) to all or a significant portion
of the assets of the Company, as the case may be, by agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company, as the case may be, would be required to perform if no such succession
had taken place. Regardless of whether such agreement is executed, this
Agreement shall be binding upon any successor in accordance with the operation
of law and such successor shall be deemed the "Company," as the case may be,
for purposes of this Agreement.
Article 7. Term of Agreement
The term of this Agreement shall commence on the date of this
Agreement and shall continue in effect for three (3) full years. However, in
the event a Change in Control occurs during the term, this Agreement will
remain in effect for the longer of: (i) thirty-six (36) months beyond the month
in which such Change in Control occurred; or (ii) until all obligations of the
Company hereunder have been fulfilled, and until all benefits required
hereunder have been paid to the Executive or other party entitled thereto. The
term of this Agreement shall be extended automatically for one additional year
as of the third anniversary of the date hereof and each subsequent annual
anniversary date hereof, unless, no later than ninety (90) days prior to any
such renewal date, either the Board, on behalf of the Company, or the Executive
gives written notice to the other that the term of this Agreement shall not be
so extended.
Article 8. Miscellaneous
8.1. Employment Status. Neither this Agreement nor any
provision hereof shall be deemed to create or confer upon the
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<PAGE> 15
Executive prior to the occurrence of a Change in Control any right to be
retained in the employ of the Company or any subsidiary or other affiliate
thereof.
8.2. Beneficiaries. The Executive may designate one or more
persons or entities as the primary and/or contingent Beneficiaries of any
Severance Benefits owing to the Executive under this Agreement. Such
designation must be in the form of a signed writing acceptable to the Board of
the Company. The Executive may make or change such designation at any time.
8.3. Entire Agreement. This Agreement contains the entire
understanding of the Company and the Executive with respect to the subject
matter hereof.
8.4. Gender and Number. Except where otherwise indicated by
the context, any masculine term used herein also shall include the feminine;
the plural shall include the singular, and the singular shall include the
plural.
8.5. Notices. All notices, requests, demands, and other
communications hereunder must be in writing and shall be deemed to have been
duly given if delivered by hand or mailed within the continental United States
by first-class certified mail, return receipt requested, postage prepaid, to
the other party, addressed as follows:
(a) if to the Company:
Aristech Chemical Corporation
600 Grant Street
Pittsburgh, PA 15219
Attn: Chairman of the Board
(b) if to Executive, to him or her at the address set forth
at the end of this Agreement. Addresses may be changed by written notice sent
to the other party at the last recorded address of that party.
8.6. Execution in Counterparts. This Agreement may be
executed by the parties hereto in counterparts, each of which shall be deemed
to be original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
8.7. Severability. In the event any provision of this
Agreement shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Agreement, and the
Agreement shall be construed and enforced as if the illegal or invalid
provision had not been included. Further, the captions of this Agreement are
not part of the provisions hereof and shall have no force and effect.
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<PAGE> 16
8.8. Modification. No provision of this Agreement may be
modified, waived, or discharged unless such modification, waiver, or discharge
is agreed to in writing and signed by the Executive and on behalf of the
Company.
8.9. Applicable Law. To the extent not preempted by the
laws of the United States, the laws of the Commonwealth of Pennsylvania, other
than the conflict of law provisions thereof, shall be the controlling law in
all matters relating to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
ARISTECH CHEMICAL CORPORATION
By:
------------------------------
Title:
--------------------------
EXECUTIVE
---------------------------------
Name:
Address:
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<PAGE> 1
EXHIBIT 10.07
ARISTECH CHEMICAL CORPORATION
DEFERRED COMPENSATION PLAN
Aristech Chemical Corporation, a Delaware corporation, (the
"Company"), hereby establishes this Deferred Compensation Plan (the "Plan"),
effective February 22, 1996 for the purpose of attracting high quality
executives and promoting in its executives increased efficiency and an interest
in the successful operation of the Company by restoring some of the savings
opportunities and employer-provided benefits that are lost under the Aristech
Savings Plan because of legislative limits. The benefits provided under the
Plan shall be provided in consideration for services to be performed after the
effective date of the Plan, but prior to the executive's retirement.
ARTICLE 1
DEFINITIONS
1.1 ADMINISTRATOR shall mean a Committee consisting of the Chairman
and Chief Executive Officer, Senior Vice President and Chief Financial Officer,
and President and Chief Operating Officer of the Company.
1.2 ANNUAL DEFERRAL shall mean the amount of Compensation which the
Participant elects to defer for a Plan Year pursuant to Articles 2 and 3 of the
Plan.
1.3 BASE SALARY shall mean the Participant's total annual base salary
payable to such Participant at the salary rate in effect on the date specified,
but without reduction for any salary reduction contributions (i) to cash or
deferred arrangements under Section 401(k) of the Code, (ii) to a cafeteria
plan under Section 125 of the Code, or (iii) to a non-qualified deferred
compensation plan. Base salary shall not take into account any incentive
bonuses, reimbursed expenses, credits or benefits under any plan of deferred
compensation to which the Company contributes, or any additional cash
compensation or compensation payable in a form other than cash.
1.4 BENEFICIARY shall mean the person or persons or entity designated
as such in accordance with Article 9 of the Plan.
1.5 CHANGE IN CONTROL shall mean:
(a) any transaction that results in Mitsubishi Corporation
and its subsidiaries (which shall include any corporation in an
unbroken chain of corporations beginning with Mitsubishi Corporation
if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing at least fifty percent (50
percent) of the total
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combined voting power of all classes of stock in one of the other
corporations in the chain) (collectively, the "MC Group") no longer
being the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
the Securities Exchange Act of 1934, as amended, which shall in any
event include having the power to vote (or cause to be voted at the
direction of any member of the MC Group) pursuant to contract,
irrevocable proxy or otherwise) of stock possessing at least fifty
percent (50 percent) of the combined voting power of the issued and
outstanding shares of all classes of the Company's stock entitled to
vote generally in the election of directors ("Voting Stock"), whether
as a result of the issuance of securities of the Company, any direct
or indirect transfer of securities of the Company or otherwise; or
(b) approval by the stockholders of the Company of a
reorganization, merger or consolidation, unless, following such
reorganization, merger or consolidation, the MC Group beneficially
owns, directly or indirectly, stock possessing at least fifty percent
(50 percent) of the total combined voting power of the issued and
outstanding shares of all classes of Voting Stock of the corporation
resulting from such reorganization, merger or consolidation; or
(c) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company; or
(d) the sale or other disposition of 60% or more by value of
the assets of the Company other than to a corporation with respect to
which, following such sale or disposition, the MC Group beneficially
owns, directly or indirectly, stock possessing at least fifty percent
(50 percent) of the total combined voting power of the issued and
outstanding shares of all classes of Voting Stock.
1.6 COMPANY shall mean Aristech Chemical Corporation, and its
successors and assigns.
1.7 COMPANY MATCHING ACCOUNT shall mean the bookkeeping account
established for a Participant pursuant to Article 5 of the Plan.
1.8 COMPANY MATCHING CREDIT shall mean the Company's credit to the
Participant's Company Matching Account under Article 5.
1.9 COMPENSATION shall mean the sum of the Participant's Base Salary
and Performance Awards for a Plan Year.
1.10 CREDITING RATE shall mean an effective annual rate equal to one
hundred twenty-five percent (125 percent) of the 60- month rolling average of
the Ten-Year United States Treasury Notes or such other rate as determined by
the Company. Such interest
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<PAGE> 3
will be compounded on a daily basis and posted to the Participant's Account per
each pay period. The 60-month rolling average rate will be determined once each
Plan Year and will be the rate in effect as of September 30 of the year prior
to the Plan Year to which it applies as determined by the Chief Financial
Officer of the Company.
Notwithstanding the method of calculating the Crediting Rate, the
Company shall be under no obligation to purchase any investments used for
determining the Crediting Rate.
1.11 DEFERRAL ACCOUNT shall mean the bookkeeping account established
for a Participant pursuant to Article 5 of the Plan.
1.12 DEFERRAL ACCOUNT BENEFIT shall mean the benefit which may become
payable to the Participant with respect to Deferral Account B and/or C as
described in Article 5.
1.13 DEFERRED COMPENSATION PLAN shall mean this Aristech Chemical
Corporation non-qualified elective deferred compensation plan, as the same may
be amended from time to time.
1.14 DEFERRED PAYMENT YEAR means the year elected by the Participant
for the payment of a Scheduled Withdrawal from Deferral Account B and/or C,
pursuant to Articles 2 and 5 of the Plan. The Deferred Payment Year shall not
be later than the year in which the Participant will attain age 70.
1.15 DISABILITY shall mean any long term disability as defined under
the Company's long-term disability plan. The Administrator, in its complete and
sole discretion, shall determine whether a Participant is under a Disability.
The Administrator may require that the Participant submit to an examination on
an annual basis, at the expense of the Company, by a competent physician or
medical clinic selected by the Administrator to confirm the existence or
continuance of a Disability. On the basis of such medical evidence, the
determination of the Administrator as to whether or not a condition of
Disability exists or continues shall be conclusive.
1.16 EARLY RETIREMENT DATE shall mean the first day of the month
coincident with or immediately following the date a Participant terminates
employment (for reasons other than death) after attaining age 55 and being
credited with at least 10 years of Vesting Service but prior to his Normal
Retirement Date.
1.17 ELIGIBLE EMPLOYEE shall mean a member of the Corporate Management
Committee who has been designated and notified as being eligible. From time to
time, the Executive Committee of the Board may designate additional key
employees of the Company as eligible to participate in the Plan. Such
determination shall take the form of a resolution adopted by the Executive
Committee of the Board
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<PAGE> 4
identifying such employees by name or by title of position. In making such
determination, the Executive Committee of the Board shall give consideration to
the function and responsibilities of the employee, his or her past
contributions to the profitability and sound growth of the Company and such
other factors as the Board may deem appropriate. Such determination need not be
uniform and may be made selectively by the Board among the employees of the
Company.
1.18 ENROLLMENT PERIOD shall mean each month of November or such other
periods for open enrollments as may determined from time to time in the sole
discretion of the Administrator. For the initial Plan Year, the Enrollment
Period shall be March 20 through April 20, 1996.
1.19 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.20 FINANCIAL HARDSHIP shall mean an unexpected need for cash arising
from an illness, Disability, casualty loss, sudden financial reversal, or other
such unforeseeable occurrence as determined by the Administrator. Cash needs
arising from foreseeable events such as the purchase of a residence or
education expenses for children shall not, alone, be considered a Financial
Hardship.
1.21 NORMAL RETIREMENT DATE shall mean the date on which a Participant
attains age 62.
1.22 PARTICIPANT shall mean an Eligible Employee who has elected to
participate and has completed a Participation Election pursuant to Article 2 of
the Plan, and shall include both persons actively employed by the Company as
well those who have terminated employment following Normal or Early Retirement
Date and who have not received distribution of their Plan Benefit.
1.23 PARTICIPATION ELECTION shall mean the Participant's written
election to participate in the Plan.
1.24 PERFORMANCE AWARDS shall mean amounts paid in cash to the
Participant by the Company in the form of annual variable compensation or
annual bonuses or long-term incentive bonuses before reductions for deferrals
under the Plan, the Savings Plan, or other benefit plans of the Company.
1.25 PLAN BENEFIT shall mean the entire vested benefit payable to a
Participant under the Plan.
1.26 PLAN YEAR shall mean the calendar year, except that the first
Plan Year shall commence May 1, 1996 and end on December 31, 1996.
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<PAGE> 5
1.27 OTHER INCENTIVE AWARDS shall mean incentive awards paid in cash
which are not Performance Awards and which the Administrator, in its sole and
absolute discretion, may permit to be deferred.
1.28 RETIREMENT shall mean a termination of employment following
Normal or Early Retirement Date.
1.29 SALARIED PENSION PLAN shall mean the Aristech Salaried Pension
Plan, as the same may be amended from time to time.
1.30 SAVINGS PLAN shall mean the Aristech Savings Plan as it currently
exists and as it may subsequently be amended from time to time.
1.31 SCHEDULED WITHDRAWAL shall mean a distribution of all or a
portion of the Participant's Plan Benefits as elected by the Participant
pursuant to the provisions of Article 6 of the Plan.
1.32 STATUTORY LIMIT shall mean any statutory or regulatory limit on
salary reduction or matching contributions to the Savings Plan, or on
compensation taken into account in calculating employer or employee
contributions to the Savings Plan. The impact of such limits on the
Participants shall be determined by the Company based upon its best estimates
and according to procedures determined by the Administrator. Once the Company
has determined the impact of the Statutory Limits, no adjustment shall be made
to increase deferrals or Matching Credits under this Plan as a result of any
adjustments ultimately required under the Savings Plan due to actual employee
contributions or other factors.
1.33 TERMINATION OF EMPLOYMENT shall mean the Participant's employment
with the Company ceases for any reason whatsoever, whether voluntary or
involuntary, other than Retirement or death.
1.34 TOTAL AND PERMANENT DISABILITY shall have the meaning given to
that term in the Amended and Restated Aristech Salaried Pension Plan.
1.35 UNSCHEDULED WITHDRAWAL shall mean a distribution of all or a
portion of the Participant's Plan Benefit as requested by the Participant
pursuant to the provisions of Article 6 of the Plan.
1.36 VALUATION DATE shall mean the first day of the month following
the month in which Termination of Employment, death, election of Scheduled
Withdrawal, or election of Unscheduled Withdrawal occurs. In the event of
Retirement or Disability, the Valuation Date shall mean the November 30 of the
year preceding the Plan Year in which benefit payments are to be made.
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1.37 VESTING shall mean the Participant's nonforfeitable right to
receive Compensation deferred under the Plan and earnings thereon and Company
Matching Credits and earnings thereon.
1.38 VESTING SERVICE shall have the meaning given to that term under
the Salaried Pension Plan.
ARTICLE 2
PARTICIPATION
2.1 PARTICIPATION ELECTION. An Eligible Employee shall become a
Participant in the Plan on the first day of the Plan Year coincident with or
next following the date the employee becomes an Eligible Employee, provided
such Eligible Employee has submitted to the Administrator a Participation
Election. To be effective, the Eligible Employee must submit the Participation
Election to the Administrator during the Enrollment Period designated by the
Administrator. In the Participation Election Form, the Eligible Employee shall
designate a Beneficiary, the Annual Deferral for the covered Plan Year, the
Deferred Payment Year or Years (subject to the limits of Article 5.1.1) the
form of benefit distributions, and any other information or elections required
by the Administrator. Notwithstanding the foregoing, the Administrator, in its
sole discretion, may permit a newly Eligible Employee to submit a Participation
Election within 30 days of that employee becoming eligible, and deferrals shall
commence as soon as practical thereafter. To the extent that no deferrals are
ultimately made under a Participation Election, then the Eligible Employee will
no longer be considered a Participant for purposes of that Participation
Election.
2.2 ANNUAL DEFERRAL. In the Participation Election, and subject to the
restrictions in Article 3, the Eligible Employee shall designate the percentage
rate of the Annual Deferral for a the applicable Plan Year. The designated
percentage must be expressed in whole percentages. The Participation Election
shall apply to salary earned after the date of the election and paid in the
applicable Plan Year, If a Participant elects to defer from Performance Awards,
the Participation Election shall apply to Performance Awards earned in the Plan
Year after the date of the election and paid in the following Plan Year. For
example, an Eligible Employee may complete a Participation Election in November
1996 covering Performance Awards to be earned in 1997 which will be paid
(except to the extent deferred) in 1998. Notwithstanding the foregoing, upon
commencement of the Plan, Eligible Employees may elect to defer Performance
Awards to be earned in 1996 and otherwise payable in 1997.
2.3 DURATION OF ANNUAL DEFERRAL. Annual Deferrals shall commence
January 1 of the covered Plan Year and shall continue through December 31 of
that Plan Year, or, in the case of a
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Participant who has elected to defer from Performance Awards, through the date
of payment of such Performance Awards, except in the case of the first Plan
Year where deferrals will commence as soon as practical after the date of the
election and continue through December 31, 1996.
2.4 CONTINUATION OF PARTICIPATION. An Eligible Employee who has
elected to participate in the Plan by making an Annual Deferral shall continue
as a Participant in the Plan until such employee ceases to be an Eligible
Employee. A Participant shall not be eligible to elect a new Annual Deferral
unless the Participant is an Eligible Employee for the Plan Year for which the
election is made. In the event a Participant transfers to a subsidiary of
Aristech Chemical Corporation and that subsidiary does not participate in the
Plan, the Participant's Annual Deferral shall cease, and the Participant's Plan
Benefit shall be held and administered in accordance with this Plan until such
time as the benefits are distributed as originally elected by the Participant
in the Participation Election.
ARTICLE 3
EMPLOYEE DEFERRALS
3.1 DEFERRAL ELECTION. The Participation Election shall designate a
specified percentage of Base Salary and/or Performance Awards and/or Other
Incentive Awards to be deferred. Annual Deferrals under this Plan shall be
irrevocable, except as provided under Articles 6, 7, and 10 of the Plan. For
deferrals to occur, the Participant must be actively employed at the time the
Compensation would otherwise have been paid but for the deferral.
3.2 MINIMUM ANNUAL DEFERRAL. The Annual Deferral must equal or exceed
a minimum established by the Administrator. Initially, the minimum deferral is
5 percent of the Participant's Base Salary or Performance Awards.
3.3 MAXIMUM ANNUAL DEFERRAL. A Participant's Annual Deferral from Base
Salary for a Plan Year may not exceed 50% of the Participant's Base Salary. The
Annual Deferral from Performance Awards for a Plan Year may not exceed 90
percent of the Participant's Performance Awards. The Company may, in its sole
discretion, reduce the Annual Deferral to accommodate mandatory withholdings
required by law.
3.4 DEFERRAL ABOVE A FLOOR AMOUNT. A Participant can also elect to
defer only portions of the Performance Award over a floor amount specified by
the Participant which would not be deferred.
3.5 DELAY BEFORE PAYMENT OF BENEFIT. A Participant cannot elect
deferrals to a Deferral Account for which the Participant has elected a
Deferred Payment Year for scheduled withdrawal purposes
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if the deferral will not be credited to the Account at least one full calendar
year before the Deferred Payment Year.
3.6 VESTING. The Participant's right to receive Compensation deferred
under this Article 3, and earnings thereon, shall be 100 percent vested at all
times.
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ARTICLE 4
COMPANY MATCHING CREDITS
4.1 AMOUNT. The Company's Matching Credit in each Plan Year shall
equal the maximum matching contributions that would have been credited to the
Participant under the Savings Plan for the Plan Year had the Participant's
Annual Deferral been contributed to the Savings Plan and had the Statutory
Limit not been in effect; provided, however, that a Participant shall receive a
Company Matching Credit for a Plan Year if the Participant contributes the
maximum permitted elective deferral for the Plan Year under the Savings Plan.
The Company Matching Credit in each Plan Year shall be reduced by the amount of
employer matching contributions, if any, actually credited to the Participant's
account under the Savings Plan.
4.2 VESTING. The Participant's right to receive Company Matching
Credits earned in any Plan Year, and earnings thereon, shall be one hundred
percent (100 percent) vested as of the first day of the calendar year following
the year in which the Annual Deferrals generating the Company Matching Credits
were credited to the Deferral Accounts or upon death, Disability, Retirement,
Change in Control, or Termination of Plan.
ARTICLE 5
DEFERRAL ACCOUNTS AND COMPANY MATCHING ACCOUNT
5.1 DEFERRAL ACCOUNTS.
5.1.1 DEFERRAL ACCOUNTS. The Company shall establish on
its books up to three Deferral Accounts for each Participant who
elects Annual Deferrals under Article 2. The Deferral Accounts shall
be designated "Account A", "Account B" and "Account C". When
completing a Participation Election, the Participant shall indicate
the percentage of the Annual Deferral that is to be allocated to one
or more of the three Deferral Accounts. The Participant shall elect a
different Deferred Payment Year for each such Account elected,
provided, however, that Account A may only be distributed upon
Retirement and the Participant shall elect a form of payment for the
benefit to be paid upon Retirement. The election of a Deferred Payment
Year for an Account is irrevocable, except as otherwise expressly
provided herein. Once the Deferred Payment Year for an Account
arrives, the Participant shall have the option of designating a new
Deferred Payment Year for such Account applicable only to Annual
Deferrals deferred into the Account in subsequent Plan Years.
5.1.2 TIMING OF CREDITS. The Company shall credit to the
Deferral Accounts the Annual Deferrals under Article 3 as
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of the same day of the month in which the amounts would have been paid
to the Participant but for the deferral.
5.2 COMPANY MATCHING ACCOUNT.
5.2.1 COMPANY MATCHING ACCOUNT. The Company shall
establish on its books a Company Matching Account for each
Participant.
5.2.2 TIMING OF CREDITS. The Company shall credit to the
Company Matching Account the Company Matching Credits under Article 4
as of the first day of the calendar year following the year in which
the Annual Deferrals generating the Company Matching Credits were
credited to the Deferral Accounts.
5.3 CREDITING RATES. Earnings shall be credited at the Crediting Rate.
5.4 BOOKKEEPING ACCOUNTS. The Company Matching Account and Deferral
Accounts are solely an accounting device for measuring the benefits that may
become payable to a Participant under this Plan. Participants and Beneficiaries
shall at all times be general unsecured creditors of the Company for the
payment of benefits, with no special or prior right to any Company assets.
5.5 STATEMENT OF ACCOUNTS. The Administrator shall provide
periodically to each Participant a statement setting forth the balance of the
Deferral and Company Matching Accounts maintained for such Participant.
ARTICLE 6
DEFERRAL AND COMPANY MATCHING ACCOUNT BENEFITS
The provisions of this Article 6 shall apply separately to each
Deferral Account created for each Participant. In addition, the provisions of
this Article 6 shall apply to the Company Matching Account created for each
Participant. The vested balance of the Company Matching Account shall
automatically and without any election on the Participant's part be distributed
at the same time and in the same form as the Deferral Account Benefit under
Account A.
6.1 CALCULATION. The Deferral Account Benefit shall be an amount equal
to the Annual Deferrals credited to the Deferral Account plus the earnings
thereon.
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<PAGE> 11
6.2 RETIREMENT BENEFITS.
The provisions of this paragraph 6.2 apply to distributions from a
Deferral Account if the Participant elects distributions for such Account to
commence on or after Retirement.
6.2.1 ENTITLEMENT. The Participant shall be entitled to
retirement benefits under this paragraph 6.2 upon Early or Normal
Retirement.
6.2.2 FORM OF BENEFIT. The Company shall pay the Deferral
Account Benefit under this paragraph 6.2.2 in the form of benefit the
Participant elected for such Account. Permissible forms of benefits
shall be determined by the Administrator, but shall include a lump
sum, monthly installments over 5, 10 or 15 years, or an initial lump
sum with the balance paid in monthly installments over 5, 10 or 15
years. Absent an election by the Participant, the Benefit shall be
paid in monthly installments over 15 years. The Participant's election
shall be as indicated on the Participation Election on which the
Participant first elected deferrals to such Account, unless the
Participant elected a different form of benefit by a written election
filed with the Administrator at least 13 months prior to Retirement,
in which case the different form elected shall control. However, the
Administrator, in its sole discretion, may ignore any change in the
form of benefit elected by the Participant if it determines that the
ability to make such changes causes the Deferral Account Benefit to
become taxable to the Participant prior to actual receipt of the
Benefit payments. If installment payments apply, the Administrator
shall adjust the amount of each installment to reflect interest
credited to the Account during the Benefit payment period.
6.2.3 TIMING. The Company shall commence benefit payments no
later than the latest of (i) January 31 following the Participant's
Retirement, (ii) 90 days after the Participant's Retirement, or (iii)
January 31 of the Deferred Payment Year.
6.2.4 SMALL BENEFIT EXCEPTION. Notwithstanding any of the
foregoing, if at Retirement the sum of all Plan Benefits payable to
the Participant from all Deferral Accounts is no greater than $10,000,
the Administrator may, in its sole discretion, elect to pay such
benefits in a single lump sum. If the installment payments are less
than $300 each, the Administrator may, in its sole discretion, elect
to shorten the benefit payment period.
6.3 SCHEDULED WITHDRAWALS.
The provisions of this Paragraph 6.3 apply if the Participant elects a
distribution from Deferral Account B and/or C
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<PAGE> 12
by specifying a Deferred Payment Year on the Participation Election
creating such Account.
6.3.1 ENTITLEMENT. If the Participant continues to be
employed by the Company to the Deferred Payment Year, the Company
shall commence payment to the Participant of the Deferral Account
Benefit. If the Participant elects a distribution to occur after
Retirement, the distribution will be made in the year elected.
6.3.2 FORM OF BENEFIT. If the Participant is employed by the
Company at the time of distribution in the Deferred Payment Year, the
Company shall pay the Deferral Account Benefit in a single lump sum.
If the Participant has retired prior to the Deferred Payment Year,
payments shall be made as originally elected by the Participant.
6.3.3 TIMING. The Company shall pay the Benefit in March of
the year specified if the Participant is still employed by the
Company; provided, however, that the Administrator may defer
commencement of the payment of Benefits for one year if it determines,
in its sole discretion, that the Company would lose the tax deduction
for payment of the Benefit if the Benefit were paid earlier.
6.4 DISABILITY BENEFITS. In the event of the Participant's Disability,
the Company shall pay the Deferral Account Benefits to the Participant on the
date the Disability benefits commence and in the form they would have been paid
if the Participant had retired from the Company.
6.5 EARLY TERMINATION BENEFITS. If the Participant terminates
employment prior to age 55 for reasons other than Disability or death, the
Company shall pay the Deferral Account Benefit to the Participant in a lump sum
within 90 days after the last day of the month in which the termination
occurred; provided, however, that the Administrator may defer payment of the
benefit until January of the year following the Participant's termination if it
determines, in its sole discretion, that the Company would lose a tax deduction
if paid earlier.
6.6 UNSCHEDULED WITHDRAWALS.
6.6.1 GENERAL PROVISIONS. A Participant (or Beneficiary) may
request an Unscheduled Withdrawal of all or any portion of the entire
amount credited to any or all of the Participant's Deferral Accounts
and/or Company Matching Account, subject to the following
restrictions: (i) the minimum withdrawal shall be 25 percent of the
balance of the specified Account, (ii) an election to withdraw 75
percent or more of the Account balance shall be deemed to be an
election to withdraw the entire Account balance, (iii) an Unscheduled
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<PAGE> 13
Withdrawal may be made only once a year, and (iv) the Company shall
deduct (and retain) from the Unscheduled Withdrawal a forfeiture
amount of 10 percent of the amount withdrawn, or such other amount
determined by the Administrator to be necessary to maintain the
deferral of income taxes on Plan Benefits. In addition, if the
Participant is employed by the Company at the time of the withdrawal,
(i) deferrals shall cease for the year in which the election for an
Unscheduled Withdrawal is made, and (ii) the Participant shall not
recommence deferrals under the Plan until after the end of the Plan
Year following the Plan Year in which the election for the Unscheduled
Withdrawal is made.
6.6.2 FOLLOWING CHANGE IN CONTROL. If the Participant's
election for an Unscheduled Withdrawal occurs within two years after a
Change in Control, the provisions under Paragraph 6.6.1 shall apply,
except that the forfeiture amount shall be reduced to 6 percent of the
amount withdrawn.
6.6.3 TIMING OF PAYMENT. The Company shall pay the
Unscheduled Withdrawal amount within 90 days after receiving the
request under paragraph 6.6.1, and within 30 days after receiving the
request under paragraph 6.6.2.
6.7 SURVIVOR BENEFITS.
6.7.1 PRE-TERMINATION DEATH. If the Participant dies prior to
Termination of Employment for any other reason, the Company shall pay
to the Participant's Beneficiary a survivor benefit equal to the
balance of the Participant's Company Matching and Deferral Accounts.
The Company shall pay such amount to the Beneficiary in a cash lump
sum within 90 days after the Participant's death.
6.7.2 POST-TERMINATION DEATH. If the Participant dies after
Termination of Employment, the Company shall pay to the Participant's
Beneficiary a survivor benefit equal to the balance of the
Participant's Company Matching and Deferral Accounts, with payment
made in a cash lump sum within 90 days after the Participant's death;
provided, however, that if the Participant was receiving benefit
installments at the time of death, the Company shall not pay the
benefits in a lump sum, but shall continue to pay such benefit
installments to the Beneficiary at the same time they would have been
paid to the Participant.
6.7.3 ALTERNATE FORMS OF PAYMENT. Within 60 days after the
Participant's death, the Beneficiary may petition the Administrator
for a different form of benefit payment than that provided above. The
Administrator shall have sole discretion in determining whether to
grant or deny the Beneficiary's petition.
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<PAGE> 14
6.7.4 SMALL BENEFIT EXCEPTION. Notwithstanding any of the
foregoing, if the sum of all benefits payable to the Beneficiary from
all Deferral Accounts is no greater than $10,000, the Administrator
may, in its sole discretion, elect to pay such benefits in a single
lump sum. If the installment payments are less than $300 each, the
Administrator may, in its sole discretion, elect to shorten the
Benefit payment period.
ARTICLE 7
CONDITIONS RELATED TO BENEFITS
7.1 NONASSIGNABILITY. The benefits provided under the Plan may not be
alienated, assigned, transferred, pledged or hypothecated by or to any person
or entity, at any time or any manner whatsoever. These benefits shall be exempt
from the claims of creditors of any Participant or other claimants and from all
orders, decrees, levies, garnishment or executions against any Participant to
the fullest extent allowed by law.
7.2 FINANCIAL HARDSHIP DISTRIBUTION. Upon a finding that the
Participant or the Beneficiary has suffered a Financial Hardship, the
Administrator may in its sole discretion, permit the Participant to cease any
on-going deferrals and accelerate distribution of benefits under the Plan in
the amount reasonably necessary to alleviate such Financial Hardship. If a
distribution is to be made to a Participant on account of Financial Hardship,
the Participant may not make deferrals under the Plan until one entire Plan
Year following the Plan Year in which a distribution based on Financial
Hardship was made has elapsed. A Disability shall be considered a Financial
Hardship.
7.3 NO RIGHT TO COMPANY ASSETS. The benefits paid under the Plan shall
be paid from the general funds of the Company, and the Participant and any
Beneficiary shall be no more than unsecured general creditors of the Company
with no special or prior right to any assets of the Company for payment of any
obligations hereunder.
7.4 PROTECTIVE PROVISIONS. The Participant shall cooperate with the
Company by furnishing any and all information requested by the Administrator,
in order to facilitate the payment of benefits hereunder.
7.5 WITHHOLDING. The Participant or the Beneficiary shall make
appropriate arrangements with the Company for satisfaction of any federal,
state or local income tax withholding requirements and Social Security or other
employee tax requirements applicable to the payment of benefits under the Plan.
If no other arrangements are made, the Company may provide, at its discretion,
for such withholding and tax payments as may be required.
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ARTICLE 8
ADMINISTRATION OF PLAN
The general administration of the Plan and the responsibility for
carrying out its provisions shall be vested in the Executive Committee of the
Board of Directors as Plan Administrator.
The Administrator shall have the sole and absolute authority and
discretion to administer the Plan and interpret, construe and apply its
provisions in accordance with its terms. The Administrator shall further
establish, adopt or revise such rules and regulations as it may deem necessary
or advisable for the administration of the Plan. All decisions of the
Administrator shall be final and binding. The individuals serving on the
committee shall, except as prohibited by law, be indemnified and held harmless
by the Company from any and all liabilities, costs, and expenses (including
legal fees), to the extent not covered by liability insurance arising out of
any action taken by any member of the committee with respect to the Plan,
unless such liability arises from the individual's own gross negligence or
willful misconduct.
ARTICLE 9
BENEFICIARY DESIGNATION
The Participant shall have the right, at any time, to designate any
person or persons as Beneficiary (both primary and contingent) to whom payment
under the Plan shall be made in the event of the Participant's death. The
Beneficiary designation shall be effective when it is submitted in writing to
the Administrator during the Participant's lifetime on a form prescribed by the
Administrator. The submission of a new Beneficiary designation shall cancel all
prior Beneficiary designations.
If a Participant fails to designate a Beneficiary as provided above,
or if the Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if every person designated as
Beneficiary predeceases the Participant or dies prior to complete distribution
of the Participant's benefits, then the Administrator shall direct the
distribution of such benefits to the Participant's estate.
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ARTICLE 10
AMENDMENT AND TERMINATION OF PLAN
10.1 AMENDMENT OF PLAN. The Company may at any time amend the Plan in
whole or in part, provided, however, that such amendment (i) shall not decrease
the balance of the Participant's Deferral Accounts or Company Matching Account
at the time of such amendment and (ii) shall not retroactively decrease the
applicable Crediting Rates of the Plan prior to the time of such amendment. The
Company may amend the Crediting Rates of the Plan prospectively, in which case
the Company shall notify the Participant of such amendment in writing within
thirty (30) days after such amendment. Notwithstanding the foregoing, the
Company may not amend or terminate the Plan for two (2) entire Plan Years
following a Change In Control without the consent of a majority of the
Participants.
10.2 TERMINATION OF PLAN. The Company may at any time terminate the
Plan; provided, however, that such termination (i) shall not decrease the
balance of the Participant's Deferral Accounts or Company Matching Account at
the time of such termination and (ii) shall not retroactively decrease the
applicable Crediting Rates of the Plan prior to the time of such termination.
If the Company terminates the Plan, the date of such termination shall be
treated as the date of Termination of Employment for the purpose of calculating
Plan benefits, and the Company shall pay to the Participant the benefits the
Participant is entitled to receive under the Plan as monthly installments over
a three (3) year period commencing within ninety (90) days. In the event the
Plan is terminated within two (2) years following a Change In Control, the
Participant's Account Balance shall be credited with earnings during the
foregoing three (3) year installment period at the Crediting Rate method in
effect prior to the Change In Control.
10.3 CONSTRUCTIVE RECEIPT TERMINATION. In the event the Administrator
determines that any amounts deferred under the Plan have been constructively
received by Participants and must be recognized as income for federal income
tax purposes before such amounts would otherwise be paid hereunder, such
amounts shall be distributed to Participants at a time and in a form
appropriate to facilitate the payment of taxes as may be determined by the
Administrator. The determination of the Administrator under this Article 10.3
shall be binding and conclusive.
ARTICLE 11
MISCELLANEOUS
11.1 SUCCESSORS OF THE COMPANY. The rights and obligations of the
Company under the Plan shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Company.
11.2 EXEMPT ERISA PLAN. The Plan is intended to be an unfunded plan
maintained primarily to provide deferred compensation
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<PAGE> 17
benefits for "a select group of management or highly compensated employees"
within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be
exempt from Parts 2, 3 and 4 of Title I of ERISA.
11.3 TRUST. The Company shall be responsible for the payment of all
benefits under the Plan. At its discretion, the Company may establish one or
more grantor trusts for the purpose of providing for payment of benefits under
the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall
be subject to the claims of the Company's creditors. Benefits paid to the
Participant from any such trust shall be considered paid by the Company for
purposes of meeting the obligations of the Company under the Plan.
11.4 EMPLOYMENT NOT GUARANTEED. Nothing contained in the Plan nor any
action taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to continued employment with the Company.
11.5 GENDER, SINGULAR AND PLURAL. All pronouns and variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, as the identity
of the person or persons may require. As the context may require, the singular
may be read as the plural and the plural as the singular.
11.6 CAPTIONS. The captions of the articles and paragraphs of the Plan
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
11.7 VALIDITY. If any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provisions of the Plan.
11.8 WAIVER OF BREACH. The waiver by the Company of any breach of any
provision of the Plan by the Participant shall not operate or be construed as a
waiver of any subsequent breach by the Participant.
11.9 NOTICE. Any notice or filing required or permitted to be given
to the Company under the Plan shall be sufficient if in writing and
hand-delivered, or sent by first class mail to the principal office of the
Company, directed to the attention of the Administrator. Such notice shall be
deemed given as of the date of delivery, or, if delivery is made by mail, as of
the date shown on the postmark.
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ARTICLE 12
CLAIMS AND REVIEW PROCEDURES
12.1 CLAIMS PROCEDURE. The Plan Administrator or its designee shall
notify a Participant in writing, within ninety (90) days after his or her
written application for benefits, of his or her eligibility or noneligibility
for benefits under the Plan. If the Plan Administrator or its designee
determines that a Participant is not eligible for benefits or full benefits,
the notice shall set forth (1) the specific reasons for such denial, (2) a
specific reference to the provisions of the Plan on which the denial is based,
(3) a description of any additional information or material necessary for the
claimant to perfect his or her claim, and a description of why it is needed,
and (4) an explanation of the Plan's claims review procedure and other
appropriate information as to the steps to be taken if the Participant wishes
to have the claim reviewed. If the Plan Administrator or its designee
determines that there are special circumstances requiring additional time to
make a decision, the Plan Administrator or its designee shall notify the
Participant of the special circumstances and the date by which a decision is
expected to be made, and may extend the time for up to an additional ninety-day
period.
12.2 REVIEW PROCEDURE. If a Participant is determined by the Plan
Administrator not to be eligible for benefits, or if the Participant believes
that he or she is entitled to greater or different benefits, the Participant
shall have the opportunity to have such claim reviewed by the Plan
Administrator by filing a petition for review with the Plan Administrator
within sixty (60) days after receipt of the notice issued by the Plan
Administrator. Said petition shall state the specific reasons which the
Participant believes entitle him or her to benefits or to greater or different
benefits. The Plan Administrator shall notify the Participant of its decision
in writing within the sixty-day period, stating specifically the basis of its
decision, written in a manner calculated to be understood by the Participant
and the specific provisions of the Plan on which the decision is based. If,
because of the need for additional information, the sixty-day period is not
sufficient, the decision may be deferred for up to another sixty-day period at
the election of the Plan Administrator, but notice of this deferral shall be
given to the Participant. In the event of the death of the Participant, the
same procedures shall apply to the Participant's Beneficiaries.
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ARTICLE 13
EXECUTION
In order to record the due adoption of this Plan, the Company has
caused the execution hereof by its authorized officers, as of the 22nd day of
February, 1996.
ARISTECH CHEMICAL CORPORATION
ATTEST:
By: By:
---------------------------- -------------------------
General Counsel & Secretary Chairman of the Board and Chief
Executive Officer
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<PAGE> 1
EXHIBIT 10.09
ARISTECH CHEMICAL CORPORATION
EXECUTIVE LIFE INSURANCE PLAN
Article 1
THE PLAN
1.1 NAME. This plan shall be known as the Aristech Chemical Corporation
Executive Life Insurance Plan (the "Plan"). The Plan is effective February 22,
1996.
1.2 PURPOSE. The Company has established the Plan to provide designated
employees with additional life insurance benefits. The Plan is intended to
qualify as a life insurance employee benefit plan as described in Revenue
Ruling 64-328.
Article 2
DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following words and phrases
shall have the meanings set forth below unless the context plainly requires a
different meaning. When the defined meaning is intended, the term is
capitalized:
2.1.1 "ADMINISTRATOR" means a committee consisting of the Chairman and
Chief Executive Officer, Senior Vice President and Chief Financial Officer,
and President and Chief Operating Officer of the Company.
2.1.2 "BASE SALARY" of a Participant means the total annual base salary
payable to such Participant at the salary rate in effect on the date
specified, but without reduction for any salary reduction contributions (i)
to cash or deferred arrangements under Section 401(k) of the Code, (ii) to a
cafeteria plan under Section 125 of the Code, or (iii) to a non-qualified
deferred compensation plan. Base salary shall not take into account any
incentive bonuses, reimbursed expenses, credits or benefits under any plan of
deferred compensation to which the Company contributes, or any additional
cash compensation or compensation payable in a form other than cash.
2.1.3 "BASIC SURVIVOR BENEFIT" means the Company provided benefit described
in Article 4.
<PAGE> 2
2.1.4 "COVERAGE ADJUSTMENT DATE" means the date during each year, selected
by the Company from time to time in its discretion, on which changes or
increases in coverage will take effect. Initially, the Coverage Adjustment
Date will be June 1 and will first be effective June 1, 1997.
2.1.5 "DISABILITY" means, in the case of a Participant who is covered by an
individual or group long-term disability policy paid for by the Company,
total disability as defined in such policy without regard to any waiting
period. If a Participant is covered by both an individual and a group
policy, Disability occurs under this Plan when total disability occurs under
either the individual or the group policy, also without regard to any waiting
period. For Participants not covered by such a policy, Disability means the
Participant suffering a sickness, accident or injury which, in the judgment
of a physician satisfactory to the Company, prevents the Participant from
performing substantially all of his or her normal duties for the Company. As
a condition to any benefits, the Company may require the Participant to
submit to such physical or mental evaluations and tests as the Company deems
appropriate.
2.1.6 "ELIGIBLE EMPLOYEE" means a member of the Corporate Management
Committee or an executive or professional employee of the Company who is
selected to participate in the Plan by the Executive Committee of the Board
of Directors (or its designee). Such determination shall take the form of a
resolution adopted by the Executive Committee of the Board identifying such
employees by name or by title of position. In making such determination, the
Executive Committee of the Board shall give consideration to the function and
responsibilities of the employee, his or her past contributions to the
profitability and sound growth of the Company and such other factors as the
Board may deem appropriate. Such determination need not be uniform and may
be made selectively by the Board among the employees of the Company.
2.1.7. "ENDORSEE" means either (i) the Participant, or (ii) the person or
trust designated in writing by the Participant to hold and exercise Policy
ownership rights as described in Article 4.
2.1.8 "INSURER" means any insurance company issuing a Policy under the
terms of this Plan.
2.1.9 "NAME FIDUCIARY" means Aristech Chemical Corporation, its successors
or assigns.
2.1.10 "OPTIONAL COVERAGE" means the Participant elected benefit life
insurance coverage on the life of a Participant
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<PAGE> 3
in an amount equal to either one or two times the Participant's Base Salary
in effect on the February 1 preceding the Participant's date of death, as
elected by a Participant. Optional Coverage is in addition to Basic Survivor
Benefit. The Participant may change the Optional Coverage election once a
year. Such election changes, and any other changes, including changes based
on changes in Base Salary, are subject to underwriting and other rules
established by the Insurer and the Company from time to time. The
Participant may discontinue Optional Coverage at any time by providing
written notice to the Company and conforming to such other rules as provided
by the Company from time to time. The Optional Coverage and the voluntary
contributions for same will terminate within thirty days after the
Participant delivers written notice to the Company.
2.1.10 "PARTICIPANT" means only a member of the Corporate Management
Committee or an executive or professional employee of the Company who is
specifically designated as a Participant by or under the direction of the
Executive Committee of the Board of Directors.
2.1.11 "POLICY" means the insurance policy purchased by the Company on the
life of each Participant, together with any supplementary contracts issued by
the Insurer.
2.1.12 "RETIREMENT" means termination of a Participant's employment with
the Company or its affiliates for reasons other than death or Disability
after the Participant has either (i) attained age fifty-five (55) and
completed at least ten (10) years of Vesting Service with the Company or (ii)
attained age 62.
2.1.13 "SALARIED PENSION PLAN" shall mean the Aristech Salaried Pension
Plan, as the same may be amended from time to time.
2.1.14 "VESTING SERVICE" shall have the meaning given to that term under
the Salaried Pension Plan.
2.2 GENDER AND NUMBER. Except as otherwise indicated by context,
masculine terminology used herein also includes the feminine and neuter, and
terms used in the singular may also include the plural.
Article 3
PARTICIPATION
3.1 IN GENERAL. The plan year for the Plan shall be May 1 to April 30,
unless and until changed by the Company. Each Participant shall be eligible to
participate in this Plan as of the
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<PAGE> 4
first May 1 following designation as a Participant by the Company. The Company
shall establish enrollment periods for election of Optional Coverage from time
to time. Any changes in elections shall take effect the following June 1,
unless otherwise specified by the Company.
3.2 PARTICIPATION CONDITIONS. To participate in and receive benefits under
this Plan, each Participant agrees to observe all rules and regulations
established by the Company for administering the Plan and shall abide by all
decisions of the Company in the construction and administration of the Plan.
3.3 INSURABILITY. Eligible Employees are not automatically entitled to all
insurance coverage offered under the Plan. Each Eligible Employee will be
covered up to the amount of guaranteed issue, if any, determined by the
Insurer, but must satisfy the Insurer's requirements for obtaining additional
life insurance before becoming covered for additional amounts under the Plan.
3.4 COMMENCEMENT OF COVERAGE. An Eligible Employee will be covered under
the Plan when coverage is approved by the Insurer.
3.5 INCREASES IN COVERAGE. When a Participant's Salary is increased, the
amount of life insurance coverage under this Plan will increase on the next
Coverage Adjustment Date, except as provided in this Section 3.5. Any such
increase in coverage will not take effect until such additional coverage is
approved by the Insurer, and a Participant may be required to satisfy the
Insurer's requirements for obtaining additional insurance before being covered
for an additional amount of life insurance coverage under the Plan. A
Participant's coverage under the Plan will be limited to the coverage issued by
the Insurer, less any amount required for recovery of the Company's premium
payments.
3.6 DECLINING COVERAGE. An Eligible Employee may decline coverage under the
Plan. However, any such Eligible Employee will be required to satisfy the
Insurer's requirements for obtaining insurance before being covered under the
Plan at a later date.
Article 4
POLICY OWNERSHIP/PREMIUMS
4.1 POLICY OWNERSHIP
4.1.1 COMPANY. The Company shall own each Policy, shall have the right to
exercise all incidents of ownership in the Policy, and, except as provided in
Section 4.1.2, shall have the right to receive the Policy values.
4.1.2 ENDORSEE'S INTEREST. Subject to the provisions of Article 8, the
Participant shall have the right to designate
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<PAGE> 5
beneficiaries of the Policy as follows, and pursuant to rules established by
the Company from time to time.
4.1.2.1 BASIC INTEREST. The Endorsee shall have the right to designate
the beneficiary of the death proceeds of the Policy in an amount equal to the
Basic Survivor Benefit. The Endorsee shall also have the right to elect and
change settlement options that may be permitted for such beneficiaries.
4.1.2.2 OPTIONAL INTEREST. The Endorsee shall also have the right to
designate the beneficiary of the death proceeds of the Policy in an amount
equal to the Optional Coverage if an Endorsee has made on election for
Optional Coverage.
4.2 PREMIUMS. The Company shall pay each premium as it comes due. The
Participant shall then reimburse the Company for any Optional Coverage elected
in an amount calculated using a schedule provided by time to time by the
Company. The Company may adjust this schedule from time to time as it deems
necessary. Such reimbursement shall be made at such times and in such manner
as specified by the Company from time to time. The Company shall then impute
as income to the Participant an amount equal to the current term rate for the
Participant's age multiplied by the death benefit payable to the beneficiaries
designated by the Endorsee under Section 4.1.2, less any amounts reimbursed to
the Company. The "current term rate" shall mean the minimum amount required to
be imputed to the Participant under Revenue Rulings 64-328 and 66-110, or any
subsequent applicable authority.
Article 5
ASSIGNMENT
The Participant shall have the right to assign without consideration any part
or all of his or her interests in the Policy and in this Plan to any person,
entity or trust by execution of a written assignment delivered to the Company.
Article 6
DISABILITY
If a Participant suffers a Disability, but is not terminated, then the
Endorsee's rights under this Plan shall continue unaffected. If the
Participant's employment with the Company terminates by reason of the
Participant's Disability, the Endorsee's rights under this Plan shall continue
as if the Participant remained employed until the Participant recovers from
such Disability, except that the Participant shall not be able to continue any
Optional Coverage. During the period of the Disability, the Participant
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<PAGE> 6
shall be deemed to have a Base Salary equal to that in effect on the date the
Disability became effective.
Article 7
TERMINATION OF EMPLOYMENT
7.1 TERMINATION OF EMPLOYMENT. The Participant's participation in this Plan
shall terminate on the Participant's termination of employment with the Company
for any reason other than the participant's death.
7.2 EFFECT OF TERMINATION.
7.2.1 TERMINATION PRIOR TO RETIREMENT. Upon termination of this Plan or
termination of the Participant's employment with the Company prior to
Retirement, the Endorsee's interests shall automatically lapse; provided,
however, that the Participant, upon termination, may elect to pay the Company
the greater of: (i) an amount equal to the cumulative premiums paid by the
Company for the Policy or (ii) the Policy cash value, less the amounts
reimbursed the Company by the participant, Upon such payment, the Company
shall assign all of its rights and interests in the Policy to the
Participant.
7.2.2 RETIREMENT. In the event of the Participant's Retirement from the
Company (or in the fifteenth year after the effective date of the policy,
whichever is later), the Company will withdraw from Policy cash value an
amount equal to the cumulative premiums paid by the Company for the Policy,
less the amounts reimbursed the Company by the Participant, and the Company
shall assign all of its rights and interests in the Policy to the
Participant. Notwithstanding the foregoing, a Participant shall have no
rights to any Policy cash value prior to Retirement or the fifteenth year
after the effective date of the policy, whichever is later.
7.2.3 INCOME TAXES. The Participant shall be responsible for any income
taxes that may be due as a result of taking ownership of the Policy.
Article 8
INSURER
Each Insurer shall be bound only by the provisions of and endorsements on its
Policy, and any payments made or actions taken by it in accordance therewith
shall fully discharge it from all claims, suits and demands of all persons.
The Insurer shall in no way be bound by or be deemed to have notice of the
provisions of this Plan. In addition, a Participant's beneficiary designation
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<PAGE> 7
may be certified by the Company to the Insurer, and the Insurer shall be
entitled to rely on such certification in paying any benefits hereunder.
Article 9
CLAIMS PROCEDURE
9.1 CLAIMS PROCEDURE. The Company shall notify a Participant, Endorsee or
beneficiary ("claimant") in writing, within ninety (90) days of his or her
written application for benefits, of his or her eligibility or noneligibility
for benefits under the Plan. If the Company determines that a claimant is not
eligible for benefits or full benefits, the notice shall set forth (1) the
specific reasons for such denial, (2) a specific reference to the provisions of
the Plan on which the denial is based, (3) a description of any additional
information or material necessary for the claimant to perfect his or her claim,
and a description of why it is needed, and (4) an explanation of the Plan's
claims review procedure and other appropriate information as to the steps to be
taken if the claimant wishes to have the claim reviewed. If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety- day period.
9.2 REVIEW PROCEDURE. The following claims procedures shall be used for the
Plan:
A. The Named Fiduciary shall notify the Participant and, where
appropriate, the beneficiaries of the Policy, of their right to claim benefits
under the claims procedures, shall make forms available for filing of such
claims, and shall provide the name of the person or persons with whom such
claims should be filed.
B. The Named Fiduciary shall establish procedures for action upon claims
initially made and the communication of a decision to the claimant promptly
and, in any event, not later than sixty (60) days after the date of the
claim. The claim may be deemed by the claimant to have been denied for
purposes of further review described below in the event a decision is not
furnished to the claimant within such sixty (60) day period. Every claim for
benefits which is denied shall be denied by written notice setting forth in a
manner calculated to be understood by the claimant (1) the specific reason or
reasons for the denial, (2) specific reference to any provisions of this Plan
on which denial is based, (3) description of any additional material or
information necessary for the claimant to perfect his claim with an
explanation of why such material or information is necessary,
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<PAGE> 8
and (4) an explanation of the procedure for further reviewing the denial of
the claim under the Plan.
C. The Named Fiduciary shall review all claim denials. The review given
after denial of any claim shall be a full and fair review with the claimant
or his duly authorized representative having one hundred eighty (180) days
after receipt of denial of his claim to request such review, having the right
to review all pertinent documents and the right to submit issues and comments
in writing.
D. The Named Fiduciary shall issue a decision not later than sixty (60)
days after the receipt of a request for review from a claimant unless special
circumstances, such as the need to hold a hearing, require a longer period of
time, in which case a decision shall be rendered as soon as possible but not
later than one hundred and twenty (120) days after receipt of the claimant's
request for review. The decision on review shall be in writing and shall
include specific reasons for the decision written in a manner calculated to
be understood by the claimant with specific reference to any provisions of
this Plan on which the decision is based. All actions of the Named Fiduciary
shall be conclusive on all persons interested in the Plan except to the
extent otherwise specifically indicated herein.
Article 10
MISCELLANEOUS
10.1 ACTIONS OF THE COMPANY. All determinations, interpretations, rules,
and decisions of the Company (or its designee) shall be conclusive and binding
upon all persons having or claiming to have any interest or right under the
Plan.
10.2 DELEGATION. The Company shall have the power to delegate specific
duties and responsibilities to officers or other employees of the Company or
other individuals or entities. Any delegation by the Company may allow further
delegations by the individual or entity to whom the delegation is made. Any
delegation may be rescinded by the Company at any time. Each person or entity
to whom a duty or responsibility has been delegated shall be responsible for
the exercise of such duty or responsibility and shall not be responsible for
any act or failure to act of any other person or entity.
10.3 REPORTS AND RECORDS. The Company is the administrator for the Plan,
and the Company and those to whom the Company has delegated duties under the
Plan shall keep records of all their proceedings and actions and shall maintain
books of account, records, and other data as shall be necessary for the proper
administration of the Plan and for compliance with applicable law.
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<PAGE> 9
10.4 FINANCES. The costs of the Plan shall be borne by the Company.
10.5 BINDING EFFECT. This Plan shall bind the Endorsee, the Participant,
their heirs, executors, administrators and transferees, and the Company and any
Policy beneficiary.
10.6 TERMINATION. The Company expects the Plan to be permanent, but
necessarily must, and hereby does, reserve the right to terminate the Plan at
any time for any reason and without notice.
10.7 NO GUARANTY OF EMPLOYMENT. The adoption and maintenance of the Plan
shall not be deemed to be a contract of employment between the Company and any
Participant. Nothing contained herein shall give any Participant the right to
be retained in the employ of the Company or to interfere with the right of the
Company to discharge any Participant at any time, nor shall it give the Company
the right to require any Participant to remain in its employ or to interfere
with the Participant's right to terminate employment at any time.
10.8 LIMITATION ON LIABILITY. The Company does not guarantee benefits
payable under any Policy described or referred to herein, and any benefits
thereunder shall be the exclusive responsibility of the Insurer that is
required to provide such benefits under such policy.
10.9 BENEFITS PROVIDED THROUGH THIRD PARTIES. If there is any conflict or
inconsistency between the description of benefits contained in this Plan and
Policy, the terms of the Policy shall control. Specifically, if any benefits
are excluded under a Policy, then such benefits shall be excluded hereunder as
well. By way of example, and not limitation, if the payment of benefits under
a Policy is excluded because of death resulting from suicide, then no such
benefits shall be payable under this plan in such circumstance.
10.10 NON-ALIENATION. Except for transfers, without consideration, to the
Endorsee, no benefit payable at any time under this Plan shall be subject in
any manner to alienation, sale, transfer, assignment, pledge, attachment, or
encumbrance of any kind.
10.11 GOVERNING LAW. This Executive Survivor Plan, and the rights of the
parties hereunder, shall be governed by and construed pursuant to the laws of
the Commonwealth of Pennsylvania, except to the extent such laws are preempted
by the laws of the United States of America.
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<PAGE> 10
10.12 EXECUTION. In order to record the due adoption of this Plan, the
Company has caused the execution hereof by its authorized officers, as of the
22nd day of February, 1996.
ARISTECH CHEMICAL CORPORATION
ATTEST:
By: By:
--------------------------- -----------------------------
General Counsel & Secretary Chairman of the Board and
Chief Executive Officer
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<PAGE> 1
EXHIBIT 10.10
LONG TERM DISABILITY PLAN
- -------------------------------------------------------------------------------
The Aristech Chemical Corporation Long Term Disability Plan provides
continuation of income in the event you are unable to work because of an
accident or sickness. Your benefit is based on compensation which includes your
base salary and annual variable bonus.
The benefits described in this summary outline the essential features of the
individual and special group insurance contract in general terms for
participants age 60 and under. The official and controlling provisions are
contained in the contracts themselves. In the event of a discrepancy, the
contract provisions will prevail. In this summary, Aristech Chemical
Corporation is referred to as the "Company", and the Long Term Disability Plan
is referred to as the "LTDP" or the "Plan."
OVERVIEW
- -------------------------------------------------------------------------------
o The Long Term Disability Plan provides you with income should you be
sick or hurt and unable to work.
o Disability benefits commence 180 days form the date of your
disability.
o Disability benefits continue until you reach age 65 (so long as you
are disabled).
o Eligible compensation includes your base salary plus the average of
your annual variable bonus for the last three years.
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November 1996 Page 1
<PAGE> 2
PLAN PROVISIONS
- -------------------------------------------------------------------------------
ELIGIBILITY You are eligible to participate in the Plan if
you are on the Corporate Management Committee
or a key executive selected by the Executive
Committee of the Board of Directors.
PARTICIPATION Before coverage begins, you must:
1. Complete a Confidential Questionnaire.
2. Cooperate in providing disability insurance
underwriting requirements which may
include, but are not limited to, a medical
exam, if requested.
3. Complete enrollment forms and sign
insurance application(s).
4. Submit all forms to Mullin Consulting,
Inc., the Company's consultant for the
Plan.
COVERAGE COMMENCES New coverage will be subject to approval by
the insurance carrier. Your individual
coverage does not commence until the insurance
carrier issues a policy. If the insurance
carrier does not approve the issuance of
individual coverage, your benefit will be
limited to the amount provided by the special
group contract.
PLAN BENEFITS Your benefit will be 60% of base salary plus
annual variable bonus, up to a maximum monthly
benefit amount of $15,000.
The first $6,000 of your monthly benefit will
be provided through a Paul Revere special
group insurance contract. (A separate Summary
Plan Description for the special group
coverage will be provided by Paul Revere). Any
coverage in excess of $6,000 a month will be
provided by an individual Paul Revere
contract. This summary describes the
provisions of the individual contract only.
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Page 2
<PAGE> 3
PLAN PROVISIONS
- --------------------------------------------------------------------------------
ELIMINATION PERIOD The benefits provided under the individual
contract will commence 180 days after you have
become totally disabled.
MAXIMUM BENEFIT TOTAL DISABILITY STARTING: BENEFITS PAYABLE:
PERIOD FOR TOTAL Before age 61 To Age 65
DISABILITY At age 61 but before age 62 48 months
At age 62 but before age 63 42 months
At age 63 but before age 64 36 months
At age 64 but before age 65 30 months
At age 65 but before age 75 24 months
At or after age 75 12 months
BENEFIT INCREASES Future increases in coverage will occur once
each year on a pre-determined date selected by
the Company. When you receive an increase in
compensation, the amount of disability coverage
will increase on the next "Coverage Adjustment
Date." Currently, the Coverage Adjustment Date
is June 1. Provision has been made to allow
automatic increases in coverage up to the
insurance carrier's limit. If your benefit
exceeds that limit, you will be required to
provide evidence of insurability, and your
benefit will be limited to the amount of
coverage issued by the insurance carrier.
TAXATION OF The Company will include an amount equal to the
DISABILITY BENEFITS total annual premium for both your group and
individual coverage in your reportable income,
which will cause any benefit payments you
receive to be income tax free.
TERMINATION Your individual coverage ends when you terminate
employment with the Company, unless you elect to
continue the coverage at your expense.
The Company must be notified in writing within
60 days after your termination date that you
wish to continue the policy.
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<PAGE> 4
PLAN PROVISIONS
- --------------------------------------------------------------------------------
DEFINITION OF Your monthly benefit will be determined once
COMPENSATION each year based on the combined total of the
following:
1. Your base salary as of the Coverage
Adjustment Date, plus
2. The average of your annual variable bonus
for the last three years.
If you have not been eligible for three bonuses,
your benefit will be based on the average of the
number of bonuses actually received. If you have
been eligible for three bonuses but received no
bonus for one or more years, your benefit will
be based on the average of three which may
include zero for one or more years.
EXAMPLE OF At the time of your benefit adjustment, your
COMPENSATION compensation considered in determining your
coverage will be calculated as follows:
Current Salary $200,000
Average Bonus 100,000
--------
Eligible Compensation $300,000
----------------------------------------------
Annual Variable Bonus
---------------------
Most Recent $125,000
Preceding Year $100,000
2 Years Preceding $ 75,000
----------------- --------
3-Year Average $100,000
-----------------------------------------------
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Page 4
<PAGE> 5
CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RENEWING COVERAGE Your individual insurance contract is guaranteed
renewable for your lifetime, as long as you
continue to work. Should you terminate
employment at the Company, you have the option
of continuing the coverage at your expense.
Premium rates will be based on your age as of
the original effective date of your coverage if
you are under age 65. If you are 65 or older,
rates will be based on your attained age and the
rates in effect at the time of your renewal.
TOTAL DISABILITY You are considered totally disabled by the
insurance carrier if you are unable to perform
the substantial and material duties of your own
occupation and are under the care of a
physician.
PRESUMPTIVE CLAUSE If injury or sickness results in the total and
permanent loss of speech, hearing in both ears,
sight in both eyes, or use of two limbs, you
will be considered totally disabled even if you
are able to work and are not under the care of
a physician.
RESIDUAL DISABILITY Residual disability benefits are paid in
BENEFITS accordance with contract provisions when you
suffer a loss of compensation of at least 20%
after returning to work from a disability.
RECOVERY BENEFIT A recovery benefit is payable if you return to
work full time, are not eligible for any other
disability benefit under the policy, and suffer
an income loss of at least 20%. The amount of
your benefit will be based on contract
provisions.
COST OF LIVING After you have been totally or residually
ADJUSTMENT disabled for 12 months, your benefit will be
increased 4% annually while you continue to be
disabled until age 65.
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<PAGE> 6
CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
BENEFIT INDEXING An indexing provision prevents the residual
benefit from being reduced due to inflation.
Commencing after 12 months of continuous
disability, the insurance carrier will adjust
your prior compensation on an annual basis while
you continue to be disabled until age 65.
RECURRENT DISABILITY Any disability which recurs within 12 months
will be considered the same disability and not
subject to a new 180-day elimination period.
SURVIVOR BENEFIT If you should die prior to age 65 while
receiving total disability benefits, your
survivor will receive an added one-time benefit
of three times the maximum monthly amount paid
in a lump sum.
REHABILITATION Rehabilitation benefits are provided in the
event of total and/or residual disability.
BENEFITS AFTER AGE 65 IF You may be required to provide proof that you
YOU ARE ACTIVELY are actively at work after age 65. The benefit
EMPLOYED period will be as shown under "Maximum Benefit
Period for Total Disability."
HOSPITAL CONFINEMENT Your individual insurance will terminate at
OPTION IF YOU ARE NOT the end of the premium paying period after
ACTIVELY EMPLOYED you terminate employment if you are not actively
employed and are 65 or older. At that time, Paul
Revere offers a hospital confinement indemnity
benefit which will pay you $100 per day while
you are confined in a legally operated hospital
because of an injury or sickness. You will be
responsible for the cost of this coverage.
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Page 6
<PAGE> 7
CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
EXCLUSIONS AND Disability due to war or an act of war is not
RESTRICTIONS covered.
Disability due to complications arising from
pregnancy or childbirth are covered during and
following the elimination period.
Pre-existing conditions misrepresented or not
disclosed on your application are not covered.
"Pre-existing conditions" mean a sickness or
physical condition for which, prior to the
effective date of the policy, symptoms existed
that would cause an ordinarily prudent person to
seek diagnosis, care, or treatment, or for which
medical advice or treatment was recommended by
or received from a physician.
Normally, no claim for disability commencing
after two reduced or denied because of a
sickness or physical condition that was not
specifically excluded by name at the date of
issuance of the policy.
ADMINISTRATION This Plan is administered by the Administrator,
which includes the Chairman & CEO, Senior Vice
President & CFO, President & COO. The
Administrator has the right to interpret the
Plan and all other matters that might arise
under the terms of the Plan. With certain
exceptions, the Company reserves the right to
amend or partially or completely terminate the
Plan. If the Plan is completely terminated, you
may retain your Paul Revere individual contract
at your own expense.
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Page 7
<PAGE> 1
EXHIBIT 10.11
ARISTECH CHEMICAL CORPORATION
1996 SUPPLEMENTAL PENSION PLAN
EFFECTIVE FEBRUARY 22, 1996
<PAGE> 2
ARISTECH CHEMICAL CORPORATION
1996 SUPPLEMENTAL PENSION PLAN
Effective February 22, 1996
Article I - Background, Purpose and Effective Date
The Aristech Chemical Corporation Supplemental Pension Plan was
amended and restated in its entirety effective March 8, 1990 and was
again amended and restated effective February 22, 1994 (as so amended
and restated, the "Original Plan"). This Aristech Chemical Corporation
1996 Supplemental Pension Plan (the "Plan") amends and restates the
Original Plan effective February 22, 1996 to modify the benefit
accrual provisions and make other appropriate changes.
The purposes of the Plan are to promote the growth and profitability
of Aristech Chemical Corporation, to attract and retain key executives
of outstanding competence and to provide key executives with
supplemental pension benefits under the terms and conditions hereof.
This Plan is intended to be an unfunded plan maintained primarily for
the purpose of providing deferred compensation for a select group of
management or highly compensated employees as described in Section
401(a)(1) of the Employee Retirement Income Security Act of 1974, as
amended.
The provisions of this Plan shall be effective February 22, 1996 and
shall apply only to persons who are in the active service of the
Company on or after such date.
Article II - Definitions
As used herein, the following terms shall have the meaning set forth:
2.01 "Accrued Benefit" shall mean, as of a determination date,
the monthly benefit earned under Section 5.01 as reduced,
if applicable, pursuant to Section 5.02.
2.02 "Actuarial Equivalent" shall have the meaning given to
that term under the Salaried Pension Plan.
2.03 "Administrator" shall mean a committee comprised of the
Chairman and Chief Executive Officer, the Senior Vice
Chairman and Chief Financial Officer, and the President
and Chief Operating Officer of the Company.
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<PAGE> 3
2.04 "Average Monthly Earnings" shall mean, for any Member,
the average monthly earnings of the Member during the
sixty (60) consecutive months out of the last 120 months
prior to Retirement during which such earnings were the
highest. For this purpose a Member's "earnings" shall
include Base Salary and Incentive Bonus.
2.05 "Base Salary" shall mean the total annual base salary
payable to a Member at the salary rate in effect on the
date specified, but without reduction for any salary
reduction contributions (i) to cash or deferred
arrangements under Section 401(k) of the Code, (ii) to a
cafeteria plan under Section 125 of the Code, or (iii) to
a non-qualified deferred compensation plan. Base salary
shall not take into account any Incentive Bonuses, other
incentive pay, reimbursed expenses, credits or benefits
under any plan of deferred compensation to which the
Company contributes, or any additional cash compensation
or compensation payable in a form other than cash.
2.06 "Beneficiary" shall mean the person, persons, trust,
trusts or other entity designated by a Member in writing
to receive benefits payable under this Plan in respect of
such Member. In the absence of such designation, a
Member's Beneficiary shall be his spouse, and if none,
his estate.
2.07 "Benefit Calculation Service" shall have the meaning
given to that term in the Salaried Pension Plan.
2.08 "Board" shall mean the Board of Directors of the Company.
2.09 "Code" shall mean the Internal Revenue Code of 1986, as
the same may be amended from time to time.
2.10 "Change in Control" shall mean
(a) any transaction that results in Mitsubishi
Corporation and its subsidiaries (which
shall include any corporation in an
unbroken chain of corporations beginning
with Mitsubishi Corporation if each of the
corporations other than the last
corporation in the unbroken chain owns
stock possessing at least fifty percent (50
percent) of the total combined voting power
of all classes of stock in one of the other
corporations in the chain) (collectively,
the "MC Group") no longer being the
beneficial owner (as defined in
- 2 -
<PAGE> 4
Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as amended, which
shall in any event include having the power
to vote (or cause to be voted at the
direction of any member of the MC Group)
pursuant to contract, irrevocable proxy or
otherwise) of stock possessing at least
fifty percent (50 percent) of the combined
voting power of the issued and outstanding
shares of all classes of the Company's
stock entitled to vote generally in the
election of directors ("Voting Stock"),
whether as a result of the issuance of
securities of the Company, any direct or
indirect transfer of securities of the
Company or otherwise; or
(b) approval by the stockholders of the Company
of a reorganization, merger or
consolidation, unless, following such
reorganization, merger or consolidation,
the MC Group beneficially owns, directly or
indirectly, stock possessing at least fifty
percent (50 percent) of the total combined
voting power of the issued and outstanding
shares of all classes of Voting Stock of
the corporation resulting from such
reorganization, merger or consolidation; or
(c) approval by the stockholders of the Company
of a complete liquidation or dissolution of
the Company; or
(d) the sale or other disposition of 60 percent
or more by value of the assets of the
Company other than to a corporation with
respect to which, following such sale or
disposition, the MC Group beneficially
owns, directly or indirectly, stock
possessing at least fifty percent (50
percent) of the total combined voting power
of the issued and outstanding shares of all
classes of Voting Stock.
2.11 "Company" shall mean Aristech Chemical Corporation and
its successors and assigns.
2.12 "Early Retirement Date" shall mean the first day of the
month coincident with or immediately following the date a
Member terminates employment (for reasons other than
death) after attaining age 55 and being credited with at
least 10 years of Vesting Service but prior to his Normal
Retirement Date.
- 3 -
<PAGE> 5
2.13 "Financial Hardship" shall mean an unexpected need for
cash arising from an illness, disability, casualty loss,
sudden financial reversal, or other such unforeseeable
occurrence as determined by the Administrator. Cash
needs arising from foreseeable events such as the
purchase of a residence or education expenses for
children shall not, alone, be considered a Financial
Hardship.
2.14 "Incentive Bonus" shall mean amounts paid in cash to a
Member by the Company in the form of annual variable
compensation or bonuses, but without reduction for any
deferrals under (i) cash or deferred arrangements under
Section 401(k) of the Code, (ii) a cafeteria plan under
Section 125 of the Code or (iii) a non-qualified deferred
compensation plan.
2.15 "Member" shall mean an employee of the Company who is
eligible to participate in the Plan as set forth in
Article III.
2.16 "Normal Retirement Date" shall mean the first day of the
month coincident with or immediately following the date a
Member terminates employment after attaining age 65.
2.17 "Plan" shall mean this Aristech Chemical Corporation 1996
Supplemental Pension Plan, as the same may be amended
from time to time.
2.18 "Primary Insurance Amount" shall mean the monthly amount
of old age insurance benefits under Section 202 of the
Social Security Act payable to a Member at a single age
that is not earlier than age 62 and not later than age
65. A Member's Primary Insurance Amount shall be
determined under the Social Security Act as in effect at
the time the Member's offset is determined, based on the
Member's then-current compensation and other relevant
factors.
2.19 "Retirement" shall mean a Member's retirement at his
Early Retirement Date or Normal Retirement Date, as
applicable.
2.20 "Salaried Pension Plan" shall mean the Aristech Salaried
Pension Plan, as the same may be amended from time to
time.
2.21 "Vesting Service" shall have the meaning given to that
term under the Salaried Pension Plan.
- 4 -
<PAGE> 6
Article III - Designation of Members
3.01 Board Action. Members of the Corporate Management
Committee of the Company shall automatically be Members
under the Plan. From time to time, the Board may
designate additional key employees of the Company as
Members eligible to participate in the Plan. Such
determination shall take the form of a resolution adopted
by the Board identifying such employees by name or by
title of position. In making such determination, the
Board shall give consideration to the function and
responsibilities of the employee, his or her past
performance, his or her contributions to the
profitability and sound growth of the Company and such
other factors as the Board may deem appropriate. Such
determination need not be uniform and may be made
selectively by the Board among the employees of the
Company.
3.02 Conditions to Benefit Payments. Notwithstanding any
provision of this Plan to the contrary, no benefits shall
be paid in respect of a Member, either directly to the
Member or to his or her Beneficiary, who is terminated
for Cause. As used herein, the term "Cause" shall be
limited to (a) action by the employee involving willful
and wanton malfeasance involving specifically a wholly
wrongful and unlawful act; (b) the employee being
convicted of a felony; or (c) a material violation by the
employee of any rule, regulation or policy of the Company
generally applicable to all employees. Nothing contained
in this Section 3.02 shall prevent the payment of
benefits in respect of a Member whose employment is
involuntarily terminated for reasons other than Cause
after such Member's benefits have vested.
Article IV - Administration
The Plan shall be administered by the Administrator in a manner not
inconsistent with the provisions of the Plan and in so doing the
Administrator shall have the authority, from time to time, to:
(a) determine whether a Member has experienced
an event giving rise to the payment of
benefits hereunder;
- 5 -
<PAGE> 7
(b) determine whether a Member or a Member's
Beneficiary is entitled to receive benefits
under the Plan;
(c) determine the amount of any benefit payable
hereunder;
(d) interpret the Plan and make all other
determinations and to take all other
actions necessary or advisable for the
implementation and administration of the
Plan, except in respect to the designation
of Members under Section 3.01 or
modification, amendment, or termination of
the Plan under Article VII, which actions
are reserved to the Board;
(e) appoint or employ agents and to delegate
thereto such responsibilities and duties
necessary or appropriate to the effective
administration of the Plan; and
(f) direct the payment of any benefits payable
hereunder from the general assets of the
Company.
All good faith actions, determinations and decisions of the
Administrator shall be final, conclusive and binding upon the Company,
Members and their Beneficiaries. The Administrator shall not be liable
for any action taken or decision made in good faith relating to the
Plan.
Article V - Benefits
5.01 Amount of Benefits. A Member's Accrued Benefit shall be
equal to the greater of (i) the monthly benefit earned by
the Member under the Plan immediately prior to its
amendment and restatement effective February 22, 1996
based on service, compensation and other factors then
prevailing or (ii) an amount of monthly retirement income
payable at the Member's Normal Retirement Date in the
form of a single life annuity equal to the Member's
Average Monthly Earnings multiplied by the applicable
percentage determined in accordance with Appendix A
hereto based upon the Member's years of Benefit
Calculation Service but reduced by the offsets described
in Section 5.02. If a Member has a fractional year of
Benefit Calculation Service, such fraction shall be
counted for purposes of determining the "Standard Accrual
Rate" but not the "Retroactive Cliff Bonus
- 6 -
<PAGE> 8
Accrual." For example, if a Member has 9.5 years of
Benefit Calculation Service, his "Cumulative Accrual"
would be 14.25 percent (13.5 percent + [.5 x 1.5
percent]).
5.02 Offsets. A Member's Accrued Benefit shall be reduced and
offset by the following amounts:
(a) the monthly amount of retirement income
payable to the Member under the Salaried
Pension Plan and any other defined benefit
pension plan maintained by the Company or
any of its affiliates or by USX or any of
its affiliates; and
(b) 50 percent of the Member's Primary
Insurance Amount.
5.03 Commencement of Benefits. The benefits payable under
this Plan shall commence to be paid at the same time as
benefits are to be paid to the Member or his or her
Beneficiary under the Salaried Pension Plan. If a
Member's benefits commence before attainment of age 62,
the Member shall be entitled to an amount equal to his
Accrued Benefit otherwise determined above reduced by
one-half of one percent (1/2 percent) for each month by
which his date of benefit commencement precedes the first
day of the month coincident with or immediately following
the date that the Member will attain age 62.
5.04 Vesting of Accrued Benefit.
(a) A Member shall acquire a fully vested interest in his
Accrued Benefit upon his death or attainment of age 65
while in the employ of the Company.
(b) Whenever the employment of a Member terminates before
Retirement and for reasons other than death, he shall be
entitled to a nonforfeitable (vested) percentage of his
Accrued Benefit, in accordance with the following table,
based on his full years of Vesting Service as of the date
of termination of employment:
<TABLE>
<CAPTION>
Full Years of Vested Percentage
Vesting Service of Accrued Benefit
--------------- ------------------
<S> <C>
Less than 5 years 0 percent
5 years or more 100 percent
</TABLE>
- 7 -
<PAGE> 9
Notwithstanding the foregoing, upon and following a Change of Control,
a Participant shall be 100 percent vested in his Accrued Benefit.
5.05 Distribution of Benefits. Each Member may elect to
receive monthly retirement income in one of the
alternative forms listed in Section 5.06. The timing of
such elections shall be in accordance with Section 5.07.
Each of the alternative forms shall be the Actuarial
Equivalent of the monthly retirement income payable in
the single life annuity form. In the absence of an
election as to the form of benefit payment, in the case
of a Member who is not married on his annuity starting
date, the Member's Accrued Benefit shall be payable in
the single life annuity form. In the absence of an
election as to the form of benefit payment, in the case
of a Member who is married on his annuity starting date,
his Accrued Benefit shall be paid in the form described
in Section 5.06(b).
5.06 Form of Payment. Subject to the limitations of subsection
(e) below, the alternative forms of payment available
under the Plan for all types of retirement benefits are
as follows:
(a) Single Life Annuity Form. A monthly income
continuing for the life of the Member.
(b) Qualified Joint and Survivor Annuity. A monthly income
payable for the lifetime of the Member and continuing
thereafter in an amount fifty percent (50 percent) as
large to the Member's spouse for the lifetime of said
spouse.
(c) Contingent Annuitant Option. A monthly income payable
for the lifetime of the Member and continuing thereafter
in an amount fifty percent (50 percent) or one hundred
percent (100 percent) as great, as elected by the Member,
to a Co-Pensioner designated in writing by the Member for
such Co-Pensioner's life. Should the Co-Pensioner named
by the Member die prior to the Member's annuity starting
date, this election shall be void and a single life
annuity shall be paid as if election of this optional
form had never been made. Should the Co-Pensioner die
after payment of the Member's Accrued Benefit has
commenced, no alternative Co-Pensioner can be named.
(d) Lump Sum Option - A Member may elect, in lieu of the
forms of payment set forth in subsections (a), (b) and
(c) above, to receive a lump sum distribution of
- 8 -
<PAGE> 10
his vested Accrued Benefit in an amount equal to the
Actuarial Equivalent of such vested Accrued Benefit.
(e) Limitation. Notwithstanding any other provision of this
Plan to the contrary, if an annuity form of distribution
is payable to the Member under the terms of the Salaried
Pension Plan, then the same form of annuity payout shall
be applicable to the Member's Accrued Benefit hereunder.
5.07 Timing of Benefit Elections. Each Member shall make his
election as to the form of benefit distribution before
the later of (i) the Member's 55th birthday and (ii) 30
days after the effective date of such Member's initial
eligibility under the Plan. Such election shall be
irrevocable except as provided in Section 5.10 and as
follows:
(a) If the change is made at least 13 months prior to the
date of termination of employment, the Member may change
his election from any optional benefit form to any other
optional benefit form.
(b) If the change is not made at least 13 months prior to the
date of termination of employment, the Member may change
his election from a lump sum to an annuity or from an
annuity to a lump sum (but not from one annuity form to
another), but in such event the Member shall forfeit ten
percent (10 percent) of his Accrued Benefit, determined
as of the date the new election is effective.
5.08 Hardship Withdrawal. Following Retirement, a Member may,
in the event of a Financial Hardship, request a
withdrawal of all or a portion of his Accrued Benefit.
The request shall be made in a time and manner determined
by the Administrative Committee, shall not be for a
greater amount than the amount required to meet the
Financial Hardship, and shall be subject to approval by
the Administrative Committee.
5.09 Change in Control. If within two years after the
occurrence of a Change in Control either (i) the Plan is
terminated or (ii) a Member's employment with the Company
is terminated by the Company without Cause, an additional
three years will be added to the Member's Benefit
Calculation Service for purposes of calculating the
Member's Accrued Benefit, except for purposes of
determining the Member's eligibility for the 10 percent
"Retroactive Cliff Bonus Accrual" at 10 years of Benefit
Accrual Service and the 12.5 percent "Retroactive Cliff
Bonus Accrual" at 15 years
- 9 -
<PAGE> 11
of Benefit Accrual Service (as described in Appendix A),
and the Member's Accrued Benefit so calculated shall be
paid to the Member in a lump sum distribution within 30
days of the date of termination.
5.10 Change in Distribution Form. Following the occurrence of
a Change in Control, a Member or Beneficiary who is
receiving an annuity benefit shall be entitled to elect
to convert such annuity into an immediate lump sum
distribution of the Actuarial Equivalent of his Accrued
Benefit, as adjusted for any benefit payments made prior
to the date of such conversion; provided that, as a
condition of such conversion, the Member or Beneficiary,
as the case may be, shall forfeit an amount equal to six
percent (6 percent) of such lump sum benefit. If a
Change in Control has not occurred, a Member or
Beneficiary shall be entitled to elect such a conversion
from an annuity to a lump sum, but the forfeited amount
shall equal ten percent (10 percent) of the lump sum
benefit.
Article VI - Survivor Benefits
6.01 Pre-Retirement Survivor Benefit for Vested Member. In the
case of any Member who dies prior to his annuity starting
date when he is vested in his Accrued Benefit, the
Member's Beneficiary shall be entitled to a survivor
benefit, payable as follows:
(a) If such Member was eligible to immediately commence
receipt of his Accrued Benefit as of the date of his
death, such survivor benefit shall be a monthly income
payable for the life of the Beneficiary, commencing on
the first day of the month immediately following the
Member's date of death equal to the benefit that would
have been payable to the Beneficiary had the Participant
retired on the day before death, and elected immediate
commencement of benefits in a joint and 50 percent
survivor annuity form under Section 5.06(c). The last
monthly payment shall be made for the month in which the
death of such Beneficiary occurs.
(b) If such Member was not eligible to immediately commence
receipt of his Accrued Benefit hereunder as of the date
of his death, such survivor benefit shall be a monthly
income payable for the life of the Beneficiary, beginning
with the first day of the month in which the Member could
have elected
- 10 -
<PAGE> 12
immediate benefits had he survived ("earliest
commencement date"), equal to the benefit that would have
been payable to the Beneficiary had the Member terminated
employment on his date of death (except where termination
of employment occurred prior to his death, the Member's
date of termination of employment shall be used) and then
survived and retired on the earliest commencement date
and elected immediate commencement of benefits in a joint
50 percent and survivor annuity form under Section
5.05(c). The last monthly payment shall be made for the
month in which the death of such Beneficiary occurs.
6.02 Post-Retirement Survivor Benefit. When a Member dies
after his annuity starting date, his Beneficiary or
Co-Pensioner shall be entitled to only such benefits, if
any, due under the form of benefit paid to the Member
upon his retirement.
Article VII - Amendment and Termination
The Company, by action of the Board, may modify, alter, amend or
terminate the Plan in whole or in part, except to the extent that such
action would result in the reduction of the Accrued Benefit of any
Member. Notwithstanding the foregoing, the Company may not amend or
terminate the Plan within two (2) years following a Change in Control
without the consent of a majority of the Participants.
Article VIII - Miscellaneous
8.01 Withholding. The Member or the Beneficiary shall make
appropriate arrangements with the Company for
satisfaction of any federal, state or local income tax
withholding requirements and Social Security or other
employee tax requirements applicable to the payment of
benefits under the Plan. If no other arrangements are
made, the Company may provide, at its discretion, for
such withholding and tax payments as may be required.
8.02 Unsecured General Creditor. The rights of a Member or
his or her Beneficiary to receive payment of any benefits
under the Plan shall be and remain no greater than the
rights of an unsecured general creditor of the Company.
In the event the Company establishes a trust, which it
may but shall not be required to do, to hold money or
other property of the Company in contemplation of paying
benefits under
- 11 -
<PAGE> 13
the Plan, such money or other property shall remain
subject to the claims of creditors of the Company.
8.03 Nonassignability. Neither a Member nor any other person
shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate or convey in advance of actual
receipt that amounts, if any payable hereunder, or any
part thereof, which are, and all rights to which are,
expressly declared to be unassignable and
nontransferable. No part of the amounts payable shall,
prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Member or any
other person, nor be transferable by operation of law in
the event of a Member's or any other person's bankruptcy
or insolvency.
8.04 Not a Contract of Employment. The terms and conditions
of this Plan shall not be deemed to constitute a contract
of employment between the Company and the Member, and the
Member (or his or her Beneficiary) shall have no rights
against the Company except as may be specifically
provided herein. Moreover, nothing in this Plan shall be
deemed to give a Member the right to be retained in the
service of the Company or to interfere with the right of
the Company to discharge him or change his employment
status at any time.
8.05 Not a Bar to Corporate Act. Nothing contained in the
Plan shall prevent the Company from engaging in any
reorganization, recapitalization, merger, liquidation,
sale of assets or other corporate transaction.
8.06 Terms. Whenever any words are used herein in the
masculine, they shall be construed as though they were
used in the feminine in all cases where they would so
apply; and wherever any words are used herein in the
singular or in the plural, they shall be construed as
though they were used in the plural or the singular, as
the case may be, in all cases where they would so apply.
8.07 Captions. The captions of the articles, sections and
paragraphs of this Plan are for convenience only and
shall not control or affect the meaning or construction
of any of its provisions.
- 12 -
<PAGE> 14
8.08 Governing Laws. The provisions of this Plan shall be
construed and interpreted according to the internal laws
of the Commonwealth of Pennsylvania.
8.09 Severability. In case any provision of this Plan shall be
held illegal or invalid for any reason, said illegality
or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as
if such illegal and invalid provision had never been
inserted herein.
8.10 Notice. Any notice or filing required or permitted to be
given to the Company under the Plan shall be sufficient
if in writing and hand delivered, or sent by registered
or certified mail, to the principal office of the
Company. Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of
the date shown on the postmark on the receipt for
registration or certification. Contact should be made
with:
Supplemental Plan
Administrator
c/o Chief Financial Officer
Aristech Chemical Corporation
600 Grant Street
Pittsburgh, PA 15230
8.11 Successor. The provisions of the Plan shall be binding
on the Company and its successors and assigns. The term
successors as used herein shall include any corporate or
other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of the
Company, and successors of any such corporation or other
business entity.
8.12 Executive Committee Action. The Executive Committee of
the Board shall be authorized to take any action that is
within the authority of the Board under this Plan.
Article IX - Execution
In order to record the due adoption of this Plan, as restated
effective February 22, 1996, the Company has caused the execution
hereof by its authorized officers, as of the 22nd day of February,
1996.
- 13 -
<PAGE> 15
ARISTECH CHEMICAL CORPORATION
ATTEST:
By:____________________________ By:______________________
General Counsel & Secretary Chairman of the Board
and Chief Executive
Officer
- 14 -
<PAGE> 16
APPENDIX A
----------
<TABLE>
<CAPTION>
====================================================================================================================================
YEARS OF STANDARD RETROACTIVE
BENEFIT ACCRUAL CLIFF BONUS CUMULATIVE
CALCULATION RATE ACCRUAL ACCRUAL
SERVICE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 1.5 percent 0 percent 1.5 percent
- ------------------------------------------------------------------------------------------------------------------------------------
2 1.5 percent 0 percent 3.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
3 1.5 percent 0 percent 4.5 percent
- ------------------------------------------------------------------------------------------------------------------------------------
4 1.5 percent 0 percent 6.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
5 1.5 percent 0 percent 7.5 percent
- ------------------------------------------------------------------------------------------------------------------------------------
6 1.5 percent 0 percent 9.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
7 1.5 percent 0 percent 10.5 percent
- ------------------------------------------------------------------------------------------------------------------------------------
8 1.5 percent 0 percent 12.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
9 1.5 percent 0 percent 13.5 percent
- ------------------------------------------------------------------------------------------------------------------------------------
10 1.5 percent 10.0 percent 25.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
11 1.5 percent 0 percent 26.5 percent
- ------------------------------------------------------------------------------------------------------------------------------------
12 1.5 percent 0 percent 28.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
13 1.5 percent 0 percent 29.5 percent
- ------------------------------------------------------------------------------------------------------------------------------------
14 1.5 percent 0 percent 31.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
15 1.5 percent 12.5 percent 45.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
16 1.0 percent 0 percent 46.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
17 1.0 percent 0 percent 47.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
18 1.0 percent 0 percent 48.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
19 1.0 percent 0 percent 49.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
20 1.0 percent 0 percent 50.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
21 1.0 percent 0 percent 51.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
22 1.0 percent 0 percent 52.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
23 1.0 percent 0 percent 53.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
24 1.0 percent 0 percent 54.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
25 1.0 percent 0 percent 55.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
26 1.0 percent 0 percent 56.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 17
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
27 1.0 percent 0 percent 57.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
28 1.0 percent 0 percent 58.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
29 1.0 percent 0 percent 59.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
30* 1.0 percent 0 percent 60.0 percent
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* and continuing at the rate of 1 percent for each full year of Benefit
Calculation Service in excess of 30.
<PAGE> 1
EXHIBIT 10.12
PERSONNEL ADMINISTRATION MANUAL SUBJECT NUMBER: ARS 414-03
ARISTECH CHEMICAL CORPORATION PAGE 1 OF 4
PROCEDURE ESTABLISHED: 01-01-95
SUBJECT: Variable Bonus Program (VBP) REVISED EFFECTIVE: 01-01-96
- -----------------------------------------------------------------------------
A. COVERAGE:
All Eligible Participants. (See Exhibit A for Summary of Key Points)
B. GENERAL:
The Company has established this variable bonus program to make payments to
Eligible Participants from a Bonus Pool.
C. DEFINITIONS:
1. COMPENSATION POOL: The sum of all Eligible Participant Base Earnings.
2. BONUS POOL: The sum of money available for bonus payments.
3. ELIGIBLE PARTICIPANT: An eligible Participant is an individual who:
a. Is a full-time non-union employee of the Company;
b. Is a full-time non-union employee of the Company as of December 31
of the Plan Year; provided, however, that an individual is exempt
from this requirement if the failure to meet it is due to any one
of the following:
(1) A management-directed transfer to an affiliate or related
joint venture entity;
(2) Termination from employment with eligibility for a severance
payment under the Aristech Chemical Corporation Severance Plan
for Eligible Employees ("Severance Plan");
(3) Retirement with eligibility for an immediate pension or
retirement at or after age 65; or
(4) Death.
c. Has been actively at work for at least 180 days during the Plan
Year; provided, however, that an individual is exempt from this
requirement if the failure to meet it is due to any one of the
following:
(1) A management-directed transfer to an affiliate or related
joint venture entity;
(2) Termination from employment with eligibility for a severance
payment under the Severance Plan;
(3) Retirement with eligibility for an immediate pension or
retirement at or after age 65;
<PAGE> 2
PERSONNEL ADMINISTRATION MANUAL SUBJECT NUMBER: ARS 414-03
ARISTECH CHEMICAL CORPORATION PAGE 2 OF 4
PROCEDURE ESTABLISHED: 01-01-95
SUBJECT: Variable Bonus Program (VBP) REVISED EFFECTIVE: 01-01-96
- -----------------------------------------------------------------------------
C. DEFINITIONS (cont:)
(4) Death; or
(5) Work-related injury or illness.
4. INELIGIBLE EMPLOYEES: Those ineligible to participate shall include,
but are not limited to, the following:
a. Quits except as provided in C.3.b.(3) and C.3.c.(3) above
b. Union employees
c. Non-union employees discharged for cause at any time in the Plan
Year. "For Cause" shall mean willful misconduct, insubordination or
conduct intended to harm the business of the company.
5. BASE EARNINGS: The amount of remuneration paid by the Company to an
Eligible Participant in a Plan Year for services rendered, including
salary and wages, holiday pay, vacation pay, health additive, salary
continuance, and Basic Income Protection payments. Base earnings for
periods of absences due to an Aristech occupational accident or an
Aristech disability will be calculated using base rates in effect on
the last day worked prior to absence.
EXCLUDED remuneration includes bonuses, overtime compensation, shift
differential, holiday pay for holidays not taken, vacation pay for
vacation days not taken, except as provided in paragraphs 5.a.(2) and
(3) below, or any other form of compensation or remuneration not
specifically included above.
a. INCLUDABLE VACATION PAY IS:
(1) Vacation time taken as time off in the Plan Year,
(2) Vacation monies paid to a terminating employee for vacation
time which was both earned and eligible to be paid in the
Plan Year had the employee not terminated, or
(3) Vacation monies paid to a terminating employee for vacation
accrued in the Plan Year but normally not paid until the
subsequent year.
b. INELIGIBLE OVERTIME EARNINGS ARE:
(1) For a normal unit schedule for 8-hour days and 40-hour work
weeks:
(a) any hours paid in excess of 8 per day, or
(b) any hours paid in excess of 40 per week.
(2) For a normal unit schedule for 12-hour days and 36/48-hour
work weeks:
<PAGE> 3
PERSONNEL ADMINISTRATION MANUAL SUBJECT NUMBER: ARS 414-03
ARISTECH CHEMICAL CORPORATION PAGE 3 OF 4
PROCEDURE ESTABLISHED: 01-01-95
SUBJECT: Variable Bonus Program (VBP) REVISED EFFECTIVE: 01-01-96
- -----------------------------------------------------------------------------
(a) all PREMIUM paid for hours in excess of 8 per day,
(b) all PREMIUM paid for hours in excess of 40 in the long week,
(c) any hours in excess of 12 per day, or
(d) any hours in excess of 36 in the short week and 48 in the
long week.
c. PART-TIME AND UNION-REPRESENTED EMPLOYMENT DURING A PLAN YEAR:
Earnings during periods of part-time and/or union-represented
employment for any Eligible Participant are includable if they
otherwise qualify as Base Earnings.
6. PLAN YEAR: The twelve (12) month period ending December 31.
D. BONUS POOL: The bonus Pool will be established upon the achievement of a
financial goal(s) for the Plan Year which goal is established prior to the
Plan Year by the Corporate Management Committee (CMC).
1. CMC will determine the amount available for payment to Eligible
Participants.
2. The Bonus Pool accrual is excluded from goal achievement levels.
E. BONUS PAYMENT: Bonuses will ordinarily be paid in February of the year
following the Plan Year. The Bonus Pool, as determined in paragraph D.
above, will be distributed to Eligible Participants in accordance with
paragraph F. below.
F. PAYMENT DISTRIBUTION TO ELIGIBLE PARTICIPANTS:
1. The amount of the Bonus Pool allocated to each business unit/staff
department or individual will be determined by CMC. The fact that an
individual is an Eligible Participant does not result in an automatic
payment or distribution. CMC has the sole discretion to decide whether
an Eligible Participant will receive a payment.
2. Business/Staff department heads may recommend payments to individual
Eligible Participants in accordance with applicable guidelines
established by the CMC.
G. DISSEMINATION OF RESULTS AGAINST FINANCIAL GOAL(S): The Company will
disseminate this information to business/staff department heads on a
periodic basis for disclosure to all Eligible Participants.
H. AMENDMENT OR TERMINATION: CMC may vote to amend or terminate the Plan at
any time. The CMC has sole and absolute discretion to administer and
interpret the terms and conditions of this VBP and its decisions will be
final, binding and conclusive unless arbitrarily and capriciously made.
I. ADMINISTRATION: The Director - Human Resources & Internal Audit is
responsible for reviewing the application of this procedure to ensure that
it is in accordance with guidelines authorized by CMC.
<PAGE> 4
PERSONNEL ADMINISTRATION MANUAL SUBJECT NUMBER: ARS 414-03
ARISTECH CHEMICAL CORPORATION PAGE 4 OF 4
PROCEDURE ESTABLISHED: 01-01-95
SUBJECT: Variable Bonus Program (VBP) REVISED EFFECTIVE: 01-01-96
- -----------------------------------------------------------------------------
J. Both the fact that any payment is to be made under this policy and the
amount of any such payment are to be determined at the sole discretion of
the CMC at or near the end of the period and not pursuant to any prior
contract, agreement, or promise causing the employee to expect such
variable compensation program payments regularly.
<PAGE> 5
PERSONNEL ADMINISTRATION MANUAL SUBJECT NUMBER: ARS 414-03
ARISTECH CHEMICAL CORPORATION EXHIBIT A-PAGE 1 OF 1
PROCEDURE ESTABLISHED: 01-01-95
SUBJECT: Variable Bonus Program (VBP) REVISED EFFECTIVE: 01-01-96
- -----------------------------------------------------------------------------
NOTE: This is a summary of certain key points only and is not intended to be,
nor should it be used as, a substitute for the complete Procedure. The
Procedure contains important additional terms, governs the plan, and
should always be consulted to determine questions of eligibility, etc.
All exempt
ELIGIBLE PARTICIPANTS: All A&T
All Non-Union Wage
Union Members
INELIGIBLE PARTICIPANTS: Quits - Except for those:
a. Age 65 or older
b. Eligible for
1) Immediate pension, or
2) Severance
Discharges for cause
A variable percentage of base earnings for the
plan year.
Base earnings include:
a. Health Care Additive
b. Holiday Pay
c. Vacation Pay
d. Salary Continuance
e. Basic Income Protection Payments
PAYMENT CALCULATION: Base earnings exclude:
a. Bonuses
b. Premium pay for overtime
c. Shift Differential
e. Holiday Pay for holidays not taken
f. Vacation pay for unpaid vacation days not
taken, except vacation monies earned
or accrued due to terminating employees.
<PAGE> 1
EXHIBIT 12.01
STATEMENT RE: COMPUTATION OF RATIO
OF EARNINGS TO FIXED CHARGES
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30
---------------------------------------- -------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL INFORMATION
Earnings:
Income from Continuing Operations
before Income Taxes $(0.1) $ 1.0 $(45.7) $14.7 $104.6 $ 93.2 $43.7
Interest Expense (Excluding Amounts
Capitalized) 74.1 59.6 54.6 56.0 49.8 38.1 32.3
Amortization of Previously
Capitalized Interest Expense 0.2 0.2 0.2 0.3 0.4 0.3 0.3
----- ----- ------ ----- ------ ------ -----
Total Earnings $74.2 $60.8 $ 9.1 $71.0 $154.8 $131.6 $76.3
===== ===== ====== ===== ====== ====== =====
Fixed Charges:
Interest Expense (Excluding Amounts
Capitalized) 74.1 59.6 54.6 56.0 49.8 38.1 32.3
Capitalized Interest 0.3 0.4 0.4 1.2 1.5 1.2 0.4
----- ----- ------ ----- ------ ------ -----
Total Fixed Charges
Including Capitalized Interest 74.4 60.0 55.0 57.2 51.3 39.3 32.7
===== ===== ====== ===== ====== ====== =====
Ratio of Earnings to Fixed Charges 1.0x 1.0x 0.2x 1.2x 3.0x 3.3x 2.3x
===== ===== ====== ===== ====== ====== =====
</TABLE>
<PAGE> 2
STATEMENT RE: COMPUTATION OF RATIO
OF EARNINGS TO FIXED CHARGES
(MILLIONS OF DOLLARS)
NINE
YEAR ENDED MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------ --------------
1995 1996
---- ----
PRO FORMA INFORMATION
Earnings:
Income from Continuing Operations before
Income Taxes $121.6 $55.5
Interest Expense (Excluding Amounts
Capitalized) 32.8 20.5
Amortization of Previously Capitalized
Interest Expense 0.4 0.3
------ -----
Total Earnings $154.8 $76.3
====== =====
Fixed Charges:
Interest Expense (Excluding Amounts
Capitalized) 32.8 20.5
Capitalized Interest 1.5 0.4
------ -----
Total Fixed Charges Including
Capitalized Interest 34.3 20.9
====== =====
Ratio of Earnings to Fixed Charges 4.5x 3.7x
====== =====
<PAGE> 1
EXHIBIT 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Aristech Chemical
Corporation on Form S-4 of our report dated January 29, 1996 (except for Note
19, as to which the date is November 19, 1996) (which expresses an unqualified
opinion and includes an explanatory paragraph relating to changes in accounting
methods for income taxes, depreciation and postretirement benefits other than
pensions), appearing in the Prospectus, which is a part of this Registration
Statement, and of our report dated January 29, 1996 relating to the financial
statement schedule appearing elsewhere in this Registration Statement.
We also consent to the reference to us under the headings "Experts" in such
Prospectus.
/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
December 16, 1996
<PAGE> 1
EXHIBIT 25.01
--------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ___________
---------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE 10017
NEW YORK, NEW YORK (Zip Code)
(Address of principal executive offices)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------
ARISTECH CHEMICAL CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE 25-1534498
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
600 GRANT STREET
PITTSBURGH, PA 15219
(Address of principal executive offices) (Zip Code)
---------------------------------------
6 7/8% NOTES DUE 2006
(Title of the indenture securities)
--------------------------------------------------------------
<PAGE> 2
GENERAL
Item 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.
New York State Banking Department, State House,
Albany, New York 12110.
Board of Governors of the Federal Reserve System,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2,
33 Liberty Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving corporation,
was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement
No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority. (On July 14, 1996, in connection with the merger of Chemical Bank and
The Chase Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 6th day
of December, 1996.
THE CHASE MANHATTAN BANK
By /s/ A. K. CRAIN
----------------------
A. K. Crain
Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank of 270 Park Avenue, New
York, New York 10017 and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ................... $ 11,095
Interest-bearing balances ............................................ 4,998
Securities: ..............................................................
Held to maturity securities................................................ 3,231
Available for sale securities.............................................. 38,078
Federal Funds sold and securities purchased under agreements to resell
in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds sold ................................................... 8,018
Securities purchased under agreements to resell ...................... 731
Loans and lease financing receivables:
Loans and leases, net of unearned income ................... $130,513
Less: Allowance for loan and lease losses .................. 2,938
Less: Allocated transfer risk reserve ...................... 27
--------
Loans and leases, net of unearned income,
allowance, and reserve ............................................... 127,548
Trading Assets ............................................................ 48,576
Premises and fixed assets (including capitalized leases) .................. 2,850
Other real estate owned ................................................... 300
Investments in unconsolidated subsidiaries and associated companies ....... 92
Customer's liability to this bank on acceptances outstanding .............. 2,777
Intangible assets ......................................................... 1,361
Other assets .............................................................. 12,204
--------
TOTAL ASSETS .............................................................. $261,859
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ..................................................... $ 80,163
Noninterest-bearing ........................................... $30,596
Interest-bearing .............................................. 49,567
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ............................................................... 65,173
Noninterest-bearing ........................................... $ 3,616
Interest-bearing .............................................. 61,557
Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's
Federal funds purchased ................................................. 14,594
Securities sold under agreements to repurchase .......................... 14,110
Demand notes issued to the U.S. Treasury ..................................... 2,200
Trading liabilities .......................................................... 30,136
Other Borrowed money:
With a remaining maturity of one year or less ........................... 16,895
With a remaining maturity of more than one year ......................... 449
Mortgage indebtedness and obligations under capitalized leases ............... 49
Bank's liability on acceptances executed and outstanding ..................... 2,764
Subordinated notes and debentures ............................................ 5,471
Other liabilities ............................................................ 13,997
-------
TOTAL LIABILITIES ............................................................ 246,001
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock ................................................................. 1,209
Surplus ...................................................................... 10,176
Undivided profits and capital reserves ....................................... 4,385
Net unrealized holding gains (Losses) on available-for-sale securities ....... (481)
Cumulative foreign currency translation adjustments .......................... 19
TOTAL EQUITY CAPITAL ......................................................... 15,308
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK AND EQUITY CAPITAL ........... $261,859
========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is
true to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER ) DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000804104
<NAME> ARISTECH CHEMICAL CORP.
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1993 DEC-31-1994 DEC-31-1995
<PERIOD-START> JAN-01-1993 JAN-01-1994 JAN-01-1995
<PERIOD-END> DEC-31-1993 DEC-31-1994 DEC-31-1995
<CASH> 0 28,700 400
<SECURITIES> 0 0 17,000
<RECEIVABLES> 0 134,900 121,900
<ALLOWANCES> 0 (800) (600)
<INVENTORY> 0 85,700 101,100
<CURRENT-ASSETS> 0 346,500 295,800
<PP&E> 0 820,300 816,600
<DEPRECIATION> 0 196,700 214,300
<TOTAL-ASSETS> 0 1,183,400 1,090,000
<CURRENT-LIABILITIES> 0 180,100 120,900
<BONDS> 0 707,900 572,200
0 123,100 51,000
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 0 1,300 133,700
<TOTAL-LIABILITY-AND-EQUITY> 0 1,183,400 1,090,000
<SALES> 788,500 945,500 1,023,300
<TOTAL-REVENUES> 788,500 945,500 1,023,300
<CGS> 669,400 763,500 758,900
<TOTAL-COSTS> 718,500 813,800 807,300
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 54,600 56,000 49,800
<INCOME-PRETAX> (45,700) 14,700 104,600
<INCOME-TAX> (5,800) 9,500 44,400
<INCOME-CONTINUING> (39,900) 5,200 60,200
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 (5,100) 0
<CHANGES> 200 0 0
<NET-INCOME> (39,700) 100 60,200
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
<PAGE> 1
EXHIBIT 99.01
LETTER OF TRANSMITTAL
ARISTECH CHEMICAL CORPORATION
OFFER TO EXCHANGE ITS 6 7/8% NOTES DUE 2006
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING 6 7/8% NOTES DUE 2006
PURSUANT TO THE PROSPECTUS
DATED , 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997, UNLESS THE OFFER IS EXTENDED (SUCH TIME ON
SUCH DATE, AND AS SUCH TIME AND DATE MAY BE EXTENDED, THE "EXPIRATION DATE").
If you desire to accept the Exchange Offer (as defined below), this Letter of
Transmittal should be completed, signed, and submitted to:
THE CHASE MANHATTAN BANK
Exchange Agent
BY REGISTERED OR CERTIFIED MAIL: BY OVERNIGHT DELIVERY OR HAND:
-------------------------------- ------------------------------
The Chase Manhattan Bank The Chase Manhattan Bank
450 West 33rd Street, 15th Floor 450 West 33rd Street, 15th Floor
New York, NY 10001 New York, NY 10001
Attention: Corporate Trust Department Attention: Corporate Trust Department
(Aristech Chemical Corporation, (Aristech Chemical Corporation,
6 7/8% Notes due 2006) 6 7/8% Notes due 2006)
OR
BY HAND ONLY:
-------------
The Chase Manhattan Bank
Institutional Trust Group
One Chase Manhattan Plaza, Floor 1B
New York, NY 10081
(Aristech Chemical Corporation,
6 7/8% Notes due 2006)
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(212) 946-3089
FACSIMILE TRANSMISSIONS:
(212) 946-8161
(Originals of all documents sent by facsimile should be sent promptly by hand,
overnight courier or registered or certified mail.)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Old Notes (as
defined below) either if Old Notes are to be forwarded herewith or if tenders of
Old Notes are to be made by book-entry transfer to an account maintained by The
Chase Manhattan Bank (the "Exchange Agent") at The Depository Trust
Company("DTC") pursuant to the procedures set forth in "The Exchange
Offer--Procedures for Tendering Old Notes" in the Prospectus.
Holders of Old Notes whose certificates (the "Certificates") for such 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 procedures for book-entry transfer on a timely
basis, must tender their Old Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer--Procedures for Tendering Old Notes"
in the Prospectus. See Instruction 1 hereto. DELIVERY OF DOCUMENTS TO DTC IN
ACCORDANCE WITH DTC'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Aristech Chemical Corporation, a Delaware
corporation (the "Company"), the aggregate principal amount of the Company's
6 7/8% Notes due 2006 (the "Old Notes") described in Box 1 below in exchange for
a like aggregate principal amount of the Company's 6 7/8% Notes due 2006 (the
"New Notes") which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), upon the terms and subject to the conditions set
forth in the Prospectus dated , 1997 (as the same may be amended or
supplemented from time to time, the "Prospectus"), receipt of which is
acknowledged, and in this Letter of Transmittal (which, together with the
Prospectus, constitutes the "Exchange Offer").
Subject to, and effective upon, the acceptance for exchange of all or any
portion of the Old Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Old Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of the Company in connection with the
Exchange Offer) with respect to the tendered Old Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), subject only to the right of withdrawal described in
the Prospectus, to (i) deliver Certificates for Old Notes to the Company
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Company upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Notes to be issued in exchange for such Old
Notes, (ii) present Certificates for such Old Notes for transfer, and to
transfer the Old Notes on the books of the Company, and (iii) receive for the
account of the Company all benefits and otherwise exercise all rights of
beneficial ownership of such Old Notes, all in accordance with the terms and
conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD
NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED HEREBY,
AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION
RIGHTS AGREEMENT (AS DEFINED IN THE PROSPECTUS). THE UNDERSIGNED HAS READ AND
AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Old Notes
tendered hereby should be printed in Box 1 below, if they are not already set
forth below, as they appear on the Certificate representing such Old Notes. The
Certificate number(s) and the Old Notes that the undersigned wishes to tender
should be indicated in the appropriate box below.
If any tendered Old Notes are not exchanged pursuant to the Exchange Offer
for any reason, or if Certificates are submitted for more Old Notes than are
tendered or accepted for exchange, Certificates for such nonexchanged or
nontendered Old Notes will be returned (or, in the case of Old Notes tendered by
book-entry transfer, such Old Notes will be credited to an account maintained at
DTC), without expense to the tendering holder, promptly following the expiration
or termination of the Exchange Offer.
The undersigned understands that tenders of Old Notes pursuant to any one
of the procedures described in "The Exchange Offer--Procedures for Tendering Old
Notes" in the Prospectus and in the instructions hereto will, upon the Company's
acceptance for exchange of such tendered Old Notes, constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Exchange Offer. The undersigned recognizes that, under
certain circumstances set forth in the Prospectus, the Company may not be
required to accept for exchange and of the Old Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Exchange
Instructions" below (Box 7), the undersigned hereby directs that the New Notes
be issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Old Notes, that such New Notes be credited to the account indicated
below maintained at DTC. If applicable, substitute Certificates representing Old
Notes not exchanged or not accepted for exchange will be issued to the
undersigned or, in the case of a book-entry transfer of Old Notes, will be
credited to the account indicated below
<PAGE> 3
maintained a DTC. Similarly, unless otherwise indicated under "Special Delivery
Instructions" (Box 8), please deliver New Notes to the undersigned at the
address shown below the undersigned's signature.
BY TENDERING OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (1) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE COMPANY, (II) ANY NEW NOTES TO BE RECEIVED BY THE UNDERSIGNED
ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED
HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW NOTES TO BE
RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A
BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE
IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW NOTES.
BY TENDERING OLD NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER
OF TRANSMITTAL, A HOLDER OF OLD NOTES WHICH IS A BROKER-DEALER REPRESENTS AND
AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE
DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO
THIRD PARTIES, THAT SUCH OLD NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND IT WILL
DELIVER THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING
THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH NEW
NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH
BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE
MEANING OF THE SECURITIES ACT).
THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE REGISTRATION
RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME
TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) IN
CONNECTION WITH RESALES OF NEW NOTES RECEIVED IN EXCHANGE FOR OLD NOTES, WHERE
SUCH OLD NOTES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN
ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES, FOR A PERIOD
ENDING 90 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN
LIMITED CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH
NEW NOTES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN THAT
REGARD, EACH BROKER-DEALER WHO ACQUIRED OLD NOTES FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-
DEALER"), BY TENDERING SUCH OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL,
AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE OCCURRENCE OF ANY
EVENT OF THE DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED IN THE
PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT
TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING, OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE
REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE
SALE OF NEW NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR
SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS
FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO SUCH PARTICIPATING
BROKER-DEALER OR THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE NEW NOTES MAY
BE RESUMED, AS THE CASE MAY BE. IF THE COMPANY GIVES SUCH NOTICE TO SUSPEND THE
SALE OF THE NEW NOTES, IT SHALL EXTEND THE 90-DAY PERIOD REFERRED TO ABOVE
DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN
CONNECTION WITH THE RESALE OF NEW NOTES BY THE NUMBER OF DAYS DURING THE PERIOD
FROM AND INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING THE
DATE WHEN PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE
SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE NEW NOTES
OR TO AND INCLUDING THE DATE ON WHICH THE COMPANY HAS GIVEN NOTICE THAT THE SALE
OF NEW NOTES MAY BE RESUMED, AS THE CASE MAY BE. A PARTICI-
<PAGE> 4
PATING BROKER-DEALER WHO INTENDS TO USE THE PROSPECTUS IN CONNECTION WITH THE
RESALE OF NEW NOTES RECEIVED IN EXCHANGE FOR OLD NOTES PURSUANT TO THE EXCHANGE
OFFER MUST NOTIFY THE COMPANY, OR CAUSE THE COMPANY TO BE NOTIFIED, ON OR PRIOR
TO THE EXPIRATION DATE THAT IT IS A PARTICIPATING BROKER-DEALER. SUCH NOTICE MAY
BE GIVEN IN THE BOX ENTITLED "PARTICIPATING BROKER-DEALER" BELOW (BOX 5), OR MAY
BE DELIVERED TO THE EXCHANGE AGENT AT ONE OF THE ADDRESSES SET FORTH ON PAGE ONE
HEREOF. ANY PARTICIPATING BROKER-DEALER WHO IS AN "AFFILIATE" OF THE COMPANY MAY
NOT RELY ON THE INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE DIVISION OF
CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES
REFERENCED ABOVE AND MUST COMPLY WITH THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE TRANSACTION.
Holders of Old Notes whose Old Notes are accepted for exchange will not
receive accrued interest on such Old Notes for any period from and after the
last Interest Payment Date to which interest has been paid or duly provided for
on such Old Notes prior to the original issue date of the New Notes or, if no
such interest has been paid or duly provided for, will not receive any accrued
interest on such Old Notes, and the undersigned waives the right to receive any
interest on such Old Notes accrued from and after such Interest Payment Date or,
if no such interest has been paid or duly provided for, from and after November
25, 1996.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representative, successors and assigns of the undersigned. Except pursuant
to the withdrawal rights set forth in the Prospectus, this tender is
irrevocable.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THE
BOXES BELOW AND FOLLOW THE INSTRUCTIONS BEGINNING ON PAGE HEREOF.
ALL TENDERING HOLDERS COMPLETE THIS BOX 1:
BOX 1
DESCRIPTION OF OLD NOTES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OF
OLD NOTES
IF BLANK, PLEASE PRINT NAME(S) AND ADDRESS(ES) CERTIFICATE PRINCIPAL TENDERED
OF REGISTERED HOLDER(S) EXACTLY AS NAME(S) NUMBER(S)OF AMOUNT OF (IF LESS
APPEAR(S) ON OLD NOTE CERTIFICATES OLD NOTES* OLD NOTES THAN ALL)**
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Total Principal
Total Principal Amount
Amount $_______ Tendered $________
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Old Notes may be tendered in whole or in part in denominations of $1,000 and
integral multiples thereof, provided that, if any Old Note is tendered for
exchange in part, the untendered principal amount thereof must be $250,000
or any integral multiple of $1,000 in excess thereof. All Old Notes held
shall be deemed tendered unless a lesser number is specified in this column.
See Instruction 4.
- --------------------------------------------------------------------------------
<PAGE> 5
BOX 2
BOOK-ENTRY TRANSFER
(See Instruction 1 Below)
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution:_____________________________________________
DTC Account Number:________________________________________________________
Transaction Code Number:___________________________________________________
- --------------------------------------------------------------------------------
BOX 3
NOTICE OF GUARANTEED DELIVERY
(See Instruction 1 Below)
- --------------------------------------------------------------------------------
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY 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 of Registered Holder(s):______________________________________________
Window Ticket Number (if any):_____________________________________________
Date of Execution of Notice of Guaranteed Delivery:________________________
Name of Institution which Guaranteed Delivery:_____________________________
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution:_____________________________________________
DTC Account Number:________________________________________________________
Transaction Code Number:___________________________________________________
- --------------------------------------------------------------------------------
BOX 4
RETURN OF NON-EXCHANGED OLD NOTES TENDERED BY BOOK-ENTRY TRANSFER
(See Instructions 4 and 6 below)
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE
- --------------------------------------------------------------------------------
BOX 5
PARTICIPATING BROKER-DEALER
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:______________________________________________________________________
Address:___________________________________________________________________
- --------------------------------------------------------------------------------
<PAGE> 6
BOX 6
TENDERING HOLDER SIGNATURE
- --------------------------------------------------------------------------------
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6 BELOW)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 IN BOX 9 BELOW)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Certificate(s) for the Old Notes hereby tendered or on a security position
listing, or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith (including such opinions of
counsel, certifications and other information as may be required by the Company
or the Trustee for the Old Notes to comply with the restrictions on transfer
applicable to the Old Notes). If signature is by an attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting in
a fiduciary capacity or representative capacity, please set forth the signer's
full title. See Instruction 5 below.
_______________________________________________________________________________
_______________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S) )
Date: ______________________________ , 1997
Name(s):_______________________________________________________________________
(PLEASE PRINT)
Address:_______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number:________________________________________________
_______________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
_______________________________________________________________________________
GUARANTEE OF SIGNATURE(S)
(See Instructions 1, 2 and 5 below)
Authorized Signature:__________________________________________________________
Name:__________________________________________________________________________
(PLEASE PRINT)
Date: ______________________________ , 1997
Capacity or Title:_____________________________________________________________
Name of Firm:__________________________________________________________________
Address:_______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number:________________________________________________
- --------------------------------------------------------------------------------
<PAGE> 7
BOX 7
SPECIAL EXCHANGE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6 BELOW)
- -------------------------------------------------------------------------------
To be completed ONLY if the New Notes are to be issued in the name of
someone other than the registered holder of the Old Notes whose name(s)
appear(s) above.
Issue New Notes to:___________________________________________________________
Name:_________________________________________________________________________
(Please Print)
Address:______________________________________________________________________
______________________________________________________________________________
(Include Zip Code)
______________________________________________________________________________
(Taxpayer Identification or Social Security No.)
- --------------------------------------------------------------------------------
BOX 8
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6 BELOW)
- -------------------------------------------------------------------------------
To be completed ONLY if New Notes are to be sent to someone other than the
registered holder of the Old Notes whose name(s) appear(s) above, or to such
registered holder(s) at an address other than that shown above.
Mail New Notes to:____________________________________________________________
Name:_________________________________________________________________________
(Please Print)
Address:______________________________________________________________________
______________________________________________________________________________
(Include Zip Code)
______________________________________________________________________________
(Taxpayer Identification or Social Security No.)
- -------------------------------------------------------------------------------
<PAGE> 8
BOX 9
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS
(SEE INSTRUCTION 9 BELOW)
SIGN THIS SUBSTITUTE FORM W-9 IN ADDITION TO THE SIGNATURE(S) REQUIRED IN BOX 6
- --------------------------------------------------------------------------------
PAYER'S NAME: THE CHASE MANHATTAN BANK
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1--Please provide your TIN
FORM W-9 (either your social security
number or employer identification TIN________________________
number) in the box to the right
and certify by signing and dating
below.
----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY Part 2-- Part 3--
INTERNAL REVENUE SERVICE
Awaiting TIN [ ] Exempt [ ]
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) SIGN THIS FORM and THE CERTIFI- See enclosed Guidelines for
AND CERTIFICATION CATION OF AWAITING TAXPAYER additional information and
IDENTIFICATION NUMBER BELOW SIGN THIS FORM
- ---------------------------------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number (or I am waiting for a
number to be issued to me); and
(2) I am not subject to backup withholding because (i) I am exempt from backup withholding, or (ii) I
have not been notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (iii) 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.
CERTIFICATION INSTRUCTIONS--You must cross out item (iii) in Part 2 above if you have been notified by
the IRS that you are subject to backup withholding because of under-reporting interest or dividends on
your tax return and you are no longer subject to backup withholding.
Signature_______________________________________________________________ Date ______________________
- ---------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 2 OF THE 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 (1) I have mailed or delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or Social Security Administrative Office or
(2) 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 payment, 31% of all payments made to me on
account of the New Notes shall be retained until I provide a taxpayer identification number to the
Exchange Agent and that, if I do not provide my taxpayer identification number within 60 days, such
retained amounts shall be remitted to the Internal Revenue Service as backup withholding and 31% of all
reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service
until I provide a taxpayer identification number.
Signature_______________________________________________________________ Date ______________________
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
FOR ADDITIONAL INFORMATION.
<PAGE> 9
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
Please do not send Certificates for Old Notes directly to the Company. Your
Old Note Certificates, together with your signed and completed Letter of
Transmittal and any required supporting documents should be mailed in the
enclosed addressed envelope, or otherwise delivered, to the Exchange Agent, at
either of the addresses indicated on the first page hereof. THE METHOD OF
DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer--Procedures for Tendering Old Notes" in the Prospectus. Certificates, or
timely confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at one of its addresses set forth herein on or
prior to 5:00 p.m., New York City time, on the Expiration Date. Old Notes may be
tendered in whole or in part in the principal amount of $1,000 and integral
multiples of $1,000, provided that, if any Old Note is tendered for exchange in
part, the untendered principal amount thereof must be $250,000 or any integral
multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent on or prior
to the Expiration Date or (iii) who cannot complete the procedures for delivery
by book-entry transfer on a timely basis, may tender their Old Notes by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
Guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for
Tendering Old Notes" in the Prospectus and by completing Box 3 hereof. Pursuant
to such procedures: (i) such tender must be made by or through an Eligible
Institution (as defined below); (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form accompanying this
Letter of Transmittal, must be received by the Exchange Agent on or prior to the
Expiration Date; and (iii) the Certificates (or a book-entry confirmation (as
defined in the Prospectus)) representing all tendered Old Notes, in proper form
for transfer, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent within five New York Stock Exchange, Inc. trading days after
the date of execution of such Notice of Guaranteed Delivery, all as provided in
"The Exchange Offer--Procedures for Tendering Old Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Notes to be
properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein, "Eligible Institution" means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker or dealer or government securities
broker or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange, Inc. Medallion Signature Program or the
Stock Exchanges Medallion Program.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter or Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any participant
in DTC whose name appears on a security position listing as the owner of
the Old Notes) of Old Notes tendered herewith, unless such holder(s) has
completed either the box entitled "Special Exchange Instructions" (Box 7)
or the box entitled "Special Delivery Instructions" (Box 8) above, or
(ii) such Old Notes are tendered for the account of a firm that is an
Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal (Box 6). See Instruction 5.
<PAGE> 10
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Old Notes and any other required information should be
listed on a separate signed schedule which should be attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Notes will be
accepted only in the principal amount of $1,000 and integral multiples thereof,
provided that, if any Old Note is tendered for exchange in part, the untendered
principal amount thereof must be $250,000 or any integral multiple of $1,000 in
excess thereof. If less than all the Old Notes evidenced by any Certificate
submitted are to be tendered, fill in the principal amount of Old Notes which
are to be tendered in Box 1 under the column "Principal Amount of Old Notes
Tendered." In such case, new Certificate(s) for the remainder of the Old Notes
that were evidenced by your old Certificate(s) will only be sent to the holder
of the Old Notes, promptly after the Expiration Date. All Old Notes represented
by Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date. In order for a withdrawal to be
effective on or prior to that time, a written, telegraphic, telex or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth above or in the Prospectus on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn, and (if Certificates for such Old
Notes have been tendered) the name of the registered holder of the Old Notes as
set forth on the Certificate for the Old Notes, if different from that of the
person who tendered such Old Notes. If Certificates for the Old Notes have been
delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Certificates for the Old Notes, the tendering holder
must submit the serial numbers shown on the particular Certificates for the Old
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Notes tendered
for the account of an Eligible Institution. If Old Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in the Prospectus
under "The Exchange Offer-- Procedures for Tendering Old Notes," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of Old Notes, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Old Notes may not be
rescinded. Old Notes validly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The Exchange Offer--Procedures for Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any affiliates or assigns of the Company, the Exchange
Agent nor any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give such a notification. Any Old Notes which have been tendered but
which are withdrawn on or prior to the Expiration Date will be returned to the
holder thereof without cost to such holder promptly after withdrawal.
5. SIGNATURES OF LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Old
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different name(s) on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers 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 Company, must
submit proper evidence satisfactory to the Company, in its sole discretion, of
such persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Old Notes listed and transmitted hereby, no endorsement(s) of Certificate(s) or
separate bond power(s) are required unless New Notes are to be issued in the
name of a person other than the registered holder(s). However, if New Notes are
to be issued in the name of a person other than the registered holder(s),
signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Notes listed, the certificates must be endorsed
or accompanied by appropriate bond powers, signed exactly as the name or names
of the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel,
<PAGE> 11
certifications and other information as the Company or the Trustee of the Old
Notes may require in accordance with the restrictions on transfer applicable to
the Old Notes. Signatures on such Certificates or bond powers must be guaranteed
by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Notes are to be sent to someone other than the signer of
this Letter of Transmittal, or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed (Box 7 and
8). Certificates for Old Notes not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Notes will be determined by the Company, in its sole
discretion, whose determination shall be final and binding on all parties. The
Company reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by it not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the
Company, be unlawful. The Company also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer set forth
in the Prospectus under "The Exchange Offer--Certain Conditions to the Exchange
Offer" or any conditions or irregularity in any tender of Old Notes of any
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Old Notes will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. Neither the Company, any affiliates or assigns of the Company, the
Exchange Agent, nor any other person shall be under any duty to give
notification of any irregularities in tenders or incur any liability for failure
to give such notification .
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a holder whose tendered Old Notes are accepted for exchange is
required, unless an exemption applies, to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9
of this Letter of Transmittal (Box 9) and certify, under penalties of perjury,
that such number is correct and he or she is not subject to backup withholding.
If the Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a $50 penalty. In
addition, payments to such holders or other payees with respect to Old Notes
exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 (Box 9) may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below Substitute Form W-9 in order to avoid backup
withholding. Notwithstanding that the box in Part 2 is checked and the
Certificate of Awaiting Taxpayer Identification Number is completed, the
Exchange Agent will withhold 31% of all payments made prior to the time a
properly certified TIN is provided to the Exchange Agent.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Notes or of the last transferee appearing on the transfers attached to,
or endorsed on, the Old Notes. If the Old Notes are registered in more than one
name or are not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below and check the box in Part 3 of
Box 9 for "exempt," to avoid possible erroneous backup withholding. A foreign
person may qualify as an exempt recipient by submitting a properly completed IRS
Form W-8, signed under penalties of perjury, attesting to that holder's exempt
status. Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather,
the U.S. Federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
<PAGE> 12
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Notes have been lost, destroyed or stolen, the holder should
promptly notify the Exchange Agent. The holder will then be instructed as to the
steps that must be taken in order to replace the certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen certificate(s) have been followed.
11. SECURITY 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 tax (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 the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE> 13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
A. TIN--The Taxpayer Identification Number for most individuals is your social
security number. Refer to the following chart to determine the appropriate
number:
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- -----------------------------------------------------------
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust (grantor
is also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under state law
- -----------------------------------------------------------
- -----------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- -----------------------------------------------------------
5. Sole proprietorship The owner(3)
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or Legal entity (4)
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of Agriculture
- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's name and social security
number.
(3) Show the individual's name. You may also enter your business name or "doing
business as" name. You may use either your Social Security number or your
employer identification number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
B. EXEMPT PAYEES--The following lists exempt payees. If you are exempt, you must
nonetheless complete the form and provide your TIN to establish that you are
exempt. Check the box in Part 3 of the form, sign and date the form.
For this purpose, Exempt Payees include: (1) A corporation; (2) An
organization exempt from tax under section 501(a), or an individual
retirement plan (IRA) or a custodial account under section 403(b)(7); (3) The
United States or any of its agencies or instrumentalities; (4) A state, the
District of Columbia, a possession of the United States, or any of their
political subdivisions or instrumentalities; (5) A foreign government or any
of its political subdivisions, agencies or instrumentalities; (6) An
international organization or any of its agencies or instrumentalities; (7) A
foreign central bank of issue; (8) A dealer in securities or commodities
required to register in the U.S. or a possession of the U.S.; (9) A real
estate investment trust; (10) An entity registered at all times during the
tax year under the Investment Company Act of 1940; (11) A common trust fund
operated by a bank under section 584(a); (12) A financial institution.
C. OBTAINING A NUMBER--If you do not have a taxpayer identification number or
you do not know your number, obtain Form SS-5, application for a Social
Security Number, or Form SS-4, Application for Employer identification
Number, at the local offfice of the Social Security Admmmstration or the
Intemal Revenue Service and apply for a number.
D. PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of
taxable-interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number. Certain penalties may also
apply.
E. PENALTIES.
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as
being due to negligence and will be subject to a penalty of 5% on any
portion of an under-payment attributable to that failure unless there is
clear and convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 1
EXHIBIT 99.02
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
6 7/8% NOTES DUE 2006
OF
ARISTECH CHEMICAL CORPORATION
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's (as defined below) 6 7/8% Notes due 2006 (the
"Old Notes") are not immediately available, (ii) time will not permit the Old
Notes, the Letter of Transmittal and all other required documents to reach The
Chase Manhattan Bank (the "Exchange Agent") on or prior to the Expiration Date
(as defined in the Prospectus referred to below) or (iii) the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, overnight courier or
mail, or transmitted by facsimile transmission, to the Exchange Agent. See "The
Exchange Offer--Procedures for Tendering Old Notes" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE CHASE MANHATTAN BANK
BY MAIL: BY OVERNIGHT DELIVERY OR HAND:
-------- ------------------------------
The Chase Manhattan Bank The Chase Manhattan Bank
450 West 33rd Street, 15th Floor 450 West 33rd Street, 15th Floor
New York, NY 10001 New York, NY 10001
Attention: Corporate Trust Department Attention: Corporate Trust Department
(Aristech Chemical Corporation, (Aristech Chemical Corporation,
6 7/8% Notes due 2006) 6 7/8% Notes due 2006)
OR
BY HAND ONLY:
-------------
The Chase Manhattan Bank
Institutional Trust Group
One Chase Manhattan Plaza, Floor 1B
New York, NY 10081
(Aristech Chemical Corporation,
6 7/8% Notes due 2006)
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(212) 946-3089
FACSIMILE TRANSMISSIONS:
(212) 946-8161
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Aristech Chemical Corporation, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated , 1997 (as the same may be amended or
supplemented from time to time, the "Prospectus") and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Old Notes set forth
below pursuant to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer--Procedures for Tendering Old Notes."
DESCRIPTION OF OLD NOTES TENDERED
Certificate Number(s)
(if available):_______________________________________
Aggregate Principal
Amount Tendered: $____________________________________
Signature(s):_________________________________________
______________________________________________________
Name(s):______________________________________________
______________________________________________________
Address(es):__________________________________________
______________________________________________________
Area Code(s) and Tel. No(s). of Registered Holder(s):
______________________________________________________
If Old Notes will be tendered by book-entry transfer, please provide the
following information:
Name of Tendering Institution:________________________________
DTC Account Number:___________________________________________
Date:_________________________________________________________
Transaction Code Number:______________________________________
THE GUARANTEE BELOW MUST BE COMPLETED
-2-
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange, Inc.
Medallion Signature Program or the Stock Exchanges Medallion Program (each of
the foregoing being referred to as an "Eligible Institution"), hereby guarantees
to deliver to the Exchange Agent, at one of its addresses set forth above,
either the Old Notes tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such Old Notes to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures for book-entry transfer set forth in the Prospectus, in either case
together with one or more properly completed and duly executed Letter(s) of
Transmittal (or facsimile thereof) and any other required documents within five
New York Stock Exchange trading days after the date of execution of this Notice
of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) 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.
<TABLE>
<S> <C>
Name of Firm:_______________________ ______________________________
(Authorized Signature)
Address:____________________________ Name:_________________________
(Please Print)
____________________________________ Capacity or Title:____________
Area Code and Tel. No.:_____________ Date:_________________________
</TABLE>
NOTE: DO NOT SEND OLD NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL
SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A
PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS.
-3-
<PAGE> 1
EXHIBIT 99.03
Aristech Chemical Corporation
600 Grant Street
Pittsburgh, PA 15219-2704
[ARISTECH LOGO]
W. D. WALSTON
Treasurer
Telephone: 412/433-7680
Facsimile: 412/433-7939
December 11, 1996
The Chase Manhattan Bank
450 West 33rd Street 15th Floor
New York, NY 10001
Ladies and Gentlemen:
Subject: Aristech Chemical Corporation
Indenture dated as of November 1, 1996
--------------------------------------
The Chase Manhattan Bank has been appointed exchange agent (the "Exchange
Agent") in connection with Aristech Chemical Corporation's offer to exchange up
to $150,000,000 aggregate principal amount of its 6 7/8% Notes due 2006 (the
"New Notes") which will be registered under the Securities Act of 1933 for a
like principal amount of its outstanding 6 7/8% Notes due 2006 (the "Old
Notes"). The New Notes are issuable, and the Old Notes were issued, under an
Indenture dated as of November 1, 1996 (the "Indenture") between Aristech
Chemical Corporation and The Chase Manhattan Bank, as Trustee (the "Trustee").
The Exchange Agent shall be entitled to all of the rights, protections,
immunities and indemnities afforded to the Trustee under the above mentioned
Indenture and subject to all of the obligations of the Trustee under such
Indenture.
Sincerely,
/s/ W. D. WALSTON
---------------------------
W. D. WALSTON
cc: M. C. Cairone
M. P. DiClemente
K. L. Stewart (K&L)
